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As filed with the Securities and Exchange Commission on March 19, 2007

Registration Statement No. 333-          

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


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


CAPITAL PRODUCT PARTNERS L.P.
(Exact name of registrant as specified in its charter)

Republic of the Marshall Islands
(State or other jurisdiction of
incorporation or organization)		   4412
(Primary Standard Industrial
Classification Code Number)		   N/A
(I.R.S. Employer
Identification No.)

3 Iassonos Street
Piraeus, 18537 Greece
+30 210 458 4950
(Address and telephone number of
Registrant's principal executive offices)
 CT Corporation System
111 Eighth Avenue, 13th Floor
New York, NY 10011
212-894-8400
(Name, address and telephone number of
agent for service)



Copies to:
Gregory M. Shaw, Esq.
Cravath, Swaine & Moore LLP
CityPoint, One Ropemaker Street
London, EC2Y 9HR, England
+44 207 453 1000 (telephone number)
 +44 207 860 1150 (facsimile number)		   Alan P. Baden
Catherine S. Gallagher
Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor
New York, New York 10103
212-237-0000 (telephone number)
 917-849-5337 (facsimile number)

                  Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.


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

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

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

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

                  If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o


CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered
   Proposed Maximum Aggregate
Offering Price(1)(2)
   Amount of
Registration Fee
Common units representing limited partnership interests   $283,762,500   $8,712
(1)
Includes common units issuable upon exercise of the underwriters' overallotment option.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).



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

Subject to Completion,
Preliminary Prospectus dated March 19, 2007

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

P R O S P E C T U S

11,750,000 Common Units

LOGO

Capital Product Partners L.P.

Representing Limited Partner Interests

                  We are a Marshall Islands limited partnership recently formed by Capital Maritime & Trading Corp. This is the initial public offering of our common units. Capital Maritime & Trading Corp., our sole unitholder, is selling 11,750,000 of our common units. We will not receive any of the proceeds from the sale of any of our common units by Capital Maritime & Trading Corp. Capital Maritime may be deemed to be an underwriter within the meaning of the U.S. Securities Act of 1933 in connection with the sale of the common units covering the exercise of the overallotment option.

                  Although we are organized as a partnership, we have elected to be taxed as a corporation solely for U.S. federal income tax purposes. We estimate the initial public offering price will be between $19.00 and $21.00 per common unit. Currently, no public market exists for the common units. We have been approved to list the common units on The Nasdaq Global Market under the symbol "CPLP."

                  Investing in our common units involves risks that are described in the "Risk Factors" section beginning on page 18 of this prospectus.

                  These risks include the following:


 
   Per Common Unit
   Total
Public offering price   $   $
Underwriting discount(1)   $   $
Proceeds, before expenses, to Capital Maritime & Trading Corp.   $   $

                  The underwriters also may purchase up to an additional 1,762,500 common units from Capital Maritime at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments.

                  Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

                  The common units will be ready for delivery on or about                      , 2007.

Merrill Lynch & Co.   UBS Investment Bank
  Bear, Stearns & Co. Inc.  

 
Wachovia Securities
 

 
Raymond James
 

 
Stifel Nicolaus
 

 
Fortis Securities
 

The date of this prospectus is                      , 2007.

LOGO


M/T "Assos" 47,872 dwt built May 2006 Hyundai MIPO Dockyard Co., Ltd, South Korea

LOGO


M/T "Avax" 47,834 dwt built January 2007 Hyundai MIPO Dockyard Co., Ltd, South Korea

LOGO


M/T "Agisilaos" 37,662 dwt built August 2006 Hyundai MIPO Dockyard Co., Ltd, South Korea


TABLE OF CONTENTS

 
   Page
Summary   1
  Capital Product Partners L.P.   1
  Business Opportunities   2
  Competitive Strengths   3
  Business Strategies   4
  Risk Factors   5
  The Transactions   5
  Management of Capital Product Partners L.P.   9
  Principal Executive Offices and Internet Address; SEC Filing Requirements   9
  Summary of Conflicts of Interest and Fiduciary Duties   10
  The Offering   11
  Summary Historical Financial Data   16
  Forecasted Cash Available for Distribution   17
Risk Factors   18
  Risks Inherent in Our Business   18
  Risks Inherent in an Investment in Us   33
  Tax Risks   40
Forward-Looking Statements   44
Use of Proceeds   46
Capitalization   47
Dilution   48
Our Cash Distribution Policy and Restrictions on Distributions   49
  General   49
  Forecasted Results of Operations and Cash Available for Distribution   51
  Financial Forecast   53
  Summary of Significant Forecast Assumptions   54
How We Make Cash Distributions   62
  Distributions of Available Cash   62
  Operating Surplus and Capital Surplus   62
  Subordination Period   65
  Distributions of Available Cash From Operating Surplus During the Subordination Period   67
  Distributions of Available Cash From Operating Surplus After the Subordination Period   68
  Incentive Distribution Rights   68
  Percentage Allocations of Available Cash From Operating Surplus   69
  Distributions From Capital Surplus   69
  Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels   70
  Distributions of Cash Upon Liquidation   70
Selected Historical Financial Data   72
Unaudited Pro Forma Combined Balance Sheet   74
  Pro Forma Adjustments and Assumptions   76
     

i

Management's Discussion and Analysis of Financial Condition and Results of Operations   78
  Overview   78
  Our Charters   79
  Factors Affecting Our Future Results of Operations   81
  Results of Operations   82
  Liquidity and Capital Resources   84
  Critical Accounting Policies   91
  Quantitative and Qualitative Disclosures About Market Risk   92
  Inflation   92
  Derivative Instruments   92
The Oil Products Tanker Industry   93
  The International Tanker Industry   93
  The Products Tanker Market   97
  Ice Class Vessels   108
  Charter Market   109
Business   113
  Overview   113
  Business Opportunities   114
  Our Competitive Strengths   115
  Business Strategies   116
  Our Fleet   117
  Acquisition of Our Newbuildings   119
  Our Customers   121
  Competition   121
  Time Charters—General Provisions   122
  Bareboat Charters—General Provisions   124
  Classification, Inspection and Maintenance   125
  Management of Ship Operations, Administration and Safety   126
  Major Oil Company Vetting Process   128
  Crewing and Staff   129
  Risk Management and Insurance   130
  Regulation   131
  Properties   135
  Legal Proceedings   135
  Taxation of the Partnership   135
Management   139
  Management of Capital Product Partners L.P.   139
  Directors and Executive Officers   141
  Reimbursement of Expenses of Our General Partner   143
  Executive Compensation   143
  Compensation of Directors   143
  Restricted Units   143
  Employment Agreement   143
Selling Unitholder and Security Ownership of Certain Beneficial Owners and Management   144
     

ii

Certain Relationships and Related Party Transactions   145
  Distributions and Payments to our General Partner and Its Affiliates   145
  Agreements Governing the Transactions   147
  Omnibus Agreement   147
  Management Agreement   150
  Administrative Services Agreement   152
  Agreement to Purchase Future Vessels   153
  Related Party Loans   154
  Dividend to Capital Maritime   154
Conflicts of Interest and Fiduciary Duties   156
  Conflicts of Interest   156
  Fiduciary Duties   160
Description of the Common Units   163
  The Units   163
  Transfer Agent and Registrar   163
  Transfer of Common Units   163
The Partnership Agreement   165
  Organization and Duration   165
  Purpose   165
  Power of Attorney   165
  Capital Contributions   165
  Voting Rights   165
  Limited Liability   168
  Issuance of Additional Securities   169
  Tax Status   169
  Amendment of the Partnership Agreement   169
  Action Relating to the Operating Subsidiary   172
  Merger, Sale, or Other Disposition of Assets   172
  Termination and Dissolution   172
  Liquidation and Distribution of Proceeds   173
  Withdrawal or Removal of our General Partner   173
  Transfer of General Partner Interest   174
  Transfer of Ownership Interests in General Partner   175
  Transfer of Incentive Distribution Rights   175
  Change of Management Provisions   175
  Limited Call Right   175
  Board of Directors   176
  Meetings; Voting   177
  Status as Limited Partner or Assignee   177
  Indemnification   178
  Reimbursement of Expenses   178
  Books and Reports   178
  Right to Inspect Our Books and Records   179
  Registration Rights   179
Units Eligible for Future Sale   180
Material U.S. Federal Income Tax Considerations   181
  Election to be Taxed as a Corporation   181
  U.S. Federal Income Taxation of U.S. Holders   181
  U.S. Federal Income Taxation of Non-U.S. Holders   186
  Backup Withholding and Information Reporting   186
     

iii

Non-United States Tax Considerations   187
  Marshall Islands Tax Consequences   187
Underwriting   188
  Commissions and Discounts   188
  Overallotment Option   189
  No Sales of Similar Securities   189
  Nasdaq Global Market Listing   190
  NASD Regulations   190
  Price Stabilization, Short Positions and Penalty Bids   191
  Electronic Distribution   191
  United Kingdom   191
  European Economic Area   192
  Other Relationships   192
Service of Process and Enforcement of Civil Liabilities   194
Legal Matters   194
Experts   194
Expenses Related to This Offering   195
Where You Can Find More Information   195
Industry and Market Data   197
Index to Financial Statements   F-1
Appendix A—Form of First Amended and Restated Agreement of Limited Partnership of Capital Product Partners L.P.   A-1
Appendix B—Glossary of Terms   B-1

              You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

iv


SUMMARY

              This summary highlights information contained elsewhere in this prospectus. Unless we otherwise specify, all references to information and data in this prospectus about our business and fleet refer to the business and fleet that will be contributed to us on the closing of this offering and the seven newbuildings scheduled for delivery during the remainder of 2007 and in 2008. You should read the entire prospectus carefully, including the historical financial statements and the notes to those financial statements. The information presented in this prospectus assumes (a) an initial public offering price of $20.00 per unit and (b) unless otherwise noted, that the underwriters' overallotment option is not exercised. You should read "Risk Factors" for more information about important risks that you should consider carefully before buying our common units. We include a glossary of some of the terms used in this prospectus in Appendix B. Unless otherwise indicated, all references to "dollars" and "$" in this prospectus are to, and amounts are presented in, U.S. Dollars.

              References in this prospectus to "Capital Product Partners L.P.," "we," "our," "us" or similar terms when used in a historical context refer to the assets of Capital Maritime & Trading Corp. and its vessel-owning subsidiaries that are being contributed to Capital Product Partners L.P. in connection with this offering. When used in the present tense or prospectively, those terms refer, depending on the context, to Capital Product Partners L.P. or any one or more of its subsidiaries, or to all of such entities.

              References in this prospectus to "Capital Maritime" refer, depending on the context, to Capital Maritime & Trading Corp. or any one or more of its subsidiaries, including Capital Ship Management or to Capital Maritime & Trading Corp. and any one or more of its subsidiaries, including Capital Ship Management Corp. Capital Ship Management Corp. (an affiliate of our general partner) will manage the commercial and technical operation of our fleet pursuant to a management agreement that it will enter into with us in connection with the closing of this offering and will provide administrative services to us pursuant to an administrative services agreement that it will enter into with us in connection with the closing of this offering and references in this prospectus to "Capital Ship Management" are to Capital Ship Management Corp.


Capital Product Partners L.P.

              We are an international owner of product tankers, newly formed by Capital Maritime, an international shipping company with a long history of operating and investing in the shipping market. We charter our vessels under medium to long-term time and bareboat charters (two to ten years, with an average remaining term of approximately 6.3 years) to large charterers. Following this offering, our initial fleet will consist of eight newly built, Ice Class 1A, double-hull, medium-range (MR) product tankers, each of which is capable of carrying crude oil, refined oil products, such as gasoline, diesel, fuel oil and jet fuel, as well as edible oils and chemicals, such as ethanol. We plan to leverage the expertise and reputation of Capital Maritime to pursue growth opportunities in this market. Upon the closing of this offering, Capital Maritime will own a 44.0% interest in us, including a 2.0% interest through our general partner, which Capital Maritime owns and controls.

              We intend to grow our fleet following this offering. We have an agreement to purchase seven additional vessels from Capital Maritime comprised of four Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three MR product tanker sister vessels that are scheduled for delivery in 2008, all of which will be under time or bareboat charters that commence at the time of delivery. We expect that by the end of the third quarter of 2008, our contracted fleet will consist of 15 MR double-hull product tankers with an average age of approximately 1.3 years. Our 12 Ice Class 1A vessels will represent the largest Ice Class 1A MR fleet in the world based on number of vessels and carrying capacity. Ice Class 1A vessels generally earn a premium during winter months as they are capable of navigating through many ice-covered routes inaccessible to standard product tankers.

1


              Our current vessels and the vessels we have contracted to purchase are under medium to long-term time charters or bareboat charters to BP Shipping Limited, Morgan Stanley Capital Group Inc., and subsidiaries of Overseas Shipholding Group Inc. We believe that the combination of the medium to long-term nature of our charters (which provide for the receipt of a fixed base fee for the life of the charter) and our management agreement with Capital Maritime (which provides for a fixed management fee for an initial term of approximately five years from when the vessels commence operations to their first special survey) will provide us with a strong base of stable cash flows. In addition, all of our current time charters contain, and our future time charters may contain, profit-sharing provisions that allow us to realize additional revenues when spot rates are higher than the base rates incorporated in our charters or in some instances through greater utilization of our vessels by our charterers. Finally, because 12 of our 15 charter contracts will expire on or after January 2010 (the date at which all single-hull tankers are due to be phased out under IMO regulations), we expect to be well-positioned to recharter our vessels.

              We have a limited operating history. As of December 31, 2006, only five of the vessels in our initial fleet had been delivered to the relevant vessel-owning subsidiaries. The following chart details the expected number of vessels in our fleet based on size and scheduled deliveries.

Vessel Size (dwt)
   Upon Closing of
Offering
   Second Quarter
2007
   Third Quarter
2007
   Fourth Quarter
2007
   2008
37,000 (Ice Class 1A)   5   5   5   5   5
47,000 (Ice Class 1A)   3   4   5   7   7
51,000   —   —   —   —   3
   
 
 
 
 
Operating Vessels   8   9   10   12   15
   
 
 
 
 

              Pursuant to our omnibus agreement with Capital Maritime, we will have the opportunity to purchase an additional six vessels from Capital Maritime comprised of two Ice Class 1A sister vessels and four MR product tanker sister vessels, but only in the event those vessels are fixed under charters of two or more years upon the expiration of their current charters or upon completion of their construction. Capital Maritime is, however, under no obligation to fix any of these six vessels under charters of two or more years. All six vessels are currently under charter for less than two years or are yet to be chartered as they are under construction.

              Capital Maritime will manage the commercial and technical operation of our fleet through Capital Ship Management. Capital Maritime has an experienced management team with a long track record, a reputation for technical expertise in managing and operating vessels, and strong relationships with leading charterers and shipyards.


Business Opportunities

              We believe that the following factors create opportunities for us to successfully execute our business plan and grow our business:

2

              We can provide no assurance, however, that the industry dynamics described above will continue or that we will be able to expand our business. For further discussion of the risks that we face, see "Risk Factors" beginning on page 18 of this prospectus.


Competitive Strengths

              We believe that our future prospects for success are enhanced by the following aspects of our business:

3

              We can provide no assurance, however, that we will be able to utilize our strengths described above. For further discussion of the risks that we face, see "Risk Factors" beginning on page 18 of this prospectus.


Business Strategies

              Our primary business objective is to increase quarterly distributions per unit over time by executing the following strategies:

              We can provide no assurance, however, that we will be able to implement our business strategies described above. For further discussion of the risks that we face, see "Risk Factors" beginning on page 18 of this prospectus.

4



Risk Factors

              An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. Please read carefully these and other risks described under "Risk Factors" beginning on page 18 of this prospectus.


The Transactions

General

              We were formed on January 16, 2007 as a Marshall Islands limited partnership to hold interests in entities that principally own and operate new or almost new double-hull medium-range product tankers.

              At or prior to the closing of this offering, the following transactions will occur to transfer to us the initial eight medium-range product tankers described in this prospectus and to effect the public offering of our common units:

5

              We will not be required to make any repayments of the principal amount outstanding under the credit facility until June 30, 2012, subject to certain conditions. For a description of our new revolving credit facility, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving Credit Facility."

              In addition, at or prior to the closing of this offering, we will enter into the following agreements:

              For further details on our agreements with Capital Maritime and Capital Ship Management, including amounts involved, please read "Certain Relationships and Related Party Transactions."

              Capital Maritime has granted the underwriters a 30-day option to purchase up to 1,762,500 additional common units to cover overallotments. Upon notice by the underwriters of the exercise of their overallotment option in full or in part, we will issue to Capital Maritime a number of common units equal to the number of common units for which the underwriters exercise their overallotment option. The underwriters will then purchase those units from Capital Maritime to cover overallotments. The additional $30 million dividend that is payable by us to Capital Maritime will be reduced by the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price appearing on the cover page of this prospectus, less the underwriting discount. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is less than $30 million, we will pay the difference to Capital Maritime in cash upon the later of the full exercise of the overallotment option or 30 days after the date of this prospectus. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is equal to or more than $30 million, Capital Maritime will not receive any additional cash dividend, but only the common units necessary to satisfy the underwriters' overallotment option and will retain the entire amount of such net proceeds, including any excess over $30 million. If the underwriters do not exercise

6


their overallotment option within 30 days after the date of this prospectus, we will pay to Capital Maritime the full additional $30 million dividend in cash promptly upon such expiration. Any portion of the $30 million dividend that we pay in cash will be paid with borrowings under Tranche No. 1 of our new revolving credit facility.

              We believe that conducting our operations through a publicly traded limited partnership will offer us the following advantages:


Holding Company Structure

              We are a holding entity and will conduct our operations and business through subsidiaries, as is common with publicly traded limited partnerships, to maximize operational flexibility. Initially, Capital Product Operating L.L.C., a limited liability company organized in the Marshall Islands, will be our only directly owned subsidiary and will conduct all of our operations through itself and its subsidiaries.

7

Organizational Structure After the Transactions

              The following diagram depicts our organizational structure after giving effect to the transactions, assuming no exercise of the underwriters' overallotment option:

Public Common Units   56.0 %  
Capital Maritime Common Units   0.0 %  
Capital Maritime Subordinated Units   42.0 %  
General Partner Interest   2.0 %  
   
   
    100.0 %  
   
   

LOGO

8


Management of Capital Product Partners L.P.

              Our board of directors will oversee and direct our operations, management and policies. Our general partner, Capital GP L.L.C., a Marshall Islands limited liability company, will manage our business and operations subject to the direction of our board of directors. Capital GP L.L.C. is wholly owned by Capital Maritime. We do not have our own executive officers and rely on the officers of our general partner to manage our day-to-day activities. All of the executive officers of our general partner and three of our directors also are executive officers, directors or affiliates of Capital Maritime. For more information about our management, including these individuals and the composition of our board of directors, please read "Management."

              Our initial board of directors will consist of six directors appointed by Capital Maritime. A seventh director will be appointed within twelve months after this offering. Thereafter, our board of directors will consist of three persons who are designated by our general partner in its sole discretion and four who are elected by the common unitholders. Our elected directors will be divided into three classes with one class of directors being up for election each year at our annual unitholder meeting and each director serving a term of three years. Directors elected by our common unitholders will be nominated by the board of directors or by any limited partner or group of limited partners that holds at least 10% of the outstanding common units. We will have a conflicts committee consisting of three independent directors that will be available at the board's discretion to review matters involving potential conflicts of interest.

              Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the United States Internal Revenue Code of 1986 as amended (or the Code), if at any time, any person or group, other than our general partner or its affiliates, owns beneficially 5% or more of any class of units then outstanding, any units owned by that person or group in excess of 4.9% may not be voted. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. For more information, please read "The Partnership Agreement—Voting Rights."

              Our general partner will not receive any management fee or other compensation in connection with its management of our business, but it will be entitled to be reimbursed for all direct and indirect expenses incurred on our behalf. Our general partner will also be entitled to distributions on its general partner interest and, if specified requirements are met, on its incentive distribution rights. Please read "Certain Relationships and Related Party Transactions," "How We Make Cash Distributions" and "Management—Reimbursement of Expenses of Our General Partner."

              We will enter into a management agreement with Capital Ship Management relating to the provision of commercial and technical management services and an administrative services agreement relating to the provision of administrative services. Please read "Certain Relationships and Related Party Transactions—Management Agreement" and "Certain Relationships and Related Party Transactions—Administrative Services Agreement."


Principal Executive Offices and Internet Address; SEC Filing Requirements

              Our principal executive offices are located at 3 Iassonos Street Piraeus, 18537 Greece, and our phone number is (+30) 210 458 4950. We expect to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, which will be operational after this offering, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Please read "Where You Can Find More Information" for an explanation of our reporting requirements as a foreign private issuer.

9



Summary of Conflicts of Interest and Fiduciary Duties

              Our general partner and our directors have a legal duty to manage us in a manner beneficial to our unitholders. This legal duty is commonly referred to as a "fiduciary" duty. However, conflicts of interest may arise in the future as a result of the relationships between our general partner and its affiliates, on the one hand, and us and our limited partners, on the other hand. The officers of our general partner also have fiduciary duties to manage it in a manner beneficial to our general partner and its sole member, Capital Maritime. Similarly, our directors have fiduciary duties to manage us in a manner beneficial to us, our general partner and our limited partners. Thus, conflicts of interest may arise because the officers of our general partner and certain of our directors also have fiduciary duties to Capital Maritime. In particular:

              Please read "Management—Directors and Executive Officers" and "Certain Relationships and Related Party Transactions."

              Although a majority of our directors will over time be elected by common unitholders, our general partner will likely have substantial influence on decisions made by our board of directors.

              As a result of these relationships, conflicts of interest may arise in the future between us and our unitholders, on the one hand, and Capital Maritime and its other affiliates, including our general partner and its officers on the other hand. For a more detailed description of the conflicts of interest and fiduciary duties of our general partner and its affiliates, please read "Conflicts of Interest and Fiduciary Duties." For a description of our other relationships with our affiliates, please read "Certain Relationships and Related Party Transactions."

              In addition, our partnership agreement contains provisions that reduce the standards to which our general partner and our directors would otherwise be held under Marshall Islands law. For example, our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and our directors to our unitholders. Our partnership agreement also restricts the remedies available to unitholders. By purchasing a common unit, you are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner, its affiliates or our directors, all as set forth in the partnership agreement. Please read "Conflicts of Interest and Fiduciary Duties" for a description of the fiduciary duties that would otherwise be imposed on our general partner, its affiliates and our directors under Marshall Islands law, the material modifications of those duties contained in our partnership agreement and certain legal rights and remedies available to our unitholders under Marshall Islands law.

10


The Offering

Common units offered to the public by Capital Maritime   11,750,000 common units; or 13,512,500 common units if the underwriters exercise their overallotment option in full.

Units outstanding after this offering
 
11,750,000 common units and 8,805,522 subordinated units, representing a 56.0% and 42.0% limited partner interest in us, respectively, assuming no exercise of the overallotment option; or 13,512,500 common units and 8,805,522 subordinated units, representing a 59.3% and 38.7% limited partner interest in us, respectively, assuming the underwriters exercise their overallotment option in full.

Use of proceeds
 
We will not receive any proceeds from the sale of our common units by Capital Maritime.

Overallotment option
 
Capital Maritime has granted the underwriters a 30-day option to purchase up to 1,762,500 additional common units to cover overallotments. Upon notice by the underwriters of the exercise of their overallotment option in full or in part, we will issue to Capital Maritime a number of common units equal to the number of common units for which the underwriters exercise their overallotment option. The underwriters will then purchase those units from Capital Maritime to cover overallotments. The additional $30 million dividend that is payable by us to Capital Maritime will be reduced by the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price appearing on the cover page of this prospectus, less the underwriting discount. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is less than $30 million, we will pay the difference to Capital Maritime in cash upon the later of the full exercise of the overallotment option or 30 days after the date of this prospectus. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is equal to or more than $30 million, Capital Maritime will not receive any additional cash dividend, but only the common units necessary to satisfy the underwriters' overallotment option and will retain the entire amount of such net proceeds, including any excess over $30 million. We will account for the distribution to Capital Maritime of the common units necessary to satisfy the underwriters' overallotment option as a common unit dividend, which will have no net impact on partners' equity. If the underwriters do not exercise their overallotment option within 30 days after the date of this prospectus, we will pay to Capital Maritime the full additional $30 million dividend in cash promptly upon such expiration. Any portion of the $30 million dividend that we pay in cash will be paid with borrowings under Tranche No. 1 of our new revolving credit facility.
         

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Cash distributions   We intend to make minimum quarterly distributions of $0.3750 per common unit to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner. In general, we will pay any cash distributions we make each quarter in the following manner:

 
 
•
 
first, 98% to the holders of common units and 2.0% to our general partner, until each common unit has received a minimum quarterly distribution of $0.3750 plus any arrearages from prior quarters;
    •   second, 98% to the holders of subordinated units and 2.0% to our general partner, until each subordinated unit has received a minimum quarterly distribution of $0.3750; and
    •   third, 98% to all unitholders, pro rata, and 2.0% to our general partner, until each unit has received an aggregate distribution of $0.3750.

 
 
If cash distributions exceed $0.4313 per unit in a quarter, our general partner will receive increasing percentages, up to 50% (including its 2.0% general partner interest), of the cash we distribute in excess of that amount. We refer to these distributions as "incentive distributions." We must distribute all of our cash on hand at the end of each quarter, less reserves established by our general partner to provide for the proper conduct of our business, to comply with any applicable debt instruments or to provide funds for future distributions. We refer to this cash as "available cash," and we define its meaning in our partnership agreement and in the glossary of terms attached as Appendix B. The amount of available cash may be greater than or less than the aggregate amount of the minimum quarterly distribution to be distributed on all units.
    We believe, based on the estimates contained in and the assumptions listed under "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted Results of Operations and Cash Available for Distribution" and under "Our Cash Distribution Policy and Restrictions on Distributions—Summary of Significant Forecast Assumptions," that we will have sufficient cash available for distributions to enable us to pay all of the minimum quarterly distribution of $0.3750 on all of our common and subordinated units for each quarter through March 31, 2009. However, unanticipated events may occur which could adversely affect the actual results we achieve during the forecast period. Consequently, our actual results of operations, cash flows and financial condition during the forecast period may vary from the forecast, and such
         

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    variations may be material. Prospective investors are cautioned to not place undue reliance on the forecast and should make their own independent assessment of our future results of operations, cash flows and financial condition. Please read "How We Make Cash Distributions— Subordination Period" and "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted Results of Operations and Cash Available for Distribution."

Subordinated units
 
Capital Maritime will initially own all of our subordinated units. The principal difference between our common units and subordinated units is that in any quarter during the subordination period the subordinated units are entitled to receive the minimum quarterly distribution of $0.3750 per unit only after the common units have received the minimum quarterly distribution and arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages. The subordination period generally will end if we have earned and paid at least $0.3750 on each outstanding unit and the corresponding distribution on the general partner's 2.0% interest for any three consecutive four-quarter periods ending on or after March 31, 2011. The subordination period may also end prior to March 31, 2011 if certain financial tests are met as described below. When the subordination period ends, all subordinated units will convert into common units on a one-for-one basis, and the common units will no longer be entitled to arrearages. Please read "How We Make Cash Distributions—Subordination Period."

Early conversion of subordinated units
 
If we have earned and paid at least $2.25 (150.0% of the annualized minimum quarterly distribution) on each outstanding unit for the four-quarter period ending on or before the date of determination, the subordinated units will convert into common units. Please read "How We Make Cash Distributions—Subordination Period."

Issuance of additional units
 
Our partnership agreement allows us to issue an unlimited number of units without the consent of our unitholders. Please read "Units Eligible for Future Sale" and "The Partnership Agreement—Issuance of Additional Securities."

Voting rights
 
We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Our general partner has the right to appoint three of the seven members of our board of directors who will serve as directors for terms determined by our general partner. The remaining four directors will be elected by our common unitholders annually on a staggered basis, and each elected director will hold office for a three-year term.
         

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    Each common outstanding unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time, any person or group, other than our general partner, its affiliates, their transferees, and persons who acquired such units with the prior approval of our board of directors, owns beneficially 5% or more of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote.
    You will have no right to elect our general partner on an annual or other continuing basis. Our general partner may not be removed except by a vote of the holders of at least 662/3% of the outstanding units, including any units owned by our general partner and its affiliates, voting together as a single class and a majority vote of our board of directors. Upon consummation of this offering, Capital Maritime will own all of our subordinated units (representing a 42.0% limited partner interest, assuming no exercise of the underwriters' overallotment option, and a 38.7% limited partner interest if the underwriters exercise their overallotment option in full). As a result, you will initially be unable to remove our general partner without its consent because Capital Maritime will own sufficient units upon completion of this offering to be able to prevent the general partner's removal. Please read "The Partnership Agreement—Voting Rights."

Limited call right
 
If at any time our general partner and its affiliates own more than 80% of the outstanding common units, our general partner has the right, but not the obligation, to purchase all, but not less than all, of the remaining common units at a price equal to the greater of (x) the average of the daily closing prices of the common units over the 20 trading days preceding the date three days before the notice of exercise of the call right is first mailed and (y) the highest price paid by our general partner or any of its affiliates for common units during the 90-day period
         

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    preceding the date such notice is first mailed. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of this limited call right.

U.S. federal income tax considerations
 
Although we are organized as a partnership, we have elected to be taxed as a corporation for U.S. federal income tax purposes. We believe that, under current U.S. federal income tax law, some portion of the distributions you receive from us will constitute dividends, and if you are an individual citizen or resident of the United States or a U.S. estate or trust and meet certain holding period requirements, such dividends are expected to be taxable as "qualified dividend income" currently subject to a maximum 15.0% U.S. federal income tax rate. Other distributions will be treated first as a non-taxable return of capital to the extent of your tax basis in your common units and, thereafter, as capital gain. We estimate that if you hold the common units that you purchase in this offering through the period ending December 31, 2009, the distributions you receive, on a cumulative basis, that will constitute dividends for U.S. federal income tax purposes will be approximately 40% of the total cash distributions for that period. Please read "Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Ratio of Dividend Income to Distributions" for the basis for this estimate. Please also read "Risk Factors—Tax Risks" for a discussion of legislation proposed in a prior legislative session of the U.S. Congress regarding qualified dividend income.

Exchange listing
 
We have been approved to list the common units on The Nasdaq Global Market, under the symbol "CPLP."

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Summary Historical Financial Data

              We have derived the following summary historical financial data from our predecessor combined financial statements as of and for the year ended December 31, 2006, appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future.

              The following table should be read together with, and is qualified in its entirety by reference to, the historical combined financial statements and the accompanying notes included elsewhere in this prospectus. The table should also be read together with "Selected Historical Financial Data," "Unaudited Pro Forma Combined Balance Sheet" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

              All numbers are in thousands of U.S. dollars, except numbers of units and earnings per unit.

 
   Year Ended December 31, 2006
  
Income Statement Data:        
Time and bareboat charter revenues   $ 15,077  
Operating expenses:        
  Voyage expenses(1)     248  
  Vessel operating expenses(2)     2,440  
  Vessel operating expenses—related party     656  
  Depreciation of fixed assets     2,977  
   
 
Total operating expenses     6,321  
   
 
Operating income     8,756  
Interest expense     (4,099 )
Interest income     13  
Foreign currency loss, net     (42 )
   
 
Net income   $ 4,628  
   
 
Pro forma earnings per unit (unaudited)        
General partner's interest in net income   $ 93  
Limited partners' interest in net income   $ 4,535  
Pro forma net income per limited partner unit, basic and diluted(3)   $ 0.22  
Pro forma limited partner units outstanding, basic and diluted(3)     20,555,522  

Pro forma adjusted earnings per unit (unaudited)
 
 
 
 
Pro forma adjusted net income per limited partner unit, basic and diluted(4)   $ 0.20  
Pro forma adjusted limited partner units outstanding, basic and diluted(4)     23,074,134  

Balance Sheet Data (at end of period):
 
 
 
 
Vessels, net and under construction   $ 198,206  
Total assets     204,238  
Total stockholders' equity     45,985  

Cash Flow Data:
 
 
 
 
Net cash provided by operating activities   $ 7,997  
Net cash used in investing activities     (162,047 )
Net cash provided by financing activities     155,282  
(1)
Voyage expenses are all expenses unique to a particular voyage, including commissions, port and canal dues and bunker fees.

(2)
Vessel operating expenses consist of all expenses related to the operation of the vessels, including crewing, repairs and maintenance, insurance, stores, spares, lubricants and miscellaneous expenses.

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(3)
Pro forma earnings per unit gives retroactive impact (along with the 2% general partner's interest) to the earnings of the Company for 2006, effecting the ownership structure to be in place subsequent to this offering, assuming the underwriters have not exercised their overallotment option.

(4)
Pro forma adjusted earnings per unit gives effect to our issuance of 2,518,612 units at an assumed offering price of $20.00 per unit (representing the mid-point of the range set forth on the cover of this prospectus), reflecting that number of units sufficient to fund the anticipated $55 million dividend to our sole stockholder existing immediately prior to this offering assuming the underwriters have not exercised their overallotment option.


Forecasted Cash Available for Distribution

              The amount of the minimum quarterly distribution is $0.3750 per unit, or $1.50 per year. We believe, based on our financial forecast and related assumptions, that we will have sufficient cash to enable us to pay the full minimum quarterly distribution on all of our common and subordinated units for the twelve month periods ending March 31, 2008 and March 31, 2009. In order to fund distributions to all of our common and subordinated unitholders at our initial rate of $1.50 per unit for the twelve month periods ending March 31, 2008 and March 31, 2009, our minimum estimated EBITDA for the twelve months ending March 31, 2008 must be at least $52.1 million and our minimum estimated EBITDA for the twelve months ending March 31, 2009 must be at least $68.0 million, assuming in each case that the underwriters exercise their overallotment option in full. We forecast that our EBITDA for the twelve month periods ending March 31, 2008 and March 31, 2009 will be approximately $56.4 million and $75.3 million, respectively. Please read "Our Cash Distribution Policy and Restrictions on Distributions" for more information on our forecast and the significant assumptions underlying it.

              Our financial forecast reflects our judgment as of the date of this prospectus of conditions we expect to exist and the course of action we expect to take during the twelve month periods ending March 31, 2008 and March 31, 2009. The assumptions and estimates used in the forecast are inherently uncertain and represent those that we believe are significant to our financial forecast. We believe our actual results of operations and cash flows will approximate those reflected in our financial forecast; however, we give you no assurance that our forecasted results will be achieved. There will likely be differences between our forecast and the actual results, and those differences could be material. If the forecast is not achieved, we may not be able to pay the full minimum quarterly distribution or any amount on our common units.

              The financial forecast has been prepared by and is the responsibility of our management. Neither our independent registered public accounting firm, nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial forecast information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the financial forecast. When considering our financial forecast, you should keep in mind the risk factors and other cautionary statements under the heading "Risk Factors" elsewhere in this prospectus and "Our Cash Distribution Policy and Restrictions on Distributions—Summary of Significant Forecast Assumptions" for information about the assumptions we have made for the financial forecast.

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RISK FACTORS

              Although many of our business risks are comparable to those a corporation engaged in a similar business would face, limited partner interests are inherently different from the capital stock of a corporation. You should carefully consider the following risk factors together with all of the other information included in this prospectus when evaluating an investment in our common units.

              If any of the following risks actually occur, our business, financial condition or operating results could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline, and you could lose all or part of your investment.

Risks Inherent in Our Business

We may not have sufficient cash from operations to enable us to pay the minimum quarterly distribution on our common units following the establishment of cash reserves and payment of fees and expenses.

              We may not have sufficient cash available each quarter to pay the minimum quarterly distribution of $0.3750 per common unit following establishment of cash reserves and payment of fees and expenses. The amount of cash we can distribute on our common units principally depends upon the amount of cash we generate from our operations, which may fluctuate based on numerous factors generally described under this "Risk Factors" heading, including, among other things:


              The actual amount of cash we will have available for distribution also will depend on other factors, some of which are beyond our control, such as:

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              The amount of cash we generate from our operations may differ materially from our profit or loss for the period, which will be affected by non-cash items. As a result of this and the other factors mentioned above, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.

The shipping industry is cyclical, which may lead to lower charter hire rates and lower vessel values resulting in decreased distributions to our common unitholders.

              The shipping industry is cyclical with attendant volatility in charter hire rates and vessel values. Charter hire rates are currently near historically high levels. We cannot assure you that we will be able to successfully charter our vessels in the future or renew existing charters at the same or similar rates. If we are required to enter into a charter when charter hire rates are low, our results of operations and our ability to make cash distributions to our common unitholders could be adversely affected.

              In addition, the market value and charter hire rates of medium-range tankers can fluctuate substantially over time due to a number of different factors, including:

              In connection with the closing of this offering, we will enter into an agreement with Capital Maritime to purchase its interests in the subsidiaries that own the seven newbuildings at pre-determined purchase prices. We will purchase from Capital Maritime its interests in each subsidiary that owns the newbuildings upon delivery of the vessel to the applicable subsidiary. Even if the market value of medium-range tankers declines between the time we enter into the agreement to purchase the newbuildings and the time the newbuildings are actually delivered to the vessel-owning subsidiaries, we will still be required to purchase the interests in those subsidiaries at the prices specified in the share purchase agreement with Capital Maritime. As a result, we may pay substantially more for those vessels than we would pay if we were to purchase those vessels from unaffiliated third parties. For more information on our agreement to purchase the seven newbuildings from Capital Maritime, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Purchase of Newbuildings" and "Certain Relationships and Related Party Transactions—Agreement to Purchase Future Vessels."

              If we sell a vessel at a time when the market value of our vessels has fallen, the sale may be at less than the vessel's carrying amount, resulting in a loss. A decline in the market value of our vessels

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could also lead to a default under any prospective credit facility to which we become a party, affect our ability to refinance our new credit facility and/or limit our ability to obtain additional financing.

The assumptions underlying the forecast of cash available for distribution that we include in "Our Cash Distribution Policy and Restrictions on Distributions" are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those forecasted.

              Our estimate of cash available for distribution set forth in "Our Cash Distribution Policy and Restrictions on Distributions" includes our forecast of results of operations and cash available for distribution for the twelve month periods ending March 31, 2008 and March 31, 2009. The forecast has been prepared by management. Neither our independent registered public accounting firm, nor any other independent accountants, have examined, compiled or performed any procedures with respect to the forecast, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the forecast. The assumptions underlying the forecast are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks, including those discussed in this section that could cause actual results to differ materially from those forecasted. If the forecasted results are not achieved, we may not be able to pay the full minimum quarterly distribution or any amount on the common units or subordinated units, in which event the market price of the common units may decline materially. The amount of available cash we need to pay the minimum quarterly distribution for four quarters on the common units, the subordinated units and the 2.0% general partner interest to be outstanding immediately after this offering is $31.5 million, assuming no exercise of the underwriters' overallotment option, and $34.2 million, assuming that the underwriters exercise their overallotment option in full. For a forecast of our ability to pay the full minimum quarterly distributions on the common units, the subordinated units and the 2.0% general partner interest for the twelve month periods ending March 31, 2008 and March 31, 2009, please read "Our Cash Distribution Policy and Restrictions on Distributions."

We have a limited operating history, which makes it more difficult to accurately forecast our future results and may make it difficult for investors to evaluate our business and our future prospects, both of which will increase the risk of your investment.

              Only five of the vessels in our initial fleet had been delivered to the relevant vessel-owning subsidiaries as of December 31, 2006 and were in operation during a portion of the period then ended. Moreover, as these vessels were operated as part of Capital Maritime's fleet during the reporting period, the vessels were operated in a different manner than they will be in the future, and thus their historical results may not be indicative of their future results. Because of our limited operating history, we lack extended historical financial and operational data, making it more difficult for an investor to evaluate our business, forecast our future revenues and other operating results, and assess the merits and risks of an investment in our common units. This lack of information will increase the risk of your investment. Moreover, you should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by companies with a limited operating history. These risks and difficulties include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories. Our failure to address these risks and difficulties successfully could materially harm our business and operating results.

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We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution. In addition, each quarter our board of directors is required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted.

              We must make substantial capital expenditures to maintain, over the long term, the operating capacity of our fleet. These maintenance and replacement capital expenditures include capital expenditures associated with drydocking a vessel, modifying an existing vessel or acquiring a new vessel to the extent these expenditures are incurred to maintain the operating capacity of our fleet. These expenditures could increase as a result of changes in:

              Our significant maintenance and replacement capital expenditures will reduce the amount of cash we have available for distribution to our unitholders. Any costs associated with scheduled drydocking are included in a fixed daily fee of $5,500 per time chartered vessel, that we will pay Capital Ship Management under a management agreement, for an initial term of approximately five years from when the vessels commence operations to and including their first special survey. In the event our management agreement is not renewed, we will separately deduct estimated capital expenditures associated with drydocking from our operating surplus in addition to estimated replacement capital expenditures.

              Our partnership agreement requires our board of directors to deduct estimated, rather than actual, maintenance and replacement capital expenditures from operating surplus each quarter in an effort to reduce fluctuations in operating surplus. The amount of estimated capital expenditures deducted from operating surplus is subject to review and change by the conflicts committee at least once a year. If our board of directors underestimates the appropriate level of estimated maintenance and replacement capital expenditures, we may have less cash available for distribution in future periods when actual capital expenditures begin to exceed previous estimates.

If we expand the size of our fleet in the future, we generally will be required to make significant installment payments for acquisitions of newbuilding vessels prior to their delivery and generation of revenue. In addition, we intend to finance the purchase of the newbuildings to be delivered in 2007 with debt, and the purchase of the newbuildings to be delivered in 2008 partly with debt and partly by issuing additional equity securities. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, our ability to make cash distributions may be diminished or our financial leverage could increase or our unitholders could be diluted.

              The actual cost of a new medium-range ice class tanker varies significantly depending on the market price charged by shipyards, the size and specifications of the vessel, governmental regulations and maritime self-regulatory organization standards. The total delivered cost of a vessel will be higher and include financing, construction supervision, vessel start-up and other costs.

              The purchase price for the seven newbuildings and related time charters we will acquire from Capital Maritime in 2007 and 2008 is $368 million. Capital Maritime is currently incurring all costs for the construction and delivery of the seven newbuildings to be delivered during the course of 2007 and

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2008. Upon their delivery, we will purchase all of the interests of Capital Maritime in the subsidiaries that own the vessels. We intend to partially finance this purchase by issuing additional common units or other equity securities, which will dilute your ownership interest in us. Please read "—We may issue additional equity securities without your approval, which would dilute your ownership interest." We may enter into similar arrangements with Capital Maritime in the future. If Capital Maritime fails to make construction payments for the newbuildings after receiving notice by the shipbuilder following nonpayment on any installment due date, the shipbuilder could rescind the purchase contract. As a result of such default, Capital Maritime could lose all or part of the installment payments made prior to such default, and we could either lose access to the vessels or may need to finance the vessels before they begin operating and generating voyage revenues, which could harm our business and reduce our ability to make cash distributions.

              If we purchase additional newbuildings in the future, we generally will be required to make installment payments prior to their delivery. We typically must pay 5-20% of the purchase price of a medium-range tanker upon signing the purchase contract, even though delivery of the completed vessel will not occur until much later (approximately 18-36 months later for current orders). If we finance these acquisition costs by issuing debt or equity securities, we will increase the aggregate amount of interest payments or minimum quarterly distributions we must make prior to generating cash from the operation of the newbuilding.

              To fund the remaining portion of these and other capital expenditures, we will be required to use cash from operations or incur borrowings or raise capital through the sale of debt or additional equity securities. Use of cash from operations will reduce cash available for distributions to unitholders. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures could have a material adverse effect on our business, results of operations and financial condition and on our ability to make cash distributions. Even if we are successful in obtaining necessary funds, the terms of such financings could limit our ability to pay cash distributions to unitholders. In addition, incurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant unitholder dilution and would increase the aggregate amount of cash required to meet our minimum quarterly distribution to unitholders, which could have a material adverse effect on our ability to make cash distributions.

Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.

              Upon the closing of this offering, our new revolving credit facility will provide us with financing availability of up to $370 million, of which we expect to have $356 million outstanding upon delivery of the final vessel in our initial fleet in 2008, assuming no exercise of the underwriters' overallotment option. For more information regarding the terms of our new revolving credit facility, please read "Management's Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources—Revolving Credit Facility." Following this offering, we will continue to have the ability to incur additional debt, subject to limitations in our new revolving credit facility. Our level of debt could have important consequences to us, including the following:

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              Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.

The new revolving credit facility that we will enter into in connection with this offering will contain restrictive covenants, which may limit our business and financing activities.

              The operating and financial restrictions and covenants in the new revolving credit facility that we will enter into upon the closing of this offering and any future credit facility could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, our new revolving credit facility requires the consent of our lenders or limits our ability to, among other items:

              The credit facility also requires us to comply with the ISM Code and to maintain valid safety management certificates and documents of compliance at all times.

              In addition, our new revolving credit facility requires us to:

We will also be required to maintain an aggregate Market Value of our financed vessels equal to 125% of the aggregate amount outstanding under the credit facility. For a description of the definitions of "EBITDA", "Total Indebtedness" and "Market Value" under our credit facility, please read

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"Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving Credit Facility."

              Our ability to comply with the covenants and restrictions contained in our new revolving credit facility and any other debt instruments we may enter into in the future may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we are in breach of any of the restrictions, covenants, ratios or tests in our new credit facility, especially if we trigger a cross default currently contained in certain of our loan agreements, a significant portion of our obligations may become immediately due and payable, and our lenders' commitment to make further loans to us may terminate. We may not have, or be able to obtain, sufficient funds to make these accelerated payments.

Restrictions in our debt agreements may prevent us from paying distributions.

              Our payment of principal and interest on the debt will reduce cash available for distribution on our units. In addition, our new credit facility will prohibit the payment of distributions if we are not in compliance with certain financial covenants or upon the occurrence of an event of default or if the fair market value of our assets is less than 125% of the aggregate amount outstanding under our credit facility.

              Events of default under our credit facility include:

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              We anticipate that any subsequent refinancing of our current debt or any new debt will have similar restrictions. For more information regarding our financing arrangements, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

We currently derive all of our revenues from a limited number of customers, and the loss of any customer or charter or vessel could result in a significant loss of revenues and cash flow.

              We have derived, and believe that we will continue to derive, all of our revenues and cash flow from a limited number of customers. Morgan Stanley Capital Group Inc. and BP Shipping Limited accounted for all of our revenues during 2006. After the delivery in 2007 and 2008 of the seven newbuildings which we have agreed to charter to either Morgan Stanley Capital Group Inc., BP Shipping Limited or subsidiaries of Overseas Shipholding Group Inc., we will derive all of our revenues from those three customers.

              We could lose a customer or the benefits of a charter if:

Please read "Business—Time Charters—General Provisions" and "Business—Bareboat Charters—General Provisions."

              If we lose a key charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most charters. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not receive any revenues from that vessel, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition. In addition, if a customer exercises its right to purchase a vessel, we would not receive any further revenue from the vessel and may be unable to obtain a substitute vessel and charter. This may cause us to receive decreased revenue and cash flows from having fewer vessels operating in our fleet. Any replacement newbuilding would not generate revenues during its construction, and we may be unable to charter any

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replacement vessel on terms as favorable to us as those of the terminated charter. Any compensation under our charters for a purchase of the vessels may not adequately compensate us for the loss of the vessel and related time charter.

              The loss of any of our customers, time or bareboat charters or vessels, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions.

If Capital Maritime's relations with Hyundai MIPO Dockyard Co., Ltd., South Korea or STX Shipbuilding Co., Ltd., were to deteriorate, the timely delivery of our newbuildings currently on order as well as our ability to secure contracts for additional newbuildings in the future could be impaired.

              All of our newbuildings are being constructed in South Korea by Hyundai MIPO Dockyard Co., Ltd., an affiliate of Hyundai Heavy Industries, the largest shipbuilder in the world and STX Shipbuilding Co., Ltd. Capital Maritime presently has strong, collaborative relationships with Hyundai MIPO and STX Shipbuilding but if relations were to deteriorate between them, the timely delivery of our newbuildings currently on order as well as our ability to secure contracts for additional newbuildings in the future could be impaired.

Delays in deliveries of newbuildings, our decision to cancel or our inability to otherwise complete the acquisitions of our newbuildings, could harm our operating results and lead to the termination of the related charters.

              We are scheduled to take delivery of four newbuildings during the remainder of 2007 and three newbuildings during the course of 2008. The delivery of these vessels, or any other newbuildings we may order, could be delayed, not completed or canceled, which would delay or eliminate our expected receipt of revenues under the time charters for the vessels. The shipbuilder could fail to deliver the newbuilding vessels as agreed, or Capital Maritime could cancel a purchase or a newbuilding contract because the shipbuilder has not met its obligations, including its obligation to maintain agreed refund guarantees in place for our benefit. For prolonged delays, the customer may terminate the time charter.

              Our receipt of newbuildings could be delayed, canceled, or otherwise not completed because of:

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              If delivery of a vessel is materially delayed, it could adversely affect our results of operations and financial condition and our ability to make cash distributions.

We depend on Capital Maritime and its affiliates to assist us in operating and expanding our business.

              Pursuant to a management agreement between us and Capital Ship Management, Capital Ship Management will provide to us significant commercial and technical management services (including the commercial and technical management of our vessels, vessel maintenance and crewing, purchasing and insurance and shipyard supervision). Please read "Certain Relationships and Related Party Transactions—Management Agreement." In addition, pursuant to an administrative services agreement between us and Capital Ship Management, Capital Ship Management will provide to us significant administrative, financial and other support services. Please read "Certain Relationships and Related Party Transactions—Administrative Services Agreement." Our operational success and ability to execute our growth strategy will depend significantly upon Capital Ship Management's satisfactory performance of these services. Our business will be harmed if Capital Ship Management fails to perform these services satisfactorily, if Capital Ship Management cancels either of these agreements, or if Capital Ship Management stops providing these services to us. We may also in the future contract with Capital Maritime for it to have newbuildings constructed on our behalf and to incur the construction-related financing. We would purchase the vessels on or after delivery based on an agreed-upon price.

              Our ability to enter into new charters and expand our customer relationships will depend largely on our ability to leverage our relationship with Capital Maritime and its reputation and relationships in the shipping industry. If Capital Maritime suffers material damage to its reputation or relationships, it may harm our ability to:

              If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions.

Our growth depends on continued growth in demand for refined products and the shipping of refined products in medium-range tankers.

              Our growth strategy focuses on expansion in the refined product medium-range tanker shipping sector. Accordingly, our growth depends on continued growth in world and regional demand for refined products and the shipping of refined products in medium-range tankers, which could be negatively affected by a number of factors, such as prices for refined products, refining capacity or general political and economic conditions.

              Reduced demand for refined products and the shipping of refined products or the increased availability of pipelines used to transport refined products, would have a material adverse effect on our future growth and could harm our business, results of operations and financial condition.

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Our growth depends on our ability to expand relationships with existing customers and obtain new customers, for which we will face substantial competition.

              Medium to long-term time charters and bareboat charters have the potential to provide income at pre-determined rates over more extended periods of time. However, the process for obtaining longer term time charters and bareboat charters is highly competitive and generally involves a lengthy, intensive and continuous screening and vetting process and the submission of competitive bids that often extends for several months. In addition to the quality, age and suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vessel operator, including:

              It is likely that we will face substantial competition for medium to long-term charter business from a number of experienced companies. Many of these competitors may have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into our transportation sectors, including in the ice class sector. Many of these competitors have strong reputations and extensive resources and experience. Increased competition may cause greater price competition, especially for medium to long-term charters.

              As a result of these factors, we may be unable to expand our relationships with existing customers or obtain new customers for medium to long-term time charters or bareboat charters on a profitable basis, if at all. However, even if we are successful in employing our vessels under longer term time charters or bareboat charters, our vessels will not be available for trading in the spot market during an upturn in the tanker market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable time charters our results of operations and operating cash flow could be adversely affected.

We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm our business, financial condition and operating results.

              Our growth strategy focuses on a gradual expansion of our fleet. Any acquisition of a vessel may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient

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to justify our investment. In addition, our growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:


The 15 vessels that make up our contracted fleet have been, or will be, built in accordance with custom designs from two different shipyards and the vessels from each respective shipyard are the same in all material respects. As a result, any latent defect discovered in one vessel will likely affect all of our vessels.

              All of the 15 vessels that we have agreed to purchase are, or will be, based on standard designs from Hyundai MIPO Dockyard Co., Ltd., South Korea and STX, South Korea and customized by Capital Maritime, in some cases in consultation with the charterers of the vessel, and are, or will be, uniform in all material respects. As a result, any latent design defect discovered in one of our vessels will likely affect all of our other vessels in that class. In addition, all of the vessels we have agreed to acquire have, or will have, the same or similar equipment. As a result, any equipment defect discovered may affect all of our vessels. Any disruptions in the operation of our vessels resulting from defects could adversely affect our receipt of revenues under the charters for the vessels affected.

Certain design features in our vessels have been modified by Capital Maritime to enhance the commercial capability of our vessels and have not yet been tested. As a result we may encounter unforeseen expenses, complications, delays and other unknown factors which could adversely affect our revenues.

              Capital Maritime has modified certain design features in our vessels which have not yet been tested and as a result, they may not operate as intended. If these modifications fail to enhance the commercial capability of our vessels as intended or interfere with the operation of our vessels, we could face expensive and time-consuming design modifications, delays in the operation of our vessels, damaged customer relationships and harm to our reputation. Any disruptions in the operation of our vessels resulting from the design modifications could adversely affect our receipt of revenues under the charters for the vessels affected.

Terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs and disruption of our business.

              Terrorist attacks, such as the attacks that occurred in the United States on September 11, 2001, the bombings in Spain on March 11, 2004, the bombings in London on July 7, 2005, and the current conflicts in Iraq and Afghanistan and other current and future conflicts, may adversely affect our business, operating results, financial condition, ability to raise capital and future growth. Continuing hostilities in the Middle East may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the United States or elsewhere, which may contribute further to economic instability

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and disruption of oil production and distribution, which could result in reduced demand for our services.

              In addition, oil facilities, shipyards, vessels, pipelines and oil and gas fields could be targets of future terrorist attacks. Any such attacks could lead to, among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs, and the inability to transport oil and other refined products to or from certain locations. Terrorist attacks, war or other events beyond our control that adversely affect the distribution, production or transportation of oil and other refined products to be shipped by us could entitle our customers to terminate our charter contracts, which would harm our cash flow and our business.

Our operations expose us to political and governmental instability, which could harm our business.

              Our operations may be adversely affected by changing or adverse political and governmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with the operation of our vessels, which could harm our business, financial condition and results of operations. In particular, we derive a substantial portion of our revenues from shipping oil and oil products from politically unstable regions. Past political efforts to disrupt shipping in these regions, particularly in the Arabian Gulf, have included attacks on ships and mining of waterways. In addition to acts of terrorism, trading in this and other regions have also been subject, in limited instances, to piracy. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to trading activities or other adverse events or circumstances in or affecting the countries and regions where we operate or where we may operate in the future.

Marine transportation is inherently risky, and an incident involving significant loss of or environmental contamination by any of our vessels could harm our reputation and business.

              Our vessels and their cargoes are at risk of being damaged or lost because of events such as:

              An accident involving any of our vessels could result in any of the following:

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              Any of these results could have a material adverse effect on our business, financial condition and operating results.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

              The operation of ocean-going vessels in international trade is inherently risky. Although we carry protection and indemnity insurance, all risks may not be adequately insured against, and any particular claim may not be paid. We do not currently maintain off-hire insurance, which would cover the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking due to damage to the vessel from accidents. Accordingly, any extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business and our ability to pay distributions to our unitholders. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintained through mutual protection and indemnity associations, and as a member of such associations we may be required to make additional payments over and above budgeted premiums if member claims exceed association reserves.

              We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could harm our business, financial condition and operating results. In addition, certain of our vessels are under bareboat charters with BP Shipping Limited and subsidiaries of Overseas Shipholding Group Inc. Under the terms of these charters, the charterer provides for the insurance of the vessel and as a result these vessels may not be adequately insured and/or in some cases may be self-insured. Any uninsured or underinsured loss could harm our business and financial condition. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our ships failing to maintain certification with applicable maritime self-regulatory organizations.

              Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. In addition, the insurance that may be available to us may be significantly more expensive than our existing coverage.

The marine energy transportation industry is subject to substantial environmental and other regulations, which may significantly limit our operations or increase our expenses.

              Our operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties, conventions and standards in force in international waters, the jurisdictional waters of the countries in which our vessels operate, as well as the countries of our vessels' registration. Many of these requirements are designed to reduce the risk of oil spills and other pollution, and our compliance with these requirements can be costly.

              These requirements can affect the resale value or useful lives of our vessels, require a reduction in cargo-capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in, certain ports. Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations, in the event that there is a release of petroleum or other hazardous substances from our vessels or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with

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our current or historic operations. Violations of or liabilities under environmental requirements also can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of our vessels.

              We could incur significant costs, including cleanup costs, fines, penalties, third-party claims and natural resource damages, as the result of an oil spill or other liabilities under environmental laws. The United States Oil Pollution Act of 1990 (OPA 90) affects all vessel owners shipping oil or petroleum products to, from or within the United States. OPA 90 allows for potentially unlimited liability without regard to fault of owners, operators and bareboat charterers of vessels for oil pollution in U.S. waters. Similarly, the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended, which has been adopted by most countries outside of the U.S., imposes liability for oil pollution in international waters. OPA 90 expressly permits individual states to impose their own liability regimes with regard to hazardous materials and oil pollution incidents occurring within their boundaries. Coastal states in the U.S. have enacted pollution prevention liability and response laws, many providing for unlimited liability.

              In addition, in complying with OPA 90, IMO regulations, EU directives and other existing laws and regulations and those that may be adopted, shipowners may incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditure on our vessels to keep them in compliance, or even to scrap or sell certain vessels altogether. For example, various jurisdictions are considering regulating the management of ballast water to prevent the introduction of non-indigenous species considered to be invasive. In addition, as a result of accidents such as the November 2002 oil spill from the motor tanker Prestige, a 26 year old single-hull tanker (which was owned by a company unrelated to us), we believe that regulation of the shipping industry will continue to become more stringent and more expensive for us and our competitors. In recent years, the IMO and EU have both accelerated their existing non-double-hull phase-out schedules in response to highly publicized oil spills and other shipping incidents involving companies unrelated to us. Future incidents may result in the adoption of even stricter laws and regulations, which could limit our operations or our ability to do business and which could have a material adverse effect on our business and financial results.

We have no history operating as a separate publicly traded entity and will incur increased costs as a result of being a publicly traded limited partnership.

              We have no history operating as a separate publicly traded entity. As a publicly traded limited partnership, we will be required to comply with the SEC's reporting requirements and with corporate governance and related requirements of the Sarbanes-Oxley Act, the SEC and the securities exchange on which our common units will be listed. We will incur significant legal, accounting and other expenses in complying with these and other applicable regulations. We anticipate that our incremental general and administrative expenses as a publicly traded limited partnership taxed as a corporation for U.S. federal income tax purposes, will be approximately $2.3 million annually, and will include costs associated with annual reports to unitholders, tax return, investor relations, registrar and transfer agent's fees, incremental director and officer liability insurance costs and director compensation.

The crew employment agreements manning agents enter into on behalf of Capital Maritime or its affiliates may not prevent labor interruptions and the failure to renegotiate these agreements successfully in the future may disrupt our operations and adversely affect our cash flows.

              The crew employment agreements manning agents enter into on behalf of Capital Maritime or its affiliates may not prevent labor interruptions and are subject to renegotiation in the future. Any labor interruptions, including due to a failure to renegotiate employment agreements with our crew

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members successfully could disrupt our operations and could adversely affect our business, financial condition and results of operations.

Risks Inherent in an Investment in Us

Capital Maritime and its affiliates may engage in competition with us.

              Pursuant to the omnibus agreement that we and Capital Maritime will enter into in connection with the closing of this offering, Capital Maritime and its controlled affiliates (other than us, our general partner and our subsidiaries) generally will agree not to acquire, own or operate medium-range tankers under time charters of two or more years without the consent of our general partner. The omnibus agreement, however, contains significant exceptions that may allow Capital Maritime or any of its controlled affiliates to compete with us which could harm our business. Please read "Certain Relationships and Related Party Transactions—Omnibus Agreement—Noncompetition."

Unitholders have limited voting rights and our partnership agreement restricts the voting rights of unitholders owning 5% or more of our common units.

              Holders of common units have only limited voting rights on matters affecting our business. We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Common unitholders elect only four of the seven members of our board of directors. The elected directors will be elected on a staggered basis and will serve for three year terms. Our general partner in its sole discretion has the right to appoint the remaining three directors and to set the terms for which those directors will serve. The partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management. Unitholders will have no right to elect our general partner and our general partner may not be removed except by a vote of the holders of at least 662/3% of the outstanding units, including any units owned by our general partner and its affiliates, voting together as a single class and a majority vote of our board of directors.

              Our partnership agreement further restricts unitholders' voting rights by providing that if any person or group, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of our board of directors, owns beneficially 5% or more of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote.

Our general partner and its other affiliates own a controlling interest in us and have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to your detriment.

              Following this offering, Capital Maritime will indirectly own the 2.0% general partner interest and a 42.0% limited partner interest in us, assuming no exercise of the underwriters' overallotment option, and will own and control our general partner, which effectively controls our day-to-day affairs consistent with policies and procedures adopted by and subject to the direction of our board of directors. Although our general partner and its affiliates and our directors have a fiduciary duty to manage us in a manner beneficial to us and our unitholders, the officers of our general partner have a fiduciary duty to manage our general partner in a manner beneficial to Capital Maritime. Furthermore,

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all of the officers of our general partner and certain of our directors are directors or officers of Capital Maritime and its affiliates and as such they have fiduciary duties to Capital Maritime that may cause them to pursue business strategies that disproportionately benefit Capital Maritime or which otherwise are not in the best interests of us or our unitholders. Conflicts of interest may arise between Capital Maritime and its affiliates, including our general partner and its officers on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our general partner and its affiliates may favor their own interests over the interests of our unitholders. Please read "—Our partnership agreement limits the fiduciary duties of our general partner and our directors to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors." These conflicts include, among others, the following situations:


              Although a majority of our directors will over time be elected by common unitholders, our general partner will likely have substantial influence on decisions made by our board of directors. Please read "Certain Relationships and Related Party Transactions" "Conflicts of Interest and Fiduciary Duties" and "The Partnership Agreement."

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We currently do not have any officers and expect to rely solely on officers of our general partner who face conflicts in the allocation of their time to our business.

              We do not currently expect our board of directors to exercise its power to appoint officers of Capital Product Partners L.P., and as a result, we expect to rely solely on the officers of our general partner, who are not required to work full-time on our affairs and also work for affiliates of our general partner, including Capital Maritime. For example, our general partner's Chief Executive Officer and Chief Financial Officer is also an executive officer of Capital Maritime. The affiliates of our general partner conduct substantial businesses and activities of their own in which we have no economic interest. As a result, there could be material competition for the time and effort of the officers of our general partner who also provide services to our general partner's affiliates, which could have a material adverse effect on our business, results of operations and financial condition.

Our partnership agreement limits our general partner's and our directors' fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner, or our directors.

              Our partnership agreement contains provisions that reduce the standards to which our general partner and directors would otherwise be held by Marshall Islands law. For example, our partnership agreement:

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              In order to become a limited partner of our partnership, a common unitholder is required to agree to be bound by the provisions in the partnership agreement, including the provisions discussed above. Please read "Conflicts of Interest and Fiduciary Duties—Fiduciary Duties."

Fees and cost reimbursements, which Capital Ship Management will determine for services provided to us and certain of our subsidiaries, will be substantial and will reduce our cash available for distribution to you.

              We will pay a fixed daily fee for an initial term of approximately five years from when the vessels commence operations to, and including, their first special survey, for services provided to us by Capital Ship Management, and we will reimburse Capital Ship Management for all expenses it incurs on our behalf. The fixed daily fee to be paid to Capital Ship Management includes all costs incurred in providing certain commercial and technical management services to us as described under "Certain Relationships and Related Party Transactions—Management Agreement." In addition, Capital Ship Management will provide us with administrative services pursuant to an administrative services agreement, and we will reimburse Capital Ship Management for all costs and expenses reasonably incurred by it in connection with the provision of those services. The payment of fees to Capital Ship Management and reimbursement of expenses to Capital Ship Management could adversely affect our ability to pay cash distributions.

Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner, and even if public unitholders are dissatisfied, they will be unable to remove our general partner without Capital Maritime's consent, unless Capital Maritime's ownership share in us is decreased; all of which could diminish the trading price of our common units.

              Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner.

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              The effect of these provisions may be to diminish the price at which the common units will trade.

The control of our general partner may be transferred to a third party without unitholder consent.

              Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. In addition, our partnership agreement does not restrict the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party.

Substantial future sales of our common units in the public market could cause the price of our common units to fall.

              We have granted registration rights to Capital Maritime and certain affiliates of Capital Maritime. These unitholders have the right subject to some conditions to require us to file registration statements covering any of our common, subordinated or other equity securities owned by them or to include those securities in registration statements that we may file for ourselves or other unitholders. Upon the closing of this offering, Capital Maritime will own approximately 8,805,522 subordinated units and the incentive distribution rights. Following their registration and sale under the applicable registration statement, those securities will become freely tradeable. By exercising their registration rights and selling a large number of common units or other securities, these unitholders could cause the price of our common units to decline.

You will experience immediate and substantial dilution of $9.49 per common unit.

              The assumed initial public offering price of $20.00 per common unit exceeds pro forma net tangible book value of $10.51 per common unit. Based on the assumed initial public offering price, you will incur immediate and substantial dilution of $9.49 per common unit. This dilution results primarily because the assets contributed by our general partner and its affiliates are recorded at their historical cost, and not their fair value, in accordance with GAAP. Please read "Dilution."

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We may issue additional equity securities without your approval, which would dilute your ownership interests.

              We may, without the approval of our unitholders, issue an unlimited number of additional units or other equity securities. In particular, we intend to finance a substantial portion of the purchase price of the newbuildings to be delivered in 2008 through the issuance of additional common units.

              The issuance by us of additional common units or other equity securities of equal or senior rank will have the following effects:

In establishing cash reserves, our board of directors may reduce the amount of cash available for distribution to you.

              Our partnership agreement requires our general partner to deduct from operating surplus cash reserves that it determines are necessary to fund our future operating expenditures. These reserves also will affect the amount of cash available for distribution to our unitholders. Our board of directors may establish reserves for distributions on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four quarters. As described above in "—Risks Inherent in Our Business—We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution. In addition, each quarter our board of directors is required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted." Our partnership agreement requires our board of directors each quarter to deduct from operating surplus estimated maintenance and replacement capital expenditures, as opposed to actual expenditures, which could reduce the amount of available cash for distribution. The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by the conflicts committee of our board of directors.

Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.

              If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market price. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your units. For additional information about the limited call right, please read "The Partnership Agreement—Limited Call Right."

              At the completion of this offering and assuming no exercise of the underwriters' overallotment option, Capital Maritime, an affiliate of our general partner, will not own any of our common units. At the end of the subordination period, assuming no additional issuances of common units, no exercise of

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the underwriters' overallotment option and conversion of our subordinated units into common units, Capital Maritime will own 42.8% of the common units.

You may not have limited liability if a court finds that unitholder action constitutes control of our business.

              As a limited partner in a partnership organized under the laws of the Marshall Islands, you could be held liable for our obligations to the same extent as a general partner if you participate in the "control" of our business. Our general partner generally has unlimited liability for the obligations of the partnership, such as its debts and environmental liabilities, except for those contractual obligations of the partnership that are expressly made without recourse to our general partner. In addition, the Marshall Islands Limited Partnership Act (or Marshall Islands Act) provides that, under some circumstances, a unitholder may be liable to us for the amount of a distribution for a period of three years from the date of the distribution. In addition, the limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some jurisdictions in which we do business. Please read "The Partnership Agreement—Limited Liability" for a discussion of the implications of the limitations on liability to a unitholder.

We can borrow money to pay distributions, which would reduce the amount of credit available to operate our business.

              Our partnership agreement will allow us to make working capital borrowings to pay distributions. Accordingly, we can make distributions on all our units even though cash generated by our operations may not be sufficient to pay such distributions. Any working capital borrowings by us to make distributions will reduce the amount of working capital borrowings we can make for operating our business. For more information, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Arrangements."

Increases in interest rates may cause the market price of our common units to decline.

              An increase in interest rates may cause a corresponding decline in demand for equity investments in general, and in particular for yield-based equity investments such as our common units. Any such increase in interest rates or reduction in demand for our common units resulting from other relatively more attractive investment opportunities may cause the trading price of our common units to decline.

There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and you could lose all or part of your investment.

              Prior to this offering, there has been no public market for the common units. After this offering, there will be only 11,750,000 publicly traded common units. We do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. You may not be able to resell your common units at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.

Unitholders may have liability to repay distributions.

              Under some circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under the Marshall Islands Act, we may not make a distribution to you if the distribution would cause our liabilities to exceed the fair value of our assets. Marshall Islands law provides that for a period of three years from the date of the impermissible distribution, limited

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partners who received the distribution and who knew at the time of the distribution that it violated Marshall Islands law will be liable to the limited partnership for the distribution amount. Assignees who become substituted limited partners are liable for the obligations of the assignor to make contributions to the partnership that are known to the assignee at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of their partnership interest and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted.

We have been organized as a limited partnership under the laws of the Republic of the Marshall Islands, which does not have a well developed body of partnership law.

              Our partnership affairs are governed by our partnership agreement and by the Marshall Islands Act. The provisions of the Marshall Islands Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. The Marshall Islands Act also provides that it is to be applied and construed to make it uniform with the Delaware Revised Uniform Partnership Act and, so long as it does not conflict with the Marshall Islands Act or decisions of the Marshall Islands courts, interpreted according to the non-statutory law (or case law) of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as the courts in Delaware. For example, the rights of our unitholders and the fiduciary responsibilities of our general partner under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. As a result, unitholders may have more difficulty in protecting their interests in the face of actions by our general partner and its officers and directors than would unitholders of a limited partnership formed in the United States.

Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

              We are organized under the laws of the Marshall Islands, and all of our assets are located outside of the United States. Our business is operated primarily from our office in Greece. In addition, our general partner is a Marshall Islands limited liability company and its directors and officers generally are or will be non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our general partner or its directors and officers. For more information regarding the relevant laws of the Marshall Islands, please read "Service of Process and Enforcement of Civil Liabilities."

Tax Risks

              In addition to the following risk factors, you should read "Business—Taxation of the Partnership", "Material U.S. Federal Income Tax Considerations" and "Non-United States Tax Considerations" for a more complete discussion of the expected material U.S. federal and non-U.S. income tax considerations relating to us and the ownership and disposition of common units.

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

              A foreign entity taxed as a corporation for U.S. federal income tax purposes will be treated as a "passive foreign investment company" (or PFIC), for U.S. federal income tax purposes if at least

40


75.0% of its gross income for any taxable year consists of certain types of "passive income," or at least 50.0% of the average value of the entity's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

              Based on our current and projected method of operation, and on opinion of counsel, we do not believe that we will be a PFIC for our 2007 taxable year nor do we expect to become a PFIC with respect to any other taxable year. We have received an opinion from our counsel, Cravath, Swaine & Moore LLP, that (1) the income we receive from time chartering activities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income from time charters exceeds 25% of our gross income for each taxable year after our initial taxable year and assets engaged in time charters exceed 50% of the average value of our assets for each taxable year after our initial taxable year, we should not be a PFIC. This opinion is based on representations and projections provided by us regarding our assets, income and charters to our counsel, and its validity is conditioned on the accuracy of such representations and projections. We expect that at least five out of the eight vessels in our initial fleet and four of the seven newbuildings we have committed to purchase will be engaged in time chartering activities and intend to treat our income from those activities as non-passive income, and the vessels engaged in those activities as non-passive assets, for PFIC purposes. However, no assurance can be given that the Internal Revenue Service or IRS will accept this position. The remainder of our fleet will be engaged in activities that may be characterized as passive for PFIC purposes and the income from that portion of our fleet may be treated as passive income for PFIC purposes. See "Material U.S. Federal Income Tax Considerations—PFIC Status and Significant Tax Consequences."

The preferential tax rates applicable to qualified dividend income are temporary, and the enactment of previously proposed legislation could affect whether dividends paid by us constitute qualified dividend income eligible for the preferential rate.

              Certain of our distributions may be treated as qualified dividend income eligible for preferential rates of U.S. federal income tax to U.S. individual unitholders (and certain other U.S. unitholders). In the absence of legislation extending the term for these preferential tax rates, all dividends received by such U.S. taxpayers in tax years beginning on January 1, 2011 or later will be taxed at ordinary graduated tax rates. Please read "Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Distributions."

              In addition, legislation proposed during a preceding legislative session of the U.S. Congress would deny the preferential rate of U.S. federal income tax currently imposed on qualified dividend income with respect to dividends received from a non-U.S. corporation, unless the non-U.S. corporation either is eligible for benefits of a comprehensive income tax treaty with the United States or is created or organized under the laws of a foreign country that has a comprehensive income tax system. Because the Marshall Islands has not entered into a comprehensive income tax treaty with the United States and imposes only limited taxes on entities organized under its laws, it is unlikely that we could satisfy either of these requirements. Consequently, if this legislation were enacted the preferential tax rates of federal income tax discussed under "Material U.S. Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Distributions" may no longer be applicable to distributions received from us. As of the date hereof, it is not possible to predict with any certainty whether this previously proposed legislation will be reintroduced and enacted.

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

              Under the Code, 50% of the gross shipping income of a vessel owning or chartering corporation that is attributable to transportation that both begins or ends, but that does not begin and end, in the U.S. is characterized as U.S. source shipping income and such income generally is subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code.

              We have received an opinion of counsel that, based on certain assumptions and representations, we and each of our subsidiaries will qualify for this statutory tax exemption, and we will take this position for U.S. federal income tax return reporting purposes. See "Business—Taxation of the Partnership." However, there are factual circumstances, including some that may be beyond our control, that could cause us to lose the benefit of this tax exemption after this offering. In addition, our conclusion, as well as that of our counsel, Cravath, Swaine & Moore LLP, that we qualify for this exemption is based upon legal authorities which do not expressly contemplate an organization structure such as ours. Although we have elected to be treated as a corporation for U.S. federal income tax purposes, for corporate law purposes we are organized as a limited partnership under Marshall Islands law and our general partner will be responsible for managing our business and affairs and has been granted certain veto rights over decisions of our board of directors. Therefore, we can give no assurances that the IRS will not take a different position regarding our qualification, or the qualification of any of our subsidiaries, for this tax exemption.

              If we or our subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries generally would be subject for those years to a 4% U.S. federal gross income tax on our U.S. source shipping income. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings available for distribution to our unitholders.

You may be subject to income tax in one or more non-U.S. countries, including Greece, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. Such laws may require you to file a tax return with and pay taxes to those countries.

              We intend that our affairs and the business of each of our controlled affiliates will be conducted and operated in a manner that minimizes income taxes imposed upon us and these controlled affiliates or which may be imposed upon you as a result of owning our common units. However, because we are organized as a partnership, there is a risk in some jurisdictions that our activities and the activities of our subsidiaries may be attributed to our unitholders for tax purposes and, thus, that you will be subject to tax in one or more non-U.S. countries, including Greece, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. If you are subject to tax in any such country, you may be required to file a tax return with and to pay tax in that country based on your allocable share of our income. We may be required to reduce distributions to you on account of any withholding obligations imposed upon us by that country in respect of such allocation to you. The United States may not allow a tax credit for any foreign income taxes that you directly or indirectly incur.

              We believe we can conduct our activities in a manner so that our unitholders should not be considered to be carrying on business in Greece solely as a consequence of the acquisition, holding, disposition or redemption of our common units. However, the question of whether either we or any of our controlled affiliates will be treated as carrying on business in any country, including Greece, will largely be a question of fact determined through an analysis of contractual arrangements, including the management agreement and the administrative services agreement we will enter into with Capital Ship Management, and the way we conduct business or operations, all of which may change over time. The laws of Greece or any other foreign country may also change, which could cause the country's taxing

42


authorities to determine that we are carrying on business in such country and are subject to its taxation laws. Any foreign taxes imposed on us or any subsidiaries will reduce our cash available for distribution.

The ratio of dividend income to distributions on our common units is subject to business, economic and other uncertainties as well as tax reporting positions with which the IRS may disagree, which could result in a higher ratio of dividend income to distributions and adversely affect the value of the common units.

              We estimate that approximately 40% of the total cash distributions made to a purchaser of common units in this offering who owns those units from the date of this offering through December 31, 2009 will constitute dividend income. The remaining portion of the distributions will be treated first as a nontaxable return of capital to the extent of the purchaser's tax basis in its common units and thereafter as capital gains. These estimates are based on certain assumptions which are subject to business, economic, regulatory, competitive and political uncertainties beyond our control. In addition, these estimates are based on current U.S. federal income tax law and tax reporting positions that we will adopt and with which the IRS could disagree. As a result of these uncertainties, these estimates may be incorrect and the actual percentage of total cash distributions that will constitute dividend income could be higher, and any difference could adversely affect the value of the common units. Please read "Material U.S. Federal Income Tax Considerations—U.S Federal Income Taxation of U.S. Holders—Ratio of Dividend Income to Distributions."

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FORWARD-LOOKING STATEMENTS

              Statements included in this prospectus which are not historical facts (including our financial forecast and any other statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate as described in this prospectus. In some cases, you can identify the forward-looking statements by the use of words such as "may," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms or other comparable terminology.

              Forward-looking statements appear in a number of places and include statements with respect to, among other things:

44

              These and other forward-looking statements are made based upon management's current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks discussed in "Risk Factors." The risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

              We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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USE OF PROCEEDS

              The common units being offered by this prospectus, including the common units offered if the underwriters' overallotment option is exercised, are solely for the account of Capital Maritime. We will not receive any proceeds from the sale of our common units by Capital Maritime. Capital Maritime will pay all offering expenses, underwriting discounts, financial advisory fees, selling commissions and brokerage fees, if any, incurred in connection with this offering, assuming no exercise of the underwriters' overallotment option. Capital Maritime has granted the underwriters a 30-day option to purchase up to 1,762,500 additional common units to cover overallotments. Upon notice by the underwriters of the exercise of their overallotment option in full or in part, we will issue to Capital Maritime a number of common units equal to the number of common units for which the underwriters exercise their overallotment option. The underwriters will then purchase those units from Capital Maritime to cover overallotments, and the amount of the $30 million dividend payable by us in cash to Capital Maritime will be reduced by the net proceeds received by Capital Maritime in connection with the exercise of the overallotment option. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is less than $30 million, we will pay the difference to Capital Maritime in cash upon the later of the full exercise of the overallotment option or 30 days after the date of this prospectus. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is equal to or more than $30 million, Capital Maritime will not receive any additional cash dividend, but only the common units necessary to satisfy the underwriters' overallotment option and will retain the entire amount of such net proceeds, including any excess over $30 million. We will account for the distribution to Capital Maritime of the common units necessary to satisfy the underwriters' overallotment as a common unit dividend which will have no net impact on partners' equity. For additional information on the dividend payable by us to Capital Maritime and the exercise of the underwriters' overallotment option, please read "Summary—The Transactions."

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CAPITALIZATION

              The following table shows:

              This table is derived from and should be read together with the historical combined financial statements and the accompanying notes contained elsewhere in this prospectus. You should also read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Combined Balance Sheet."

 
   As of December 31, 2006
 
   Actual
   Pro Forma
As Adjusted
 
   (in thousands)
Cash and cash equivalents:   $ 1,239   $ 5,000
   
 
Debt:            
  Current portion of long-term debt   $ 4,979   $ —
  Current portion of long-term related party debt     8,042     —
  Long-term debt     52,554     —
  Long-term related party debt     87,498     —
  Borrowings under revolving credit facility     —     60,000
   
 
      Total debt     153,073     60,000
   
 
Equity:            
  Stockholder's Equity     45,985      
 
Held by public:
 
 
 
 
 
 
    Common units     —     123,455
 
Held by general partner and its affiliates:
 
 
 
 
 
 
    General partner interest     —     4,409
    Subordinated units     —     92,591
   
 
      Total equity     45,985     220,455
   
 
      Total capitalization   $ 199,058   $ 280,455
   
 

              On February 21, 2007, Capital Maritime entered into interest rate swap agreements on our behalf (agreements that will be assigned to us upon the completion of this offering), to reduce our exposure to cash flow risks from fluctuating interest rates. No consideration will be given or received upon assignment. As of March 9, 2007, the fair value of the swaps was approximately $(3.75 million), due to the fluctuation in interest rates since the time the agreements were entered into.

              Changes in interest rates could occur due to changes in market interest rates for debt with substantially similar credit risk and payment terms. The swap agreements fix the LIBOR portion of our interest rate at 5.1325% for $356 million in borrowings under our new credit facility for a period up to June 30, 2012. The swap arrangements have not been reflected in the capitalization table above as they were not in place at December 31, 2006 and are not directly attributable to the offering.

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DILUTION

              Dilution is the amount by which the offering price will exceed the net tangible book value per common unit after this offering. On a pro forma basis as of December 31, 2006, our pro forma net tangible book value was $220.5 million, or $10.51 per common unit. This remains unchanged when adjusted for the sale of 11,750,000 common units in this offering at an initial public offering price of $20.00 per common unit. Purchasers of common units in this offering will experience substantial and immediate dilution in net tangible book value per common unit for financial accounting purposes, as illustrated in the following table.

Assumed initial public offering price per common unit   $ 20.00
Less: Net tangible book value per unit before and after the offering(1)     10.51
   
Immediate dilution in net tangible book value per common unit to new investors   $ 9.49
   
(1)
Determined by dividing the total number of units (11,750,000 common units, 8,805,522 subordinated units and the 2.0% general partner interest represented by 419,500 general partner units), assuming no exercise of the underwriters' overallotment option, to be issued to our general partner and its affiliates for their contribution of assets and liabilities to us into the net tangible book value of the contributed assets and liabilities.

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OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS

              You should read the following discussion of our cash distribution policy and restrictions on distributions in conjunction with specific assumptions included in this section. In addition, you should read "Forward-Looking Statements" and "Risk Factors" for information regarding statements that do not relate strictly to historical or current facts and certain risks inherent in our business.

General

              Our cash distribution policy reflects a basic judgment that our unitholders will be better served by our distributing our cash available (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves) rather than retaining it. Because we believe we will generally finance any expansion capital expenditures from external financing sources, we believe that our investors are best served by our distributing all of our available cash. Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all of our available cash quarterly (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves).

              There is no guarantee that unitholders will receive quarterly distributions from us. Our distribution policy is subject to certain restrictions and may be changed at any time, including:

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              Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

              We have a limited operating history upon which to rely with respect to whether we will have sufficient cash available for distributions to allow us to pay the minimum quarterly distributions on our common and subordinated units. While we believe, based on our financial forecast and related assumptions, that we will have sufficient cash to enable us to pay the full minimum quarterly distribution on all of our common and subordinated units for the period ending December 31, 2008, we may be unable to pay the full minimum quarterly distribution or any amount on our common units.

Our Ability to Grow Depends on Our Ability to Access External Expansion Capital

              Because we distribute all of our available cash, growth may not be as fast as businesses that reinvest their available cash to expand ongoing operations. We expect that we will rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions and expansion and investment capital expenditures. As a result, to the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow. To the extent we issue additional units in connection with any acquisitions or expansion or investment capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level, which in turn may affect the available cash that we have to distribute on each unit. There are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional borrowings or other debt by us to finance our growth strategy would result in increased interest expense, which in turn may affect the available cash that we have to distribute to our unitholders.

Initial Distribution Rate

              The amount of the minimum quarterly distribution is $0.3750 per unit, or $1.50 per year. The amount of available cash from operating surplus, which we also refer to as cash available for distributions, needed to pay the minimum quarterly distribution on all of the common units and subordinated units and the 2.0% general partner interest to be outstanding immediately after this

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offering for one quarter and for four quarters will be approximately (assuming no exercise and full exercise of the underwriters' overallotment option):

 
   No Exercise of the Underwriters' Overallotment Option
   Full Exercise of the Underwriters' Overallotment Option
 
    
   Distributions
    
   Distributions
 
   Number
of Units
   Number
of Units
 
   One Quarter
   Four Quarters
   One Quarter
   Four Quarters
Common units   11,750,000   $ 4,406,250   $ 17,625,000   13,512,500   $ 5,067,188   $ 20,268,750
Subordinated units   8,805,522     3,302,071     13,208,283   8,805,522     3,302,071     13,208,283
General Partner Interest(1)   419,500     157,313     629,250   455,470     170,801     683,205
   
 
 
 
 
 
Total   20,975,022   $ 7,865,634   $ 31,462,533   22,773,492   $ 8,540,060   $ 34,160,238
   
 
 
 
 
 
(1)
The number of general partner units is determined by multiplying the total number of units deemed to be outstanding (i.e., the total number of common and subordinated units outstanding divided by 98.0%) by the general partner's 2.0% general partner interest.

              Upon completion of this offering, our board of directors will adopt a policy pursuant to which we will pay an initial quarterly distribution of $0.3750 per unit for each complete quarter. Beginning with the quarter ending June 30, 2007, we will distribute, within 45 days after the end of each quarter, all of our available cash to unitholders of record on the applicable record date. We will adjust our first distribution for the period from the closing of this offering through June 30, 2007 based on the actual length of the period.

              During the subordination period, before we make any quarterly distributions to subordinated unitholders, our common unitholders are entitled to receive payment of the full minimum quarterly distribution plus any arrearages in distributions from prior quarters. Please read "How We Make Cash Distributions—Subordination Period." The amount of the minimum quarterly distribution is $0.3750 per unit, or $1.50 per unit per year. We cannot guarantee, however, that we will pay the minimum quarterly distribution or any amount on the common units in any quarter.

              Our general partner will be entitled to 2.0% of all distributions that we make prior to our liquidation. The general partner's initial 2.0% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its initial 2.0% general partner interest. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest.

              In the section that follows, we present in detail the basis for our belief that we will have sufficient available cash from operating surplus to pay our minimum quarterly distribution on all of our common and subordinated units for the twelve month periods ending March 31, 2008 and March 31, 2009.

Forecasted Results of Operations and Cash Available for Distribution

              Our financial forecast reflects our judgment as of the date of this prospectus of conditions we expect to exist and the course of action we expect to take during the twelve month periods ending March 31, 2008 and March 31, 2009. The assumptions and estimates used in the forecast are inherently uncertain and represent those that we believe are significant to our financial forecast. We believe our actual results of operations and cash flows will approximate those reflected in our financial forecast; however, we give you no assurance that our forecasted results will be achieved. There will likely be differences between our forecast and the actual results, and those differences could be material. If the forecast is not achieved, we may not be able to pay the full minimum quarterly distribution or any amount on our common units.

              Our financial forecast assumes the underwriters exercise their overallotment option in full. The underwriters may or may not elect to exercise the overallotment option. We have presented our ability to make distributions assuming the issuance of an additional 1,762,500 common units and 35,969

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general partner units as a result of the overallotment option. Because the net proceeds from the exercise of the overallotment option in full will reduce the amount of borrowings under our revolving credit facility by $30 million, if the overallotment option is exercised in full, our cash available for distribution will increase by approximately $1.8 million due to lower interest expense. This increase is offset by the approximately $2.7 million of cash required to make distributions on the additional common and general partner units for the twelve month period ending March 31, 2008. If the option to purchase additional units is not exercised, our interest expense will increase and cash available for distribution will decrease by $1.8 million for the twelve month period ending March 31, 2008.

              In order to fund distributions to all of our common and subordinated unitholders at our initial rate of $1.50 per unit for the twelve month periods ending March 31, 2008 and March 31, 2009, our minimum estimated EBITDA for the twelve months ending March 31, 2008 must be at least $52.1 million and our minimum estimated EBITDA for the twelve months ending March 31, 2009 must be at least $68.0 million, assuming the underwriters exercise their overallotment option in full. As set forth in the following table, we forecast that our EBITDA for the twelve month periods ending March 31, 2008 and March 31, 2009 will be approximately $56.4 million and $75.3 million, respectively. Please read "Summary of Significant Forecast Assumptions" for information about the assumptions we have made for the financial forecast.

              Our financial forecast is a forward-looking statement and should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical combined financial statements and accompanying notes included elsewhere in this prospectus. We do not, as a matter of course make public projections as to future revenues, earnings or other results. However, our management has prepared the financial forecast set forth below in support of our belief that we will have sufficient cash available from our operating surplus to allow us to pay the minimum quarterly distribution on all of our outstanding common and subordinated units during the forecast period. The accompanying financial forecast was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but in the view of our management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of our knowledge and belief, the expected course of action and the expected future financial performance of Capital Product Partners L.P. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the financial forecast.

              The financial forecast has been prepared by and is the responsibility of our management. Neither our independent registered public accounting firm, nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial forecast information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the financial forecast.

              When considering our financial forecast, you should keep in mind the risk factors and other cautionary statements under the heading "Risk Factors" elsewhere in this prospectus. Any of the risks discussed in this prospectus could cause our actual results of operations to vary significantly from the financial forecast.

              Unanticipated events may occur which could adversely affect the actual results we achieve during the forecast period. Consequently, our actual results of operations, cash flows and financial condition during the forecast period may vary from the forecast and such variations may be material. Prospective investors are cautioned to not place undue reliance on the forecast and should make their own independent assessment of our future results of operations, cash flows and financial condition.

              We do not undertake any obligation to release publicly the results of any future revisions we may make to the financial forecast or to update the financial forecast to reflect events or circumstances after the date of this prospectus, even in the event that any or all of the underlying assumptions are shown to be in error. Therefore, we caution you not to place undue reliance on this information.

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Financial Forecast

Capital Product Partners L.P.
Statement of Forecasted Results of Operations and Cash Available for Distribution (unaudited)

 
   Twelve months
ending
March 31,
2008
   Twelve months
ending
March 31,
2009
  
 
   (in thousands except per unit amounts)

  
Gross Revenue   $ 74,365   $ 96,634  
  Less: Commissions     (525 )   (540 )
   
 
 
Net Revenue     73,839     96,094  
  Less: Operating expenses     (15,226 )   (18,562 )
  Less: Selling, general and administrative expenses     (2,250 )   (2,250 )
  Less: Depreciation     (14,633 )   (20,644 )
  Less: Net interest expense     (10,469 )   (17,796 )
   
 
 
    Net income     31,261     36,842  

Adjustments to reconcile net income to Estimated EBITDA:
 
 
 
 
 
 
 
Add:              
  Depreciation     14,633     20,644  
  Interest expense     10,469     17,796  
   
 
 
    Estimated EBITDA(1)     56,363     75,282  

Adjustments to reconcile estimated EBITDA to estimated cash available for distribution:
 
 
 
 
 
 
 
Less:              
  Cash interest expense     (10,469 )   (17,796 )
  Expansion capital expenditures     (272,000 )   (96,000 )
  Replacement capital expenditures     (8,230 )   (10,984 )
Add:              
  Deferred revenue(2)     783     634  
  Borrowings to fund expansion capital expenditures     272,000     24,000  
  Equity issuance to fund expansion capital expenditures     0     72,000  
   
 
 
    Estimated cash available for distribution   $ 38,447   $ 47,137  
   
 
 
Per unit minimum annual distribution   $ 1.50   $ 1.50  
Annual distributions to:              
  Publicly held common units   $ 20,269   $ 25,839  
  Subordinated units held by affiliates of our general partner     13,208     13,208  
  General partner units held by our general partner     683     783  
   
 
 
Total minimum annual cash distributions   $ 34,160   $ 39,830  
   
 
 
  Excess of cash available for distributions over the minimum annual distributions   $ 4,287   $ 7,306  
   
 
 
  Calculation of minimum estimated EBITDA necessary to pay minimum annual cash distributions              
  Estimated EBITDA   $ 56,363   $ 75,282  
Less:              
  Excess of cash available for distributions over minimum annual distributions     (4,287 )   (7,306 )
   
 
 
  Minimum estimated EBITDA necessary to pay minimum annual cash distribution   $ 52,076   $ 67,976  
   
 
 

Please read "—Summary of Significant Forecast Assumptions."

(1)
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA is not a recognized measure under U.S. GAAP, but is a measure that management believes is highly correlated to cash and useful for the purpose of

53

(2)
The terms of the bareboat charters with BP Shipping Limited covering the Atlantas, Aktoras and Aiolos vessels have each been extended for a period of three years, and the term of the time charter covering the Arionas vessel has been extended for a period of six months. The daily charter rates payable under each of these charters during the extension period is lower than the daily charter rates payable during the original term. Pursuant to FASB 13, paragraph 19b, we will recognize the revenues under these charters on a straight line basis based on the average daily charter rate over the duration of the charter and will record deferred revenue for the difference between cash collections and average daily charter rates over the original terms of these charters. Accordingly, the amounts attributable to such charters included in our net revenues in the forecast are calculated using the average daily charter rates over the terms of these charters, and are therefore lower than the anticipated cash collections under those charters during the forecast period. During the twelve months ended March 31, 2008 and the twelve months ended March 31, 2009, we forecast cash collections will exceed revenue recognized by $0.8 million and $0.6 million, respectively, pursuant to these charters.

Summary of Significant Forecast Assumptions

              Vessels.    The forecast assumes the following:

              A delay in the delivery of any of the vessels currently under contract for delivery could materially affect our forecast.

              Revenues.    Our forecast assumptions are based on contracted daily charter rates for each vessel (as set out in the tables below), 362 operating days per calendar year of expected operations for each vessel under time charter and 365 operating days per calendar year for each vessel under bareboat charter. We do not bear any loss of revenue when a vessel under bareboat charter is off-hire. We expect to drydock our vessels under time charters five years from their delivery date at the time of a vessel's special survey and every 30 months thereafter. We do not expect any drydocking during the forecast period. The actual number of off-hire days for vessels under time charter could vary and depends, among other factors, upon the time a vessel spends in drydocking for repairs, maintenance or inspection, equipment breakdowns or delays due to accidents or similar problems. The tables below provide details for each vessel included in the forecast, including the net daily charter rate.

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              Initial Fleet.    The following table provides information regarding the eight vessels in our initial fleet.

Vessel Name
   Year Built
   DWT
   Charter Type(1)
   Commencement
of Charter
   Expiration of
Charter(2)
   Daily Charter
Rate(3)
  
Atlantas   2006   37,000   8-year BC   04/06   03/14   $ 15,000 (4)
Aktoras   2006   37,000   8-year BC   07/06   06/14   $ 15,000 (4)
Agisilaos   2006   37,000   2.5-year TC   08/06   01/09   $ 17,500 (5)
Assos   2006   47,000   3-year TC   11/06   10/09   $ 20,000 (5)
Arionas   2006   37,000   2.5-year TC   11/06   04/09   $ 21,000 (5)(6)
Axios   2007   47,000   3-year TC   03/07   02/10   $ 20,500 (5)
Aiolos   2007   37,000   8-year BC   03/07   2/15   $ 15,000 (4)
Avax   2007   47,000   3-year TC   06/07   05/10   $ 20,500 (7)
(1)
TC: Time Charter, BC: Bareboat Charter.

(2)
Earliest possible redelivery date. Redelivery date is +/– 30 days at the charterer's option.

(3)
The BP Shipping Limited time and bareboat charters are subject to commissions and the rates quoted above are the net rates after we have paid such commissions. We will not be paying any commissions for the Morgan Stanley Capital Group Inc. time charters and Overseas Shipholding Group Inc. bareboat charters.

(4)
The last 3 years of the BC will be at a daily charter rate of $13,432.

(5)
Subject to 50/50 profit sharing arrangement. Please read "—Profit Sharing" for further detail.

(6)
The last 6 months of the TC will be at a daily charter rate of $19,000 plus a 50/50 profit sharing arrangement.

(7)
Avax is currently under a charter which commenced in March 2007 at a daily charter rate of $24,687 and expires at the end of May 2007.

              Newbuildings.    The table below provides information regarding the seven newbuildings we have committed to purchase.

Vessel Name
   Expected
Delivery Date
   DWT
   Charter Type(1)
   Commencement
of Charter
   Expiration of
Charter
   Daily Charter
Rate(2)
  
Atrotos   05/07   47,000   3-year TC   05/07   04/10   $ 20,000 (3)
Akeraios   08/07   47,000   3-year TC   08/07   07/10   $ 20,000 (3)
Anemos I   10/07   47,000   3-year TC   10/07   09/10   $ 20,000 (3)
Apostolos   10/07   47,000   3-year TC   10/07   09/10   $ 20,000 (3)
Alexandros II   01/08   51,000   10-year BC   01/08   12/17 (4) $ 13,000  
Aristotelis II   06/08   51,000   10-year BC   06/08   05/18 (4) $ 13,000  
Aris II   08/08   51,000   10-year BC   08/08   07/18 (4) $ 13,000  
(1)
TC: Time Charter, BC: Bareboat Charter.

(2)
The BP Shipping Limited time and bareboat charters are subject to commissions and the rates quoted above are the net rates after we have paid such commissions. We will not be paying any commissions for the Morgan Stanley Capital Group Inc. time charters and Overseas Shipholding Group Inc. bareboat charters.

(3)
Subject to 50/50 profit sharing arrangement. Please read "—Profit Sharing" for further detail.

(4)
Under the charters with subsidiaries of Overseas Shipholding Group Inc. for the three STX vessels to be delivered in 2008, Overseas Shipholding Group Inc. has an option to purchase each vessel at the end of the eighth, ninth or tenth year of the charter, for $38.0 million, $35.5 million and $33.0 million respectively, which option is exercisable six months before the date of completion of the eighth, ninth or tenth year of the charter. The expiration date above may therefore change depending on whether the charterer exercises its purchase option.

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              Profit Sharing.    All of our current time charter contracts contain profit sharing provisions. Profit sharing refers to an arrangement between owners and charterers to share, at a pre-determined percentage, voyage profit in excess of the basic hire rate.

              The profit sharing arrangements for our vessels time chartered with Morgan Stanley Capital Group Inc. are calculated on the basis of a weighted monthly average of three indices published daily by the Baltic Exchange based on specific routes and cargo sizes representative of the vessel's trading. At the end of each month, the monthly average of each route is calculated and the Time Charter Equivalent (TCE) for a round voyage is estimated based upon the weighted average of the three routes, the speed and consumption of the vessel in question, bunker prices at agreed ports as published by Platts, port expenses adjusted twice a year and other parameters mutually agreed such as loading/discharging time, bad weather and commissions. If the weighted average hire rate is less than or equal to the basic hire rate, then we receive the basic hire rate only. If the weighted average hire exceeds the basic hire rate, then we receive the basic hire rate plus 50% of the excess. However, we also have the right to access the charterer's annual results of operations for each vessel and if it is shown that the vessel has performed better than the estimated profit outlined above, then we may opt to use the charterer's results of operations and are reimbursed the difference between profits received under the first option outlined above, and 50% of actual vessel profits above the basic hire rate. Annual results of operations from the charterer are to be presented by December 31 of each year for the period commencing December 1 of the previous year to November 30 of the year in question.

              Our profit sharing arrangements for our vessels time chartered with BP Shipping Limited are based on the calculation of the TCE according to the "last to next" principle (previous discharge port to last discharge port). Actual voyage revenues earned and received, actual expenses incurred and actual time taken to perform the voyage are used for the purpose of the calculation. The charterer is obliged to provide us with a copy of each fixture note and all reasonable documentation with respect to items of cost and earnings referring to each voyage within every calculation period, as well as with a statement listing actual voyage results for voyages completed and estimated results for any voyage not completed at the time of settlement. When actual revenue and/or expenses have not been settled, BP Shipping Limited's estimates apply but remain subject to adjustment upon closing of actual accounts. If the average daily TCE is less than or equal to the basic gross hire rate, then we receive the basic net hire rate only. If the average daily TCE exceeds the basic gross hire rate, then we receive the basic net hire rate plus 50% of the excess over the gross hire rate. The profit share with BP Shipping Limited is calculated and settled semi-annually.

              Please see the table below for information on the gross charter rates for vessels time charted with BP Shipping Limited:

Vessel Name
   DWT
   Charter Type
   Gross
Charter Rate
   Commission
Agisilaos   37,000   2.5-year TC   $ 17,721   1.25%
Arionas   37,000   2-year TC   $ 21,266 (1) 1.25%
Axios   47,000   3-year TC   $ 20,759   1.25%
Avax   47,000   3-year TC   $ 20,759 (2) 1.25%
(1)
A gross charter rate of $19,241 for the Arionas applies for the six month period the time charter covering the Arionas has been extended (from November 4, 2008 to April 4, 2009).

(2)
Avax is currently under a charter which commenced in March 2007 at a daily gross charter rate of $25,000 and expires at the end of May 2007.

              Our profit sharing forecast assumes a daily spot market rate of $21,750 for the 37,000 dwt vessels under time charter and $22,750 for the 47,000 dwt vessels under time charter. Based on such assumed spot market rates, the amount of revenue derived from our profit sharing arrangements that is

56


included in the forecast amounts to $3.3 million for the twelve months ending March 31, 2008 and $4.1 million for the twelve months ending March 31, 2009. The approximate average daily spot market rates for 37,000 dwt vessels and 47,000 dwt vessels during 2006 have been $25,882 and $26,788, respectively. The approximate average daily spot market rates for 37,000 dwt vessels and 47,000 dwt vessels over the past three years have been $27,430 and $27,823, respectively. While the assumed daily spot rates used to calculate our profit share are lower than spot market rates during 2006 or over the past three years, actual spot market rates over the forecast period could differ significantly from those forecasted and we can therefore give you no assurance that we will derive any additional revenue from our profit sharing arrangements. We believe we will have sufficient available cash from operating surplus to pay our minimum quarterly distribution on all units during the forecast period without any revenue derived from profit sharing.

              Vessel Operating Expenses.    Our forecast assumes operating expenses per vessel will be equal to the number of days in the year, multiplied by the applicable daily operating expense rate. We will enter into a management agreement with Capital Ship Management upon the closing of this offering which will cover chartering, crewing, technical support and maintenance, insurance and costs associated with the first special survey and related drydocking of each of our vessels. The management agreement will have an initial term of approximately five years from when each vessel commences operations until its first special survey. Pursuant to the management agreement, the daily operating expense rate will be $5,500 per time chartered vessel. The sole expense we will incur in connection with our vessels under bareboat charter is a daily fee of $250 per bareboat chartered vessel payable to Capital Ship Management, mainly to cover compliance costs. Under the management agreement, we will be required to pay additional fees to Capital Ship Management for additional costs incurred by it in some circumstances. Please read "Certain Relationships and Related Party Transactions—Management Agreement". We have assumed we will incur no additional fees during the forecast period. As a result, this forecast could vary significantly if any additional fees are incurred.

              Depreciation.    Depreciation of the vessels is based on their cost to the vessel-owning subsidiaries. Depreciation is calculated using the straight-line method and an estimated useful life of 25 years for each vessel.

              General and Administrative Expenses.    Our forecast assumes we will incur $2.3 million of total general and administrative expenses per year. This amount relates to the increased cost of being a publicly traded limited partnership, and includes board of director costs, executive compensation, director and officer insurance, investor relations, and legal, accounting, tax and securities regulatory compliance costs as well as other administrative needs.

              At the closing of this offering, we will enter into an administrative services agreement with Capital Ship Management, pursuant to which Capital Ship Management will provide certain administrative management services to us. The agreement has an initial term of five years from the closing date of this offering. We will reimburse Capital Ship Management for reasonable costs and expenses incurred in connection with the provision of these services within 15 days after Capital Ship Management submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required.

              Although we anticipate adopting equity compensation plans, we have not established the types or amounts of any awards and do not have an estimate of expenses that may be associated with these plans.

              Expenditures for Vessels.    We have agreed to purchase from Capital Maritime four additional Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three additional MR product tanker sister vessels that are scheduled for delivery in 2008. The aggregate purchase price for the four vessels to be purchased from Capital Maritime in 2007 is $224 million ($56 million per vessel) and the

57


aggregate purchase price for the three vessels to be purchased from Capital Maritime in 2008 is $144 million ($48 million per vessel).

              Interest Expense, Net.    We have assumed that the purchase price of $224 million for the 2007 vessels will be financed borrowings under our new credit facility debt and that $72 million of the purchase price for the 2008 vessels will be financed with borrowings under our new credit facility, with the remaining $72 million of the purchase price for the 2008 vessels being raised through equity issuances. We have further assumed that we will draw $30 million from our new credit facility to finance the $25 million dividend we intend to pay Capital Maritime at the closing of this offering, assuming full exercise of the underwriters' overallotment option. Additionally, we have assumed interest income is generated based on a weighted average rate of 5.0% from our cash balance.

              Our forecast assumes an interest rate of 0.75% per annum over US$ LIBOR on the $370 million aggregate amount of debt, with drawings under the new credit facility made to finance the purchase of the additional vessels as they are delivered and gives effect to existing interest rate swap agreements to fix the LIBOR portion of our interest rate under our new credit facility for a period up to June 30, 2012. Our swap agreements cover the $356 million aggregate debt amount at 5.1325%. Our forecasted interest rate for the forecast period is 5.88%. We have assumed that any cash withheld to cover distributions will be used to repay indebtedness at an interest rate of 5.88%. Also included in interest expense are associated commitment fees, which are equal to an annual rate of 20 basis points on the undrawn portion of the revolving credit facility, and administrative fees associated with our revolving credit facility.

              Capital Maritime has entered into interest rate swap agreements on our behalf (agreements that will be transferred to us upon the completion of this offering) to reduce our exposure to cash flow risks from fluctuating interest rates. No consideration will be given or received upon transfer. As of March 9, 2007, the fair value of the swaps was approximately $(3.75 million) due to the fluctuation in interest rates since the time the agreements were entered into.

              Changes in interest rates could occur due to changes in market interest rates for debt with substantially similar credit risk and payment terms. The swap agreements fix the LIBOR portion of our interest rate at 5.1325% for $356 million in borrowings under our new credit facility up to June 30, 2012. It is not possible to determine whether or not these swap arrangements will qualify for hedge accounting upon transfer, but we do not expect cash flows to differ for the purposes of the forecast regardless of whether the arrangement qualifies for hedge accounting.

              Estimated Maintenance Capital Expenditures.    Our partnership agreement requires our board of directors to deduct from operating surplus each quarter estimated maintenance and replacement capital expenditures as opposed to actual maintenance and replacement capital expenditures in order to reduce disparities in operating surplus caused by fluctuating maintenance and replacement capital expenditures, such as drydocking and vessel replacement. Please read "How We Make Cash Distributions—Operating Surplus and Capital Surplus—Capital Expenditures" for more detail. Scheduled drydocking expenditures for our time chartered vessels are included in the fixed daily fee of $5,500 per time chartered vessel we pay to Capital Ship Management pursuant to our management agreement. Drydocking expenditures for our vessels under bareboat charter are covered by the charterer. The amount of estimated maintenance and replacement capital expenditures attributable to future vessel replacements is based on the following assumptions: (i) the average transfer price per vessel, (ii) a 25-year useful life, and (iii) a 7% net investment rate. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. Our board of directors, with the approval of the conflicts committee, may determine that one or more of our assumptions should be revised, which could cause our board of directors to increase the amount of estimated maintenance and replacement capital expenditures. We may elect to finance some or all of our

58


maintenance and replacement capital expenditures through the issuance of additional common units which could be dilutive to existing unitholders. Please read "Risk Factors—Risks Inherent in Our Business—We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution. In addition, each quarter our board of directors is required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted."

              Income Taxes.    We have assumed that no taxes on our income will be payable during the forecast period.

              Payments of Distributions on Common Units, Subordinated Units and the 2.0% General Partner Interest.    Forecasted payments of distributions on common units, subordinated units and on the 2.0% general partner interest are estimated at $74.0 million for the period from the estimated closing date of this offering (March 31, 2007) through March 31, 2009, based on the payment of the minimum quarterly distribution for each quarter and assuming that the underwriters exercise their overallotment option in full. We assumed that we will issue a further 3,713,684 common units during the second quarter of 2008 in connection with the partial financing of the acquisition of the three vessels we committed to purchase from Capital Maritime in 2008, and that these common units will be issued at a net price equal to 95% of the initial offering price of the common units in this offering (to include a 5% discount for underwriting and other offering costs). Quarterly distributions are paid within 45 days after the close of each quarter.

              The following table sets forth our forecasted distributions on our common units, subordinated units and general partner units, assuming full exercise of the underwriters' overallotment option, based on a $0.3750 per unit minimum quarterly distribution and assumes that we will issue an additional 3,713,684 common units during the second quarter of 2008 at a net price (to include a 5% discount for underwriting and other offering costs) equal to 95% of the assumed initial public offering price of the common units in this offering.

 
   Twelve Months Ending March 31,
 
   2008
   2009
 
   (dollars in thousands except per unit amounts)
Total common units     13,512,500     17,226,184
Total subordinated units     8,805,522     8,805,522
Total general partner units     455,470     531,259
Distributions per unit   $ 1.50   $ 1.50

Total distributions on common units
 
$
20,269
 
$
25,839
Total distributions on subordinated units     13,208     13,208
Total distributions on general partner units     683     783
   
 
Total distributions on all units   $ 34,160   $ 39,830

              Additional Cash Required for Distributions.    As market conditions can change, there is no guarantee that we will be able to complete the additional offering in 2008, or at any time, at a price equal to or greater than our initial public offering price. The table below demonstrates the additional

59


cash we would require to pay distributions on our units if the price of the common units we issue in our proposed secondary offering is less than the forecasted offering price.

 
   Twelve Months
Ending
March 31,
2009
 
   (in thousands)
Decrease in offering price per common unit      
10%   $ 632
15%     1,003
20%     1,421
25%     1,895

              Forecast of Compliance with Debt Covenants.    Our ability to make distributions could be affected if we do not remain in compliance with the covenants of our credit facility. There are certain financial covenants that govern our credit facility. Our leverage covenant requires us to have, as of the date of any distribution a ratio of Total Indebtedness to aggregate Market Value (as defined in our credit facility) of our total fleet, current or future, of no more than 0.725 to 1.00. Our EBITDA coverage covenant requires that EBITDA (as defined in our credit facility) is at least 2.0 times our interest expense for the four quarters immediately prior to the distribution. Our credit facility has additional covenants that are not set out in the table below, including a requirement that we maintain minimum free consolidated liquidity (50% of which may be in the form of undrawn commitments under the credit facility) of at least $500,000 per financed vessel. We have assumed we will be in compliance with such covenants. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving Credit Facility." The table below outlines the calculations for our leverage covenant and our EBITDA coverage covenant and our forecasted compliance during the forecast period, assuming full exercise of the underwriters' overallotment option.

 
   Twelve Months Ending March 31,
  
 
   2008
   2009
  
 
   (dollars in thousands)

  
Total Indebtedness(1)   $ 297,713   $ 314,421  
Total Market Value(2)     700,000     796,000  
Total Indebtedness/Market Value ratio(1)(2)     43 %   40 %
EBITDA(3)     56,363     75,282  
Interest expense     10,469     17,796  
EBITDA/interest expense ratio(3)     5.4 x   4.2 x
(1)
Total Indebtedness under our credit facility means 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; (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.

(2)
The Market Value of our vessels will be calculated under our credit facility as the arithmetic mean of two appraisals obtained by us from two approved brokers (BRS, Clarkson, Plateou, Galbraiths and Gibson) (one to be chosen by us and one to be chosen by HSH Nordbank AG, Hamburg) on a charter-free basis. If such valuations differ by more than 15% a third valuation is required to be obtained by an approved broker nominated by HSH Nordbank AG, Hamburg. The Market Value of our vessels will then consist of the arithmetic mean of such three sets of valuations. For purposes of the ratio set

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(3)
Under our credit facility, EBITDA means, in respect of the relevant period, the aggregate amount of consolidated or combined pre-tax profits of us and our subsidiaries (whether direct or indirect and including, but not limited to, each vessel-owning subsidiary) before extraordinary or exceptional items, depreciation, interest, repayment of principal in respect of any loan, rentals under finance leases and similar charges payable.

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HOW WE MAKE CASH DISTRIBUTIONS

Distributions of Available Cash

              Within approximately 45 days after the end of each quarter, beginning with the quarter ending June 30, 2007, we will distribute all of our available cash to unitholders of record on the applicable record date. We will adjust the minimum quarterly distribution for the period from the closing of this offering through June 30, 2007 based on the actual length of the period.

              We define available cash in the glossary, and it generally means, for each fiscal quarter, all cash on hand at the end of the quarter:

              We intend to distribute to the holders of common units and subordinated units on a quarterly basis at least the minimum quarterly distribution of $0.3750 per unit, or $1.50 per unit per year, to the extent we have sufficient cash on hand to pay the distribution after we establish cash reserves and pay fees and expenses. The amount of available cash from operating surplus needed to pay the minimum quarterly distribution for one quarter on all units outstanding immediately after this offering and the related distribution on the 2.0% general partner interest is approximately $7.9 million, assuming no exercise of the underwriters' overallotment option, or $8.5 million if the underwriters' overallotment option is exercised in full. There is no guarantee that we will pay the minimum quarterly distribution on the common units and subordinated units in any quarter. Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement. We will be prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default is existing, under our credit agreement. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving Credit Facility" for a discussion of the restrictions to be included in our credit agreement that may restrict our ability to make distributions.

Operating Surplus and Capital Surplus

              All cash distributed to unitholders will be characterized as either "operating surplus" or "capital surplus." We treat distributions of available cash from operating surplus differently than distributions of available cash from capital surplus.

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              We define operating surplus in the glossary, and for any period it generally means:

              If a working capital borrowing, which increases operating surplus, is not repaid during the 12-month period following the borrowing, it will be deemed repaid at the end of such period, thus decreasing operating surplus at such time. When such working capital borrowing is in fact repaid, it will not be treated as a reduction in operating surplus because operating surplus will have been previously reduced by the deemed repayment.

              As described above, operating surplus includes an amount up to two times the amount needed for any one quarter for us to pay a distribution on all of our units (including the general partner units) and the incentive distribution rights at the same per unit amount as was distributed in the immediately preceding quarter. This amount, which initially equals approximately $15.7 million, assuming no exercise of the underwriters' overallotment option, does not reflect actual cash on hand available to pay distributions to unitholders. Rather, it is a provision that will enable us, if we choose, to distribute as operating surplus up to this amount of cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. In addition, the effect of including, as described above, certain cash distributions on equity securities or interest payments on debt in operating surplus would be to increase operating surplus by the amount of any such cash distributions or interest payments. As a result, we may also

63


distribute as operating surplus up to the amount of any such cash distributions or interest payments of cash we receive from non-operating sources.

              For purposes of determining operating surplus, maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of or the revenue generated by our capital assets, and expansion capital expenditures are those capital expenditures that increase the operating capacity of or the revenue generated by our capital assets. To the extent, however, that capital expenditures associated with acquiring a new vessel increase the revenues or the operating capacity of our fleet, those capital expenditures would be classified as expansion capital expenditures.

              Investment capital expenditures are those that are neither maintenance and replacement capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes.

              Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases of equity securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes.

              Examples of maintenance and replacement capital expenditures include capital expenditures associated with drydocking, modifying an existing vessel or acquiring a new vessel to the extent such expenditures are incurred to maintain the operating capacity of or the revenue generated by our fleet. Maintenance and replacement capital expenditures will also include interest (and related fees) on debt incurred and distributions on equity issued to finance the construction of a replacement vessel and paid during the construction period, which we define as the period beginning on the date that we enter into a binding construction contract and ending on the earlier of the date that the replacement vessel commences commercial service or the date that the replacement vessel is abandoned or disposed of. Debt incurred to pay or equity issued to fund construction period interest payments, and distributions on such equity, will also be considered maintenance and replacement capital expenditures.

              Because our maintenance and replacement capital expenditures can be very large and vary significantly in timing, the amount of our actual maintenance and replacement capital expenditures may differ substantially from period to period, which could cause similar fluctuations in the amounts of operating surplus, adjusted operating surplus, and available cash for distribution to our unitholders if we subtracted actual maintenance and replacement capital expenditures from operating surplus each quarter. Accordingly, to eliminate the effect on operating surplus of these fluctuations, our partnership agreement will require that an amount equal to an estimate of the average quarterly maintenance and replacement capital expenditures necessary to maintain the operating capacity of or the revenue generated by our capital assets over the long term be subtracted from operating surplus each quarter, as opposed to the actual amounts spent. In the partnership agreement, we refer to these estimated maintenance and replacement capital expenditures to be subtracted from operating surplus as "estimated maintenance capital expenditures." The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by our conflicts committee. The estimate will be made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of our maintenance and replacement capital expenditures, such as a major acquisition or the introduction of new governmental regulations that will affect our fleet. For purposes of calculating operating surplus, any adjustment to this estimate will be prospective only. For a discussion of the amounts we have allocated toward estimated maintenance and replacement capital expenditures, please read "Our Cash Distribution Policy and Restrictions on Distributions."

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              The use of estimated maintenance and replacement capital expenditures in calculating operating surplus will have the following effects:

              We also define capital surplus in the glossary, and it generally will be generated only by:

              We will treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since we began operations equals the operating surplus as of the most recent date of determination of available cash. We will treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus. As described above, operating surplus includes an amount up to two times the amount needed for any one quarter for us to pay a distribution on all of our units (including the general partner units) and the incentive distribution rights at the same per unit amount as was distributed in the immediately preceding quarter. This amount, which initially equals approximately $15.7 million, assuming no exercise of the underwriters' overallotment option, does not reflect actual cash on hand available to pay distributions to unitholders. Rather, it is a provision that will enable us, if we choose, to distribute as operating surplus up to this amount of cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. We do not anticipate that we will make any distributions from capital surplus.

Subordination Period

              During the subordination period, which we define below and in the glossary, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.3750 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. Distribution arrearages do not accrue on the subordinated units. The purpose of the subordinated units is to increase the

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likelihood that during the subordination period there will be available cash to be distributed on the common units.

              We define the subordination period in the glossary. Except as described below under "—Early Termination of Subordination Period", the subordination period will extend until the first day of any quarter, beginning after March 31, 2011, that each of the following tests are met:

              If the unitholders remove our general partner without cause, the subordination period may end before March 31, 2011.

              The subordination period will automatically terminate and the subordinated units will convert into common units on a one-for-one basis if the following tests are met:

              For purposes of determining whether sufficient adjusted operating surplus has been generated under these conversion tests, the conflicts committee may adjust adjusted operating surplus upwards or downwards if it determines in good faith that the estimated amount of maintenance and replacement capital expenditures used in the determination of operating surplus was materially incorrect, based on circumstances prevailing at the time of original determination of the estimate.

              We define adjusted operating surplus in the glossary, and for any period it generally means:

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              Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore excludes net increases in working capital borrowings and net drawdowns of reserves of cash generated in prior periods.

              Upon expiration of the subordination period, each outstanding subordinated unit will convert into one common unit and will then participate pro rata with the other common units in distributions of available cash. In addition, if the unitholders remove our general partner other than for cause and units held by our general partner and its affiliates are not voted in favor of such removal:

Distributions of Available Cash From Operating Surplus During the Subordination Period

              We will make distributions of available cash from operating surplus for any quarter during the subordination period in the following manner:

              The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of securities.

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Distributions of Available Cash From Operating Surplus After the Subordination Period

              We will make distributions of available cash from operating surplus for any quarter after the subordination period in the following manner:

              The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of securities.

Incentive Distribution Rights

              Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the partnership agreement. Except for transfers of incentive distribution rights to an affiliate or another entity as part of our general partner's merger or consolidation with or into, or sale of substantially all of its assets to such entity, the approval of a majority of our common units (excluding common units held by our general partner and its affiliates), voting separately as a class, generally is required for a transfer of the incentive distribution rights to a third party prior to March 31, 2017. Please read "The Partnership Agreement—Transfer of Incentive Distribution Rights." Any transfer by our general partner of the incentive distribution rights would not change the percentage allocations of quarterly distributions with respect to such rights.

              If for any quarter:

then, we will distribute any additional available cash from operating surplus for that quarter among the unitholders and our general partner in the following manner:

              In each case, the amount of the target distribution set forth above is exclusive of any distributions to common unitholders to eliminate any cumulative arrearages in payment of the minimum quarterly distribution. The percentage interests set forth above assume that our general partner maintains its 2.0% general partner interest and has not transferred the incentive distribution rights and that we do not issue additional classes of equity securities.

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Percentage Allocations of Available Cash From Operating Surplus

              The following table illustrates the percentage allocations of the additional available cash from operating surplus among the unitholders and our general partner up to the various target distribution levels. The amounts set forth under "Marginal Percentage Interest in Distributions" are the percentage interests of the unitholders and our general partner in any available cash from operating surplus we distribute up to and including the corresponding amount in the column "Total Quarterly Distribution Target Amount," until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our general partner assume that our general partner maintains its 2.0% general partner interest and assume our general partner has not transferred the incentive distribution rights.

 
    
   Marginal Percentage Interest in Distributions
  
 
   Total Quarterly Distribution Target Amount
   Unitholders
   General Partner
  
Minimum Quarterly Distribution   $0.3750   98 % 2 %
First Target Distribution   up to $0.4313   98 % 2 %
Second Target Distribution   above $0.4313 up to $0.4688   85 % 15 %
Third Target Distribution   above $0.4688 up to $0.5625   75 % 25 %
Thereafter   above $0.5625   50 % 50 %

Distributions From Capital Surplus

              We will make distributions of available cash from capital surplus, if any, in the following manner:

              The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional clauses or equity securities.

              The partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price from this offering, which is a return of capital. Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the distribution had to the fair market value of the common units prior to the announcement of the distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution, after any of these distributions are made, it may be easier for our general partner to receive incentive distributions and for the subordinated units to convert into common units.

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However, any distribution of capital surplus before the minimum quarterly distribution is reduced to zero cannot be applied to the payment of the minimum quarterly distribution or any arrearages.

              Once we reduce the minimum quarterly distribution and the target distribution levels to zero, we will then make all future distributions from operating surplus, with 50% being paid to the holders of units and 50% to our general partner. The percentage interests shown assume that our general partner maintains its 2.0% general partner interest and assume our general partner has not transferred the incentive distribution rights.

Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels

              In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our units into fewer units or subdivide our units into a greater number of units, we will proportionately adjust:

              For example, if a two-for-one split of the common and subordinated units should occur, the minimum quarterly distribution, the target distribution levels and the initial unit price would each be reduced to 50% of its initial level. If we combine our common units into a lesser number of units or subdivide our common units into a greater number of units, we will combine our subordinated units or subdivide our subordinated units, using the same ratio applied to the common units. We will not make any adjustment by reason of the issuance of additional units for cash or property.

              In addition, if legislation is enacted or if existing law is modified or interpreted by a governmental taxing authority so that any of our subsidiaries becomes subject to additional taxation as an entity for U.S. federal, state, local or foreign tax purposes, our partnership agreement specifies that the minimum quarterly distribution and the target distribution levels for each quarter will be reduced by multiplying each distribution level by a fraction, the numerator of which is available cash for that quarter and the denominator of which is the sum of available cash for that quarter plus our board of directors' estimate of our direct or indirect aggregate liability for the quarter for such taxes payable by reason of such legislation or interpretation. To the extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in subsequent quarters.

Distributions of Cash Upon Liquidation

              If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will apply the proceeds of liquidation in the manner set forth below.

              If, as of the date three trading days prior to the announcement of the proposed liquidation, the average closing price for our common units for the preceding 20 trading days (or the current market price) is greater than the sum of:

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              then the proceeds of the liquidation will be applied as follows:

              If, as of the date three trading days prior to the announcement of the proposed liquidation, the current market price of our common units is equal to or less than the sum of:

              then the proceeds of the liquidation will be applied as follows:

              The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of equity securities.

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SELECTED HISTORICAL FINANCIAL DATA

              We have derived the following selected historical financial data from our audited predecessor combined financial statements as of December 31, 2006, 2005 and 2004, and for the years ended December 31, 2006 and 2005 and the period from August 27, 2003 (inception) to December 31, 2004, appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future.

              The following table should be read together with, and is qualified in its entirety by reference to, the historical combined financial statements and the accompanying notes included elsewhere in this prospectus. The table should also be read together with "Unaudited Pro Forma Combined Balance Sheet" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

              All numbers are in thousands of U.S. dollars, except numbers of units and earnings per unit.

 
   Period from
August 27, 2003
(inception) to
December 31, 2004*
   Year Ended
December 31, 2005*
   Year Ended
December 31, 2006
  
Income Statement Data:                    
Time and bareboat charter revenues   $ —   $ —   $ 15,077  
Operating expenses:                    
  Voyage expenses(1)     —     —     248  
  Vessel operating expenses(2)     32     5     2,440  
  Vessel operating expenses—related party     —     —     656  
  Depreciation of fixed assets     —     —     2,977  
   
 
 
 
Total operating expenses     32     5     6,321  
   
 
 
 
Operating income (expense)     (32 )   (5 )   8,756  
Interest expense     —     —     (4,099 )
Interest income     —     —     13  
Foreign currency (loss), net     —     —     (42 )
   
 
 
 
Net income (loss)   $ (32 ) $ (5 ) $ 4,628  
   
 
 
 
Pro forma earnings per unit (unaudited)                    
General partner's interest in net income               $ 93  
Limited partners' interest in net income               $ 4,535  
Pro forma net income per limited partner unit, basic and diluted(3)               $ 0.22  
Pro forma limited partner units outstanding, basic and diluted(3)                 20,555,522  
Pro forma adjusted earnings per unit (unaudited)                    
Pro forma adjusted net income per limited partner unit, basic and diluted(4)               $ 0.20  
Pro forma adjusted limited partner units outstanding, basic and diluted(4)                 23,074,134  
Balance Sheet Data (at end of period):                    
Vessels, net and under construction   $ 24,100   $ 39,136   $ 198,206  
Total assets     24,107     39,510     204,238  
Total stockholders' equity     19,203     23,410     45,985  
Number of shares     3,200     3,200     3,200  
Cash Flow Data:                    
Net cash provided by operating activities     9     601     7,997  
Net cash used in investing activities     (24,100 )   (15,036 )   (162,047 )
Net cash provided by financing activities     24,098     14,435     155,282  
(1)
Voyage expenses are all expenses unique to a particular voyage, including commissions, port and canal dues and bunker fees.

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(2)
Vessel operating expenses consist of all expenses related to the operation of the vessels, including crewing, repairs and maintenance, insurance, stores, spares, lubricants and miscellaneous expenses.

(3)
Pro forma earnings per unit gives retroactive impact (along with the 2% general partner's interest) to the earnings of the Company for 2006, effecting the ownership structure to be in place subsequent to this offering, assuming the underwriters have not exercised their overallotment option.

(4)
Pro forma adjusted earnings per unit gives effect to our issuance of 2,518,612 units at an assumed offering price of $20.00 per unit (representing the mid-point of the range set forth on the cover of this prospectus), reflecting that number of units sufficient to fund the anticipated $55 million dividend to our sole stockholder existing immediately prior to this offering assuming the underwriters have not exercised their overallotment option.

*
The amount of historical earnings (loss) per unit for the period August 27, 2003 (inception) to December 31, 2004 and the year ended December 31, 2005, giving retroactive impact to the number of common and subordinated units (along with the 2% general partner interest) that will be issued in this offering is not presented in our selected historical financial data, because the vessel-owning subsidiaries included herein were in the start-up phase until the delivery of the Atlantas in April 2006. We do not believe that a pro forma presentation of earnings (loss) per unit for these periods would be meaningful as it is not reflective of our anticipated earnings and operations going forward.

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UNAUDITED PRO FORMA COMBINED BALANCE SHEET

              The following unaudited pro forma combined balance sheet presents the financial position of Capital Product Partners L.P. as of December 31, 2006, assuming this offering and the related transactions had been completed as of December 31, 2006. The historical financial information has been adjusted to give effect to pro forma events that are directly attributable to this offering and the related transactions.

              We have derived the following information by adjusting our predecessor combined balance sheet as of December 31, 2006. The adjustments are based on currently available information and certain estimates and assumptions; therefore, the actual adjustments may differ from the pro forma adjustments. However, management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the offering and the other related transactions contemplated, and that the pro forma adjustments give appropriate effect to the assumptions and are properly applied in the unaudited pro forma combined balance sheet.

              This unaudited pro forma combined balance sheet does not purport to represent what our financial position would actually have been had the completion of this offering and the related transactions in fact occurred on December 31, 2006, nor do they purport to project our financial position at any future date. The following pro forma combined balance sheet should be read together with the audited predecessor combined financial statements and accompanying notes included elsewhere in this prospectus. The table should also be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations."

              The unaudited pro forma combined balance sheet assumes the following transactions occurred on December 31, 2006:

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   As of December 31, 2006
 
   Historical
Predecessor
   Offering and other
transactions adjustments
(unaudited)
   Capital Product
Partners L.P.
Pro Forma
(unaudited)
 
   (in thousands)
Assets                  
Current assets                  
Cash and cash equivalents   $ 1,239   $ (1,239 )(1)   —
            5,000 (2) $ 5,000
Trade accounts receivable     534     (534 )(1)   —
Insurance claims     68     (68 )(1)   —
Due from related parties     3,255     (3,255 )(1)   —
Prepayments and other     130     (130 )(1)   —
Inventories     192     (192 )(1)   —
   
 
 
Total current assets     5,418     (418 )   5,000
   
 
 
Fixed assets                  
Vessels under construction     29,225     (29,225 )(3)   —
Vessels, net     168,981     106,474 (3)   275,455
   
 
 
Total fixed assets     198,206     77,249     275,455
   
 
 
Other non current assets                  
Deferred finance charges, net     614     (614 )(1)   —
   
 
 
Total non current assets     198,820     76,635     275,455
   
 
 
Total assets   $ 204,238   $ 76,217   $ 280,455
   
 
 
Liabilities and Stockholders'/Partners' Equity                  
Current liabilities                  
Current portion of long-term debt   $ 4,979   $ (4,979 )(1) $ —
Current portion of related party debt     8,042     (8,042 )(1)   —
Trade accounts payable     1,282     (1,282 )(1)   —
Due to related parties     1,880     (1,880 )(1)   —
Accrued loan interest     1,369     (1,369 )(1)   —
Other accrued liabilities     371     (371 )(1)   —
Deferred revenue     278     (278 )(1)   —
   
 
 
Total current liabilities     18,201     (18,201 )   —
   
 
 
                   

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Long-term liabilities                  
Long-term debt     52,554     (52,554) (1)    
            60,000 (2) $ 60,000
            23,233 (3)    
            (23,233) (4)    
      87,498     (87,498 )(1)    
Long-term related party debt           18,680
(18,680
20,630
(20,630		 (3)
)(4)
(3)
)(4)		    
Total long-term liabilities     140,052     (80,052 )   60,000
   
 
 
Total liabilities     158,253     (98,253 )   60,000
   
 
 
Stockholders'/partners' equity                  
Common stock 3,200 shares with no par value     —     —     —
Additional paid-in capital     41,394     152,221
14,706
62,543
(270,864		 (1)
(3)
(4)
)(5)		    
(Accumulated deficit)/retained earnings     4,591     (55,000
50,409		 )(2)
(5)		   —
General partner—419,500 units     —     4,409 (5)   4,409
Limited partners—11,750,000 common units     —     123,455 (5)   123,455
Limited partners—8,805,522 subordinated units     —     92,591 (5)   92,591
   
 
 
Total stockholders'/partners' equity     45,985     174,470     220,455
   
 
 
Total liabilities and stockholders'/partners' equity   $ 204,238   $ 76,217   $ 280,455
   
 
 

Pro Forma Adjustments and Assumptions

(1)
All net assets (except for the vessels of the eight vessel-owning subsidiaries) will be assumed by Capital Maritime concurrently upon the consummation of this offering.

(2)
Reflects borrowings of $60 million under our new credit facility, $55 million of which will be used in part to finance the dividend we intend to pay Capital Maritime at the closing of this offering, assuming no exercise of the underwriters' overallotment option. A dividend of $25 million in cash will be payable immediately upon completion of this offering. The payment of the remaining $30 million dividend will be deferred until the expiration of the overallotment option period.


If the underwriters exercise their overallotment option, we will distribute the number of common units for which the overallotment option is exercised to Capital Maritime. Capital Maritime will then sell the distributed common units to the underwriters at the public offering price, less the underwriting discount. The additional $30 million dividend payable by us to Capital Maritime will be reduced by the net proceeds received by Capital Maritime in connection with the exercise of the overallotment option, up to a maximum of $30 million. Capital Maritime will keep all proceeds generated from the sale of the overallotment units, including any excess of $30 million.

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We will account for the distribution to Capital Maritime of the common units necessary to satisfy the underwriters' overallotment option as a common unit dividend which will have no net impact on partners' equity.

(3)
Reflects additions to vessels of $77,249 subsequent to December 31, 2006 up to March 2, 2007 financed by long-term related party debt of $39,310 (comprised of $18,680 debt for the Aiolos and $20,630 debt for the Avax), long-term debt of $23,233 and additional paid-in capital of $14,706. Advances for vessels under construction amounted to $29,225 as of December 31, 2006 and all corresponding vessels had been delivered by March 2, 2007.

(4)
Long-term related party debt of $39,310 and long-term debt of $23,233 drawn down subsequent to December 31, 2006 will be assumed by Capital Maritime concurrently upon the consummation of this offering.

(5)
Reflects allocation of additional paid-in capital and accumulated deficit between our general partner, common unitholders and subordinated unitholders.

              On February 21, 2007, Capital Maritime entered into interest rate swap agreements on our behalf (agreements that will be assigned to us upon the completion of this offering), to reduce our exposure to cash flow risks from fluctuating interest rates. No consideration will be given or received upon assignment. As of March 9, 2007 the fair value of the swaps was approximately $(3.75 million), due to the fluctuation in interest rates since the time the agreements were entered into.

              Changes in interest rates could occur due to changes in market interest rates for debt with substantially similar credit risk and payment terms. The swap agreements fix the LIBOR portion of our interest rate at 5.1325% for $356 million in borrowings under our new credit facility for a period up to June 30, 2012. The swap arrangements have not been reflected in the pro forma balance sheet, as they were not in place at December 31, 2006 and are not directly attributable to the offering.

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

              You should read the following discussion of our financial condition and results of operations in conjunction with the combined financial statements and related notes of Capital Product Partners L.P. included elsewhere in this prospectus. Among other things, those financial statements include more detailed information regarding the basis of presentation for the following information. The financial statements have been prepared in accordance with U.S. GAAP and are presented in U.S. Dollars. Any amounts converted from Euros or another non-U.S. currency to U.S. Dollars in this prospectus are at the rate applicable at the balance sheet date.

              Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties. Please read "Forward-Looking Statements" for more information. You should also review the "Risk Factors" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements.

Overview

              We are an international owner of product tankers, newly formed by Capital Maritime, an international shipping company with a long history of operating and investing in the shipping market. We charter our vessels under medium to long-term time and bareboat charters (two to ten years, with an average remaining term of approximately 6.3 years) to large charterers such as BP Shipping Limited, Morgan Stanley Capital Group Inc. and subsidiaries of Overseas Shipholding Group Inc. Following this offering, our initial fleet will consist of eight newly built, Ice Class 1A, double-hull MR product tankers, each of which is capable of carrying crude oil, refined oil products, such as gasoline, diesel, fuel oil and jet fuel, as well as edible oils and chemicals, such as ethanol. We intend to grow our fleet following this offering. We have an agreement to purchase seven additional vessels from Capital Maritime comprised of four Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three MR product tanker sister vessels that are scheduled for delivery in 2008, all of which will be under time or bareboat charters that commence at the time of delivery. Pursuant to our omnibus agreement with Capital Maritime, we will have the opportunity to purchase an additional six vessels from Capital Maritime comprised of two Ice Class 1A sister vessels and four MR product tanker sister vessels, but only in the event those vessels are fixed under charters of two or more years upon the expiration of their current charters or upon completion of their construction. Capital Maritime is, however, under no obligation to fix any of these six vessels under charters of two or more years. All six vessels are currently under charter for less than two years or are yet to be chartered as they are under construction. We expect that by the end of the third quarter of 2008, our contracted fleet will consist of 15 MR double-hull product tankers with an average age of approximately 1.3 years. Our 12 Ice Class 1A vessels will represent the largest Ice Class 1A MR fleet in the world based on number of vessels and carrying capacity. Ice Class 1A vessels may earn a premium during winter months as they are capable of navigating through many ice-covered routes inaccessible to standard product tankers.

              Our historical results of operations and cash flows are not indicative of the results of operations or cash flows to be expected from any future period. We were formed in January 2007 and none of the vessels comprising our initial fleet were delivered to the relevant vessel-owning subsidiaries prior to January 1, 2006. Only five of the vessels in our initial fleet had been delivered as of December 31, 2006 and were in operation during a portion of the period then ended. Moreover, as some of these vessels were operated as part of Capital Maritime during the reporting period, the vessels were operated in a different manner than they will be in the future. For example, revenue included charter hire derived from charters with different terms, and operating expenses during the period represented actual costs incurred in vessel operation as opposed to the fixed management fee we will pay to our manager going forward. Finally, the financing arrangements in place at December 31, 2006 are not representative of the financing arrangements we will enter into in

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connection with the acquisition of our contracted fleet. All of the debt of the subsidiaries that own the vessels comprising our initial fleet will be repaid by Capital Maritime with the proceeds of this offering. The initial fleet will be contributed to us by Capital Maritime debt free.

              For more detail on the differences between our historical results and expected future results, please read "—Results of Operations" below. For more detail on our operations on a going forward basis, please read "Our Cash Distribution Policy and Restrictions on Distributions."

Our Charters

              We generate revenues by charging our customers for the use of our MR tankers to transport their products. We provide our services under either bareboat charters or time charters ranging in length from two to ten years. All of the vessels in our initial fleet and all of the seven newbuildings to be delivered in 2007 and 2008 are under time or bareboat charter with BP Shipping Limited, Morgan Stanley Capital Group Inc. or subsidiaries of Overseas Shipholding Group Inc. The charters entered into with subsidiaries of Overseas Shipholding Group Inc. are fully and unconditionally guaranteed by Overseas Shipholding Group Inc. We may in the future operate vessels in the spot market until the vessels have been chartered under appropriate medium to long-term charters.

              For the year ended December 31, 2006, Morgan Stanley Capital Group Inc. and BP Shipping Limited accounted for 30% and 70% of our revenues, respectively. During 2007 and 2008, we expect to derive almost all of our revenues from BP Shipping Limited, Morgan Stanley Capital Group Inc., and Overseas Shipholding Group Inc. In the future, as our fleet expands beyond our initial fleet and the vessels we have committed to purchase from Capital Maritime are delivered in 2007 and 2008, we also expect to enter into charters with new charterers in order to maintain a portfolio that is diverse from a customer, geographic and maturity perspective.

              We believe that the combination of the medium to long-term nature of our charters (which provide for the receipt of a fixed base fee for the life of the charter) and our management agreement with Capital Ship Management (which provides for a fixed management fee for an initial term of approximately five years from when the vessels commence operations to their first special survey) will provide us with a strong base of stable cash flows. In addition, all of our current time charters contain, and our future time charters may contain, profit-sharing provisions that allow us to realize additional revenues when spot rates are higher than the base rates incorporated in our charters or in some instances through greater utilization of our vessels by our charterers. Please read "—Profit Sharing" below for more detail.

              A time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. One vessel from our initial fleet and four of our newbuildings under construction are subject to time charters with Morgan Stanley Capital Group Inc. with three year terms. The time charter for the vessel that is currently chartered with Morgan Stanley Capital Group Inc. will expire in October 2009, and the charters for the newbuildings chartered with Morgan Stanley Capital Group Inc. will begin upon delivery of those vessels. Please read "—Liquidity and Capital Resources—Purchase of Newbuildings" for a table summarizing certain information with respect to our newbuildings, including their expected delivery dates. In addition, from our initial fleet we have chartered two vessels with BP Shipping Limited under time charters for a period of two years and six months and two vessels with BP Shipping Limited under a time charter of three years. The basic hire rate payable under the charters is a previously agreed daily rate, as specified in the charter, payable at the beginning of the month in U.S. Dollars. Please read "Business—Our Fleet" for more detail on charter rates.

              Under the time charters, Capital Ship Management, our manager, is generally responsible for commercial, technical, health and safety and other management services related to the vessels'

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operation, and the charterer is responsible for bunkering and substantially all of the vessel voyage costs, including canal tolls and port charges, and, in the case of the Morgan Stanley Capital Group Inc. time charters, for commissions. In the case of the BP Shipping Limited time charters, our manager is responsible for paying broker commissions. Under the management agreement with Capital Ship Management that we will enter into in connection with the closing of this offering, our manager will bear all of the vessel operating expenses in exchange for the payment of a fixed daily fee. Under this agreement, which has an initial term of approximately five years from when the vessels commence operations to their first special survey, our manager will be responsible for commercial, technical, health and safety and other management services related to the vessels' operation, including chartering, technical support and maintenance, insurance and costs associated with the first special survey and related drydocking. Under the administrative services agreement that we will enter into with Capital Ship Management at the closing of this offering, we will reimburse Capital Ship Management for reasonable costs and expenses incurred in connection with the provision of the services under this agreement within 15 days after Capital Ship Management submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required. Under this agreement which has an initial term of five years from the closing date of this offering, Capital Ship Management will be responsible for significant administrative, financial and other support services. Please read "Certain Relationships and Related Party Transactions—Management Agreement" and "Certain Relationships and Related Party Transactions—Administrative Services Agreement" for more information.

              All of our current time charter contracts contain profit sharing provisions. Profit sharing refers to an arrangement between owners and charterers to share, at a pre-determined percentage, voyage profit in excess of the basic hire rate.

              The profit sharing arrangements for our vessels time chartered with Morgan Stanley Capital Group Inc. are calculated on the basis of a weighted monthly average of three indices published daily by the Baltic Exchange based on specific routes and cargo sizes representative of the vessel's trading. At the end of each month, the monthly average of each route is calculated and the Time Charter Equivalent (TCE) for a round voyage is estimated based upon the weighted average of the three routes, the speed and consumption of the vessel in question, bunker prices at agreed ports as published by Platts, port expenses adjusted twice a year and other parameters mutually agreed such as loading/discharging time, bad weather and commissions. If the weighted average hire rate is less than or equal to the basic hire rate, then we receive the basic hire rate only. If the weighted average hire exceeds the basic hire rate, then we receive the basic hire rate plus 50% of the excess. However, we also have the right to access the charterer's annual results of operations for each vessel and if it is shown that the vessel has performed better than the estimated profit outlined above, then we may opt to use the charterer's results of operations and are reimbursed the difference between profits received under the first option outlined above, and 50% of actual vessel profits above the basic hire rate. Annual results of operations from the charterer are to be presented by December 31 of each year for the period commencing December 1 of the previous year to November 30 of the year in question.

              Our profit sharing arrangements for our vessels time chartered with BP Shipping Limited are based on the calculation of the TCE according to the "last to next" principle (previous discharge port to last discharge port). Actual voyage revenues earned and received, actual expenses incurred and actual time taken to perform the voyage are used for the purpose of the calculation. The charterer is obliged to provide us with a copy of each fixture note and all reasonable documentation with respect to items of cost and earnings referring to each voyage within every calculation period, as well as with a statement listing actual voyage results for voyages completed and estimated results for any voyage not completed at the time of settlement. When actual revenue and/or expenses have not been settled, BP

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Shipping Limited's estimates apply but remain subject to adjustment upon closing of actual accounts. If the average daily TCE is less than or equal to the basic gross hire rate, then we receive the basic net hire rate only. If the average daily TCE exceeds the basic gross hire rate, then we receive the basic net hire rate plus 50% of the excess over the gross hire rate. The profit share with BP Shipping Limited is calculated and settled semi-annually.

              Please see the table below for information on the gross charter rates for vessels time charted with BP Shipping Limited:

Vessel Name
   DWT
   Charter
Type
   Gross Charter
Rate
   Commission
  
Agisilaos   37,000   2.5-year TC   $ 17,721   1.25 %
Arionas   37,000   2-year TC   $ 21,266 (1) 1.25 %
Axios   47,000   3-year TC   $ 20,759   1.25 %
Avax   47,000   3-year TC   $ 20,759 (2) 1.25 %
(1)
A gross charter rate of $19,241 for the Arionas applies for the six month period the time charter covering the Arionas has been extended (from November 4, 2008 to April 4, 2009).

(2)
Avax is currently under a charter which commenced in March 2007 at a daily gross charter rate of $25,000 and expires at the end of May 2007.

              Pursuant to our bareboat charters, we provide full use of the vessel to the charterer for a fixed period of time at a specified daily rate. During the bareboat charter period, the bareboat charterer will generally be responsible for operating and maintaining the vessel and will bear all costs and expenses with respect to the vessel, including insurance, except commissions. Since, under a bareboat charter, the charterer provides for the vessel's operating expenses and generally assumes all risk of operation, the daily rate of hire under a bareboat charter agreement is lower than that under a time charter agreement.

              We have chartered three vessels from our initial fleet under bareboat charters to BP Shipping Limited, each for a period of eight years expiring in March 2014, June 2014 and February 2015, respectively. Three of our newbuildings under construction are subject to ten-year bareboat charters with subsidiaries of Overseas Shipholding Group Inc. The charters entered into with subsidiaries of Overseas Shipholding Group Inc. are fully and unconditionally guaranteed by Overseas Shipholding Group Inc. The charters for the newbuildings will commence upon delivery of those vessels. Under these charters, Overseas Shipholding Group Inc. has the option to purchase each of these three vessels at the end of years eight, nine or ten of the bareboat charters at a purchase price of $38.0 million, $35.5 million or $33.0 million, respectively. Under the terms of the bareboat charters, BP Shipping Limited is obligated to pay a fixed basic rate hire of approximately $15,000 (net) per day for the first five years and approximately $13,433 (net) per day for the remaining three years of the charter period, and Overseas Shipholding Group Inc. is obligated to pay a fixed basic rate hire of $13,000 per day for the entire charter period. The basic rate hire is payable to us monthly in advance in U.S. Dollars.

Factors Affecting Our Future Results of Operations

              We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other key factors that will be fundamental to our business, future financial condition and results of operations include:

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              In addition to the factors discussed above, we believe certain specific factors have impacted, and will continue to impact, our combined and consolidated results of operations. These factors include:

              Please read "Risk Factors" for a discussion of certain risks inherent in our business.

Results of Operations

              Our historical results of operations and cash flows are not indicative of results of operations and cash flows to be expected from any future period, principally for the following reasons:

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              Because we have a limited operating history, with the year ended December 31, 2006 being the only period with meaningful operations, period to period comparisons of our results of operations are not yet possible and may not be meaningful in the near future.

Time and Bareboat Charter Revenues

              Time and bareboat charter revenues are comprised of the charter hire received from unaffiliated third-party customers. Time and bareboat charter revenues amounted to approximately $15.1 million for the year ended December 31, 2006.

              Revenues for this period are not indicative of revenues to be expected from any future period. Only five of the eight vessels forming part of our initial fleet were in operation during some of the year ended December 31, 2006. Please read "Business—Our Fleet" for information about the charters on these vessels, including daily charter rates. Moreover, a portion of the revenues during this period was derived from charters with different terms than the charter arrangements that are in place for future periods.

Voyage Expenses

              Voyage expenses amounted to $248,000 for the year ended December 31, 2006. Voyage expenses consist mainly of commissions. We do not expect voyage expenses, except commission expenses on certain bareboat and time charter agreements, to form part of our expenses in the near term, except in the case where we may temporarily operate vessels under voyage charters until the vessels have been fixed under appropriate medium to long-term time charters.

Vessel Operating Expenses

              For the year ended December 31, 2006, our vessel operating expenses amounted to $3,096,000 and were comprised of: crewing and related costs (approximately 35%), insurance (approximately 11%), spares, repairs, maintenance and other (approximately 17%), stores and lubricants (approximately 16%) and management fees (approximately 21%).

              For an initial term of approximately five years from when the vessels commence operations to their first special survey, our manager, Capital Ship Management, will provide all of our time chartered vessels with a wide range of services such as chartering, technical support, crewing and maintenance, insurance, costs associated with the first special survey and related scheduled drydocking for a fixed

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daily fee of $5,500. We will also pay our manager a fixed daily fee of $250 per bareboat chartered vessel, mainly to cover compliance costs.

Depreciation

              Depreciation of fixed assets amounted to $2,977,000 for the year ended December 31, 2006. This amount represents depreciation on five vessels only, delivered in April, May, July, August and November 2006, respectively. Depreciation is calculated using an estimated useful life of 25 years from the date the vessel was originally delivered from the shipyard. Our historical depreciation is not indicative of depreciation to be expected in future periods. Because the remainder of our initial fleet will be contributed to us on a carry-over asset value basis, depreciation is expected to increase proportionally as our fleet grows. Depreciation will also increase because it will be calculated over the entire reporting period.

Other Income (Expense), Net

              Other income (expense), net for the year ended December 31, 2006 was approximately $(4.1 million). This amount represents interest expense charged to the vessel-owning companies from the vessel delivery date through December 31, 2006 and amortization of financing charges and bank charges of $4.1 million, interest income of $13,000 and a loss on foreign currency exchange differences of $42,000. Interest expense for this period is not indicative of interest expense to be expected for any future period, predominantly because the historical bank debt bore interest at floating rates while we anticipate entering into interest rate swap agreements to fix the LIBOR portion of our interest rate in connection with the debt to be drawn down under our new credit facility.

Net Income

              Net income for the year ended December 31, 2006 amounted to $4.6 million. For an explanation of why our historical net income is not indicative of net income to be expected in future periods, please refer to the discussion under "—Time and Bareboat Charter Revenues," "—Voyage Expenses", and "—Vessel Operating Expenses" above.

Seasonality

              Our vessels operate under medium to long-term charters and are not generally subject to the effect of seasonable variations in demand.

Liquidity and Capital Resources

              Upon the closing of this offering, we expect to enter into a new $370 million revolving credit facility with certain lenders, including HSH Nordbank AG, Hamburg. Our obligations under the credit facility will be secured by first-priority mortgages covering each of our vessels and will be guaranteed by each vessel-owning subsidiary.

              The financing availability under the new credit facility will be divided into three tranches:

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              Borrowings under our new credit facility will bear interest at a rate of 0.75% per annum over US$ LIBOR. We may draw under the credit facility until June 30, 2012, at which date any amounts available for borrowing under the credit facility will automatically terminate and the outstanding amount under the credit facility will automatically convert into a five-year term loan. The date until which we are able to draw under the credit facility may be extended for three years by the lenders, in their sole discretion, upon our request and if certain conditions are met. After the credit facility has been fully drawn, all three tranches will be aggregated into one single tranche. We will not be required to make any repayments of the principal amounts outstanding under the revolving credit facility until June 30, 2012 (or until such later date until we are able to draw under the credit facility is extended as described above), provided that we maintain an aggregate Market Value of our financed vessels equal to 125% of the aggregate amount outstanding under the credit facility. The credit facility has a final maturity date of the earlier of ten years after the initial borrowing date and June 30, 2017. We expect that the initial borrowing date will be the date of the closing of this offering.

              Our credit facility contains restrictive covenants that prohibit us from, among other things: incurring or guaranteeing indebtedness; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of our vessels; changing the commercial and technical management of our vessels; selling or changing the beneficial ownership or control of our vessels; and subordinating the obligations under our new credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the management agreement.

              In addition, the credit facility requires us to:

              We will also be required to maintain an aggregate Market Value of our financed vessels equal to 125% of the aggregate amount outstanding under the credit facility.

              The Market Value of our vessels is calculated as the arithmetic mean of two appraisals obtained by us from two approved brokers (BRS, Clarkson, Plateou, Galbraiths and Gibson) (one to be chosen by us and one to be chosen by HSH Nordbank AG, Hamburg) on a charter-free basis. If such valuations differ by more than 15%, a third valuation is required to be obtained by an approved broker nominated by HSH Nordbank AG, Hamburg. The Market Value of our vessels will then consist of the arithmetic mean of such three sets of valuations.

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              Total Indebtedness under our credit facility means a liability of the debtor:

              Under our credit facility, EBITDA means, in respect of the relevant period, the aggregate amount of consolidated or combined pre-tax profits of us and our subsidiaries (whether direct or indirect and including, but not limited to, each vessel-owning subsidiary) before extraordinary or exceptional items, depreciation, interest, repayment of principal in respect of any loan, rentals under finance leases and similar charges payable.

              The credit facility prohibits us from paying distributions to our unitholders if we are not in compliance with certain financial covenants or upon the occurrence of an event of default or if the fair market value of our assets is less than 125% of the aggregate amount outstanding under the credit facility. Events of default under our credit facility include:

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              All of the vessel-owning subsidiaries' outstanding debt at the closing of this offering will be repaid by Capital Maritime with the proceeds of this offering.

              The table below summarizes certain information with respect to the vessels we have agreed to purchase from Capital Maritime in 2007 and 2008, including their purchase prices.

Name of Vessel
   Expected Delivery Date
   Expiration of Charter
   Daily Charter Rate(1)
   Purchase Price
Atrotos   May 2007   April 2010   $ 20,000(2 ) $ 56,000,000
Akeraios   August 2007   July 2010   $ 20,000(2 ) $ 56,000,000
Anemos I   October 2007   September 2010   $ 20,000(2 ) $ 56,000,000
Apostolos   October 2007   September 2010   $ 20,000(2 ) $ 56,000,000
Alexandros II   January 2008   December 2017   $ 13,000(3 ) $ 48,000,000
Aristotelis II   June 2008   May 2018   $ 13,000(3 ) $ 48,000,000
Aris II   August 2008   July 2018   $ 13,000(3 ) $ 48,000,000
(1)
The BP Shipping Limited time and bareboat charters are subject to commissions and the rates quoted above are the net rates after we have paid such commissions. We will not be paying any commissions for the Morgan Stanley Capital Group Inc. time charters and Overseas Shipholding Group Inc. bareboat charters.

(2)
Subject to 50/50 profit sharing arrangement. Please read "—Time Charters—Profit Sharing" above for more information.

(3)
Under the charters with Overseas Shipholding Group Inc. for the three STX vessels to be delivered in 2008, Overseas Shipholding Group Inc. has an option to purchase each vessel at the end of the eighth, ninth or tenth year of the charter, for $38.0 million, $35.5 million and $33.0 million respectively, which option is exercisable six months before the date of completion of the eighth, ninth or tenth year of the charter. The expiration date above may therefore change depending on whether the charterer exercises its purchase option.

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              The table below shows as of December 31, 2006 aggregate construction costs, accumulated depreciation, net book value and vessel advances with respect to the initial vessels.

 
   (in thousands)
  
Construction cost   $ 171,958  
Accumulated depreciation     (2,977 )
   
 
Net book value   $ 168,981  
   
 

Vessels advances
 
 
29,225
 

              The table below shows as of December 31, 2006 information on loans drawdown with respect to the initial vessels.

 
   (in thousands)
Loans drawdown   $ 147,460
Predelivery loans drawdown     5,613
   
Total loans drawdown   $ 153,073
   

Vessels loans drawdown
 
 
57,533
Related Party loans drawdown(1)     95,540
(1)
Related Party loans are loans where Capital Maritime has acted as the borrower and its vessel-owning subsidiaries as the guarantors.

              The table below shows information on our expected loans drawdown with respect to the initial vessels as of December 31, 2006:

 
   (in thousands)
  
Loans drawdown   $ 39,310  
Pre-delivery loans drawdown     1,704  
Repayment of pre-delivery loans at time of delivery     (7,317 )
Post delivery loans     28,846  
   
 
Total loans drawdown   $ 62,543  
   
 

Vessels loans drawdown
 
 
23,233
 
Related Party loans drawdown     39,310  

Net Cash Provided by Operating Activities

              Net cash provided by operating activities amounted to $8 million for the year ended December 31, 2006. For an explanation of why our historical net cash provided by operating activities is not indicative of net cash provided by operating activities to be expected in future periods, please read "—Time and Bareboat Charter Revenues", "—Voyage Expenses", and "—Vessel Operating Expenses" above.

Net Cash Used in Investing Activities

              Net cash used in investing activities amounted to $162 million for the year ended December 31, 2006. Cash was used for vessel acquisitions and advances for our newbuildings. Our financing arrangements in place during the reporting period are not representative of our future financing arrangements. In connection with this offering, Capital Maritime will contribute to us the capital stock

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of the eight subsidiaries that own the vessels comprising our initial fleet in exchange for 11,750,000 common units, representing a 56.0% limited partner interest in us, 8,805,522 subordinated units representing a 42.0% limited partnership interest in us, the 2.0% general partner interest, the incentive distribution rights, and (assuming no exercise of the underwriters' overallotment option) a $55 million dividend. The vessel-owning subsidiaries' debt outstanding at the closing of this offering will be repaid by Capital Maritime with the proceeds of this offering. The initial fleet will be contributed to us by Capital Maritime debt free.

Net Cash Provided by Financing Activities

              Net cash provided by financing activities amounted to $155 million for the year ended December 31, 2006. Proceeds from the issuance of long-term debt amounted to $77 million. Proceeds from long-term debt due to related parties amounted to $82 million. Repayment of debt and related party debt amounted to $20 million and $2 million, respectively. Capital contributions amounted to $18 million. At the time of contribution of the subsidiaries owning the vessels comprising our initial fleet, we expect to draw up to $60 million from our new credit facility which will be used in part to finance the $55 million dividend we intend to pay Capital Maritime at the closing of this offering (assuming no exercise of the underwriters' overallotment option).

Borrowings

              Our long-term third party borrowings are reflected in our combined balance sheet as "Long-term debt, net" and as current liabilities in "Current portion of long-term debt." As of December 31, 2006, long-term net debt was $53 million and the current portion of long-term debt was $5 million. Related party debt is reflected in our combined balance sheet as "Long-term related party debt" and as "Current portion of related party debt." As of December 31, 2006, long-term related party debt was $87 million and the current portion of related party debt was $8 million.

Financing Arrangements

              Our combined financial statements show the financing arrangements in existence at December 31, 2006. These financing arrangements represent loans in which Capital Maritime acts as the borrower and the respective vessel-owning companies as the guarantors or, in one instance, the vessel-owning company acts as the borrower and Capital Maritime as the guarantor. These financing arrangements are not indicative of our future financing arrangement. Capital Maritime will repay these loans with the proceeds of this offering. Upon the closing of this offering, we will enter into a new credit facility that will provide us with sufficient funds to purchase all four newbuildings to be delivered in 2007 and pay half of the purchase price for the three newbuildings to be delivered in 2008. For more information about the terms of our new credit facility, please read "—Liquidity and Capital Resources—Revolving Credit Facility." We have entered into interest rate swap agreements to fix the LIBOR portion of our interest rate at 5.1325% for $356 million in borrowings under our new credit facility for a period up to June 30, 2012.

              During the year ended December 31, 2006, we financed our capital expenditures with cash flow from operations, the incurrence of bank debt and contributions to stockholders' equity. Capital expenditures amounted to $162 million for the year ended December 31, 2006 (of which $143 million related to the acquisition of newbuildings and $19 million related to advances toward newbuildings).

              Going forward, maintenance and replacement capital expenditures for our vessels and expenses related to drydocking will be included in the fixed fee we pay our manager under our management agreement. We will pay Capital Ship Management a fixed daily fee of $5,500 per time chartered vessel

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for an initial term of approximately five years from when the vessels commence operations to and including their first special survey, to provide such commercial and technical services to the vessels making up our initial fleet and any additional vessels to be delivered in the future. This fixed fee includes any costs associated with scheduled drydocking during the term of the management agreement. Since the vessels are all newbuildings, no major drydocking expenses other than those associated with the first special survey should be incurred. The sole expense we will incur in connection with our vessels under bareboat charter is a daily fee of $250 per bareboat chartered vessel payable to Capital Ship Management, mainly to cover compliance costs. We estimate that our maintenance and replacement capital expenditures associated with modifying an existing vessel or acquiring a new vessel to the extent these expenditures are incurred to maintain the operating capacity of our fleet for the twelve month periods ending March 31, 2008 and March 31, 2009 will be approximately $8.2 million and $11.0 million, respectively. With proceeds from a new credit facility, we intend to finance a substantial portion of the acquisition of our contracted fleet for an aggregate purchase price of $368 million. We also expect to issue equity to partially finance the acquisition of the three vessels to be delivered in 2008. Please read "—Liquidity and Capital Resources—Revolving Credit Facility" for more detail regarding our financing of the acquisition of the contracted fleet.

              Although we do not currently have in place any agreements relating to acquisitions of other vessels, we assess potential acquisition opportunities on a regular basis. Pursuant to our omnibus agreement with Capital Maritime, we will have the opportunity to purchase an additional six vessels from Capital Maritime comprised of two Ice Class 1A sister vessels and four MR product tanker sister vessels, but only in the event those vessels are fixed under charters of two or more years upon the expiration of their current charters or upon completion of their construction. Capital Maritime is, however, under no obligation to fix any of these six vessels under charters of two or more years. All six vessels are currently under charter for less than two years or are yet to be chartered as they are under construction. If we were to undertake any acquisition in the future, subject to the terms of our loan agreements, we could elect to fund it with equity or debt or cash on hand or a combination of these forms of consideration. Any debt incurred for this purpose could make us more leveraged and increase our debt service obligations or could subject us to additional operational or financial restrictive covenants.

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

              The following table summarizes our long-term contractual obligations as of December 31, 2006.

 
   December 31,
    
    
 
   2007
   2008
   2009
   2010
   2011
   Thereafter
   Total
Loan Obligations(1)   $ 13,021   $ 14,416   $ 14,415   $ 12,753   $ 9,775   $ 88,693   $ 153,073
Interest Obligations(2)   $ 9,127   $ 8,518   $ 7,573   $ 6,695   $ 5,969   $ 20,643   $ 58,525
Initial Vessel Purchase Commitments(3)   $ 78,127           —     —     —     —     78,127
   
 
 
 
 
 
 
Total   $ 100,275   $ 22,934   $ 21,988   $ 19,448   $ 15,744   $ 109,336   $ 289,725
   
 
 
 
 
 
 
(1)
Capital Maritime will repay these obligations with the proceeds of this offering.

(2)
Interest expense has been calculated based on the latest interest roll over as at December 31, 2006.

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(3)
Purchase commitments represent outstanding purchase commitments relating to the construction and completion of the initial vessels. Concurrently with the closing of this offering, we will enter into an agreement with Capital Maritime to purchase four additional Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three additional MR product tanker sister vessels that are scheduled for delivery in 2008, for an aggregate purchase price of $368 million. We expect to debt finance the purchase price of the 2007 vessels and half of the purchase price of the 2008 vessels through drawdowns on our new credit facility. We expect to finance the other half of the purchase price of the 2008 vessels through issuances of equity.

Critical Accounting Policies

              The discussion and analysis of our financial condition and results of operations is based upon our combined financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

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

              The carrying value of each of our vessels represents its original cost at the time of delivery or purchase less depreciation or impairment charges. We depreciate our vessels on a straight-line basis over a vessel's estimated useful life, less an estimated residual value. Depreciation is calculated using an estimated useful life of 25 years from the date the vessel was originally delivered from the shipyard, or a shorter period if regulations prevent us from operating the vessels for 25 years. In the shipping industry, the use of a 25-year vessel life has become the prevailing standard. However, the actual life of a vessel may be different, with a shorter life potentially resulting in an impairment loss. We are not aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on the vessel lives of our current fleet.

              The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Both charter rates and newbuilding costs tend to be cyclical in nature. We review vessels and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. We measure the recoverability of an asset by comparing its carrying amount to future undiscounted cash flows that the asset is expected to generate over its remaining useful life. If we consider a vessel or equipment to be impaired, we recognize impairment in an amount equal to the excess of the carrying value of the asset over its fair market value.

              Charter revenue is generated from medium to long-term time charters for each vessel and commences as soon as the vessel is delivered. Charter revenues are recorded on a straight-line basis over the term of the charter arrangement. The charters provide for a per vessel fixed daily charter hire rate. We currently do not enter into spot voyage arrangements with respect to any of our vessels but may do so in the future. Although our charter revenues are fixed, and accordingly little judgment is required to be applied to the amount of revenue recognition, there is no certainty as to the daily charter rates or other terms that will be available upon the expiration of our existing charters.

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              The terms of the bareboat charters covering the Atlantas, Aktoras and Aiolos vessels have each been extended for a period of three years, and the term of the bareboat charter covering the Arionas vessel has been extended for a period of six months. The daily charter rates payable under each of these charters during the extension period is lower than the daily charter rates payable during the original term. Pursuant to FASB 13, paragraph 19b, we will recognize the revenues under these charters on a straight line basis based on the average daily charter rate over the duration of the charter and will record deferred revenue for the difference between cash collections and average daily charter rates as documented in the original terms of these charters.

Quantitative and Qualitative Disclosures About Market Risk

              All of our revenues and expenses are denominated in U.S. Dollars.

              Our existing bank debt generally bears interest at floating rates and the debt to be incurred under our new credit facility will bear interest at 0.75% per annum over US$ LIBOR. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the year ended December 31, 2006, we paid interest on our outstanding debt at a weighted average interest rate of 6.20%. A 1% increase in LIBOR would have increased our interest expense for the year ended December 31, 2006 from $4.1 million to $4.7 million. This debt will be fully repaid by Capital Maritime with the proceeds of this offering.

              We have entered into swap agreements to fix the interest rate payable on our bank debt in order to reduce our exposure to market risks from changing interest rates. The interest rate swaps will fix the LIBOR portion of the interest rate at 5.1325% for $356 million in borrowings under our new credit facility for a period up to June 30, 2012.

              Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of cash and cash equivalents, and trade accounts receivable. We place our cash and cash equivalents, consisting mostly of deposits, with financial institutions with high credit ratings. We perform periodic evaluations of the relative credit standing of those financial institutions. As of December 31, 2006, all of our revenue was derived from two charterers. We do not obtain rights to collateral to reduce our credit risk.

Inflation

              Inflation has had a minimal impact on vessel operating expenses, drydocking expenses and general and administrative expenses. Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

Derivative Instruments

              On February 21, 2007, in connection with our new revolving credit facility, Capital Maritime entered into interest rate swap agreements (agreements that will be transferred to us upon the completion of this offering) to reduce its exposure to cash flow risks from fluctuating interest rates. These changes could occur due to changes in market interest rates for debt with substantially similar credit risk and payment terms. The interest swaps will be accounted in accordance with the provisions of SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). It is not possible to determine whether or not these interest swaps will qualify for hedge accounting upon transfer.

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THE OIL PRODUCTS TANKER INDUSTRY

              The information and data in this section relating to the international maritime transportation industry have been provided by Clarkson Research Services Ltd ("CRS"), a UK-based company providing research and statistics to the shipping industry. CRS based its analysis on information drawn from published and private industry sectors. These include CRS' databases, the BP Statistical Review of World Energy, IEA Monthly Oil Market Reports, the U.S. Department of Agriculture (Foreign Agricultural Section), the Shipping Intelligence Network and the Oil & Tanker Trades Outlook. Data is taken from the most recently available published sources and these sources do revise figures and forecasts over time.

              CRS has advised us that (1) some industry data included in this discussion is based on estimates or subjective judgments in circumstances where data for actual market transactions either does not exist or is not publicly available, (2) the published information of other maritime data collection experts may differ from this data, and (3) while CRS has taken reasonable care in the compilation of the industry statistical data and believe them to be correct, data collection is subject to limited audit and validation procedures.

The International Tanker Industry

Overview

              Oil has been one of the world's primary energy sources for a number of decades. In 2005, the consumption of oil accounted for approximately 36% of world energy consumption. Daily oil demand has increased from approximately 75.4 million barrels per day ("bpd") to 86.0 million bpd between 1999 and 2007 (a 1.7% compound annual growth rate ("CAGR")), primarily as a result of global economic growth. Current proven oil reserves were approximately 41 times larger than 2005 production levels, according to the BP Statistical Review of World Energy June 2006, and tend to be located in regions far from major consuming countries, which contributes to tanker demand. According to the International Energy Agency (IEA) (as of February 13, 2007) world oil demand will grow by 1.8% in 2007, on top of several years of strong growth, to average 86.0 million bpd. Some of the fastest demand growth in recent years has been recorded in China, India and the United States. However, an economic downturn may sharply reduce the demand for oil and refined petroleum products, and also potentially affect tanker demand. Long-term growth in oil demand may also be reduced by a switching away from oil and/or a drive for increased efficiency in the use of refined petroleum products as a result of environmental concerns and/or high oil prices.

              The chart below illustrates the growth in oil demand in recent years, and the seasonality of changes:


Global Oil Demand

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              Crude oil tankers transport crude oil cargoes from points of production to points of consumption, typically oil refineries. Customers include oil companies, oil traders, large oil consumers, refiners, petroleum product producers, government agencies and storage facility operators. Product tankers normally move refined petroleum products, typically gasoline, jet fuel, kerosene, fuel oil, naphtha and other soft chemicals and edible oils.

              The seaborne movement of refined petroleum products between regions addresses demand and supply imbalances for such products caused by the lack of resources or refining capacity in consuming countries. Differences in price between refining centers can also result in "arbitrage" trade movements. Owners of product tankers seek to utilize trade patterns to optimize the revenue and profit-generating potential of their product tanker fleets by maximizing vessel employment and minimizing waiting time and ballast days.

              Although these commodities can also be delivered by pipeline or rail, the vast majority of worldwide crude and refined petroleum products transportation has been conducted by tankers because transport by sea is typically the most cost-effective method.

              Seaborne trading distances are determined principally by the location of oil production and its efficient distribution for refining and end use consumption. These trading patterns are sensitive both to major geographical events and to small shifts, imbalances and disruptions at all stages from wellhead production through refining to end use. Seaborne trading distances are also influenced by infrastructural factors, such as the availability of pipelines and canal "shortcuts."

              In addition to the volume of oil cargo, tanker demand is affected by the distance required to transport oil from oil-producing locations to oil-consuming (or refining) destinations. Tanker demand is usually expressed in "ton-miles", defined as the product of the amount of oil transported in tankers and the distance over which such oil is transported. Over the past five years, seaborne trade in refined petroleum products has grown at a rate in excess of general oil demand, driven principally by the growth in overall oil demand and the increasing reliance upon limited numbers of high volume producers. Unusual disruptions, such as those caused by Hurricane Katrina, have also contributed to the high growth.

              The seaborne transportation of crude oil and refined petroleum products is a mature industry. The two main types of oil tanker operators are independent operators who charter out their vessels for voyage or time charter use and major oil companies (including state owned companies) that generally operate captive fleets. At present, the majority of independent operators hire their tankers for one voyage at a time in the form of a spot charter at fluctuating rates based on existing tanker supply and demand.

              The crude and products tanker industry has historically developed in a cyclical fashion. Oil tanker charter hire rates are very sensitive to changes in demand for and supply of vessel capacity. Decreases in demand or increases in supply of ships can reduce vessel earnings. Pricing of crude oil and oil products transportation services occurs in a highly competitive global tanker charter market. Although some business is conducted directly between ship owners and charterers, often one or more ship brokers act as intermediaries.

              Supply and demand in the tanker market have been closely matched over the past five years. As a result of this tight supply and demand balance and increasing ton-miles, charter rates for tankers have been volatile and have reached historically high levels, with geopolitical events that influence seaborne trading patterns, congestion and climatic events each having a visible influence on the freight markets.

              The seaborne transportation of crude oil, refined petroleum products and edible oils is subject to regulatory measures focused on increasing safety and providing greater protection for the marine environment at global and local levels. Recent international regulations ratified or awaiting approval

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include the United Nations' International Maritime Organization (IMO) amended regulations in 2003 to accelerate the phase-out of tankers without double-hulls, limiting the transportation of fuel oil to double-hull vessels, and a reclassification of the vessels that can be used for transportation of vegetable and other edible oils. As a result, oil companies acting as charterers, terminal operators, shippers and receivers are becoming increasingly selective with respect to the vessels they charter, inspecting and vetting both vessels and shipping companies on a periodic basis.

              Since January 1, 2007, only higher specification tankers have been permitted to transport vegetable oils and animal fats (see "Regulatory Environment" for more details). This could have an impact on the supply and demand balance in the wider product tanker market, as ships with the required specifications enter the vegetable oil market. The Foreign Agricultural Section of the U.S. Department of Agriculture has reported that, in 2005/2006, global imports of major vegetable oils amounted to approximately 43.5 million tons, compared with 706 million tons for refined petroleum products in 2006. Published figures for total seaborne products trade vary due to different definitions and coverage.

Tanker Vessel Types

              As of February 1, 2007, the global oil tanker fleet (above 10,000 dwt) comprised 4,289 vessels (of 365.3 million dwt), with an orderbook of 1,626 vessels (of 139.2 million dwt), which is a historical high. In order to benefit from economies of scale, tanker charterers will typically charter the largest possible vessel, taking into consideration port and canal size restrictions and optimal cargo sizes. The fleet is generally divided into the following categories of vessels, based upon carrying capacity:

Class of Tankers
  Vessel Size
(dwt)
   World Fleet
(# vessels)
   Orderbook (# vessels)
% of current
fleet in
parentheses
   Typical Use
Very Large Crude Carriers (VLCC)   >200,000   486   175
(38%
)		 Long-haul crude transportation from the Middle East Gulf and West Africa to Northern Europe (via the Cape of Good Hope), to the Far East and to the U.S. Gulf.

Suezmax
 
120,000–199,999
 
355
 
113
(33%

)
Medium-haul of crude oil from the Med, Middle East and West Africa to the U.S. and Europe.

Aframax (LR2)
 
80,000–119,999
 
706
 
233
(36%

)
Short- to medium-haul of crude oil and oil products from the North Sea or Med to Europe or the U.S. East Coast, from the Middle East Gulf to the Pacific Rim/Europe and on regional trade routes in the North Sea, Caribbean, the Mediterranean and the Indo-Pacific Basin.

Panamax (LR1)
 
55,000–79,999
 
336
 
127
(42%

)
Short- to medium-haul of crude oil and refined petroleum products worldwide, mostly on regional trade routes.

MR
 
30,000–54,999
 
1,333
 
593
(49%

)
Short to medium haul of mostly refined petroleum products worldwide, usually on local or regional trade routes but sometimes on longer-haul voyages.

Handy
 
10,000–29,999
 
1,073
 
385
(31%

)
Short-haul of mostly refined petroleum products worldwide, usually on local or regional trade routes.

Includes all tankers >10,000 dwt

Source:
Clarkson Research Services Ltd, February 1, 2007. 

              The world product tanker fleet is mainly comprised of Handy, MR, LR1 and some LR2 vessels that generally carry small quantities (10,000 to 75,000 metric tons) of refined petroleum products over

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short- to medium-haul distances (although some products are carried in larger cargoes and over longer distances). Product tankers typically have cargo handling systems that are designed to transport at least four different refined products simultaneously and have coated (e.g., epoxy) cargo tanks which assist in tank cleaning between voyages involving different cargoes and protect the steel from corrosive cargoes. Some vessels are also fitted with stainless steel heating coils.

              MR and Handy tankers carry the majority of the global trade of refined petroleum products transported at sea because their smaller size allows the greatest flexibility in trade routes and port access. MR and Handy tankers can access ports that LR tankers cannot due to restrictions at berthing facilities and/or depth considerations.

              Unlike the transportation of large volumes of crude oil, which is typically transported from a few centers of oil production to many regions of consumption, the transportation of refined petroleum products involves multiple areas of production and consumption. As a result, owners of product tankers seek to utilize trade patterns to optimize the revenue and profit-generating potential of their product tanker fleets by maximizing vessel employment and minimizing waiting time and ballast (when the vessel is repositioning for new cargoes) days.

              Although the crude and refined products sectors have displayed some independent rate behavior from time to time, typically there has been a strong correlation between crude tanker and product tanker charter hire rates for the following reasons:

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PRODUCTS AND CHEMICALS MARKET

LOGO

The Products Tanker Market

Products Tanker Demand

              Global demand for products tankers is determined primarily by the volume of refined petroleum products requiring transportation and the distances over which these products have to be transported. These factors are influenced by:

              Trading in refined products is also influenced by the availability of transportation alternatives (such as pipelines or rail) and the output of refineries. Seaborne trading patterns are also periodically influenced by geopolitical or climatic events that divert tankers from normal trading patterns and by

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inter-regional oil supply and demand imbalances. Examples of such factors that have influenced products tanker demand in recent years include the loss of U.S. Gulf crude production following Hurricanes Katrina and Rita, port and arterial congestion, Chinese oil demand growth (which has required large amounts of products imports) and standard arbitrage opportunities between different markets. Economic slowdown may slow or reverse growth in products tanker demand. Long-term environmental concerns and/or high oil prices may also reduce demand.

              The following table details the growth of global products consumption between 1999 and 2005 by type of product:

Refined Petroleum Products Consumption by Product Group, 1999–2005

thousand bpd
   1999
   2000
   2001
   2002
   2003
   2004
   2005
   1999–2005
Annual Growth Rate
  
Light distillates   23,405   23,400   23,588   24,192   24,536   25,178   25,319   1.32 %
Middle distillates   26,160   26,593   27,130   27,153   27,804   28,966   29,584   2.07 %
Fuel oil   10,613   10,381   10,014   9,696   9,807   9,956   10,150   -0.74 %
Others   14,908   15,405   15,648   16,239   16,508   17,344   17,406   2.62 %
   
 
 
 
 
 
 
 
 
Total   75,087   75,779   76,379   77,280   78,655   81,444   82,459   1.57 %
   
 
 
 
 
 
 
     
Annual Growth   2.0 % 0.9 % 0.8 % 1.2 % 1.8 % 3.5 % 1.2 %    
   
 
 
 
 
 
 
     

Source: BP Statistical Review of World Energy, June 2006

              In comparison to the above, total seaborne imports of crude oil and refined petroleum products have expanded from approximately 37.6 million bpd in 1995 to 51.6 million bpd in 2005 (representing a CAGR of 3.2%). In 2005, seaborne transportation of refined petroleum products accounted for around one-third of total seaborne oil imports.

              From 2001 to 2006, seaborne transportation of crude oil has grown at an average rate of 2.4% per year, while seaborne transportation of refined petroleum products has grown at 5.3% per year. The combined growth of seaborne crude and products is 3.2%. This exceeds the rate of growth in overall crude oil and refined petroleum products consumption. These figures indicate that demand for world tanker tonnage is growing at a faster rate than global demand for oil, which implies that a larger proportion of global oil demand is being transported by sea.

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              The graph set forth below illustrates the development of tanker ton miles since 1995:


Oil Products: Ton Mile Development (1995-2006E)

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              Estimated ton miles grew by 5.0% between 2005 and 2006. Over the last three years, ton miles have grown by 6.4%, with a 5-year average growth of 4.6%.

              The graph below indicates the annual percentage change in the world seaborne crude oil and refined products trades since 1986. It is estimated that the seaborne transportation of crude oil has grown in all but one year since 1995, while the seaborne transportation of refined products has grown in all but two years. A portion of the growth in products trade was caused by Hurricane Katrina disruptions.

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Growth in World Seaborne Oil Trade

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              The following table shows the growth in global seaborne transportation of refined petroleum products by region:

Global Refined Petroleum Products Imports (million bpd)

 
   Product Imports
  
 
   1995
   2005
   Change
   % change
  
USA   1.59   3.47   1.88   118.1 %
Europe   1.73   2.72   0.99   57.2 %
Other Asia Pacific   1.98   2.09   0.10   5.1 %
Japan   0.98   1.00   0.02   1.9 %
China   0.30   0.83   0.53   176.4 %
South and Central America   0.28   0.40   0.12   44.6 %
Mexico   0.13   0.33   0.19   144.8 %
Canada   0.17   0.28   0.11   61.4 %
Australasia   0.06   0.23   0.17   271.4 %
West Africa   0.12   0.19   0.07   59.0 %
North Africa   0.10   0.17   0.07   65.7 %
Middle East   0.07   0.13   0.07   94.2 %
Eastern & Southern Africa   0.08   0.12   0.04   51.9 %
Former Soviet Union (FSU)   0.21   0.09   –0.12   –55.6 %
Unidentified   0.25   0.00   –0.25   N/A  
   
 
 
 
 
Total World   8.06   12.05   3.99   49.5 %
   
 
 
 
 

Please note that direct comparison of Europe and FSU is difficult as definitions changed between 1996 and 2006 reports. Data also includes some landborne trade.

Source:
BP Statistical Review of World Energy June 1996 and June 2006 

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Regional Oil Products Demand

              According to the BP Statistical Review of World Energy June 2006, the global oil products trade (both land and seaborne) constituted 12.1 million bpd in 2005. The larger importing areas are the United States, Europe and the Asia-Pacific region. The largest exporting areas are the Middle East, Europe and South and Central America.

              The following map shows the estimated trade in refined petroleum products between major regions in 2005:


The Major Seaborne Refined Petroleum Products Trades, 2005

               LOGO

Source: Clarkson Research Services Ltd, BP Statistical Review of World Energy, June 2006

              Global refinery capacity expanded by 4.8% between 2000 and 2005, the majority of it (1.75 million bpd of a net total 3.88 million bpd) in the United States, Europe and Australasia. Through 2010, industry sources have indicated that an additional 5.5 million bpd of capacity could be brought online, resulting in 6.5% growth between 2005 and 2010. There are additional refinery projects at various stages of development around the world, many of which must be considered speculative. The vast majority of this additional growth is expected in Asia, the Middle East, Africa, South and Central

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America and the Caribbean. The table below shows the expansion of refinery capacity from 2000 to 2005 and projected increases for 2010:

Refinery Capacity Expansion (million bpd)

 
   2000
   2005
   2010(e)
   % increase
2005–2010
  
Europe   16.05   17.95   18.03   0.4 %
Asia   19.21   21.37   23.49   9.9 %
Africa   3.27   3.23   3.53   9.3 %
Middle East   5.38   6.48   7.49   15.5 %
FSU   8.40   6.55   6.72   2.5 %
North America   18.44   19.14   19.98   4.3 %
South and Central America & Caribbean   8.26   8.33   9.32   11.9 %
Australasia   0.95   0.81   0.84   4.7 %
Others   1.28   1.26   1.26   0.0 %
   
 
 
 
 
Total   81.25   85.13   90.66   6.5 %
   
 
 
 
 

Source: Clarkson Research Services Ltd based on industry sources, January 2007

              No new refineries have been built in the U.S. since 1976, which has led to a growing disparity between U.S. demand for refined petroleum products and U.S. domestic refinery capacity. However, US refinery capacity has expanded through refinery creep. For example, between 1995 and 2005, U.S. consumption of refined petroleum products has risen by an average rate of 2.0% per year. By contrast, U.S. refinery capacity has only expanded by an average of 1.3% per year. This has generated increased demand for imports of refined petroleum products. Between 2000 and 2006, product imports have expanded from approximately 2.4 million bpd to 3.5 million bpd, an average increase of over 6.7% per year (although a proportion of this is the result of the 2005 hurricane season). Historically oil demand in the United States has been affected by drives for increased efficiency as a result of high oil prices or political decisions.

              The annual percentage growth in seaborne import of refined petroleum products into the U.S. is indicated in the graph below.


Growth in U.S. Seaborne Imports of Refined Petroleum Products

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              China leads developing countries in terms of both economic growth and industrial energy consumption. Chinese oil products consumption increased by an average of approximately 8% per year between 1995 and 2005. By contrast, Chinese refinery capacity has only expanded by an average of 5% per year in the same period. As a result, Chinese demand for refined products imports has increased significantly. Between 1995 and 2005, refined products imports into China have grown from 0.30 million bpd to 0.83 million bpd (CAGR of 10.7%). China has indicated plans to increase refinery capacity over the next few years, which may limit growth in, or even cause a reduction in, its oil products imports.

              The graph below shows the growth in imports of refined petroleum products into China between 1999 and 2006.


Chinese Refined Products Imports

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              A growing sector of the products/chemical seaborne transportation market is edible oils. According to the U.S. Department of Agriculture, major vegetable oils imports have grown from approximately 30.1 million tons in 2000/2001 to an estimated 43.5 million tons in 2005/2006, representing a growth rate of approximately 7.6% per year. Just over 25 million tons of this trade (2005/2006) was palm oil. Chinese imports of major vegetable oils have been around 7 million tons each year since 2003/2004. Indian imports have varied between 4.5 and 6 million tons in the last four year (2002/2003 - 2005/2006). The main exporters of major vegetable oils are Malaysia and Indonesia (almost 27 million tons in 2005/2006), with Argentina and Brazil exporting almost 9 million tons in the same year. Growth in this market is expected to continue over the next few years.

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              The graph below illustrates the growth in vegetable oil imports into China since 1996:


Chinese Vegoil Imports

               LOGO

              There is also a substantial trade in ethanol, a corn-based additive which is increasingly being used to replace MTBE as an oxygenate in petrol. The United States is a particular growth area, following sustained legislative pressure in recent years. U.S. production of ethanol has increased from approximately 0.5 million tons in 1994 to 1.2 million tons in 2004, with increasing evidence of insufficient supply (corn prices in rural parts of the U.S. have more than doubled since September 2006). Imports have also increased in recent years, with imports growing from approximately 60,000 tons in 1995 to approximately 80,000 tons in 2005 (the last full year for which data is available). Annualized data for January through November 2006 shows an increase in U.S. imports to around approximately 275,000 tons. It remains unclear if the increasing use of ethanol as an additive will have any long-term effect on the tanker market, with much depending upon wider political decisions.

Products Tanker Supply

              The supply of tankers is a function of the size of the existing fleet, the rate of deliveries of newbuildings, scrappings, and to a lesser extent casualties, the number of combination carriers carrying oil, the number used as storage vessels and the amount of tonnage in lay-up. Other factors can influence available supply, including delays caused by congestion at ports and in shipping channels, and extreme weather. The products tanker market is highly fragmented, with a significant number of small and medium-sized active owner groups. For example, in the MR tanker sector, 294 owners are active. The ten largest owners (by dwt) control 21% of the world fleet (in dwt terms); the twenty largest owners control 34%.

              The table below shows that as of February 1, 2007, the world tanker fleet had a total capacity of approximately 365.3 million dwt. The large number of tanker newbuildings delivered into the market over the past few years has reduced the average age of the world tanker fleet as modern, double-hull vessels replaced older single-hull tankers. As of February 1, 2007, the average age of the world tanker fleet over 10,000 dwt was 11.1 years. The average age of the fleet tends to be lowest in tanker sectors above 80,000 dwt, with the smaller vessel sectors having higher average ages.

              As of February 1, 2007, the tanker orderbook was equivalent to approximately 38% of the current tanker fleet, which in historical terms is high. This will result in high levels of deliveries over

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the next few years, and the fleet is expected to grow strongly, which may have a negative impact on rates.

World Tanker Fleet Overview by Vessel Size

 
    
    
    
   % of Fleet On Order for Delivery (by dwt):
    
Vessel Class
   Capacity
(million dwt)
   % of
total fleet
(by dwt)
   Average
Age
(years)
   % not
double hulled
(by dwt)
  2007
   2008
   2009
   2010
   2011+
   Total
VLCC   142.3   39%   9.1   7%   8%   13%   8%   1%   38%   31%
Suezmax   53.5   15%   9.2   6%   6%   15%   6%   0%   33%   20%
Aframax   71.8   20%   9.5   8%   9%   15%   5%   0%   36%   20%
LR1 (55-80k dwt)   23.0   6%   10.4   16%   11%   12%   1%   0%   40%   27%
MR (30-55k dwt)   54.9   15%   10.4   13%   16%   13%   6%   0%   49%   25%
SR (10-30k dwt)   19.6   5%   14.7   15%   10%   5%   1%   0%   31%   48%
   
 
 
 
 
 
 
 
 
 
Total   365.3   100%   11.1   9%   10%   13%   6%   1%   38%   27%
   
 
 
 
 
 
 
 
 
 

All tankers.

Source:
Clarkson Research Services Ltd, February 1, 2007. 

              The level of tanker newbuilding orders is a function primarily of newbuilding prices in relation to current and anticipated charter market conditions and yard space / delivery date. Today, delivery of a tanker typically occurs within approximately 30 to 36 months after ordering, although historically the lag has been less. The high level of newbuilding activity experienced over the past few years means that many shipyards, particularly the larger yards, are fully booked several years in advance. As of February 1, 2007, the world tanker orderbook for vessels above 10,000 dwt was approximately 139.2 million dwt, more than double the figure at the beginning of 2002. Since the mid-1970s, shipbuilding has been concentrated in Japan, South Korea and more recently China, primarily due to economies of scale, construction techniques and the prohibitive costs of building in most areas of Europe. Shipbuilding capacity has increased in recent years and is expected to make further expansion over the rest of the decade.

              At any point in time, the level of scrapping activity is a function primarily of environmental regulations, the age profile of the fleet as well as scrapping prices in relation to current and prospective charter market conditions. Operating, repair and survey costs, steel prices and the changing regulatory environment also exert an influence on scrapping levels.

              Insurance companies and customers rely on the survey and classification regime to provide reasonable assurance of a tanker's seaworthiness and tankers must be certified as "in-class" in order to continue to trade. Because the costs of maintaining a tanker in-class rise as the age of the tanker increases, tanker owners often conclude that it is more economical to scrap a tanker that has exhausted its anticipated useful life than to upgrade it to maintain it in-class. However, in a strong freight rate environment owners are more likely to continue to keep a vessel trading.

              Tanker scrapping averaged approximately 17.7 million dwt per year between 2001 and 2003 but fell to 7.9 million dwt in 2004 and to only 4.0 million dwt in 2005. In 2006, total tanker demolition was estimated at only 2.9 million dwt. Approximately 0.9m dwt was scrapped in January 2007. Approximately 27% (by dwt) of the world tanker fleet is currently not double-hulled and may be subject to phase-out. This proportion is higher in the small tanker fleet, where 48% of vessels between 10,000 and 30,000 dwt are not double-hulled.

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Regulatory Environment

              Governmental authorities and international conventions have historically regulated the oil and refined petroleum products transportation industry and since 1990 the emphasis on environmental protection has increased. Legislation and regulations such as the United States Oil Pollution Act of 1990 (OPA 90), IMO regulations and classification society procedures demand higher-quality vessel construction, maintenance, repair and operations. This development has accelerated in recent years in the wake of several high-profile accidents involving 1970s-built ships of single-hull construction, including the "Erika" in 1999 and the "Prestige" in November 2002. A summary of selected regulations pertaining to the operation of tankers is shown in the table below.

Summary of Selected Shipping Regulations

Regulation
   Introduced/
Modified
   Features
OPA 90   1989   Single-hull tankers banned by 2010 in the U.S. Double sided and double bottom tankers banned by 2015.

IMO MARPOL Regulation 13G
 
1992
 
Single-hull tankers banned from trading by their 25th anniversary. All single-hull tankers fitted with segregated ballast tanks may continue trading to their 30th anniversary, provided they have had selected inspections. New buildings must be double-hull.

IMO MARPOL Regulation 13G
 
2001
 
Phase-out of pre-MARPOL tankers by 2007. Remaining single-hull tankers phased-out by 2015.

IMO MARPOL Regulation 13G & 13H
 
2003
 
Phase-out of pre-MARPOL tankers by 2005. Remaining single-hull tankers phased-out by 2010 or 2015, depending on port and flag states. Single-hull tankers over 15 years of age subject to Conditional Assessment Scheme. Single-hull tankers banned from carrying heavy oil grades by 2005, or 2008 for tankers between 600–5,000 dwt.

EU 417/2002
 
1999
 
25 year old single-hull tankers to cease trading by 2007 unless they apply hydrostatic balance methods or segregated ballast tanks. Single-hull tankers fitted with segregated ballast tanks phased-out by 2015.

EU 1723/2003
 
2003
 
Pre-MARPOL single-hull tankers banned after 2005. Remaining single-hull tankers banned after 2010. Single-hull tankers banned from carrying heavy oil grades by 2003.

MARPOL Annex II, International Bulk Chemical Code (IBC)
 
2004
 
Since January 1, 2007, vegetable oils which were previously categorized as being unrestricted will now be required to be carried in IMO II chemical tankers, or certain IMO III tankers that meet the environmental protection requirements of an IMO II tanker with regard to hull type (double hull) and cargo tank location.

              The increasing focus on safety and protection of the environment has led oil companies i.e. charterers and terminal operators, flag states, shippers and receivers to become increasingly selective with respect to the vessels they charter, vetting both vessels and shipping companies on a

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periodic basis or not allowing these vessels into port. Although these vetting procedures and increased regulations raise the operating cost and potential liabilities for tanker vessel owners and operators, they strengthen the relative competitive position of shipowners with higher quality tanker fleets and operations.

              The table on the following page shows estimates of the number of tankers below 55,000 dwt due to be phased out under IMO Regulation 13G through 2010, alongside the current orderbook for delivery through 2010. The analysis assumes that the IMO phase-out program will be followed and that flag and port states will not allow extensions for single-hull vessels beyond 2010. The table shows that the largest potential for tanker replacement demand remains in the 10,000–30,000 dwt size range.

10,000–55,000 dwt Tanker Phase-Out and Orderbook (assuming 2010 phase-out)

 
   10,000–30,000 dwt
   30,000–55,000 dwt
  
 
   Phase-Out
   Orderbook
   Phase-Out
   Orderbook
  
 
   No
   m dwt
   No
   m dwt
   No
   m dwt
   No
   m dwt
  
Pre 07/2007   151   2.71   171   2.51   98   3.68   160   7.09  
  2008   46   1.01   93   1.38   21   0.93   194   8.82  
  2009   24   0.53   44   0.70   19   0.76   151   7.10  
  2010   116   2.66   5   0.09   81   3.24   65   3.05  
  2011   14   0.24   0   0.00   18   0.76   5   0.21  
   
 
 
 
 
 
 
 
 
Total Phase-Out   351   7.14   313   4.69   237   9.36   575   26.27  
Total Fleet       14.15           1,321   50.91          
% of Fleet*       50.5 %     33.1 %     18.4 %     51.6 %
       
     
     
     
 

As of February 1, 2007. * phase out percentage does not include phase-out of stainless steel vessels
Phase-out figures based on CRS estimates of IMO Reg 13G Phase-Out, as of February 1, 2007. It assumes phase-out of all single-hull vessels at the 2010 deadline (although some vessels will benefit from possible extensions granted by flag and port states). Assumes double bottomed and double sided vessels will trade to 25 years. Assumes average demolition ages of 30 years (10-30,000 dwt) and 29 years (30-55,000 dwt) for double hull and IMO II vessels.
Vessels may continue to trade coastally. Numbers exclude stainless steel vessels.
Source: Clarkson Research Services Ltd

              A number of countries or regions have announced that they will not allow the extended trading of non-double hull ships beyond 2010. These include the United States, European Union and Australia. Other countries, such as Japan, China and Singapore have indicated they will adopt a more flexible policy towards extensions. It is therefore possible that single-hull ships will continue to trade beyond 2010, increasing the global supply of tanker capacity and putting downward pressure on rates. In addition, tankers may continue to trade in coastwise domestic waters.

              In addition to the accelerated phase-out of single-hull tankers, in October 2004, the Marine Environment Protection Committee (MEPC) of the IMO revised Annex II of the MARPOL convention and amendments to the IBC Code. Since January 1, 2007, vegetable oils and animal fats can only be transported in IMO II chemical tonnage or IMO III double-hull tonnage which meet the minimum dimensions requirements for an IMO II chemical carrier. To date, there is evidence of a firming of the market in some trades (South America to China, for example), however other routes have been softer.

              Currently, approximately 295 IMO II capable vessels have been identified in the tanker fleet (between 30,000 and 55,000 dwt) (equivalent to 21% of the 30,000–55,000-dwt fleet, in dwt terms), with approximately 376 double-hulled IMO III-only capable vessels (equivalent to 28% of the fleet).

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              It is unclear what implications this regulatory change will have on the freight rate market, but some owners and analysts feel this may have a positive impact on freight rates in the products tanker sector. However, there is a large IMO III orderbook in the 35,000–40,000 dwt range (3.52m dwt) and a large IMO II orderbook in the 10,000–15,000 dwt range (1.51m dwt), both of which may potentially help to absorb this increase.

Ice Class Vessels

              Ice class tankers are vessels that have been constructed with strengthened hulls, a sufficient level of propulsive power for transit through ice-covered routes and specialized machinery and equipment design to operate in cold climates. Such vessels are also capable of operating in more temperate climates. By virtue of their additional specifications, ice class tankers are more expensive to build and operate than an equivalent size, non-ice class tanker. Newbuilding prices for Ice Class 1A tankers are typically approximately 5–8% more than those for equivalent non-ice class vessels, although any premium available on the second hand market has narrowed significantly in recent years, as a result of increased supply.

              Each class society has their own ice class notations, but these fit into generally similar classes. The Lloyds Register class notation for ice class vessels is as follows:

              Ice Class 1A and 1AS tankers are able to operate in severe ice-covered routes, notably the north Baltic seas and some of the northern regions of Russia. In addition, these classes of vessels are able to operate in the ice-covered routes of the Gulf of Finland, which are governed by the Helsinki Commission safety regulations.

Ice-Class Vessel Demand

              There are four major areas where ice-class tankers are designed to operate:

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Supply of MR Ice Class Tankers

              The size of the ice class tanker fleet built to the equivalent of Ice Class 1A specifications has expanded rapidly over the past few years, and, given the size of the orderbook, the supply of available ice class vessels should continue to grow. The total Ice Class 1A fleet currently represents approximately 3% of the existing world tanker fleet by dwt.

              As of February 1, 2007, the world Ice Class 1A MR fleet (30,000–55,000 dwt) stood at 67 vessels. All but seven of these have been delivered since 1997. There are an additional 40 vessels on the orderbook.

              The tables below show the current fleet and orderbook for Ice-Class 1A MR vessels (between 30,000 and 55,000 dwt):

Current MR (30,000-55,000 dwt) Fleet and Orderbook 1A Ice-Class Fleet

Owner
   Fleet
No of vessels
   Orderbook
No of vessels
   Total
No of vessels
Capital Maritime   10   4   14
Tsakos Group   8   2   10
Interorient Nav. Co.   8   0   8
OMI Marine Services   8   0   8
Sovcomflot JSC   5   3   8
Others/Unknown   31   31   62
   
 
 
Total   70   40   110
   
 
 

Based upon Clarkson February 1, 2007 data./Capital Maritime fleet at 2/3/07
Source: Clarkson Research Services Ltd/Capital Ship Management

Charter Market

              The charter market is highly competitive. Competition is based primarily on the offered charter rate, the location and technical specification of the vessel and the reputation of the vessel and its manager. Typically, the agreed terms are based on standard industry charter parties prepared to streamline the negotiation and documentation processes. The most common types of employment structures for a tanker are:

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              The type of employment arrangement is determined by customer requirements for operational involvement and range of services, along with current market conditions.

Product Charter Rates and Vessel Prices

              The products tanker industry has been highly cyclical, experiencing volatility of charter rates and vessel values resulting from changes in the supply of and demand for tankers and fuel oil, refined petroleum products and edible oil cargoes. The following chart and table illustrate the volatility of earnings in the tanker market.

Estimated owner's 1-year and 3-year time charter rates

 
   Product Tanker Rates
 
   36,000 dwt
   45,000 dwt
 
   1-year
$/day
   3-year
$/day
   1-year
$/day
   3-year
$/day
Average 2001           18,866   17,116
Average 2002   13,056   13,149   13,339   13,439
Average 2003   14,206   13,499   14,718   13,764
Average 2004   17,325   15,717   18,897   16,540
Average 2005   23,627   19,578   26,027   21,794
Average 2006   24,675   20,704   27,006   22,294
   
 
 
 
Jan-06   26,000   21,125   29,000   22,625
Feb-06   26,000   21,500   28,000   23,500
Mar-06   24,800   20,700   26,200   22,100
Apr-06   22,000   19,250   23,250   20,500
May-06   23,000   20,375   25,000   21,500
Jun-06   23,800   20,500   26,200   21,500
Jul-06   25,000   20,500   28,000   21,750
Aug-06   26,250   20,875   29,250   22,000
Sep-06   27,000   21,000   29,800   22,800
Oct-06   25,000   20,625   27,875   23,250
Nov-06   23,750   21,000   26,000   23,000
Dec-06   23,500   21,000   25,500   23,000
Jan-07   23,500   21,000   25,250   22,750

Source: Clarkson Research Services Ltd, February 2007

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Products Tanker Timecharter Rates

               LOGO

Average timecharter equivalent earnings as calculated by CRS using the assumptions for products tankers described in Clarkson's Shipping Intelligence Weekly Sources & Methods. Data to February 1, 2007.

              Fluctuations in vessel prices show a relationship to the charter market. A reduction in charter rates caused by a decrease in demand for and / or an increase in the supply of tanker vessels reduce vessel prices significantly, although there can be a lag in vessel prices. Newbuilding prices increased significantly between 2003 and 2006, primarily as a result of significantly increased tanker demand for new tonnage in response to increased demand for oil, higher charter rates, regulations requiring the phase-out of single-hull tankers, constrained shipyard capacity and rising steel prices (which contributed to a strong increase in shipyard costs). In addition, as a result of strong demand for other types of vessels, shipyard capacity, especially for large vessels, has been booked several years in advance, further contributing to the increased prices of newbuildings.

              Recent developments in the newbuilding and secondhand prices of standard, non ice class MR tankers are shown below. Since January 2006, five vessels sales have been publicly reported in the "modern' (2000-built or younger) 40,000–47,000 dwt range. Prices have varied between $48.5 million (in October 2006 for 2000-built vessels) and $54 million (in June and July 2006 for a resale and 2006-built vessel). Although this is not typical, the market is currently prepared to pay a significant premium over newbuild prices for prompt delivery. Typically Ice Class 1A "newbuild' contracts are approximately 5–8% more expensive than equivalent non-ice class tankers, although the premium for secondhand vessels has narrowed below that range.

Estimated Tanker Newbuilding and Secondhand Prices ($ in millions)

Start Year:
   2002
   2003
   2004
   2005
   2006
   2007
   03/02/07
47,000 dwt newbuilding   26.0   28.0   34.0   41.0   43.5   47.0   47.0
45,000 dwt 5-year-old vessel   21.0   23.0   30.0   40.0   47.0   47.0   47.0

Source: Clarkson Research Services Ltd
Dates shown refer to contracting date. Vessel typically would not be delivered for another 30–36 months.

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Newbuilding prices relate to a theoretically "standard' vessel which assumes "European spec", 10/10/10/70% payments and "first class competitive yards" quotations.
Based on broker estimates and actual sales assuming charter free, willing buyer/willing seller at the point in time indicated in the table. There is no guarantee that the prices are sustainable and readers should be aware that prices may move up and down significantly. Longer term trends are shown in the graph below.


Product Tanker Asset Values

               LOGO

Newbuilding prices assume "European spec.", 10/10/10/70% payments and "first class competitive yards" quotations. MR Newbuilding: 40,000 dwt until October 1999, 47,000 dwt thereafter. Secondhand: 40,000 dwt until October 1999, 45,000 dwt thereafter.

Ice Class Charter Rates

              In exchange for the extra costs involved in constructing and operating specialized ice class vessels, ice class tankers traditionally earn a premium during the winter months when they are needed for entering ports requiring ice strengthened hulls. Although each vessel fixture is subject to its own unique circumstances that can influence the negotiated freight rate, evidence suggests that this premium has narrowed in recent years as new ships were delivered to the market. For the winter of 2006/07 an increased fleet and mild winter has combined to mean the market has paid a small premium for ice-strengthened vessels, although the premium has increased towards the end of the winter. This sector of the tanker market is developing rapidly, and freight rates will continue to depend on changes in the supply of, and demand for, ice class tonnage as well as the overall state of the global tanker market.

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BUSINESS

Overview

              We are an international owner of product tankers, chartering our vessels under medium to long-term time and bareboat charters to large charterers. Our initial fleet consists of eight newly built, double-hull MR product tankers (constructed by Hyundai MIPO Dockyard Co., Ltd. to high specifications) and is capable of carrying crude oil, refined oil products, such as gasoline, diesel, fuel oil and jet fuel, as well as edible oils and chemicals, such as ethanol. Because our vessels are IMO II compliant, they are each able to carry a full range of refined products, and expect these to comply not only with the strict regulatory standards that are currently in place but also with the stricter regulatory standards that will be implemented over the next several years.

              We intend to grow our fleet following this offering. We have an agreement to purchase seven additional vessels from Capital Maritime comprised of four Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three MR product tanker sister vessels that are scheduled for delivery in 2008, all of which will be under time or bareboat charters that commence at the time of delivery. We expect that by the end of the third quarter of 2008, our contracted fleet will consist of 15 MR double-hull product tankers with an average age of approximately 1.3 years. Our 12 Ice Class 1A vessels will represent the largest Ice Class 1A MR fleet in the world based on number of vessels and carrying capacity. Ice Class 1A vessels generally earn a premium during winter months as they are capable of navigating through many ice-covered routes inaccessible to standard product tankers.

              Our current vessels and the vessels we have contracted to purchase are under medium to long-term time charters or bareboat charters to BP Shipping Limited, Morgan Stanley Capital Group Inc., and subsidiaries of Overseas Shipholding Group Inc. We believe that the combination of the medium to long-term nature of our charters (which provide for the receipt of a fixed base fee for the life of the charter) and our management agreement with Capital Maritime (which provides for a fixed management fee for an initial term of approximately five years from when the vessels commence operations to their first special survey) will provide us with a strong base of stable cash flows. In addition, all of our current time charters contain, and our future time charters may contain, profit-sharing provisions that allow us to realize additional revenues when spot rates are higher than the base rates incorporated in our charters or in some instances through greater utilization of our vessels by our charterers. Finally, because 12 of our 15 charter contracts will expire on or after January 2010 (the date at which all single-hull tankers are due to be phased out under IMO regulations), we expect to be well-positioned to recharter our vessels.

              We focus on MR product tankers in order to capitalize on the strong projected increase in demand from oil companies and commodity traders to transport gasoline and other products from refineries to areas of consumption that has occurred and is expected to continue over the next several years. Due to increasing environmental restrictions on the building of refineries in larger markets, additional refineries are expected to continue to be built at locations far from points of consumption (such as the Middle East, India and the Asia-Pacific region), resulting in refined product tankers being required to travel longer distances on each voyage. The resulting increase in ton-mile demand for product tankers is demonstrated by the fact that over the past five years the demand for the shipping of refined products has grown at a faster rate than the demand for the refined products themselves (4.6% annual growth as compared to 1.8% annual growth, respectively, according to CRS). The longer voyage times also result in a reduction in the availability of refined product tankers for rehire, which we believe will provide us greater opportunities to enter into medium to long-term charters at attractive rates.

              We were formed on January 16, 2007 by Capital Maritime, an international shipping company with a long history of operating and investing in the shipping market, having grown its fleet from

113


5 vessels as of December 31, 2001 to 30 vessels as of December 31, 2006, representing an eight-fold increase in deadweight capacity. Capital Maritime will manage the commercial and technical operation of our fleet through Capital Ship Management (an affiliate of our general partner). Capital Maritime has an experienced management team with a long track record, a reputation for technical expertise in managing and operating vessels, and strong relationships with leading shipyards and charterers. This expertise is reflected in Capital Maritime's history of a limited number of off-hire days and strong safety record. Upon the closing of this offering, Capital Maritime will own a 44.0% interest in us, including a 2.0% general partner interest through our general partner, which Capital Maritime owns and controls.

              Capital Maritime is owned by the Marinakis family, which has been engaged in the shipping business for generations. Our chairman, Mr. Evangelos Marinakis, has been President and Chief Executive Officer of Capital Maritime since 1999, and has been active in his family's shipping business for more than 15 years. In guiding the growth and expansion of Capital Maritime over the past several years, Mr. Marinakis has built on the reputation first established by his late grandfather, who founded the predecessor to Capital Maritime at the beginning of the 20th century, and his late father, who further developed the business.

Business Opportunities

              We believe that the following factors create opportunities for us to successfully execute our business plan and grow our business:

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Our Competitive Strengths

              We believe that our future prospects for success are enhanced by the following aspects of our business:

115

Business Strategies

              Our primary business objective is to increase quarterly distributions per unit over time by executing the following strategies:

116

Our Fleet

              Our fleet currently contains eight newly built MR product tankers that are capable of carrying a full range of refined products. We have also agreed to purchase from Capital Maritime all of its interest in a further four additional Ice Class 1A sister vessels that are scheduled for delivery in 2007 and three additional MR product tanker sister vessels constructed by STX Shipbuilding Co., Ltd. that are scheduled for delivery in 2008. At the end of 2008, our contracted base fleet will consist of 15 MR double-hull product tankers. Please read "Certain Relationships and Related Party Transactions—Agreement to Purchase Future Vessels." We may from time to time purchase additional vessels, including vessels from Capital Maritime.

              All of our current vessels operate, and the newbuildings we will purchase from Capital Maritime will operate, under medium to long-term time charters or bareboat charters of more than two years with counterparties that we believe are creditworthy. Under certain circumstances we may operate vessels in the spot market until the vessels have been fixed under appropriate medium to long-term charters.

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Initial Fleet At Time Of This Offering

              The following table provides information regarding the eight medium-range tankers in our initial fleet.

Vessel Name
   Year Built(1)
   DWT
   Charter
Type(2)
   Expiration of
Charter(3)
   Daily Charter
Rate(4)
   Profit Sharing
Arrangement(5)
   Charterer
Atlantas   2006   37,000   8-year BC   March 2014   $ 15,000 (6)     BP Shipping Limited
Aktoras   2006   37,000   8-year BC   June 2014   $ 15,000 (6)     BP Shipping Limited
Agisilaos   2006   37,000   2.5-year TC   January 2009   $ 17,500   X   BP Shipping Limited
Assos   2006   47,000   3-year TC   October 2009   $ 20,000   X   Morgan Stanley
Arionas   2006   37,000   2.5-year TC   April 2009   $ 21,000 (7) X   BP Shipping Limited
Axios   2007   47,000   3-year TC   February 2010   $ 20,500   X   BP Shipping Limited
Aiolos   2007   37,000   8-year BC   February 2015   $ 15,000 (6)     BP Shipping Limited
Avax   2007   47,000   3-year TC   May 2010   $ 20,500 (8) X   BP Shipping Limited
(1)
All vessels were built by Hyundai MIPO Dockyard Co., Ltd., South Korea.

(2)
TC: Time Charter, BC: Bareboat Charter.

(3)
Earliest possible redelivery date. Redelivery date is +/-30 days at the charterers option.

(4)
The BP Shipping Limited time and bareboat charters are subject to commissions and the rates quoted above are the net rates after we have paid such commissions. We will not be paying any commissions for the Morgan Stanley Capital Group Inc. time charters.

(5)
Please read "Time Charters-General Provisions-Profit Sharing" for more information.

(6)
The last 3 years of the BC will be a daily charter rate of $13,432.

(7)
The last 6 months of the TC will be at a daily charter rate of $19,000 plus a 50/50 profit sharing arrangement.

(8)
Avax is currently under a charter which commenced in March 2007 at a daily charter rate of $24,687 and expires at the end of May 2007.

Newbuildings

              The table below provides information regarding the seven newbuildings we have committed to purchase.

Vessel Name
   Expected
Delivery
Date
   DWT
   Charter
Type(3)
   Expiration of
Charter(4)
   Daily Charter
Rate(5)
   Profit Sharing
Arrangement(6)
   Charterer
Atrotos   05/07 (1) 47,000   3-year TC   April 2010   $ 20,000   X   Morgan Stanley
Akeraios   08/07 (1) 47,000   3-year TC   July 2010   $ 20,000   X   Morgan Stanley
Anemos I   10/07 (1) 47,000   3-year TC   September 2010   $ 20,000   X   Morgan Stanley
Apostolos   10/07 (1) 47,000   3-year TC   September 2010   $ 20,000   X   Morgan Stanley
Alexandros II   01/08 (2) 51,000   10-year BC   December 2017   $ 13,000       OSG
Aristotelis II   06/08 (2) 51,000   10-year BC   May 2018   $ 13,000       OSG
Aris II   08/08 (2) 51,000   10-year BC   July 2018   $ 13,000       OSG
(1)
These vessels are being built by Hyundai MIPO Dockyard Co., Ltd., South Korea.

(2)
These vessels are being built by STX Shipbuilding Co., Ltd., South Korea.

(3)
TC: Time Charter, BC: Bareboat Charter.

(4)
Under the charters with Overseas Shipholding Group Inc. for the three STX vessels to be delivered in 2008, Overseas Shipholding Group Inc. has an option to purchase each vessel at the end of the eighth, ninth or tenth year of the charter, for $38.0 million, $35.5 million and $33.0 million respectively, which option is exercisable six months before the date of completion of the eighth, ninth or tenth year of the charter. The expiration date above may therefore change depending on whether the charterer exercises its purchase option.

(5)
The BP Shipping Limited time and bareboat charters are subject to commissions and the rates quoted above are the net rates after we have paid such commissions. We will not be paying any commissions for the Morgan Stanley Capital Group Inc. time charters and Overseas Shipholding Group Inc. bareboat charters.

(6)
Please read "Time Charters—General Provisions—Profit Sharing" for more information.

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Optional MR Product Tanker Sister Vessels

              Pursuant to our omnibus agreement with Capital Maritime, we will have the option to purchase an additional six sister vessels from Capital Maritime comprised of two Ice Class 1A sister vessels and four MR product tanker sister vessels, but only in the event those vessels are fixed under charters of two or more years upon the expiration of their current charters or upon completion of their construction. Capital Maritime is, however, under no obligation to fix any of these six vessels under charters of two or more years. All six vessels are currently under charter for less than two years or are yet to be chartered as they are under construction. The table below provides information regarding these six vessels.

Vessel Name
   Delivery Date/Expected
Delivery Date
   DWT
   Description
Agamemnon II   12/08 (1) 51,000   IMO II/III
Chemical/Product
Ayrton III   01/09 (1) 51,000   IMO II/III
Chemical/Product
Adonis II   03/09 (1) 51,000   IMO II/III
Chemical/Product
Asterix II   07/09 (1) 51,000   IMO II/III
Chemical/Product
Aristidis   01/06 (2) 37,000   Ice Class 1A IMO II/III
Chemical/Product
Alkiviadis   03/06 (2) 37,000   Ice Class 1A IMO II/III
Chemical/Product
(1)
These vessels are being built by STX Shipbuilding Co., Ltd., South Korea.

(2)
These vessels were built by Hyundai MIPO Dockyard Co., Ltd., South Korea.

Acquisition of Our Newbuildings

General

              In connection with this offering, we will enter into a share purchase agreement with Capital Maritime to purchase its interests in the vessel-owning subsidiaries that own the four additional Ice Class 1A sister vessels being constructed by Hyundai MIPO Dockyard Co., Ltd., South Korea, that are scheduled for delivery in 2007 and three additional MR product tanker sister vessels being constructed by STX Shipbuilding Co., Ltd., South Korea, that are scheduled for delivery in 2008.

              Each of the additional vessels is being built pursuant to a ship building contract with a subsidiary of Capital Maritime. These ship building contracts will not be assigned to us prior to delivery, and Capital Maritime will be responsible for payments due under the ship building contracts. If Capital Maritime fails to make installment payments for the newbuildings after receiving notice by the shipbuilder following non-payment on any installment due date, the shipbuilder could rescind the purchase contract. As a result of such default, Capital Maritime could lose all or part of the installment payments made prior to such default, and we could lose access to the vessels or may need to finance the vessels before they begin operating and generating voyage revenues, which could harm our business and reduce our ability to make cash distributions. In the event of a default or an anticipated default by a subsidiary of Capital Maritime under its shipbuilding contract with the shipyard, we have the right under our agreement to purchase the vessels from Capital Maritime, to perform the obligations of such subsidiary of Capital Maritime. The following discussion describes the material terms common to all of the shipbuilding contracts.

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Vessel Specifications and Classification

              All four vessels that will be delivered by Hyundai will be double-hull medium-range (47,000 dwt) Ice Class 1A IMO II product tankers capable of carrying refined products and will have the same specifications. All three vessels that will be delivered by STX Shipbuilding Co., Ltd. will be double-hull medium-range (51,000 dwt) IMO II product tankers capable of carrying refined products and will have the same specifications. All of the Hyundai and STX vessels are designed and are being constructed, inspected and tested in accordance with the rules and regulations of and under special survey of either the Det Norske Veritas (DNV) or the American Bureau of Shipping (ABS).

Deliveries

              We will take delivery of each vessel under construction upon its completion and inspection and its purchase by the respective vessel-owning subsidiary. The scheduled delivery date for each of the additional seven vessels on order is set out in a table under the heading "Our Fleet—Newbuildings."

Purchase Price

              We will pay Capital Maritime a fixed purchase price for each of the seven vessels which differs from the construction price paid by the respective vessel-owning subsidiary pursuant to the ship building contracts. Please read "Risk Factors—Risks Inherent in Our Business—The shipping industry is cyclical, which may lead to lower charter hire rates and lower vessel values resulting in decreased distributions to our common unitholders."

Cancellation of Contract

              Each of the ship building contracts allows the relevant vessel-owning subsidiary to cancel the contract in certain circumstances, including if the permissible delay is excessive, the relevant shipyard breaches the terms of a ship building contract in a certain manner, a court declares bankruptcy against the relevant shipyard, insolvency proceedings prevent the relevant shipyard from completing the vessel or if the speed or deadweight of the vessel does not meet the contract specifications. There are also certain circumstances in which the relevant shipyard may cancel a contract, including if the relevant vessel-owning subsidiary defaults in payment of an installment of the purchase price. We have the right under our share purchase agreement with Capital Maritime to perform the obligations of a vessel-owning subsidiary in the event of a default or an anticipated default by a vessel-owning subsidiary under its shipbuilding contract with the relevant shipyard, in which case, we have a right to be reimbursed by the vessel-owning subsidiary for the performance of such obligation.

Warranty

              For a 12-month period that begins once a vessel has been delivered to its relevant vessel-owning subsidiary, the relevant shipyard guarantees each vessel in its entirety against all defects, omissions, shortages and non-conformity, defective or unsuitable materials or equipment, faulty design and/or performance or poor workmanship, provided that such defects are not the result of an accident, ordinary wear and tear, misuse, negligence or willful neglect or omissions on the part of the owner, its employees or agents. The normal 12-month guarantee period will be extended for various components of the vessel if the manufacturer's or supplier's guarantee for those components extends beyond the 12-month period. Where the relevant shipyard remedies a defect covered by the warranty, an additional warranty period will apply to the replaced parts starting from the time the defect is remedied. The relevant shipyard will remedy at its cost any vessel defects that are guaranteed pursuant to the terms of the contract. The relevant shipyard is not responsible for any consequential loss, damage or expense incurred by the relevant vessel-owning subsidiary as a result of such defects. If the defect is recurring, the relevant shipyard is obligated to investigate its cause.

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Our Customers

              We provide or will provide marine transportation services under medium to long-term time charters or bareboat charters with counterparties that we believe are creditworthy. Currently, our customers are:

              BP Shipping Limited and Morgan Stanley Capital Group Inc. accounted for 70% and 30%, respectively, of our revenues for the year ended December 31, 2006. The loss of any significant customer or a substantial decline in the amount of services requested by a significant customer could harm our business, financial condition and results of operations.

Competition

              We operate in a highly competitive global market based primarily on supply and demand of vessels and cargoes. The international tanker industry is highly fragmented with many charterers, owners and operators of vessels. Ownership of medium range product tankers capable of transporting refined oil products, such as gasoline, diesel, fuel oil and jet fuel, as well as edible oils and chemicals, is highly diversified and is divided among many independent medium range tanker owners. We believe that no single competitor has a dominant position in the markets in which we compete. Competition for charters, including for the transportation of oil and oil products, can be intense and depends on price as well as on the location, size, age, condition and acceptability of the vessel and its operator to the charterer and is frequently tied to having an available vessel with the appropriate approvals from oil majors. Please read "—Major Oil Company Vetting Process".

              It is likely that we will face substantial competition for medium to long-term charter business from a number of experienced companies. Many of these competitors may have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into our transportation sectors, including in the ice class sector. Many of these competitors have strong reputations and extensive resources and experience. Increased competition may cause greater price competition, especially for medium to long-term charters.

              The process for obtaining longer term time charters and bareboat charters generally involves a lengthy and intensive screening and vetting process and the submission of competitive bids. In addition to the quality and suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vessel operator, including:

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              As a result of these factors, we may be unable to expand our relationships with existing customers or obtain new customers for medium to long-term time charters or bareboat charters on a profitable basis, if at all. However, even if we are successful in employing our vessels under longer term time charters or bareboat charters, our vessels will not be available for trading in the spot market during an upturn in the tanker market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable time charters our results of operations and operating cash flow could be adversely affected.

Time Charters—General Provisions

              A time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. All of our time charters also include profit sharing provisions. Under a time charter, the vessel owner provides crewing and other services related to the vessel's operation, the cost of which is included in the daily rate and the customer is responsible for substantially all of the vessel voyage costs. We have two general forms of time charters for charters with Morgan Stanley Capital Group Inc. and BP Shipping Limited. The following discussion describes the material terms common to all of our medium to long-term time charters.

              "Basic hire rate" refers to the basic payment from the customer for the use of the vessel. The hire rate is generally payable monthly, in advance on the first day of each month, in U.S. Dollars as specified in the charter.

              All of our current time charter contracts contain profit sharing provisions. Profit sharing refers to an arrangement between owners and charterers to share, at a pre-determined percentage, voyage profit in excess of the basic hire rate.

              The profit sharing arrangements for our vessels time chartered with Morgan Stanley Capital Group Inc. are calculated on the basis of a weighted monthly average of three indices published daily by the Baltic Exchange based on specific routes and cargo sizes representative of the vessel's trading. At the end of each month, the monthly average of each route is calculated and the Time Charter Equivalent (TCE) for a round voyage is estimated based upon the weighted average of the three routes, the speed and consumption of the vessel in question, bunker prices at agreed ports as published by Platts, port expenses adjusted twice a year and other parameters mutually agreed such as loading/discharging time, bad weather and commissions. If the weighted average hire rate is less than or equal to the basic hire rate, then we receive the basic hire rate only. If the weighted average hire exceeds the basic hire rate, then we receive the basic hire rate plus 50% of the excess. However, we also have the right to access the charterer's annual results of operations for each vessel and if it is shown that the vessel has performed better than the estimated profit outlined above, then we may opt to use the

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charterer's results of operations and are reimbursed the difference between profits received under the first option outlined above, and 50% of actual vessel profits above the basic hire rate. Annual results of operations from the charterer are to be presented by December 31 of each year for the period commencing December 1 of the previous year to November 30 of the year in question.

              Our profit sharing arrangements for our vessels time chartered with BP Shipping Limited are based on the calculation of the TCE according to the "last to next" principle (previous discharge port to last discharge port). Actual voyage revenues earned and received, actual expenses incurred and actual time taken to perform the voyage are used for the purpose of the calculation. The charterer is obliged to provide us with a copy of each fixture note and all reasonable documentation with respect to items of cost and earnings referring to each voyage within every calculation period, as well as with a statement listing actual voyage results for voyages completed and estimated results for any voyage not completed at the time of settlement. When actual revenue and/or expenses have not been settled, BP Shipping Limited's estimates apply but remain subject to adjustment upon closing of actual accounts. If the average daily TCE is less than or equal to the basic gross hire rate, then we receive the basic net hire rate only. If the average daily TCE exceeds the basic gross hire rate, then we receive the basic net hire rate plus 50% of the excess over the gross hire rate. The profit share with BP Shipping Limited is calculated and settled semi-annually.

              Please see the table below for information on the gross charter rates for vessels time chartered with BP Shipping Limited:

Vessel Name
   DWT
   Charter
Type
   Gross
Charter Rate
   Commission
Agisilaos   37,000   2.5-year TC   $ 17,721   1.25%
Arionas   37,000   2-year TC   $ 21,266 (1) 1.25%
Axios   47,000   3-year TC   $ 20,759   1.25%
Avax   47,000   3-year TC   $ 20,759 (2) 1.25%
(1)
A gross charter rate of $19,241 for the Arionas applies only for the six month period the time charter covering the Arionas has been extended (from November 4, 2008 to April 4, 2009).

(2)
Avax is currently under a charter which commenced in March 2007 at a daily gross charter rate of $25,000 and expires at the end of May 2007.

              We will pay Capital Ship Management a fixed daily fee of $5,500 per vessel for our time chartered vessels, covering vessel operating expenses, which include crewing, repairs and maintenance, insurance and the cost of the special survey and related scheduled drydocking. This fee is for an initial term of approximately five years from when the vessels commence operations to their first special survey and includes the expenses for the first special survey. Capital Ship Management is directly responsible for providing all of these items and services. The sole expense we will incur in connection with our vessels under bareboat charter is a daily fee of $250 per bareboat chartered vessel payable to Capital Ship Management, mainly to cover compliance costs. Please read "Certain Relationships and Related Party Transactions—Management Agreement." The charterer generally pays the voyage expenses, which include all expenses relating to particular voyages, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions.

              When the vessel is "off-hire", the charterer generally is not required to pay the basic hire rate, and we are responsible for all costs. Prolonged off-hire may lead to vessel substitution or termination of the time charter. A vessel generally will be deemed off-hire if there is a loss of time for more than six

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consecutive hours on any one occasion or more than twenty four hours in a year due to various factors, including operational deficiencies; drydocking for repairs, maintenance or inspection; or delays due to accidents, crewing strikes or similar problems.

              Under all of our time charters, we are responsible for the technical management of the vessel and for maintaining the vessel, periodic drydocking, cleaning and painting and performing work required by regulations. Capital Ship Management will provide all services related to the vessel to us pursuant to a management agreement. Please read "Certain Relationships and Related Party Transactions—Management Agreement".

              Each time charter terminates automatically upon a total loss of the vessel. In addition, we are generally entitled to suspend performance (but with the continuing accrual to our benefit of hire payments and default interest) and, under most time charters, terminate the charter if the customer defaults in its payment obligations. Under most of our time charters, either party may also terminate the charter in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel.

Bareboat Charters—General Provisions

              A bareboat charter is a contract pursuant to which the vessel owner provides the vessel to the customer for a fixed period of time at a specified daily rate, and the customer provides for all of the vessel's operating expenses including crewing, repairs, maintenance, insurance, stores, lube oils and communication expenses in addition to the voyage costs and generally assumes all risk of operation. The customer undertakes to maintain the vessel in a good state of repair and efficient operating condition and dry-dock the vessel during this period as per the classification society requirements. We have two general forms of bareboat charters with subsidiaries of Overseas Shipholding Group and BP Shipping Limited. The following discussion sets forth the material terms common to our bareboat charters.

              The term for a bareboat charter commences upon the vessel's delivery and lasts for the duration as specified in the charter. Our bareboat charters do not include options to extend the charter's term (except for the industry standard +/- 30 days at the charterers' option).

              Upon the expiration of the bareboat charter, the charterer is required to redeliver the vessel in the same or as good structure, state, condition and class as that in which the vessel was delivered, fair wear and tear not affecting class excepted. We and the charterer will appoint a reputable firm to carry out a delivery survey on both our behalves sharing the time and cost equally between us.

              Basic hire rate is generally payable monthly, in advance, in U.S. Dollars as specified in the charter. Unlike the time charters, our bareboat charters do not include profit share provisions.

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              The charters with respect to the Alexandros II, Aristotelis II and Aris II include options for the charterer, Overseas Shipholding Group, to purchase each vessel for $38.0 million, $35.5 million or $33.0 million at the end of the eighth, ninth or tenth year of the charter, respectively. In each case, the option to purchase the vessel must be exercised six months prior to the end of the charter year.

              Under a bareboat charter, the charterer is responsible for crewing, insuring, maintaining and repairing each vessel including any drydocking as well as for all other operating costs with respect to each vessel. Overseas Shipholding Group and BP Shipping Limited have agreed to cover the costs associated with the vessels' special surveys and related drydocking falling within the charter period. If the vessel requires major repairs or repairs in excess of U.S. $100,000, charterers shall obtain our prior approval of the proposed method of repair and the proposed repairer. If any improvements, structural changes or installation of equipment costing more than U.S. $1,000,000 in total becomes necessary for the continued operation of the vessel by reason of new class requirements or by compulsory legislation, then the cost of compliance in excess of U.S. $1,000,000 shall be shared equally between us and the charterer.

              We have the right to terminate the charter if the customer fails to make punctual hire payments, trades the vessel outside the mutually agreed trading ranges, fails to insure or self-insure the vessel or fails to maintain and/or repair the vessel as agreed.

              The charter shall terminate and neither party shall be liable to the other for any claim under or arising out of the charter or its termination, if the vessel on delivery does not fully comply in every respect with our specifications under the shipbuilding contract such that we have a right of rejection, or we fail to deliver the vessel for reasons beyond our reasonable control and the customer elects to cancel the charter.

              Our customers have the right to terminate the contract if owners are deemed to be in breach of their obligations under the contract and deprive the customers of the use of the vessel for more than a specified period of time.

              Under most of our bareboat charters, either party may also terminate the charter in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel.

Classification, Inspection and Maintenance

              Every large, commercial seagoing vessel must be "classed" by a classification society. The classification society certifies that the vessel is "in class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned. The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

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

              Annual Surveys.    For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable, on special equipment classed at intervals of 12 months from the date of commencement of the class period indicated in the certificate.

              Intermediate Surveys.    Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey.

              Class Renewal Surveys.    Class renewal surveys, also known as special surveys, are carried out on the ship's hull and machinery, including the electrical plant, and on any special equipment classed at the intervals indicated by the character of classification for the hull. During the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of funds may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period is granted, a shipowner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. At an owner's application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

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

              Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society which is a member of the International Association of Classification Societies. All of our vessels are certified as being "in class" by American Bureau of Shipping or Det Norske Veritas. All of the newbuildings we currently have on order and any other new and secondhand vessels that we purchase must be certified prior to their delivery. If any vessel we have contracted to purchase is not certified as "in class" on the date of closing, we have no obligation to take delivery of the vessel.

Management of Ship Operations, Administration and Safety

              Capital Maritime provides, through its subsidiary Capital Ship Management, expertise in various functions critical to our operations. This affords a safe, efficient and cost-effective operation and, pursuant to a management agreement and an administrative services agreement with Capital Ship Management, we will have access to human resources, financial and other administrative functions, including:

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              Technical management services including:

              For more information on the management agreement we have with Capital Ship Management and the administrative services agreement we have with Capital Ship Management please read "Certain Relationships and Related Party Transactions—Management Agreement" and "Certain Relationships and Related Party Transactions—Administrative Services Agreement."

              The generally uniform design of our newbuilding vessels and the adoption of common equipment standards should also result in operational efficiencies, including with respect to crew training and vessel management, equipment operation and repair, and spare parts ordering.

              In 2003, 2004, 2005 and 2006, Capital Maritime's commercial management team achieved a fleet utilization rate of 99.1%, 99.1%, 99.9% and 100%, respectively. Capital Maritime believes that it has developed strong relationships with important customers, including major oil companies. Utilizing the skills of its strong in-house technical and vetting departments, it has achieved a 99% approval rate following tanker vettings by major international oil companies. Please read "—Major Oil Company Vetting Process."

              The fleet Capital Maritime has operated and managed in the past differs significantly from the fleet it will operate and manage for us after this offering, including with respect to fleet age, fleet composition, business strategy and operating market. Therefore, the performance of Capital Maritime's historical fleet is not indicative of the future performance of our fleet.

              The following table sets forth certain operational data for Capital Maritime's historical fleet.

 
   As of and for the year ended December 31,
  
 
   2003
   2004
   2005
   2006
  
Total number of vessels at end of period   22   30   32   30  
Average number of vessels(1)   16.7   23.4   33.1   33.7  
Weighted average age of fleet (in years)   17.2   16.5   16.5   13.8  
Tankers   16.4   17.5   18.3   13.7  
Bulk carriers   18.0   13.7   11.9   14.4  
Total operating days for fleet(2)   5,813   8,216   11,398   11,816  
Total available days for fleet(3)   5,864   8,289   11,412   11,816  
Total days for fleet(4)   6,104   8,541   12,085   12,304  
Fleet utilization rate(5)   99.1 % 99.1 % 99.9 % 100 %
(1)
Average number of vessels is the number of vessels that constituted the fleet for a period, as measured by the sum of the number of days each vessel was a part of the fleet during the period divided by the number of total days in that period.

(2)
Total operating days for fleet is the sum of the days each vessel was in operation for a period, measured by subtracting idle days from available days for each vessel in that period.

(3)
Total available days for fleet is the sum of the total days that each vessel was in Capital Maritime's possession for a certain period and available for employment, net of off-hire days associated with major repairs, upgrades, drydockings or special or intermediate surveys in that period.

(4)
Total days for fleet is the sum of the total days each vessel was in Capital Maritime's possession for a period, including idle days and off-hire days associated with major repairs, upgrades, drydockings, special surveys or intermediate surveys.

(5)
Fleet utilization rate is the percentage of time that vessels were available for revenue generating days, determined by dividing operating days by available days for the relevant period.

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              Capital Maritime's fleet currently includes the following double-hull, non-MR, newbuilding product tankers which we could agree with Capital Maritime to potentially purchase in the event those vessels are fixed under charters of two or more years upon the expiration of their current charters or upon completion of their construction:

Vessel Name
   Delivery Date/Expected
Delivery Date
   DWT
   Tanker Type
Miltiadis M II   04/06(1 ) 162,000   ICE Class 1A Product/Crude Oil
Alterego II   06/08(2 ) 14,000   IMO II/III Chemical/Product
Amore Mio II   08/08(2 ) 14,000   IMO II/III Chemical/Product
Archimidis II   12/08(2 ) 14,000   IMO II/III Chemical/Product
Aias II   04/09(2 ) 14,000   IMO II/III Chemical/Product
Active II(4)   08/09(2 ) 14,000   IMO II/III Chemical/Product
Amigo II(4)   11/09(2 ) 14,000   IMO II/III Chemical/Product
Attikos   01/05(2 ) 12,000   Product
Aristofanis   05/05(2 ) 12,000   Product
Akadimos   02/08(3 ) 12,000   IMO II/III Chemical/Product
Asopos   07/08(3 ) 12,000   IMO II/III Chemical/Product
(1)
This vessel was built by Daewoo Shipbuilding and Marine Engineering Co., Ltd., South Korea. It is fully equipped to transport oil products but currently is trading crude oil.

(2)
These vessels are being built or were built by Zhejiang Shenglong Ocean Shipping Co. Ltd, PRC.

(3)
These vessels are being built by Ziuziang Yinxing Shipyard Co. Ltd, PRC.

              With the exception of the Militadis M II, these product tanker vessels are smaller in size than our initial vessels, our contracted vessels or the vessels we may have an option to purchase, ranging from 12,000 dwt to 14,000 dwt. However, each of these vessels is engaged in similar product trades. The Miltiadis M II is a considerably larger vessel, fully equipped to trade refined oil products and crude oil.

              Safety is our top operational priority. Capital Maritime operates under a safety and quality management system certified under the ISM Code and Capital Maritime is currently pursuing voluntary certification for compliance with the quality assurance standard ISO 900-2000 and the environmental management standard ISO 14000 with American Bureau of Shipping. As a result, our vessels are operated in a manner intended to protect the safety and health of Capital Maritime's employees, the general public and the environment. Capital Maritime's technical management team actively manages the risks inherent in our business and is committed to eliminating incidents that threaten safety, such as groundings, fires, collisions and petroleum spills, as well as reducing emissions and waste generation.

Major Oil Company Vetting Process

              Shipping, and especially crude oil, refined product and chemical tankers have been, and will remain heavily regulated. Many international and national rules, regulations and other requirements—whether imposed by the classification societies, international statutes (IMO's SOLAS, MARPOL, etc.), national and local administrations or industry—must be complied with in order to enable a shipping company to operate and a vessel to trade.

              Traditionally there have been relatively few commercial players in the oil trading business and the industry is continuously being consolidated. The so called "oil majors", such as ExxonMobil, BP p.l.c., Royal Dutch Shell plc, Chevron, ConocoPhillips (which recently acquired Louis Dreyfus Energy Holdings Ltd.) and Total S.A., together with a few smaller companies, represent a significant

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percentage of the production, trading and, especially, shipping (terminals) of crude and oil products world-wide.

              Concerns for the environment have led the oil majors to develop and implement a strict due diligence process when selecting their commercial partners, especially vessels and vessel operators. The vetting process has evolved into a sophisticated and comprehensive assessment of both the vessel and the vessel operator.

              While numerous factors are considered and evaluated prior to a commercial decision, the oil majors, through their association, Oil Companies International Marine Forum (OCIMF), have developed and are implementing two basic tools: (i) a Ship Inspection Report Programme (SIRE) and (ii) the Tanker Management & Self Assessment (TMSA) Program. The former is a ship inspection based upon a thorough Vessel Inspection Questionnaire (VIQ), and performed by accredited (by OCIMF) inspectors, resulting in a report being logged on SIRE. The report is an important element of the ship evaluation undertaken by any oil major when a commercial need exists. The latter, a recent addition to the risk assessment tools used by the oil majors, is effectively an organizational road map against which an oil tanker management company can self-assess. The results are made available to and used by the oil majors for their evaluation, while the management company is expected to develop a comprehensive improvement action plan indicating the actions, milestones and expected completion time for the full compliance with both the key performance indicators and the best practice in the TMSA.

              Based upon commercial needs, there are three levels of assessment used by the oil majors, (i) terminal use, which will clear a vessel to call at one of the oil major's terminals; (ii) voyage charter, which will clear the vessel for a single voyage; and (iii) term charter, which will clear the vessel for use for an extended period of time. The depth, complexity and difficulty of each of these levels of assessment varies.

              While for the terminal use and voyage charter relationships a ship inspection and the operator's TMSA will be sufficient for the assessment to be undertaken, a term charter relationship also requires a thorough office audit. An operator's request for such an audit is by no means a guarantee one will be performed; it will take a long record of proven excellent safety and environmental protection on the operator's part as well as high commercial interest on the part of the oil major to have an office audit performed.

              Few ship management companies worldwide are evaluated by the oil majors and even fewer complete the evaluation successfully. Out of thousands of ship management companies worldwide, we believe a limited number meet the requirements to have their operations audited by a given oil major, and even fewer companies enter into a long term relationship with the oil major.

              We believe Capital Maritime and Capital Ship Management are among the few companies to have undergone and successfully completed audits by three major international oil companies in the past several months. During that period BP p.l.c., Royal Dutch Shell plc and Statoil ASA have assessed and cleared Capital Maritime's operations.

Crewing and Staff

              Capital Maritime recruits the senior officers and all other crew members for our vessels either directly through a subsidiary crewing office in Romania or through a crewing agent and is further expanding its recruitment efforts through its relationships with training institutions in Romania and Russia. Capital Maritime is also evaluating the potential for establishing similar training and assistance programs with crew training institutions elsewhere. Capital Maritime's vessels are currently manned primarily by Romanian, Russian and Filipino crew members. Having employed these crew

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configurations for a number of years, Capital Maritime has considerable experience in operating vessels in this configuration and has a pool of certified and experienced crew members.

Risk Management and Insurance

              The operation of any cargo vessel embraces a wide variety of risk. This includes such things as mechanical failure, for example by reason of the seizure of a main engine crankshaft, physical damage to the vessel, for example by reason of collision, and other property, for example by reason of cargo damage or oil pollution. It may also include business interruption, for example by reason of political disturbance or labor disputes or losses due to terrorist or war-like action between countries. The value of such losses or damages may vary from modest sums, for example for a small cargo shortage damage claim, to catastrophic liabilities, for example arising out of a marine disaster, such as a serious oil spill, which may be virtually unlimited. Although we believe our current insurance program is comprehensive, we cannot insure against all risks, and we cannot be assured that all covered risks are adequately insured against. Furthermore, there can be no guarantee that any specific claim will be paid by the insurer or that it will always be possible to obtain insurance coverage at reasonable rates. Moreover, under the terms of our bareboat charters, the charterer provides for the insurance of the vessel, and as a result, these vessels may not be adequately insured and/or in some cases may be self-insured. Any uninsured or under-insured loss could harm our business and financial condition.

              The following table sets forth certain information regarding our insurance coverage as of March 13, 2007.

Type
   Aggregate Sum Insured For All Vessels in our Existing Fleet
Hull and Machinery   $332 million (increased value insurance (including excess liabilities) provide additional coverage).

Increased Value (including Excess Liabilities)
 
Up to $163 million additional coverage in total.

Protection and Indemnity (P&I)
 
Pollution liability claims: limited to $1.0 billion per vessel per incident.

War Risk
 
$495 million.

              The principal coverage for marine risks (covering loss or damage to the vessels, rather than liabilities to third parties) are hull and machinery insurance and war risk insurance. These address the risks of the actual (or constructive) total loss of a vessel and accidental damage to a vessel's hull and machinery, for example from running aground or colliding with another ship. These insurances provide coverage which is limited to an agreed "insured value' which, as a matter of policy, is never less than the particular vessel's fair market value. Reimbursement of loss under such coverage is subject to policy deductibles which vary according to the vessel and the nature of the coverage. Hull and machinery deductibles may, for example, be between $100,000 and $150,000 per incident whereas the war risks insurance has a more modest incident deductible of $30,000. The fleet's hull and machinery insurance program is augmented by an "increased value" program that provides a low-cost means of increasing the insured value of the vessels in the event of a total loss casualty.

              This is the principal coverage for a shipowner's third party liabilities as they arise out of the operation of his vessel. Such liabilities include those arising, for example, from the injury or death of crew, passengers and other third parties working on or about the vessel to whom the shipowner is

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responsible, or from loss of or damage to cargo carried on board or any other property owned by third parties to whom the shipowner is answerable. P&I coverage is traditionally (and for the most part) provided by mutual insurance associations, originally established by shipowners to provide coverage for risks that were not covered by the marine policies that developed through the Lloyd's market.

              Our P&I coverage for liabilities arising out of oil pollution is limited to $1.0 billion per vessel per incident. As the P&I associations are mutual in nature, there has been, historically no limit to the value of coverage afforded. In recent years, however, because of the potentially catastrophic consequences to the membership of a P&I association having to make additional calls upon the membership for further funds to meet a catastrophic liability, the associations have introduced a formula based overall limit of coverage which is approximately $5.4 billion. Although contingency planning by the managements of the various associations has reduced the risk to as low as reasonably practicable, it nevertheless remains the case that an adverse claims experience across an association's membership as a whole may require the members of that association to pay, in due course, unbudgeted additional funds to balance its books.

              Not all risks are insured and not all risks are insurable. The principal insurable risks which nevertheless remain uninsured across the fleet are "loss of hire" and "strikes." Capital Maritime does not insure these risks because the costs are regarded as disproportionate. These insurances provide, subject to a deductible, a limited indemnity for hire that is not receivable by the ship-owner for reasons set forth in the policy. For example, loss of hire risk may be covered on a 14/90/90 basis, with a 14 days deductible, 90 days cover per incident and a 90-day overall limit per vessel per year. Should a vessel on time charter, where the vessel is paid a fixed hire day by day, suffer a serious mechanical breakdown, the daily hire will no longer be payable by the charterer. The purpose of the loss of hire insurance is to secure the loss of hire during such periods. However, Capital Maritime has "Freight at Risk" coverage which is designed to provide coverage in case the freight carried in a voyage should be lost by virtue of a marine casualty resulting in the total loss of the vessel during the course of the voyage. In the case of strikes insurance, if a vessel is being paid a fixed sum to perform a voyage and the ship becomes strike bound at a loading or discharging port, the insurance covers the loss of earnings during such periods.

Regulation

              Our operations and our status as an operator and manager of ships are significantly regulated by international conventions, (i.e. SOLAS, MARPOL), Class requirements, U.S. federal, state and local and foreign health, safety and environmental protection laws and regulations, including OPA 90, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the U.S. Port and Tanker Safety Act, the Act to Prevent Pollution from Ships, regulations adopted by the IMO and the European Union, various volatile organic compound air emission requirements, IMO/U.S. Coast Guard pollution regulations and various Safety of Life at Sea (SOLAS) amendments, as well as other regulations described below. In addition, various jurisdictions either have or are considering regulating the management of ballast water to prevent the introduction of non-indigenous species considered to be invasive. Compliance with these laws, regulations and other requirements could entail additional expense, including vessel modifications and implementation of certain operating procedures.

              We are also required by various other governmental and quasi-governmental agencies to obtain permits, licenses and certificates for our vessels, depending upon such factors as the country of registry, the commodity transported, the waters in which the vessel operates, the nationality of the vessel's crew, the age and size of the vessel and our status as owner or charterer. Failure to maintain necessary

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permits, licenses or certificates could require us to incur substantial costs or temporarily suspend operations of one or more of our vessels.

              We believe that the heightened environmental and quality concerns of insurance underwriters, regulators and charterers will in the future impose greater inspection and safety requirements on all vessels in the shipping industry. In addition to inspections by us, our vessels are subject to both scheduled and unscheduled inspections by a variety of governmental and private entities, each of which may have unique requirements. These entities include the local port authorities (such as U.S. Coast Guard, harbour master or equivalent), classification societies, flag state administration P&I Clubs, charterers, and particularly terminal operators and major oil companies which conduct frequent vessel inspections.

              Our vessels operate in full compliance with applicable environmental laws and regulations. However, because such laws and regulations frequently change and may impose increasingly strict requirements, we cannot predict the ultimate cost of complying with these and any future requirements or the impact of these and any future requirements on the resale value or useful lives of our vessels.

              The United States regulates the tanker industry with an extensive regulatory and liability regime for environmental protection and the cleanup of oil spills, primarily through OPA 90 and CERCLA.

              OPA 90 affects all vessel owners and operators shipping oil or petroleum products to, from, or within U.S. waters. The law phases out the use of tankers having single-hulls and can effectively impose unlimited liability on vessel owners and operators in the event of an oil spill. Under OPA 90, vessel owners, operators and bareboat charterers are liable, without regard to fault, for all containment and clean-up costs and other damages, including natural resource damages and economic loss without physical damage to property, arising from oil spills and pollution from their vessels. OPA 90 had historically limited liability to the greater of $1,200 per gross ton or $10 million per tanker that is over 3,000 gross tons (subject to possible adjustment for inflation), unless the incident was caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability was unlimited. Amendments to OPA 90 signed into law on July 11, 2006, however, increased these limits on the liability of responsible parties to the greater of $1,900 per gross ton or $16 million per tanker that is double-hulled and over 3,000 gross tons. In addition, OPA 90 does not preempt state law and permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries. Coastal states have enacted pollution prevention, liability and response laws, many providing for unlimited liability. CERCLA, which applies to the discharge of hazardous substances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $0.5 million, unless the incident is caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability is unlimited.

              The financial responsibility regulations for tankers issued under OPA 90 also require owners and operators of vessels entering U.S. waters to obtain, and maintain with the U.S. Coast Guard, Certificates of Financial Responsibility, or COFRs, in the amount of $1,500 per gross ton for tankers, combining the previous OPA 90 limitation of liability of $1,200 per gross ton with the CERCLA liability of $300 per gross ton. The U.S. Coast Guard has indicated that it intends to propose a rule that will increase the required amount of such COFRs to $2,200 per gross ton to reflect the higher limits on liability imposed by the July 2006 amendments to OPA 90, as described above. Under the regulations, owners or operators of fleets of vessels are required to demonstrate evidence of financial responsibility for each covered tanker up to the maximum aggregate liability under OPA 90 and CERCLA. All of our vessels that need COFRs have them.

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              We insure each of our tankers with pollution liability insurance in the maximum commercially available amount of $1.0 billion per incident. A catastrophic spill could exceed the insurance coverage available, in which event there could be a material adverse effect on our business. OPA 90 requires that tankers over 5,000 gross ton calling at U.S. ports have double hulls if contracted after June 30, 1990 or delivered after January 1, 1994. Furthermore, OPA 90 calls for the phase-out of all single hull tankers by the year 2015 according to a schedule that is based on the size and age of the vessel, unless the tankers are retrofitted with double-hulls. All of our current vessels as well as the vessels that we have agreed to purchase have double hulls.

              OPA 90 also amended the Federal Water Pollution Control Act (or Clean Water Act) to require owners and operators of vessels to adopt contingency plans for reporting and responding to oil spill scenarios up to a "worst case" scenario and to identify and ensure, through contracts or other approved means, the availability of necessary private response resources to respond to a "worst case discharge." In addition, periodic training programs and drills for shore and response personnel and for vessels and their crews are required. Our vessel response plans have been approved by the U.S. Coast Guard.

              The Clean Water Act prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in the form of penalties for unauthorized discharges. The Clean Water Act also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under the more recent OPA 90 and CERCLA, discussed above. The U.S. Environmental Protection Agency (or EPA) had exempted the discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. ports from Clean Water Act permitting requirements. However, on March 30, 2005, a U.S. District Court ruled that the EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the exemption in the EPA's regulations for all discharges incidental to the normal operation of a vessel as of September 30, 2008, and directing the EPA to develop a system for regulating all discharges from vessels by that date. The EPA has appealed this decision. However, if the exemption is ultimately repealed, we would be subject to Clean Water Act permit requirements that could include ballast water treatment obligations that could increase the cost of operating in the United States. For example, this could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost and/or otherwise restrict our vessels from entering U.S. waters.

              We believe that we are in compliance with OPA 90, CERCLA and all applicable state regulations in U.S. ports where our vessels call.

              The IMO has also negotiated international conventions that impose liability for oil pollution in international waters and a signatory's territorial waters. In September 1997, the IMO adopted Annex VI to the International Convention for the Prevention of Pollution from Ships to address air pollution from ships. Annex VI, which became effective in May 2005, sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulphur content of fuel oil and allows for special areas to be established with more stringent controls on sulphur emissions. A failure to comply with Annex VI requirements could result in a vessel not being able to operate.

              All of our vessels are subject to Annex VI regulations. We believe that our existing vessels meet relevant Annex VI requirements and that our undelivered Ice Class 1A product tanker newbuildings and product tankers will be fitted with these emission control systems prior to their delivery.

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              The ISM Code, promulgated by the IMO, also requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. All of our ocean going vessels are ISM certified.

              Noncompliance with the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. For example, the U.S. Coast Guard and EU authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and EU ports.

              Many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969 (the CLC) (the United States, with its separate OPA 90 regime, is not a party to the CLC). Under this convention and depending on whether the country in which the damage results is a party to the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage, a vessel's registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain defenses. Under an amendment to the Protocol that became effective on November 1, 2003, for vessels of 5,000 to 140,000 gross tons, liability will be limited to approximately $6.6 million plus $926 for each additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability will be limited to approximately $131 million. As the convention calculates liability in terms of a basket of currencies, these figures are based on currency exchange rates on December 31, 2006. The right to limit liability is forfeited under the International Convention on Civil Liability for Oil Pollution Damage where the spill is caused by the owner's actual fault and under the 1992 Protocol where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the International Convention on Civil Liability for Oil Pollution Damage has not been adopted, various legislative schemes or common law regimes govern, and liability is imposed either on the basis of fault or in a manner similar to that convention. We believe that our P&I insurance will cover the liability under the plan adopted by the IMO.

              IMO regulations also require owners and operators of vessels to adopt Shipboard Marine Pollution Emergency Plans (SMPEPs). Periodic training and drills for response personnel and for vessels and their crews are required. The SMPEPs required for our vessels are in place.

              In addition, our operations are subject to compliance with the International Bulk Chemical (IBC) Code, as required by MARPOL and SOLAS for chemical tankers built after July 1, 1986, which provides ship design, construction and equipment requirements and other standards for the bulk transport of certain liquid chemicals. Under October 2004 amendments to the IBC Code (implemented to meet recent revisions to SOLAS and Annex II to MARPOL), some previously unrestricted vegetable oils, including animal fats and marine oils, must be transported in chemical tankers meeting certain double-hull construction requirements. Our vessels may transport such cargoes but are restricted as to the volume they are able to transport per cargo tank. This restriction does not apply to edible oils. In addition, those amendments require re-evaluation of the categorization of certain products with respect to their properties as marine pollutants, as well as related ship type and carriage requirements. Where necessary pollution data is not supplied for those products missing such data, it is possible that the bulk carriage of such products will be prohibited.

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              Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the Maritime Transportation Security Act of 2002 (MTSA) came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States.

              Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security (ISPS) Code. Among the various requirements are:


              The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempted non-U.S. vessels from MTSA vessel security measures provided such vessels had on board, by July 1, 2004, a valid International Ship Security Certificate that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code and have ensured that our vessels are compliant with all applicable security requirements.

Properties

              Other than our vessels, we do not have any material property.

Legal Proceedings

              Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not at present party to any legal proceedings. We are not aware of any proceedings against us, or contemplated to be brought against us. We maintain insurance policies with insurers in amounts and with coverage and deductibles as our board of directors believes are reasonable and prudent. We expect that these claims would be covered by insurance, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

Taxation of the Partnership

United States Taxation

              The following is a discussion of our material U.S. federal income tax characteristics and is the opinion of Cravath, Swaine & Moore LLP, our U.S. counsel, insofar as it relates to matters of U.S. federal income tax law and legal conclusions with respect to those matters. The opinion of our counsel is dependent on the accuracy of representations made by us to them, including descriptions of our operations contained herein. This discussion is based upon provisions of the Code as in effect on the date of this prospectus, existing final and temporary regulations thereunder (or Treasury Regulations), and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially

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from the consequences described below. The following discussion is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations applicable to us.

              Election to be Taxed as a Corporation.    We have elected to be taxed as a corporation for U.S. federal income tax purposes. As such, we will be subject to U.S. federal income tax on our income to the extent it is from U.S. sources or otherwise is effectively connected with the conduct of a trade or business in the Unites States as discussed below.

              Taxation of Operating Income.    We expect that substantially all of our gross income will be attributable to the transportation of crude oil and related products. For this purpose, gross income attributable to transportation (or Transportation Income) includes income derived from, or in connection with, the use (or hiring or leasing for use) of a vessel to transport cargo, or the performance of services directly related to the use of any vessel to transport cargo, and thus includes both time charter or bareboat charter income.

              Transportation Income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States (or U.S. Source International Transportation Income) will be considered to be 50.0% derived from sources within the United States. Transportation Income attributable to transportation that both begins and ends in the United States (or U.S. Source Domestic Transportation Income) will be considered to be 100.0% derived from sources within the United States. Transportation Income attributable to transportation exclusively between non-U.S. destinations will be considered to be 100% derived from sources outside the United States. Transportation Income derived from sources outside the United States generally will not be subject to U.S. federal income tax.

              Based on our current operations, we do not expect to have U.S. Source Domestic Transportation Income. However, certain of our activities give rise to U.S. Source International Transportation Income, and future expansion of our operations could result in an increase in the amount of U.S. Source International Transportation Income, as well as give rise to U.S. Source Domestic Transportation Income, all of which could be subject to U.S. federal income taxation, unless the exemption from U.S. taxation under Section 883 of the Code (or the Section 883 Exemption) applies.

              The Section 883 Exemption.    In general, the Section 883 Exemption provides that if a non-U.S. corporation satisfies the requirements of Section 883 of the Code and the Treasury Regulations thereunder (or the Section 883 Regulations), it will not be subject to the net basis and branch taxes or 4.0% gross basis tax described below on its U.S. Source International Transportation Income. The Section 883 Exemption only applies to U.S. Source International Income. As discussed below, we believe that under our current ownership structure, the Section 883 Exemption will apply and we will not be taxed on our U.S. Source International Transportation Income. The Section 883 Exemption does not apply to U.S. Source Domestic Transportation Income.

              We will qualify for the Section 883 Exemption if, among other matters, we meet the following three requirements:


              The Publicly Traded Test requires that one or more classes of equity representing more than 50.0% of the voting power and value in a non-U.S. corporation be "primarily and regularly traded" on

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an established securities market either in the United States or in a jurisdiction outside the United States that grants an Equivalent Exemption. The Section 883 Regulations provide, in pertinent part, that equity interests in a non-U.S. corporation will be considered to be "primarily traded" on an established securities market in a given country if the number of units of each class of equity that are traded during any taxable year on all established securities markets in that country exceeds the number of units in each such class that are traded during that year on established securities markets in any other single country. Equity of a non-U.S corporation will be considered to be "regularly traded" on an established securities market under the Section 883 Regulations if one or more classes of equity of the corporation that, in the aggregate, represent more than 50.0% of the combined vote and value of the non-U.S corporation are listed on such market and certain trading volume requirements are met or deemed met as described below. For this purpose, if one or more "5.0% unitholders" (i.e., a unitholder holding, actually or constructively, at least 5.0% of the vote and value of a class of equity) own in the aggregate 50.0% or more of the vote and value of a class of equity, such class of equity will not be treated as primarily and regularly traded on an established securities market (the "Closely Held Block Exception").

              We are organized under the laws of the Republic of the Marshall Islands. The U.S. Treasury Department has recognized the Republic of the Marshall Islands as a jurisdiction that grants an Equivalent Exemption. Consequently, our U.S. Source International Transportation Income (including for this purpose, any such income earned by our subsidiaries that have properly elected to be treated as partnerships or disregarded as entities separate from us for U.S. federal income tax purposes) will be exempt from U.S. federal income taxation provided we meet the Publicly Traded Test.

              Since our common units will only be traded on the Nasdaq Global Market, which is considered to be an established securities market, our common units will be deemed to be "primarily traded" on an established securities market. In addition, we have received the opinion of Cravath, Swaine & Moore LLP that our common units will represent more than 50.0% of our vote and, assuming that they represent more than 50% of our value, will be considered to be "regularly traded" on an established securities market. We believe that our common units represent more than 50% of our value and intend to take that position. These conclusions, however, are based upon legal authorities which do not expressly contemplate an organization structure such as ours. In particular, although we have elected to be treated as a corporation for U.S. federal income tax purposes, for corporate law purposes we are organized as a limited partnership under Marshall Islands law and our general partner will be responsible for managing our business and affairs and has been granted certain veto rights over decisions of our board of directors. Accordingly, it is possible that the IRS could assert that our common units do not meet the "regularly traded" test.

              Provided our common units are treated as representing more than 50.0% of our vote and value, we believe we will meet the trading volume requirements described previously because the pertinent regulations provide that trading volume requirements will be deemed to be met with respect to a class of equity traded on an established securities market in the United States where, as will be the case for our common units, the units are regularly quoted by dealers who regularly and actively make offers, purchases and sales of such common units to unrelated persons in the ordinary course of business.

              In addition, we expect that our common units will not lose eligibility for the Section 883 Exemption as a result of the Closely Held Block Exception, because our partnership agreement provides that the voting rights of any 5.0% unitholders are limited to a 4.9% voting interest in us regardless of how many common units are held by that 5.0% unitholder. Thus, although the matter is not free from doubt, we believe that we will satisfy the Publicly Traded Test. Should any of the facts described above cease to correct, our ability to satisfy the test will be compromised.

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              The Net Basis Tax and Branch Profits Tax.    If we earn U.S. Source International Transportation Income and the Section 883 Exemption does not apply, the U.S. source portion of such income may be treated as effectively connected with the conduct of a trade or business in the United States (or Effectively Connected Income) if we have a fixed place of business in the United States and substantially all of our U.S. Source International Transportation Income is attributable to regularly scheduled transportation or, in the case of bareboat charter income, is attributable to a fixed place of business in the United States. Based on our current operations, none of our potential U.S. Source International Transportation Income is attributable to regularly scheduled transportation or is received pursuant to bareboat charters. As a result, we do not anticipate that any of our U.S. Source International Transportation Income will be treated as Effectively Connected Income. However, there is no assurance that we will not earn income pursuant to regularly scheduled transportation or bareboat charters attributable to a fixed place of business in the United States in the future, which would result in such income being treated as Effectively Connected Income. In addition, any U.S. Source Domestic Transportation Income generally will be treated as Effectively Connected Income.

              Any income we earn that is treated as Effectively Connected Income would be subject to U.S. federal corporate income tax (the highest statutory rate is currently 35.0%). In addition, a 30.0% branch profits tax imposed under Section 884 of the Code also would apply to such income, and a branch interest tax could be imposed on certain interest paid or deemed paid by us.

              On the sale of a vessel that has produced Effectively Connected Income, we could be subject to the net basis corporate income tax and to the 30.0% branch profits tax with respect to our gain not in excess of certain prior deductions for depreciation that reduced Effectively Connected Income. Otherwise, we would not be subject to U.S. federal income tax with respect to gain realized on the sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles.

              The 4.0% Gross Basis Tax.    If the Section 883 Exemption does not apply and the net basis tax does not apply, we would be subject to a 4.0% U.S. federal income tax on the U.S. source portion of our gross U.S. Source International Transportation Income, without benefit of deductions.

              Based on the opinion of Watson, Farley & Williams (New York) LLP, our counsel as to matters of the law of the Republic of the Marshall Islands, because we, our operating subsidiary and our controlled affiliates do not, and we do not expect that we and our controlled affiliates will, conduct business or operations in the Republic of the Marshall Islands, neither we nor our controlled affiliates will be subject to income, capital gains, profits or other taxation under current Marshall Islands law. As a result, distributions by our operating subsidiary and our controlled affiliates to us will not be subject to Marshall Islands taxation.

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MANAGEMENT

Management of Capital Product Partners L.P.

              Our partnership agreement provides that our general partner will delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis, and such delegation will be binding on any successor general partner of the partnership. Our general partner, Capital GP L.L.C., a Marshall Islands limited liability company, subject to the direction of our board of directors, will manage our business and operations. Capital GP L.L.C. is wholly owned by Capital Maritime. We currently do not have our own executive officers and expect to rely on the officers of our general partner to manage our day-to-day activities consistent with the policies and procedures adopted by our board of directors. All of the executive officers of our general partner and three of our directors also are executive officers, directors or affiliates of Capital Maritime.

              Our general partner will also have the right to approve certain partnership actions, such as:

              Our initial board of directors will be appointed by Capital Maritime. Thereafter, our board of directors will consist of three persons who are designated by our general partner in its sole discretion and four who are elected by the common unitholders. Directors appointed by our general partner will serve as directors for terms determined by our general partner. Directors elected by our common unitholders are divided into three classes serving staggered three-year terms. The initial four directors appointed by Capital Maritime and designated as Class I, Class II and Class III elected directors will serve until our annual meetings of unitholders in 2008, 2009 and 2010, respectively. At each annual meeting of unitholders, directors will be elected to succeed the class of directors whose terms have expired by a plurality of the votes of the common unitholders (excluding common units held by Capital Maritime and its affiliates). Directors elected by our common unitholders will be nominated by the board of directors or by any limited partner or group of limited partners that holds at least 10% of the outstanding common units. We will have a conflicts committee consisting of two independent directors that will be available at the board's discretion to review matters involving potential conflicts of interest.

              Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time, any person or group, other than our general partner or its affiliates, owns beneficially 5% or more of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted. The voting rights of any such unitholders in

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excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. For more information, please read "The Partnership Agreement—Voting Rights."

              Our initial board of directors will consist of six members, two of whom meet the independence standards established by The Nasdaq Global Market. In compliance with the rules of the Nasdaq Global Market, one additional independent director will be appointed within twelve months after this offering. The Nasdaq Global Market does not require a listed limited partnership like us to have a majority of independent directors on our board of directors or to establish a compensation committee or a nominating/corporate governance committee.

              At least three of the elected members of our board of directors will serve on a conflicts committee to review specific matters that the board believes may involve conflicts of interest. The conflicts committee will determine if the resolution of the conflict of interest is fair and reasonable to us. The members of the conflicts committee may not be officers or employees of our general partner or directors, officers or employees of its affiliates, and must meet the independence standards established by The Nasdaq Global Market to serve on an audit committee of a board of directors and certain other requirements. Any matters approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our directors, our general partner or its affiliates of any duties any of them may owe us or our unitholders. Our initial conflicts committee will be comprised of the members of our audit committee and will be appointed prior to the closing of this offering. For additional information about the conflicts committee, please read "Conflicts of Interest and Fiduciary Duties—Conflicts of Interest."

              In addition, we will have an audit committee of at least three independent directors. One of the members of the audit committee will qualify as an "audit committee financial expert" for purposes of the U.S. Sarbanes-Oxley Act. The audit committee will, among other things, review our external financial reporting, engage our external auditors and oversee our internal audit activities and procedures and the adequacy of our internal accounting controls.

              The day-to-day affairs of our business are generally managed by the officers of our general partner and key employees of certain of our operating subsidiaries, subject to the direction of our board of directors. Employees of Capital Ship Management, a subsidiary of Capital Maritime, will provide assistance to us and our operating subsidiaries pursuant to the management agreement and the administrative services agreement. Please read "Certain Relationships and Related Party Transactions—Management Agreement" and "Certain Relationships and Related Party Transactions—Administrative Services Agreement."

              Our general partner's Chief Executive Officer and Chief Financial Officer, Ioannis E. Lazaridis, will allocate his time between managing our business and affairs and the business and affairs of Capital Maritime. The amount of time Mr. Lazaridis will allocate between our business and the businesses of Capital Maritime will vary from time to time depending on various circumstances and needs of the businesses, such as the relative levels of strategic activities of the businesses.

              Officers of our general partner and other individuals providing services to us or our subsidiaries may face a conflict regarding the allocation of their time between our business and the other business interests of Capital Maritime. Our general partner intends to seek to cause its officers to devote as much time to the management of our business and affairs as is necessary for the proper conduct of our business and affairs.

              Our general partner owes a fiduciary duty to our unitholders. Our general partner will be liable, as general partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are expressly non-recourse to it. Whenever possible, the

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partnership agreement directs that we should incur indebtedness or other obligations that are non-recourse to our general partner.

              Whenever our general partner makes a determination or takes or declines to take an action in its individual capacity rather than in its capacity as our general partner, it is entitled to make such determination or to take or decline to take such other action free of any fiduciary duty or obligation whatsoever to us or any limited partner, and our general partner is not required to act in good faith or pursuant to any other standard imposed by our partnership agreement or under the Marshall Islands Act or any other law. Specifically, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the appointment of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units, general partner interest or incentive distribution rights or votes upon the dissolution of the partnership. Actions of our general partner, which are made in its individual capacity, will be made by Capital Maritime.

Directors and Executive Officers

              Set forth below are the names, ages and positions of our directors and director nominees and our general partner's executive officers.

Name
   Age
   Position
Evangelos M. Marinakis   39   Director and Chairman of the Board
Ioannis E. Lazaridis   39   Chief Executive Officer and Chief Financial Officer and Director
Nikolaos Syntychakis(1)   45   Director Nominee
Abel Rasterhoff(2)   66   Director Nominee
Evangelos G. Bairactaris(3)   35   Director and Secretary
Keith Forman(3)   48   Director Nominee
(1)
Expected to be appointed as initial Class I director (term expires in 2008).

(2)
Expected to be appointed as initial Class II director (term expires in 2009).

(3)
Expected to be appointed as initial Class III director (term expires in 2010).

              Biographical information with respect to each of our directors, our director nominees and our general partner's executive officers is set forth below. The business address for our directors and executive officers is 3 Iassonos Street Piraeus, 18537 Greece.

Evangelos M. Marinakis, Director and Chairman of the Board.

              Mr. Marinakis joined our board of directors on March 13, 2007 and serves as the Chairman of the Board. Mr. Marinakis has served as Capital Maritime's President and Chief Executive Officer and as a director since its incorporation in March 2005. From 1992 to 2005, Mr. Marinakis was the Commercial Manager of Capital Ship Management and oversaw the businesses of the group of companies that form Capital Maritime. For the past 15 years, Mr. Marinakis has also been active in various other family businesses, all related to the shipping industry. During this time he founded Curzon Maritime Limited and ESTC. Mr. Marinakis began his career as a Sale & Purchase trainee broker at Harley Mullion in the UK, and then worked as a chartering broker for Elders Chartering Limited, also in the UK. Mr. Marinakis holds a B.A. in International Business Administration and an MSC in International Relations from the United States International University Europe, London.

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Ioannis E. Lazaridis, Chief Executive and Chief Financial Officer and Director.

              Mr. Lazaridis has served as the Chief Executive and Chief Financial Officer of our general partner since its formation in January 2007 and joined our board of directors on March 13, 2007. Mr. Lazaridis has served as Capital Maritime's Chief Financial Officer and as a director since its incorporation in March 2005. From 2004 to March 2005, Mr. Lazaridis was employed by our predecessor companies. From 1996 to 2004, Mr. Lazaridis was employed by Credit Agricole Indosuez Cheuvreux in London, where he worked in the equity department. From 1993 to 1996, Mr. Lazaridis was employed by Kleinwort Benson in equity sales and from 1990 to 1993 was employed by Norwich Union Investment Management. Mr. Lazaridis holds a B.A. degree in economics from the University of Thessaloniki in Greece and an M.A. in Finance from the University of Reading in the UK. He is also an Associate for the Institute of Investment Management and Research in the UK.

Evangelos G. Bairactaris, Director and Secretary.

              Mr. Bairactaris joined our board of directors on March 13, 2007 and has served as our Secretary since our formation in January 2007. Mr. Bairactaris is a Greek attorney at law and a member of the Piraeus Bar Association. Mr. Bairactaris has been a partner in G.E.Bairactaris & Partners since 2000 and has acted as managing partner since 2003. He has regularly provided his professional services to our predecessor companies and many Greek and international shipping companies and banks. Mr. Bairactaris holds a degree in law from the Law School of the Kapodistrian University of Athens in Greece.

Nikolaos Syntychakis, Director Nominee.

              Mr. Syntychakis has agreed to join our board of directors prior to the closing of this offering. Mr. Syntychakis, Managing Director of Capital Ship Management, joined Capital Ship Management in January 2001 where he has served as Vetting Manager, Crew Manager and Operations Manager. From 2000 to 2001, Mr. Syntychakis served as Fleet Operator of Delfi S.A. in Piraeus, Greece and from 1988 to 1997, he worked as the Chief Officer of Sougerka Maritime also in Piraeus, Greece. Mr. Syntychakis has been involved in the shipping industry in various capacities for over 25 years and has also been closely involved with vetting matters, serving on Intertanko's Vetting Committee for several years.

Abel Rasterhoff, Director Nominee.

              Mr. Rasterhoff has agreed to join our board of directors prior to the closing of this offering. He will serve on our conflicts committee and will be the audit committee's financial expert. Mr. Rasterhoff joined Shell International Petroleum Maatschappij in 1967, and worked for various entities of the Shell group of companies until his retirement from Shell in 1997. From 1981 to 1984, Mr. Rasterhoff was Managing Director of Shell Tankers B.V., Vice Chairman and Chairman-elect of the Dutch Council of Shipping and a Member of the Dutch Government Advisory Committee on the North Sea. From 1991 to 1997, Mr. Rasterhoff was Director and Vice President Finance and Planning for Shell International Trading and Shipping Company Limited. During this period he also served as a Board Member of the Securities and Futures Authority (SFA) in London. From February 1998 to 2004, Mr. Rasterhoff has served as a member of the executive board and as Chief Financial Officer of TUI Nederland, the largest Dutch tour operator. From February 2001 to September 2001, Mr. Rasterhoff served as a member of the executive board and as Chief Financial Officer of Connexxion, the government owned public transport company. Mr. Rasterhoff was also on the Supervisory Board of SGR and served as an advisor to the trustees of the TUI Nederland Pension Fund. Mr. Rasterhoff served on the Capital Maritime Board from May 2005 until his resignation in February 2007, as the chairman of the audit committee. Mr. Rasterhoff is currently a director and audit committee member of Aegean Marine Petroleum Network Inc., a company listed on the New York Stock Exchange. Mr. Rasterhoff holds a graduate business degree in economics from Groningen State University.

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Keith Forman, Director Nominee.

              Mr Forman has agreed to join our board of directors prior to the closing of this offering and will serve on our conflicts committee and our audit committee. Mr Forman is a member of the board of directors of Kayne Anderson Energy Management, as investment company investing primarily in energy companies, and is also a member of the board of directors of Energy Solutions International Ltd., a supplier of oil and gas pipeline software management systems. From January 2004 to July 2005, he was Senior Vice President, Finance for El Paso Corporation, a leading provider of natural gas services. Mr. Forman, who joined El Paso in 1998 upon their acquisition of the general partner of the Leviathan Gas Pipeline Partners, also served as Vice President from 2001 to 2003, of El Paso Field Services and from 1992 to 2003 he served as Chief Financial Officer, GulfTerra Energy Partners L.P., a publicly traded master limited partnership. In his position with GulfTerra, he was responsible for the financing activities of the partnership, including its commercial and investment banking relationships.

Reimbursement of Expenses of Our General Partner

              Our general partner will not receive any management fee or other compensation for managing us. Our general partner and its other affiliates will be reimbursed for expenses incurred on our behalf. These expenses include all expenses necessary or appropriate for the conduct of our business and allocable to us, as determined by our general partner.

Executive Compensation

              We and our general partner were formed in January 2007. We have not paid any compensation to our directors or our general partner's officers nor accrued any obligations with respect to management incentive or retirement benefits for our directors and our general partner's officers prior to this offering. Because our Chief Executive Officer and Chief Financial Officer, Mr. Lazaridis, is an employee of Capital Maritime, his compensation will be set and paid by Capital Maritime, and we will reimburse Capital Maritime for time he spends on partnership matters. Officers and employees of our general partner or its affiliates may participate in employee benefit plans and arrangements sponsored by Capital Maritime, our general partner or their affiliates, including plans that may be established in the future.

Compensation of Directors

              Officers of our general partner or Capital Maritime who also serve as our directors will not receive additional compensation for their service as directors. We anticipate that each non-management director will receive compensation for attending meetings of our board of directors, as well as committee meetings. We expect non-management directors will receive a director fee of $30,000 to 50,000 per year. Mr. Marinakis will receive a fee of $100,000 for acting as a director and as our chairman of the board. Members of the audit and conflicts committees each will receive a committee fee of $10,000 to 25,000 per year. In addition, each director will be reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees. Each director will be fully indemnified by us for actions associated with being a director to the extent permitted under Marshall Islands law.

Restricted Units

              We do not expect to adopt a long term incentive plan for our employees and directors in the immediate future. We may, however, issue a limited number of restricted units to some of our employees at a future date. Such number is not anticipated to exceed 250,000 restricted units.

Employment Agreement

              Prior to the consummation of this offering, we expect that our general partner will enter into an employment agreement with Mr. Lazaridis for a term of three years, unless terminated earlier in accordance with the terms of the agreement. If a change in control occurs within two years from the date of the agreement, Mr. Lazaridis may resign within six months of such change in control.

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SELLING UNITHOLDER AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              The following table sets forth the beneficial ownership of units of Capital Product Partners L.P. that will be issued upon the consummation of this offering and the related transactions and held by the selling unitholder, beneficial owners of 5.0% or more of the units, and all of our directors, director nominees and the executive officers of our general partner as a group.

              All common units will be sold in this offering, and all subordinated units will continue to be held by Capital Maritime immediately after this offering.

 
    
    
   Common Units to be Beneficially Owned After the Offering
    
    
    
  
 
    
    
   Subordinated Units to be Beneficially Owned Before and After the Offering
   Percentage of
Total Common and
Subordinated Units
to be Beneficially
Owned After
the Offering
  
 
   Common Units Beneficially Owned Before
the Offering
  
Name of Beneficial Owner
  
  Number
   %
   Number
   %
   Number
   %
  
Capital Maritime(1)(2)   11,750,000   100   0   0   8,805,522   100   42.8 %
All executive officers, directors and director nominees as a group (6 persons)(2)   11,750,000   100   0   0   8,805,522   100   42.8 %
(1)
Excludes the 2.0% general partner interest held by our general partner, a wholly owned subsidiary of Capital Maritime. Assumes no exercise of the overallotment option.

(2)
Mr. Marinakis, our chairman, may be deemed to beneficially own all of our subordinated units through his ownership of Capital Maritime. None of our directors, director nominees or the officers of our general partner (other than Mr. Marinakis) may be deemed to beneficially own any of our subordinated units.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

              After this offering, Capital Maritime, the sole member of our general partner, will own no common units and 8,805,522 subordinated units, representing a 42.0% limited partner interest in us, assuming no exercise of the underwriters' overallotment option. In addition, our general partner will own a 2.0% general partner interest in us and all of the incentive distribution rights. Capital Maritime's ability, as sole member of our general partner, to control the appointment of three of the seven members of our board of directors and to approve certain significant actions we may take and its ownership of all of the outstanding subordinated units and its right to vote the subordinated units as a separate class on certain matters, means that Capital Maritime, together with its affiliates, will have the ability to exercise influence regarding our management.

Distributions and Payments to our General Partner and Its Affiliates

              The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in connection with our formation, ongoing operation and any liquidation. These distributions and payments were determined by and among affiliated entities and, consequently, are not the result of arms'-length negotiations.

 
    
Formation Stage

The consideration received by our general partner and its affiliates for the contribution to us of the capital stock of the vessel-owning subsidiaries
 
•        11,750,000 common units;

 
 
•        8,805,522 subordinated units;

 
 
•        2.0% general partner interest in us;

 
 
•        the incentive distribution rights;

 
 
•        the $55 million dividend (assuming no exercise of the underwriters' overallotment option); and

 
 
•        the net proceeds from this offering as described in "Use of Proceeds."

 
 
Please read "Summary—The Transactions" for further information about our formation and assets contributed to us in connection with the closing of this offering.

 
 
The subordinated units to be owned by Capital Maritime after giving effect to this offering represent a 42.0% limited partner interest in us, assuming no exercise of the underwriters' overallotment option, which gives it the ability to control the outcome of unitholder votes on certain matters. For more information, please read "The Partnership Agreement—Voting Rights" and "The Partnership Agreement—Amendment of the Partnership Agreement."
     

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Operational Stage

Distributions of available cash to our general partner and its affiliates
 
We will generally make cash distributions 98% to unitholders (including Capital Maritime, the owner of our general partner and the holder of 8,805,522 subordinated units) and the remaining 2.0% to our general partner.

 
 
In addition, if distributions exceed the minimum quarterly distribution and other higher target levels, our general partner, as the holder of the incentive distribution rights, will be entitled to increasing percentages of the distributions, up to 50% of the distributions above the highest target level. We refer to the rights to the increasing distributions as "incentive distribution rights." Please read "How We Make Cash Distributions—Incentive Distribution Rights" for more information regarding the incentive distribution rights.

 
 
Assuming we have sufficient available cash to pay the full minimum quarterly distribution on all of our outstanding units for four quarters, but no distributions in excess of the full minimum quarterly distribution, our general partner would receive an annual distribution of approximately $0.6 million on its 2.0% general partner interest and Capital Maritime would receive an annual distribution of approximately $13.2 million on its subordinated units.

Payments to our general partner and its affiliates
 
Our general partner will not receive a management fee or other compensation for the management of our partnership. Our general partner and its other affiliates will be entitled to reimbursement for all direct and indirect expenses they incur on our behalf. In addition, will pay fees to Capital Ship Management, a subsidiary of Capital Maritime for commercial and technical management services and administrative services. Our general partner will determine the amount of these reimbursable expenses and will negotiate these fees. Please read "—Omnibus Agreement" and "—Management Agreement" and "—Administrative Services Agreement."

Withdrawal or removal of our general partner
 
If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests. Please read "The Partnership Agreement—Withdrawal or Removal of the General Partner."

Liquidation Stage

Liquidation
 
Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions as described in "The Partnership Agreement—Liquidation and Distribution of Proceeds."

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Agreements Governing the Transactions

              We, our general partner, our operating companies and other parties have entered into or will enter into various documents and agreements that will effect the transactions relating to our formation and this offering, including the vesting of assets in, and the assumption of liabilities by, us and our subsidiaries and the application of the proceeds of this offering. These agreements will not be the result of arms'-length negotiations and they, or any of the transactions that they provide for, may not be effected on terms at least as favorable to the parties to these agreements as they could have obtained from unaffiliated third parties. All of the transaction expenses incurred in connection with these transactions, including the expenses associated with vesting assets in our subsidiaries, will be paid from the proceeds of this offering.

Omnibus Agreement

              At the closing of this offering, we will enter into an omnibus agreement with Capital Maritime, our general partner, and our operating subsidiary. The following discussion describes provisions of the omnibus agreement.

              Under the omnibus agreement, Capital Maritime will agree, and will cause its controlled affiliates (other than us, our general partner and our subsidiaries) to agree, not to acquire, own or operate medium-range tankers under charter for two or more years. This restriction will not prevent Capital Maritime or any of its controlled affiliates (other than us and our subsidiaries) from:

1.
acquiring, owning, chartering or operating medium-range tankers under charter for less than two years;

2.
acquiring one or more medium-range tankers under charter for two or more years after the closing of this offering if Capital Maritime offers to sell to us the tanker for the acquisition price plus any administrative costs associated with transfer and re-flagging, including related legal costs, to Capital Maritime that would be required to transfer the medium-range tankers and related charters to us at the time it is acquired or putting a medium-range tanker that Capital Maritime owns or operates under charter for two or more years if Capital Maritime offers to sell the tanker to us for fair market value at the time it is chartered for two or more years and, in each case, at each renewal or extension of that charter for two or more years;

3.
acquiring one or more medium-range tankers under charter for two or more years as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels provided, however, that:

i.
if less than a majority of the value of the total assets or business acquired is attributable to those medium-range tankers and related charters, as determined in good faith by the board of directors of Capital Maritime; Capital Maritime must offer to sell such medium-range tankers and related charters to us for their fair market value plus any additional tax or other similar costs to Capital Maritime that would be required to transfer the medium-range tankers and related charters to us separately from the acquired business.

ii.
if a majority or more of the value of the total assets or business acquired is attributable to the medium-range tankers and related charters, as determined in good faith by the board of directors of Capital Maritime; Capital Maritime shall notify us in writing, of the proposed acquisition. We shall, not later than the 10th calendar day following receipt of such notice, notify Capital Maritime if we wish to acquire the medium-range tankers and related charters forming part of the business or package of assets in cooperation and simultaneously with Capital Maritime acquiring the Non-Medium Range Tankers and

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4.
acquiring a non-controlling interest in any company, business or pool of assets;

5.
acquiring, owning or operating the seven medium-range newbuildings and related charters if we do not purchase such vessels under our agreement with Capital Maritime (please read "—Agreement to Purchase Future Vessels");

6.
acquiring, owning or operating medium-range tankers under charter for two or more years subject to the offers to us described in paragraphs (2) and (3) above (i) pending our determination whether to accept such offers and pending the closing of any offers we accept, or (ii) if we elect to acquire the medium-range tankers and related charter;

7.
providing ship management services relating to any vessel whatsoever, including to medium-range tankers owned by the controlled affiliates of Capital Maritime; or

8.
acquiring, operating or chartering medium-range tankers under charter for two or more years if we have previously advised Capital Maritime that we consent to such acquisition, operation or charter.

              If Capital Maritime or any of its controlled affiliates (other than us or our subsidiaries) acquires, owns, operates and charters medium-range tankers pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other than pursuant to those exceptions.

              In addition, under the omnibus agreement we will agree, and will cause our subsidiaries to agree, to acquire, own, operate or charter medium-range tankers with charters of two or more years only (any vessels that are not medium-range tankers will in the following be referred to as the "Non-Medium Range Tankers"). This restriction will not:

1.
apply to any Non-Medium Range Tanker owned, operated or chartered by us or any of our subsidiaries as of the closing of this offering, and the ownership, operation or chartering of any Non-Medium Range Tanker that replaces any of those Non-Medium Range Tankers in connection with the destruction or total loss of the original tanker; the tanker being damaged to an extent that makes repairing it uneconomical or renders it permanently unfit for normal use, as determined in good faith by our board of directors within 90 days after the occurrence of the damage; or the tanker's condemnation, confiscation, requisition, seizure, forfeiture or a similar taking of title to or use of it that continues for at least six months;

2.
prevent us or any of our subsidiaries from acquiring Non-Medium Range Tankers and any related charters as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels, provided, however, that:

i.
if less than a majority of the value of the total assets or business acquired is attributable to Non-Medium Range Tankers and related charters, as determined in good faith by us; we must offer to sell such Non-Medium Range Tankers and related charters to Capital Maritime for their fair market value plus any additional tax or other similar costs to us that would be required to transfer the Non-Medium Range Tankers and related charters to Capital Maritime separately from the acquired business;

ii.
if a majority or more of the value of the total assets or business acquired is attributable to Non-Medium Range Tankers and related charters, as determined in good faith by us; we shall notify Capital Maritime in writing of the proposed acquisition. Capital Maritime shall, not later than the 10th calendar day following receipt of such notice, notify us if it wishes to acquire the Non-Medium Range Tankers forming part of the business or package

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3.
prevent us from acquiring a non-controlling interest in any company, business or pool of assets;

4.
prevent us or any of our subsidiaries from owning, operating or chartering any Non-Medium Range Tankers subject to the offer to Capital Maritime described in paragraph (2) above, pending its determination whether to accept such offer and pending the closing of any offer it accepts;

5.
acquiring, operating or chartering Non-Medium Range Tankers if Capital Maritime has previously advised us that it consents to such acquisition, operation or charter.

              If we or any of our subsidiaries owns, operates and charters Non-Medium Range Tankers pursuant to any of the exceptions described above, neither we nor such subsidiary may subsequently expand that portion of our business other than pursuant to those exceptions.

              Upon a change of control of us or our general partner, the noncompetition provisions of the omnibus agreement will terminate immediately. Upon a change of control of Capital Maritime, the noncompetition provisions of the omnibus agreement will terminate at the time that is the later of one year following the change of control and the date on which all of our outstanding subordinated units have converted to common units; provided, however, that in no event will the noncompetition provisions of the omnibus agreement terminate upon a change of control of Capital Maritime prior to the date that is three years following the date of the omnibus agreement.

              Under the omnibus agreement, we and our subsidiaries will grant to Capital Maritime a first offer on any proposed sale, transfer or other disposition of any of our medium-range tankers and related charters or any Non-Medium Range Tankers and related charters owned or acquired by us. Likewise, Capital Maritime will agree (and will cause its subsidiaries to agree) to grant a similar right of first offer to us for any medium-range tankers under charter for two or more years it might own. These rights of first offer will not apply to a sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party.

              Prior to engaging in any negotiation regarding any vessel disposition with respect to a medium-range tanker under charter for two or more years with a non-affiliated third-party, we or Capital Maritime, as the case may be, will deliver a written notice to the other party setting forth the material terms and conditions of the proposed transaction. During the 10-day period after the delivery of such notice, we and Capital Maritime will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement within such 10-day period, we or Capital Maritime, as the case may be, will be able within the next 180 calendar days to sell, transfer, dispose or re-charter the vessel to a third party (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to us or Capital Maritime, as the case may be, than those offered pursuant to the written notice.

              Upon a change of control of us or our general partner, the right of first offer provisions of the omnibus agreement will terminate immediately. Upon a change of control of Capital Maritime, the right of first offer provisions of the omnibus agreement will terminate at the time that is the later of one year following the change of control and the date on which all of our outstanding subordinated units have converted to common units; provided, however, that in no event will the right of first offer provisions of the omnibus agreement terminate upon a change of control of Capital Maritime prior to the date that is three years following the date of the omnibus agreement.

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              Under the omnibus agreement, Capital Maritime will indemnify us after the closing of this offering for a period of five years against certain environmental and toxic tort liabilities to the extent arising prior to the closing date of this offering. Liabilities resulting from a change in law after the closing of this offering are excluded from the environmental indemnity. There is an aggregate cap of $5 million on the amount of indemnity coverage provided by Capital Maritime for these environmental and toxic tort liabilities. No claim may be made unless the aggregate dollar amount of all claims exceeds $500,000, in which case Capital Maritime is liable for claims only to the extent such aggregate amount exceeds $500,000.

              Capital Maritime will also indemnify us for liabilities related to:

              The omnibus agreement may not be amended without the prior approval of the conflicts committee of our board of directors if the proposed amendment will, in the reasonable discretion of our board of directors, adversely affect holders of our common units.

Management Agreement

              At the closing of this offering, we will enter into a management agreement with Capital Ship Management, pursuant to which Capital Ship Management will provide certain commercial and technical management services to us. These services will be provided in a commercially reasonable manner in accordance with customary ship management practice and under our direction. Capital Ship Management will provide these services to us directly but may subcontract for certain of these services with other entities, including other Capital Maritime subsidiaries.

              The commercial and technical management services will include:

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              Pursuant to the management agreement, we will pay Capital Ship Management a fixed daily fee of $5,500 per time chartered vessel in our fleet to provide the commercial and technical management services and costs to such time chartered vessels. We will also pay Capital Ship Management a fixed daily fee of $250 per bareboat chartered vessel in our fleet, mainly to cover compliance costs, which include those costs incurred by Capital Ship Management to remain in compliance with the oil majors' requirements, including vetting requirements. With respect to each vessel in our initial fleet, the management agreement will have an initial term of approximately five years beginning from when each vessel commenced operations through and including the date of its first special survey. With respect to each vessel that is delivered or acquired after the closing of this offering, including the seven newbuildings to be delivered in 2007 and 2008, the management agreement will have an initial term of approximately five years beginning from when each vessel commences operations through and including the date of its first special survey. The $5,500 fixed daily fee payable with respect to each time chartered vessel includes the cost of the first special survey.

              The management agreement may be terminated prior to the end of its initial term by us upon 120 days' notice if there is a change of control of Capital Ship Management or by Capital Ship Management upon 120 days' notice if there is a change of control of us. In addition, the management agreement may be terminated by us or by Capital Ship Management upon 120 days' notice if:

              In addition to the fixed daily fees payable under the management agreement, the management agreement provides that Capital Ship Management will be entitled to reasonable supplementary remuneration for extraordinary fees and costs resulting from:

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              Under the management agreement, neither we nor Capital Ship Management will be liable for failure to perform any of our or its obligations, respectively, under the management agreement by reason of any cause beyond our or its reasonable control.

              In addition, Capital Ship Management will have no liability for any loss arising in the course of the performance of the commercial and technical management services under the management agreement unless and to the extent that such loss is proved to have resulted solely from the fraud, gross negligence or willful misconduct of Capital Ship Management or its employees, in which case (except where such loss has resulted from Capital Ship Management's intentional personal act or omission and with knowledge that such loss would probably result) Capital Ship Management's liability will be limited to $3 million for each incident or series of related incidents.

              Further, under our management agreement, we have agreed to indemnify Capital Ship Management and its employees and agents against all actions which may be brought against them under the management agreement including, without limitation, all actions brought under the environmental laws of any jurisdiction, or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such action, provided however that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence or willful misconduct of Capital Ship Management or its employees or agents, or any breach of the management agreement by Capital Ship Management.

Administrative Services Agreement

              At the closing of this offering, we will enter into an administrative services agreement with Capital Ship Management, pursuant to which Capital Ship Management will provide certain administrative management services to us. The agreement has an initial term of five years from the closing date of this offering.

              The administrative services agreement may be terminated prior to the end of its term by us upon 120 days' notice if there is a change of control of Capital Ship Management or by Capital Ship Management upon 120 days' notice if there is a change of control of us. In addition, the administrative services agreement may be terminated by us or by Capital Ship Management upon 120 days' notice if:

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              The administrative services will include:

              We will reimburse Capital Ship Management for reasonable costs and expenses incurred in connection with the provision of these services within 15 days after Capital Ship Management submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required.

              Under the administrative services agreement, we have agreed to indemnify Capital Ship Management and its employees against all actions which may be brought against them under the administrative services agreement including, without limitation, all actions brought under the environmental laws of any jurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence or willful misconduct of Capital Ship Management or its employees or agents.

Agreement to Purchase Future Vessels

              In connection with the closing of this offering, we will enter into a share purchase agreement with Capital Maritime to purchase its interests in the subsidiaries that own the seven newbuildings and

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related charters that comprise our contracted fleet. For more information on the vessels we agreed to purchase from Capital Maritime, please read "Business—Our Fleet—Newbuildings."

              The completion of the purchase of each of the additional seven vessels that are currently on order will take place following the date of delivery to, and acceptance by, a vessel-owning subsidiary of the vessel under its ship building contract or such later date as may be mutually agreed. Please read "Business—Acquisition of Our Newbuildings" for more information on these ship building contracts.

              The purchase price for the additional seven vessels will be funded with borrowings under our new credit facility and the proceeds of a future equity offering. Our obligation to purchase the additional seven vessels is not conditioned upon our ability to obtain financing for such purchases.

              If for any reason one or more of the additional seven vessels that are currently on order is not delivered by the shipyard to the relevant vessel-owning company in accordance with the ship building contract, we are not obligated to purchase the vessel and the time charter for that vessel will be excluded from the transaction.

Related Party Loans

              For the financing of the construction of five of the vessels in our initial fleet, the Atlantas, Aktoras, Avax, Aiolos and Assos, Capital Maritime has entered into loan agreements with three separate banks on behalf of the related vessel-owning subsidiaries. Capital Maritime acts as the borrower and the vessel-owning subsidiaries act as guarantors in all of these loan agreements, and Capital Maritime transfers the loan proceeds to the vessel-owning subsidiaries who subsequently remit the installment payments due on the respective vessels to the shipyards in connection with the construction of these vessels. All of these bank loans bear interest at LIBOR plus a margin between 90 and 95 basis points payable quarterly or semi-annually. Interest payments due under the loan agreements are transferred by the vessel-owning subsidiaries to Capital Ship Management, which makes the interest payments due to the banks on Capital Maritime's behalf. The five vessels in our initial fleet described above have been financed in the amounts of $0, $15.5 million and $95.5 million as of December 31, 2004, 2005 and 2006, respectively. Each bank loan is secured by a first preferred mortgage on the respective vessel or vessels and a general assignment of the earnings, insurances and requisition compensation of the respective vessel or vessels. The loan agreements contain customary ship finance covenants. These loans will be repaid by Capital Maritime with a portion of the proceeds of this offering.

Dividend to Capital Maritime

              We will pay Capital Maritime a cash dividend in the amount of $25 million at the closing of this offering and issue to Capital Maritime the right to receive an additional dividend of $30 million in cash or a number of common units necessary to satisfy the underwriters' overallotment option or a combination thereof, upon the earlier of the exercise in full of the underwriters' overallotment option or 30 days after the date of this prospectus. At the closing of this offering, we will borrow $30 million under our new credit facility, $5 million of which we will used for working capital purposes and $25 million of which will be used to pay part of the dividend to Capital Maritime. Capital Maritime has granted the underwriters a 30-day option to purchase up to 1,762,500 additional common units to cover overallotments. Upon notice by the underwriters of the exercise of their overallotment option in full or in part, we will issue to Capital Maritime a number of common units equal to the number of common units for which the underwriters exercise their overallotment option. The underwriters will then purchase those units from Capital Maritime to cover overallotments. The remaining $30 million dividend that will be payable by us to Capital Maritime will be reduced by the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price appearing on the cover page of this prospectus, less the underwriting discount.

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If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount (payable by Capital Maritime to the underwriters) is less than $30 million, we will pay the difference to Capital Maritime in cash upon the later of the full exercise of the overallotment option or 30 days after the date of this prospectus. If the product of the number of units we issue to Capital Maritime in connection with the exercise of the overallotment option and the public offering price, less the underwriting discount payable by Capital Maritime to the underwriters, is equal to or more than $30 million, Capital Maritime will not receive any additional cash dividend, but only the common units necessary to satisfy the underwriters' overallotment option and will retain the entire amount of such net proceeds including any excess over $30 million. We will account for the distribution to Capital Maritime of the common units necessary to satisfy the underwriters' overallotment option as a common unit dividend which will have no net impact on partners' equity. If the underwriters do not exercise their overallotment option within 30 days after the date of this prospectus, we will pay to Capital Maritime the full additional $30 million dividend in cash promptly upon such expiration. Any portion of the remaining $30 million dividend that we pay in cash will be paid with borrowings under Tranche No. 1 of our new revolving credit facility.

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CONFLICTS OF INTEREST AND FIDUCIARY DUTIES

Conflicts of Interest

              Conflicts of interest exist and may arise in the future as a result of the relationships between our general partner and its affiliates, including Capital Maritime, on the one hand, and us and our unaffiliated limited partners, on the other hand. The officers of our general partner have certain fiduciary duties to manage our general partner in a manner beneficial to its owners. At the same time, our general partner has a fiduciary duty to manage us in a manner beneficial to us and our unitholders. Similarly, our board of directors has fiduciary duties to manage us in a manner beneficial to us, our general partner and our limited partners. Furthermore, three of our directors are also directors and officers of Capital Maritime and as such they have fiduciary duties to Capital Maritime that may cause them to pursue business strategies that disproportionately benefit Capital Maritime or which otherwise are not in the best interests of us or our unitholders.

              Our partnership affairs are governed by our partnership agreement and the Marshall Islands Act. The provisions of the Marshall Islands Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. We are not aware of any material difference in unitholder rights between the Marshall Islands Act and the Delaware Revised Uniform Limited Partnership Act. The Marshall Islands Act also provides that it is to be applied and construed to make it uniform with the Delaware Revised Uniform Limited Partnership Act and, so long as it does not conflict with the Marshall Islands Act or decisions of the Marshall Islands courts, interpreted according to the non-statutory law or "case law" of the courts of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as courts in Delaware. For example, the rights of our unitholders and fiduciary responsibilities of our general partner and its affiliates under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. Due to the less-developed nature of Marshall Islands law, our public unitholders may have more difficulty in protecting their interests in the face of actions by our general partner, its affiliates or controlling unitholders than would unitholders of a limited partnership organized in the United States.

              Our partnership agreement contains provisions that modify and limit the fiduciary duties of our general partner and our directors to the unitholders under Marshall Islands law. Our partnership agreement also restricts the remedies available to unitholders for actions taken by our general partner or our directors that, without those limitations, might constitute breaches of fiduciary duty.

              Neither our general partner nor our board of directors will be in breach of their obligations under the partnership agreement or their duties to us or the unitholders if the resolution of the conflict is:

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              Our general partner or our board of directors may, but are not required to, seek the approval of such resolution from the conflicts committee of our board of directors or from the common unitholders. If neither our general partner nor our board of directors seek approval from the conflicts committee, and our board of directors determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in the third and fourth bullet points above, then it will be presumed that, in making its decision, the board of directors, including the board members affected by the conflict, acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. When our partnership agreement requires someone to act in good faith, it requires that person to reasonably believe that he is acting in the best interests of the partnership, unless the context otherwise requires. Please read "Management—Management of Capital Product Partners L.P." for information about the composition and formation of the conflicts committee of our board of directors.

              Conflicts of interest could arise in the situations described below, among others.

              The amount of cash that is available for distribution to unitholders is affected by decisions of our board of directors regarding such matters as:

              In addition, borrowings by us and our affiliates do not constitute a breach of any duty owed by our general partner or our directors to our unitholders, including borrowings that have the purpose or effect of:

              For example, in the event we have not generated sufficient cash from our operations to pay the minimum quarterly distribution on our common units and our subordinated units, our partnership agreement permits us to borrow funds, which would enable us to make this distribution on all outstanding units. Please read "How We Make Cash Distributions—Subordination Period."

              Our partnership agreement provides that we and our subsidiaries may borrow funds from our general partner and its affiliates. Our general partner and its affiliates may not borrow funds from us, our operating subsidiary, or its subsidiaries.

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              Because all of the officers of our general partner and three of our directors are also directors and officers of Capital Maritime, such officers and directors have fiduciary duties to Capital Maritime that may cause them to pursue business strategies that disproportionately benefit Capital Maritime or which otherwise are not in the best interests of us or our unitholders.

              Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by Marshall Islands fiduciary duty law. For example, our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligations to give any consideration to any interest of or factors affecting us, our affiliates or any unitholder. Decisions made by our general partner in its individual capacity will be made by its sole owner, Capital Maritime. Specifically, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units, general partner interest or incentive distribution rights or votes upon the dissolution of the partnership.

              Affiliates of our general partner conduct businesses and activities of their own in which we have no economic interest. If these separate activities are significantly greater than our activities, there could be material competition for the time and effort of the officers who provide services to our general partner and its affiliates. The officers of our general partner are not required to work full-time on our affairs but are required to devote time to the affairs of Capital GP L.L.C. and its affiliates, and we reimburse their employers for the services they render to us and our subsidiaries. Our general partner's Chief Executive Officer and Chief Financial Officer is also an executive officer of Capital Maritime.

              We will reimburse our general partner and its affiliates for costs incurred in managing and operating us, including costs incurred in rendering corporate staff and support services to us. Our partnership agreement provides that our general partner will determine the expenses that are allocable to us in good faith. Please read "Certain Relationships and Related Party Transactions" and "Management—Reimbursement of Expenses of Our General Partner."

              Our partnership agreement directs that liability of our general partner for the contractual arrangements of the partnership are limited so that the other party has recourse only to our assets and not against our general partner or its assets or any affiliate of our general partner or its assets. Our partnership agreement provides that any action taken by our general partner or by our directors to

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limit the liability of our general partner or our directors, is not a breach of the fiduciary duties of our general partner or our directors, even if we could have obtained terms that are more favorable without the limitation on liability.

              Any agreements between us, on the one hand, and our general partner and its affiliates, on the other, will not grant to the unitholders, separate and apart from us, the right to enforce the obligations of our general partner and its affiliates in our favor.

              Neither our partnership agreement nor any of the other agreements, contracts and arrangements between us and our general partner and its affiliates are or will be the result of arms'-length negotiations. Our partnership agreement generally provides that any affiliated transaction, such as an agreement, contract or arrangement between us and our general partner and its affiliates, must be:

              Our general partner may also enter into additional contractual arrangements with any of its affiliates on our behalf; however, there is no obligation of our general partner and its affiliates to enter into any contracts of this kind, and our general partner will determine, in good faith, the terms of any of these transactions.

              Our general partner may exercise its right to call and purchase common units as provided in the partnership agreement or assign this right to one of its affiliates or to us. Our general partner may use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. As a result, a common unitholder may have common units purchased from the unitholder at an undesirable time or price. Please read "The Partnership Agreement—Limited Call Right."

              The attorneys, independent accountants and others who perform services for us have been retained by our board of directors. Attorneys, independent accountants and others who perform services for us are selected by our board of directors or the conflicts committee and may perform services for our general partner and its affiliates. We may retain separate counsel for ourselves or the holders of common units in the event of a conflict of interest between our general partner and its affiliates, on the one hand, and us or the holders of common units, on the other, depending on the nature of the conflict. We do not intend to do so in most cases.

              Our partnership agreement provides that our general partner will be restricted from engaging in any business activities other than acting as our general partner and those activities incidental to its ownership of interests in us. In addition, our partnership agreement provides that our general partner,

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for so long as it is general partner of our partnership, will cause its affiliates not to engage in, by acquisition or otherwise, the businesses described above under the caption "Certain Relationships and Related Party Transactions—Omnibus Agreement—Noncompetition". Similarly, under the omnibus agreement, Capital Maritime will agree and will cause it affiliates to agree, for so long as Capital Maritime controls our partnership, not to engage in the businesses described above under the caption "Certain Relationships and Related Party Transactions—Omnibus Agreement—Noncompetition." Except as provided in our partnership agreement and the omnibus agreement, affiliates of our general partner are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us.

Fiduciary Duties

              Our general partner and its affiliates are accountable to us and our unitholders as fiduciaries. Fiduciary duties owed to unitholders by our general partner and its affiliates are prescribed by law and the partnership agreement. The Marshall Islands Act provides that Marshall Islands partnerships may, in their partnership agreements, restrict or expand the fiduciary duties owed by our general partner and its affiliates to the limited partners and the partnership. Our directors are subject to the same fiduciary duties as our general partner, as restricted or expanded by the partnership agreement.

              In addition, we have entered into services agreements, and may enter into additional agreements with Capital Maritime and certain of its subsidiaries, including Capital Ship Management. In the performance of their obligations under these agreements, Capital Maritime and its subsidiaries are not held to a fiduciary standard of care but rather to the standards of care specified in the relevant agreement.

              Our partnership agreement contains various provisions restricting the fiduciary duties that might otherwise be owed by our general partner or by our directors. We have adopted these provisions to allow our general partner and our directors to take into account the interests of other parties in addition to our interests when resolving conflicts of interest. We believe this is appropriate and necessary because the officers of our general partner have fiduciary duties to manage our general partner in a manner beneficial both to its owner, Capital Maritime, as well as to you. These modifications disadvantage the common unitholders because they restrict the rights and remedies that would otherwise be available to unitholders for actions that, without those limitations, might constitute breaches of fiduciary duty, as described below. The following is a summary of:


Marshall Islands law fiduciary duty standards   Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing otherwise, would generally require a general partner and the directors of a Marshall Islands limited partnership to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise, would generally prohibit a general partner or the directors of a Marshall Islands limited partnership from taking any action
         

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              In order to become one of our limited partners, a common unitholder is required to agree to be bound by the provisions in the partnership agreement, including the provisions discussed above. The failure of a limited partner or transferee to sign a partnership agreement does not render the partnership agreement unenforceable against that person.

              Under the partnership agreement, we must indemnify our general partner and its officers and our directors to the fullest extent permitted by law, against liabilities, costs and expenses incurred by our general partner or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that these persons engaged in actual fraud or willful misconduct. We also must provide this indemnification for criminal proceedings when our general partner or these other persons acted with no reasonable cause to believe that their conduct was unlawful. Thus, our general partner and its officers and our directors could be indemnified for their negligent acts if they met the requirements set forth above. To the extent that these provisions purport to include indemnification for liabilities arising under the Securities Act, in the opinion of the Securities and Exchange Commission such indemnification is contrary to public policy and therefore unenforceable. Please read "The Partnership Agreement—Indemnification."

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DESCRIPTION OF THE COMMON UNITS

The Units

              The common units and the subordinated units represent limited partner interests in us. The holders of units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. For a description of the relative rights and privileges of holders of common units and subordinated units in and to partnership distributions, please read this section and "How We Make Cash Distributions." For a description of the rights and privileges of limited partners under our partnership agreement, including voting rights, please read "The Partnership Agreement."

Transfer Agent and Registrar

              The Bank of New York will serve as registrar and transfer agent for the common units. We pay all fees charged by the transfer agent for transfers of common units, except the following, which must be paid by unitholders:

              There is no charge to unitholders for disbursements of our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.

              The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer agent will become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If a successor has not been appointed or has not accepted its appointment within 30 days after notice of the resignation or removal, our general partner may, at the direction of our board of directors, act as the transfer agent and registrar until a successor is appointed.

Transfer of Common Units

              By transfer of common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer and admission is reflected in our books and records. Each transferee:

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              A transferee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our general partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.

              We may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder's rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

              Common units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a limited partner in our partnership for the transferred common units.

              Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

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THE PARTNERSHIP AGREEMENT

              The following is a summary of the material provisions of our partnership agreement. The form of our partnership agreement is included in this prospectus as Appendix A. We will provide prospective investors with a copy of the agreement upon request at no charge.

              We summarize the following provisions of our partnership agreement elsewhere in this prospectus:

Organization and Duration

              We were organized on January 16, 2007 and have perpetual existence.

Purpose

              Our purpose under the partnership agreement is to engage in any business activities that may lawfully be engaged in by a limited partnership pursuant to the Marshall Islands Act.

              Although our board of directors has the ability to cause us, our operating subsidiary or its subsidiaries to engage in activities other than the marine transportation of refined oil products, edible oils and chemicals, it has no current plans to do so and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. Our general partner will delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis. Our general partner, subject to the direction and supervision of our board of directors, will manage our business and operations and carry out our purpose.

Power of Attorney

              Each limited partner, and each person who acquires a unit from another unitholder grants to our general partner and, if appointed, a liquidator, a power of attorney to, among other things, execute and file documents required for our qualification, continuance or dissolution. The power of attorney also grants our general partner the authority to amend, and to make consents and waivers under, the partnership agreement.

Capital Contributions

              Unitholders are not obligated to make additional capital contributions, except as described below under "—Limited Liability."

Voting Rights

              The following matters require the unitholder vote specified below. Matters requiring the approval of a "unit majority" require:

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              In voting their common and subordinated units, our general partner and its affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us and the limited partners.

              Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time, any person or group, other than our general partner and its affiliates, owns beneficially 5% or more of any class of units then outstanding, any units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote.

              We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. The sole member of our general partner, Capital Maritime & Trading Corp., has the right to appoint three of the seven members of our board of directors with the remaining four directors being elected by our common unitholders. Subordinated units will not be voted in the election of the four directors.

Action
   Unitholder Approval Required and Voting Rights
Issuance of additional units   No approval rights.

Amendment of the partnership agreement
 
Certain amendments may be made by our board of directors without the approval of the unitholders if those amendments are also approved by our general partner. Other amendments generally require the approval of a unit majority. Please read "—Amendment of the Partnership Agreement."

Amendment of the operating agreement of the operating subsidiary
 
Unit majority if such amendment would adversely affect our limited partners in any material respect. Please read "—Action Relating to the Operating Subsidiary."

Merger of our partnership or the sale of all or substantially all of our assets
 
Unit majority and approval of our general partner and our board of directors. Please read "—Merger, Sale or Other Disposition of Assets."

Dissolution of our partnership
 
Unit majority and approval of our general partner and our board of directors. Please read "—Termination and Dissolution."

Reconstitution of our partnership upon
dissolution
 
Unit majority. Please read "—Termination and Dissolution."
     

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Election of four of the seven members of our board of directors
 
A plurality of the votes of the holders of the common units.

Withdrawal of the general partner
 
Under most circumstances, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to March 31, 2017 in a manner which would cause a dissolution of our partnership. Please read "—Withdrawal or Removal of the General Partner."

Removal of the general partner
 
Not less than 662/3% of the outstanding units, including units held by our general partner and its affiliates, voting together as a single class and a majority vote of our board of directors. Please read "—Withdrawal or Removal of the General Partner."

Transfer of the general partner interest in us
 
Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to such person. The approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to March 31, 2017. Please read "—Transfer of General Partner Interest."

Transfer of incentive distribution rights
 
Except for transfers to an affiliate or another person as part of the general partner's merger or consolidation with or into, or sale of all or substantially all of its assets to such person, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, voting separately as a class, is required in most circumstances for a transfer of the incentive distribution rights to a third party prior to March 31, 2017. Please read "—Transfer of Incentive Distribution Rights."

Transfer of ownership interests in the general partner
 
No approval required at any time. Please read "—Transfer of Ownership Interests in General Partner."

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Limited Liability

              Assuming that a limited partner does not participate in the control of our business within the meaning of the Marshall Islands Act and that he otherwise acts in conformity with the provisions of our partnership agreement, his liability under the Marshall Islands Act will be limited, subject to possible exceptions, to the amount of capital he is obligated to contribute to us for his common units plus his share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited partners as a group:


constituted "participation in the control" of our business for the purposes of the Marshall Islands Act, then the limited partners could be held personally liable for our obligations under the laws of Marshall Islands, to the same extent as our general partner. This liability would extend to persons who transact business with us who reasonably believe that the limited partner is a general partner. Neither our partnership agreement nor the Marshall Islands Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Marshall Islands case law.

              Under the Marshall Islands Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Marshall Islands Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the non-recourse liability. The Marshall Islands Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Marshall Islands Act shall be liable to the limited partnership for the amount of the distribution for three years. Under the Marshall Islands Act, a purchaser of units who becomes a limited partner of a limited partnership is liable for the obligations of the transferor to make contributions to the partnership, except that the transferee is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership agreement.

              Maintenance of our limited liability may require compliance with legal requirements in the jurisdictions in which the operating subsidiary and its subsidiaries conduct business, which may include qualifying to do business in those jurisdictions.

              Limitations on the liability of limited partners for the obligations of a limited partner have not been clearly established in many jurisdictions. If, by virtue of our membership interest in the operating subsidiary or otherwise, it were determined that we were conducting business in any jurisdiction without compliance with the applicable limited partnership or limited liability company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace the general partner, to approve some amendments to the partnership agreement, or to take other action under the partnership agreement constituted "participation in the control" of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We will

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operate in a manner that our board of directors considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.

Issuance of Additional Securities

              The partnership agreement authorizes us to issue an unlimited amount of additional partnership securities and rights to buy partnership securities for the consideration and on the terms and conditions determined by our board of directors without the approval of the unitholders. Our general partner will have the right to approve issuances of additional securities that are not reasonably expected to be accretive to equity within twelve months of issuance or which would otherwise have a material adverse impact on our general partner or its interest in us.

              We intend to fund acquisitions, including acquisitions of the newbuildings to be delivered in 2008, through borrowings and the issuance of additional common units or other equity securities and the issuance of debt. Holders of any additional common units we issue will be entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, the issuance of additional common units or other equity securities interests may dilute the value of the interests of the then-existing holders of common units in our net assets.

              In accordance with Marshall Islands law and the provisions of our partnership agreement, we may also issue additional partnership securities interests that, as determined by our board of directors, have special voting rights to which the common units are not entitled.

              Upon issuance of additional partnership securities, our general partner will have the right, but not the obligation, to make additional capital contributions to the extent necessary to maintain its 2.0% general partner interest in us. Our general partner's interest in us will thus be reduced if we issue additional partnership securities in the future and our general partner does not elect to maintain its 2% general partner interest in us. Our general partner and its affiliates will have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units, subordinated units or other equity securities whenever, and on the same terms that, we issue those securities to persons other than our general partner and its affiliates, to the extent necessary to maintain its and its affiliates' percentage interest, including its interest represented by common units and subordinated units, that existed immediately prior to each issuance. Other holders of common units will not have similar preemptive rights to acquire additional common units or other partnership securities.

Tax Status

              The partnership agreement provides that the partnership will elect to be taxed as a corporation for U.S. federal income tax purposes.

Amendment of the Partnership Agreement

              Amendments to our partnership agreement may be proposed only by or with the consent of our general partner and our board of directors. However, neither our general partner nor our board of directors will have a duty or obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, approval of both our board of directors and our general partner is required, as well as written approval of the holders of the number of units required to approve the amendment or call a meeting of the limited partners to consider and vote

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upon the proposed amendment. Except as we describe below, an amendment must be approved by a unit majority.

              No amendment may be made that would:

              The provision of our partnership agreement preventing the amendments having the effects described in clauses (1) through (5) above can be amended upon the approval of the holders of at least 90% of the outstanding units voting together as a single class (including units owned by our general partner and its affiliates). Upon completion of this offering, the owner of our general partner will own 42.8% of our outstanding units, assuming no exercise of the underwriters' overallotment option.

              Our board of directors may generally make amendments to our partnership agreement without the approval of any limited partner to reflect:

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              All amendments reflecting matters described in (1) through (11) above require the approval of our general partner.

              In addition, our board of directors may make amendments to the partnership agreement without the approval of any limited partner if our board of directors determines that those amendments:

              All amendments reflecting matters described in (1) through (5) above require the approval of our general partner.

              Neither our general partner nor our board of directors will be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited partners if one of the amendments described above under "—No Unitholder Approval" should occur. No other amendments to our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding units voting as a single class unless we obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of our limited partners.

              In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or privileges of any type or class of outstanding units in relation to other classes of units will require the approval of at least a majority of the type or class of units so affected. Any amendment that reduces the voting percentage required to take any action must be approved by the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced.

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Action Relating to the Operating Subsidiary

              We effectively control, manage and operate our operating subsidiary by being its sole member. Our general partner and officers manage our operating subsidiary under the direction and supervision of our board of directors.

Merger, Sale, or Other Disposition of Assets

              A merger or consolidation of us requires the approval of our board of directors and the consent of our general partner. However, our general partner will have no duty or obligation to consent to any merger or consolidation and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In addition, our partnership agreement generally prohibits our board of directors, without the prior approval of our general partner and the holders of units representing a unit majority, from causing us to, among other things, sell, exchange, or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions, including by way of merger, consolidation, or other combination, or approving on our behalf the sale, exchange, or other disposition of all or substantially all of the assets of our subsidiaries. Our board of directors may, however, mortgage, pledge, hypothecate, or grant a security interest in all or substantially all of our assets without the prior approval of the holders of units representing a unit majority, although it is required to obtain the prior approval of our general partner if any such mortgage, pledge or hypothecation is done for purposes other than securing indebtedness that does not result in our over leverage, taking into account customary industry leverage levels, our structure and our other assets and liabilities. Our general partner and our board of directors may also sell all or substantially all of our assets under a foreclosure or other realization upon those encumbrances without the approval of the holders of units representing a unit majority.

              If conditions specified in our partnership agreement are satisfied, our board of directors, with the consent of our general partner, may convert us or any of our subsidiaries into a new limited liability entity or merge us or any of our subsidiaries into, or convey some or all of our assets to, a newly formed entity if the sole purpose of that merger or conveyance is to effect a mere change in our legal form into another limited liability entity. The unitholders are not entitled to dissenters' rights of appraisal under our partnership agreement or applicable law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets, or any other transaction or event.

Termination and Dissolution

              We will continue as a limited partnership until terminated or converted under our partnership agreement. We will dissolve upon:

              Upon a dissolution under clause (4), the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions described in the

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partnership agreement by appointing as general partner an entity approved by the holders of units representing a unit majority, subject to our receipt of an opinion of counsel to the effect that the action would not result in the loss of limited liability of any limited partner.

Liquidation and Distribution of Proceeds

              Upon our dissolution, unless we are continued as a new limited partnership, the liquidator authorized to wind up our affairs will, acting with all of the powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as provided in "How We Make Cash Distributions—Distributions of Cash Upon Liquidation." The liquidator may defer liquidation or distribution of our assets for a reasonable period or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our partners.

Withdrawal or Removal of our General Partner

              Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to March 31, 2017 without obtaining the approval of our board of directors and the holders of at least a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, and furnishing an opinion of counsel regarding limited liability. On or after March 31, 2017, our general partner may withdraw as general partner without first obtaining approval of any unitholder or our board of directors by giving 90 days' written notice, and that withdrawal will not constitute a violation of the partnership agreement. Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90 days' notice to the limited partners if at least 50% of the outstanding common units are held or controlled by one person and its affiliates other than our general partner and its affiliates. In addition, the partnership agreement permits our general partner in some instances to sell or otherwise transfer all of its general partner interest in us without the approval of the unitholders. Please read "—Transfer of General Partner Interests" and "—Transfer of Incentive Distribution Rights."

              Upon withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the holders of a majority of the outstanding common units and subordinated units, voting as separate classes, may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period of time after that withdrawal, the holders of a unit majority agree in writing to continue our business and to appoint a successor general partner. Please read "—Termination and Dissolution."

              Our general partner may not be removed unless that removal is approved by the vote of the holders of not less than 662/3% of the outstanding units, including units held by our general partner and its affiliates, voting together as a single class and a majority vote of our board of directors, and we receive an opinion of counsel regarding limited liability. The ownership of more than 331/3% of the outstanding units by our general partner and its affiliates or controlling our board of directors would provide the practical ability to prevent our general partner's removal. At the closing of this offering, our general partner and its affiliates will own 42.8% of the outstanding units, assuming no exercise of the overallotment option. Any removal of our general partner is also subject to the successor general partner being approved by the vote of the holders of a majority of the outstanding common units and subordinated units and general partner units, voting as a single class.

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              Our partnership agreement also provides that if our general partner is removed as our general partner under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of that removal:

              In the event of removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates the partnership agreement, a successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner for a cash payment equal to the fair market value of those interests. Under all other circumstances where our general partner withdraws or is removed by the limited partners, the departing general partner will have the option to require the successor general partner to purchase the general partner interest of the departing general partner and its incentive distribution rights for their fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.

              If the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner's general partner interest and its incentive distribution rights will automatically convert into common units equal to the fair market value of those interests as determined by an investment banking firm or other independent expert selected in the manner described in the preceding paragraph.

              In addition, we will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, any employee-related liabilities, including severance liabilities, incurred for the termination of any employees employed by the departing general partner or its affiliates for our benefit.

Transfer of General Partner Interest

              Except for the transfer by our general partner of all, but not less than all, of its general partner interest in us to:


our general partner may not transfer all or any part of its general partner interest in us to another person prior to March 31, 2017 without the approval of the holders of at least a majority of the outstanding common units, excluding common units held by our general partner and its affiliates. As a condition of this transfer, the transferee must, among other things, assume the rights and duties of the

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general partner, agree to be bound by the provisions of the partnership agreement and furnish an opinion of counsel regarding limited liability.

              Our general partner and its affiliates may at any time transfer units to one or more persons, without unitholder approval, except that they may not transfer subordinated units to us.

Transfer of Ownership Interests in General Partner

              At any time, the members of our general partner may sell or transfer all or part of their respective membership interests in our general partner to an affiliate or a third party without the approval of our unitholders.

Transfer of Incentive Distribution Rights

              Our general partner or its affiliates or a subsequent holder may transfer its incentive distribution rights to an affiliate of the holder (other than an individual) or another entity as part of the merger or consolidation of such holder with or into another entity, or sale of all or substantially all of its assets to that entity without the prior approval of the unitholders. Prior to March 31, 2017, other transfers of the incentive distribution rights will require the affirmative vote of holders of a majority of the outstanding common units, excluding common units held by our general partner and its affiliates. On or after March 31, 2017, the incentive distribution rights will be freely transferable.

Change of Management Provisions

              The partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove Capital GP L.L.C. as our general partner or otherwise change management. If any person or group other than our general partner and its affiliates acquires beneficial ownership of 5% or more of any class of units then outstanding, that person or group loses voting rights on all of its units in excess of 4.9% of all units.

              The partnership agreement also provides that if our general partner is removed under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of that removal:

Limited Call Right

              If at any time our general partner and its affiliates hold more than 80% of the then-issued and outstanding partnership securities of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the remaining partnership securities of the class held by unaffiliated persons as of a record date to be selected by the general partner, on at least ten but not more than 60 days' notice equal to the greater of (x) the average of the daily closing prices of the partnership securities of such class over the 20 trading days preceding the date three days before the notice of exercise of the call right is first mailed and (y) the highest price paid by our general partner or any of its affiliates for partnership securities of such class during the 90-day period preceding the date such notice is first mailed. Our general partner

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is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of this limited call right.

              As a result of the general partner's right to purchase outstanding partnership securities, a holder of partnership securities may have the holder's partnership securities purchased at an undesirable time or price. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of common units in the market. Please read "Material U.S. Federal Income Tax Considerations—United States Federal Income Taxation of U.S. Holders—Sale, Exchange or Other Disposition of Common Units" and "Material U.S. Federal Income Tax Considerations—United States Federal Income Taxation of Non-U.S. Holders—Disposition of Units."

              At the completion of this offering and assuming no exercise of the underwriters' overallotment option, Capital Maritime, an affiliate of our general partner, will not own any of the common units. At the end of the subordination period, assuming no additional issuances of common units, no exercise of the underwriters' overallotment option and conversion of our subordinated units into common units, Capital Maritime will own approximately 42.8% of the common units.

Board of Directors

              Under our partnership agreement, our general partner delegates to our board of directors the authority to oversee and direct our operations, policies and management on an exclusive basis, and such delegation will be binding on any successor general partner of the partnership. Our board of directors is comprised of seven persons, three of whom are appointed by Capital Maritime in its sole discretion and four of whom are elected by the common unitholders.

              Our board of directors nominates individuals to stand for election as elected board members on a staggered basis at an annual meeting of our limited partners. In addition, any limited partner or group of limited partners that holds beneficially 10% or more of the outstanding common units is entitled to nominate one or more individuals to stand for election as elected board members at the annual meeting by providing written notice to our board of directors not more than 120 days nor less than 90 days prior to the meeting. However, if the date of the annual meeting is not publicly announced by us at least 100 days prior to the date of the meeting, the notice must be delivered to our board of directors not later than ten days following the public announcement of the meeting date. The notice must set forth:

              Our general partner may remove an appointed board member with or without cause at any time. "Cause" generally means a court's finding a person liable for actual fraud or willful misconduct in his or her capacity as a director. Any and all of the board members may be removed at any time for cause by the affirmative vote of a majority of the other board members. Any and all of the board members may be removed for cause at a properly called meeting of the limited partners by a majority of the outstanding units, voting as a single class. If any appointed board member is removed, resigns or is otherwise unable to serve as a board member, our general partner may fill the vacancy. If any

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elected board member is removed, resigns or is otherwise unable to serve as a board member, the vacancy may be filled by a majority of the other elected board members then serving.

Meetings; Voting

              Except as described below regarding a person or group owning 5% or more of any class of units then outstanding, unitholders who are record holders of units on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which approvals may be solicited. In the case of common units held by our general partner on behalf of non-citizen assignees, our general partner will distribute the votes on those common units in the same ratios as the votes of limited partners on other units are cast.

              We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Any action that is required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.

              Each record holder of a unit may vote according to the holder's percentage interest in us, although additional limited partner interests having special voting rights could be issued. Please read "—Issuance of Additional Securities." However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time any person or group, other than our general partner and its affiliates, acquires, in the aggregate, beneficial ownership of 5% or more of all units then outstanding, that person or group will lose voting rights on all of its units in excess of 4.9% of all such units and those units in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum, or for other similar purposes. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise. Except as the partnership agreement otherwise provides, subordinated units will vote together with common units as a single class.

              Any notice, demand, request report, or proxy material required or permitted to be given or made to record holders of common units under the partnership agreement will be delivered to the record holder by us or by the transfer agent.

Status as Limited Partner or Assignee

              Except as described above under "—Limited Liability," the common units will be fully paid, and unitholders will not be required to make additional contributions. By transfer of common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer and admission is reflected in our books and records.

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Indemnification

              Under the partnership agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:

              Any indemnification under these provisions will only be out of our assets. Unless it otherwise agrees, our general partner will not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power to indemnify the person against liabilities under the partnership agreement.

Reimbursement of Expenses

              Our partnership agreement requires us to reimburse our general partner and the members of our board of directors for all direct and indirect expenses they incur or payments they make on our behalf and all other expenses allocable to us or otherwise incurred by our general partner or the members of our board of directors in connection with operating our business. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf, and expenses allocated to our general partner by its affiliates. Our general partner and the members of our board of directors are entitled to determine in good faith the expenses that are allocable to us.

Books and Reports

              Our general partner is required to keep appropriate books of our business at our principal offices. The books will be maintained for both tax and financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year is the calendar year.

              We will furnish or make available to record holders of common units, within 120 days after the close of each fiscal year, an annual report containing audited financial statements and a report on those financial statements by our independent chartered accountants. Except for our fourth quarter, we will also furnish or make available summary financial information within 90 days after the close of each quarter.

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Right to Inspect Our Books and Records

              The partnership agreement provides that a limited partner can, for a purpose reasonably related to his interest as a limited partner, upon reasonable demand and at the limited partner's own expense, have furnished to the limited partner:

              Our board of directors may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our board of directors believes in good faith is not in our best interests or that we are required by law or by agreements with third parties to keep confidential.

Registration Rights

              Under the partnership agreement, we have agreed to register for resale under the Securities Act of 1933 and applicable state securities laws any common units, subordinated units or other partnership securities proposed to be sold by our general partner or any of its affiliates or their assignees if an exemption from the registration requirements is not otherwise available or advisable. These registration rights continue for two years following any withdrawal or removal of Capital GP L.L.C. as our general partner. We are obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions. Please read "Units Eligible for Future Sale."

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UNITS ELIGIBLE FOR FUTURE SALE

              After the sale of the common units offered by this prospectus, our general partner and its affiliates will hold an aggregate of 8,805,522 subordinated units. All of the subordinated units will convert into common units at the end of the subordination period. The sale of these common and subordinated units could have an adverse impact on the price of the common units or on any trading market that may develop.

              The common units sold in this offering will generally be freely transferable without restriction or further registration under the Securities Act of 1933. However, any common units held by an "affiliate" of ours may not be resold publicly except in compliance with the registration requirements of the Securities Act or under an exemption from the registration requirements of the Securities Act pursuant to Rule 144 or otherwise. Rule 144 permits securities acquired by an affiliate of ours to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:

              Sales under Rule 144 are also subject to specific manner of sale provisions, holding period requirements, notice requirements and the availability of current public information about us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned common units for at least two years, would be entitled to sell those common units under Rule 144 without regard to the current public information requirements, volume limitations, manner of sale provisions, and notice requirements of Rule 144.

              The partnership agreement provides that we may issue an unlimited number of limited partner interests of any type without a vote of the unitholders. Any issuance of additional common units or other equity securities would result in a corresponding decrease in the proportionate ownership interest in us represented by, and could adversely affect the cash distributions to and market price of, common units then outstanding. Please read "The Partnership Agreement—Issuance of Additional Securities."

              Under the partnership agreement, our general partner and its affiliates have the right to cause us to register under the Securities Act and applicable state securities laws the offer and sale of any units that they hold. Subject to the terms and conditions of the partnership agreement, these registration rights allow our general partner and its affiliates or their assignees holding any units to require registration of any of these units and to include any of these units in a registration by us of other units, including units offered by us or by any unitholder. Our general partner will continue to have these registration rights for two years following its withdrawal or removal as our general partner. In connection with any registration of this kind, we will indemnify each unitholder participating in the registration and its officers, directors and controlling persons from and against any liabilities under the Securities Act or any applicable state securities laws arising from the registration statement or prospectus. We will bear all costs and expenses incidental to any registration, excluding any underwriting discounts and commissions. Except as described below, our general partner and its affiliates may sell their units in private transactions at any time, subject to compliance with applicable laws.

              We, our subsidiaries, our general partner and its affiliates, including the directors and executive officers of our general partner, and Capital Maritime, have agreed not to sell any common units for a period of 180 days from the date of this prospectus, subject to certain exceptions. Please read "Underwriting" for a description of these lock-up provisions.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

              The following is a discussion of the material U.S. federal income tax considerations that may be relevant to prospective unitholders and, unless otherwise noted in the following discussion, is the opinion of Cravath, Swaine & Moore LLP, our U.S. counsel, insofar as it relates to matters of U.S. federal income tax law and legal conclusions with respect to those matters. The opinion of our counsel is dependent on the accuracy of representations made by us to them, including descriptions of our operations contained herein.

              This discussion is based upon provisions of the Code as in effect on the date of this prospectus, Treasury Regulations, and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the context otherwise requires, references to this section to "we", "our" or "us" are references to Capital Product Partners L.P.

              The following discussion does not comment on all aspects of U.S. federal income taxation which may be important to particular unitholders in light of their individual circumstances, such as unitholders subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, tax-exempt organizations, or former citizens or long-term residents of the United States) or to persons that will hold the units as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for U.S. federal income tax purposes, partnerships or their partners, or that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. If a partnership or other entity classified as a partnership for U.S. federal income tax purposes holds our common units, the tax treatment of a partner thereof will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common units, you should consult your tax advisor.

              No ruling has been or will be requested from the Internal Revenue Service (or the IRS) regarding any matter affecting us or prospective unitholders. The opinions and statements made here may not be sustained by a court if contested by the IRS.

              This discussion does not contain information regarding any U.S. state or local, estate or alternative minimum tax considerations concerning the ownership or disposition of common units. Each prospective unitholder is urged to consult its tax advisor regarding the U.S. federal, state, local, and other tax consequences of the ownership or disposition of common units.

Election to be Taxed as a Corporation

              We have elected to be taxed as a corporation for U.S. federal income tax purposes. As such, among other things, U.S. Holders (as defined below) will not directly be subject to U.S. federal income tax on our income, but rather will be subject to U.S. federal income tax on distributions received from us and dispositions of units as described below.

U.S. Federal Income Taxation of U.S. Holders

              As used herein, the term U.S. Holder means a beneficial owner of our common units that:

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Distributions

              Subject to the discussion of the rules applicable to passive foreign investment companies (or PFICs) below, any distributions made by us with respect to our common units to a U.S. Holder generally will constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in its common units on a dollar-for-dollar basis and thereafter as capital gain. U.S. Holders that are corporations generally will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common units generally will be treated as "passive category income" for purposes of computing allowable foreign tax credits for U.S. federal income tax purposes.

              Dividends paid on our common units to a U.S. Holder who is an individual, trust or estate (or a U.S. Individual Holder) will be treated as "qualified dividend income" that is taxable to such U.S. Individual Holder at preferential capital gain tax rates (through 2010) provided that: (i) our common units are readily tradable on an established securities market in the United States (such as the Nasdaq Global Market on which we expect our common units to be traded); (ii) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be, as discussed below); (iii) the U.S. Individual Holder has owned the common units for more than 60 days in the 121-day period beginning 60 days before the date on which the common units become ex-dividend; and (iv) the U.S. Individual Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. There is no assurance that any dividends paid on our common units will be eligible for these preferential rates in the hands of a U.S. Individual Holder, and any dividends paid on our common units that are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder. In the absence of legislation extending the term of the preferential tax rates for qualified dividend income, all dividends received by a taxpayer in tax years beginning January 1, 2011 or later will be taxed at rates applicable to ordinary income.

              Special rules may apply to any "extraordinary dividend" paid by us. An extraordinary dividend is, generally, a dividend with respect to a common unit if the amount of the dividend is equal to or in excess of 10 percent of a unitholder's adjusted basis (or fair market value in certain circumstances) in such common unit. If we pay an "extraordinary dividend" on our common units that is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such common units will be treated as long-term capital loss to the extent of the amount of such dividend.

              In addition, under legislation proposed in a prior legislative session of the U.S. Congress, the preferential rate of federal income tax currently imposed on qualified dividend income would be denied with respect to dividends received form a non-U.S. corporation, unless the non-U.S. corporation either is eligible for benefits of a comprehensive income tax treaty with the United States or is created or organized under the laws of a foreign country which has a comprehensive income tax system. Because the Marshall Islands has not entered into a comprehensive income tax treaty with the United States and imposes only limited taxes on corporations organized under its laws, it is unlikely that we could satisfy either of these requirements. Consequently, if this legislation were enacted the preferential tax rates imposed on qualified dividend income may no longer be applicable to dividends received from us. Any dividends paid on our common shares that are not eligible for the preferential rate will be taxed as

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ordinary income to a U.S. Individual Holder. As of the date hereof, it is not possible to predict with any certainty whether this previously proposed legislation will be reintroduced or enacted.

Ratio of Dividend Income to Distributions

              We estimate that for distributions made to a purchaser of common units in this offering and who owns those common units from the date of closing of this offering through December 31, 2009, approximately 40% of the total cash distributions made during that period, on a cumulative basis, will constitute dividend income. The remaining portion of this distribution will be treated first as a nontaxable return of capital to the extent of the purchaser's tax basis in its common units on a dollar-for-dollar basis and thereafter as capital gain. These estimates are based upon the assumption that we will pay the minimum quarterly dividend of $0.3750 per unit on our common units during the referenced period and other assumptions with respect to the periods and amounts relating to the purchase of seven newbuildings from Capital Maritime, other capital expenditures and cash flow. These estimates and assumptions are subject to, among other things, numerous business, economic, regulatory, competitive and political uncertainties beyond our control. Further, the estimates are based on current U.S. federal income tax law and tax reporting positions that we will adopt and with which the IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct. The actual percentage of total cash distributions that will constitute dividend income could be higher or lower, and any differences could be material or could materially affect the value of the common units.

Sale, Exchange or other Disposition of Common Units

              Subject to the discussion of PFICs below, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our units in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such units. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S. source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.

PFIC Status and Significant Tax Consequences

              Special and adverse U.S. federal income tax rules apply to a U.S. Holder that owns an equity interest in a non-U.S. entity taxed as a corporation and classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common units, either:

              Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute "passive income" unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

              Provided we meet certain statutory requirements, we will not be treated as a PFIC in the first year in which we have taxable income even if we satisfy the income test or asset test set out in the

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bullet points above. Based on our current and projected methods of operation, and an opinion of counsel, we do not believe that we will be a PFIC with respect to any taxable year. We have received an opinion from our U.S. counsel, Cravath, Swaine & Moore LLP, that (1) the income we receive from time chartering activities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income from time charters exceeds 25% of our gross income for each taxable year after our initial taxable year and assets engaged in time charters exceed 50% of the average value of our assets for each taxable year after our initial taxable year, we should not be a PFIC. This opinion is based on representations and projections provided by us regarding our assets, income and charters to our counsel, and its validity is conditioned on the accuracy of such representations and projections.

              Although there is no legal authority directly on point, and we are not obtaining a ruling from the IRS on this issue, our counsel's opinion is based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering activities of our wholly owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels we or our subsidiaries own that are subject to time charters, should not constitute passive assets for purposes of determining whether we were a PFIC. We expect that at least five out of the eight vessels in our initial fleet and four of the seven newbuildings we have committed to purchase will be engaged in time chartering activities and intend to treat our income from those activities as non-passive income, and the vessels engaged in those activities as non-passive assets. The remainder of our fleet will be engaged in activities that may be characterized as passive for PFIC purposes and the income from that portion of our fleet may be treated as passive income for PFIC purposes. Our counsel believes that there is substantial legal authority supporting our position consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with this position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

              As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a "Qualified Electing Fund", which election we refer to as a "QEF election". As an alternative to making a QEF election, a U.S. Holder should be able to make a "mark-to-market" election with respect to our common units, as discussed below.

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

              If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an "Electing Holder", the Electing Holder must report each year for U.S. federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the common units will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common units and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common units. A U.S. Holder would make a QEF election with respect to any year that we are a PFIC by filing one copy of IRS Form 8621 with his U.S. federal income tax return and a second copy in accordance with the

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instructions to such form. If we were to be treated as a PFIC for any taxable year, we would provide each U.S. Holder with all necessary information in order to make the QEF election described above.

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

              Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate, our units were treated as "marketable stock," a U.S. Holder would be allowed to make a "mark-to-market" election with respect to our common units, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common units at the end of the taxable year over such holder's adjusted tax basis in the common units. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the common units over the fair market value thereof at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in his common units would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common units would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common units would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder.

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

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

              These penalties would not apply to a qualified pension, profit sharing or other retirement trust or other tax-exempt organization that did not borrow money or otherwise utilize leverage in connection with its acquisition of our common units. If we were treated as a PFIC for any taxable year and a Non-Electing Holder who is an individual dies while owning our common units, such holder's successor generally would not receive a step-up in tax basis with respect to such units.

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U.S. Federal Income Taxation of Non-U.S. Holders

              A beneficial owner of our common units (other than a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder is a Non-U.S. Holder.

Distributions

              Distributions we pay to a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax if the Non-U.S. Holder is not engaged in a U.S. trade or business. If the Non-U.S. Holder is engaged in a U.S. trade or business, distributions we pay will be subject to U.S. federal income tax to the extent those distributions constitute income effectively connected with that Non-U.S. Holder's U.S. trade or business. However, distributions paid to a Non-U.S. Holder who is engaged in a trade or business may be exempt from taxation under an income tax treaty if the income represented thereby is not attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder.

Disposition of Units

              The U.S. federal income taxation of Non-U.S. Holders on any gain resulting from the disposition of our common units is generally the same as described above regarding distributions. However, individual Non-U.S. Holders may be subject to tax on gain resulting from the disposition of our common units if they are present in the United States for 183 days or more during the taxable year in which those shares are disposed and meet certain other requirements.

Backup Withholding and Information Reporting

              In general, payments of distributions or the proceeds of a disposition of common units to a non-corporate U.S. Holder will be subject to information reporting requirements. These payments to a non-corporate U.S. Holder also may be subject to backup withholding, if the non-corporate U.S. Holder:

              Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding on payments within the United States by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.

              Backup withholding is not an additional tax. Rather, a unitholder generally may obtain a credit for any amount withheld against his liability for U.S. federal income tax (and a refund of any amounts withheld in excess of such liability) by filing a return with the IRS.

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NON-UNITED STATES TAX CONSIDERATIONS

Marshall Islands Tax Consequences

              The following discussion is based upon the opinion of Watson, Farley & Williams (New York) LLP, our counsel as to matters of the laws of the Republic of the Marshall Islands, and the current laws of the Republic of the Marshall Islands applicable to persons who do not reside in, maintain offices in or engage in business in the Republic of the Marshall Islands.

              Because we and our subsidiaries do not, and we do not expect that we and our subsidiaries will, conduct business or operations in the Republic of the Marshall Islands, and because all documentation related to this offering will be executed outside of the Republic of the Marshall Islands, under current Marshall Islands law you will not be subject to Marshall Islands taxation or withholding on distributions, including upon a return of capital, we make to you as a unitholder. In addition, you will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of common units, and you will not be required by the Republic of the Marshall Islands to file a tax return relating to the common units.

              It is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent jurisdictions, including the Marshall Islands, of his investment in us. Accordingly, each prospective unitholder is urged to consult his tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each unitholder to file all state, local and non-U.S., as well as U.S. federal tax returns, that may be required of him.

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UNDERWRITING

              Capital Maritime intends to offer the common units through the underwriters. Merrill Lynch, Pierce, Fenner & Smith Incorporated and UBS Securities LLC, are acting as representatives of the underwriters named below. Subject to the terms and conditions described in a purchase agreement among us, Capital Maritime and the underwriters, Capital Maritime has agreed to sell to the underwriters, and the underwriters severally have agreed to purchase from Capital Maritime, the number of common units listed opposite their names below.

                           Underwriter

   Number of
Common Units

 
 
 
Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated		    
UBS Securities LLC    
Bear, Stearns & Co. Inc.    
Wachovia Capital Markets, LLC    
Raymond James & Associates, Inc.    
Stifel, Nicolaus & Company, Incorporated    
Fortis Securities LLC    
   
                      Total   11,750,000
   

              The underwriters have agreed to purchase all of the common units sold under the purchase agreement if any of these common units are purchased. If an underwriter defaults, the purchase agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

              We, our general partner, our operating subsidiary and Capital Maritime have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

              The underwriters are offering the common units, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the common units, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officers' certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

              The representatives have advised us and Capital Maritime that the underwriters propose initially to offer the common units to the public at the initial public offering price on the cover page of this prospectus and to dealers at that price less a concession not in excess of $          per common unit. The underwriters may allow, and the dealers may reallow, a discount not in excess of $          per common unit to other dealers. After the initial public offering, the public offering price, concession and discount may be changed.

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              The following table shows the public offering price, underwriting discount and proceeds before expenses to Capital Maritime. The information assumes either no exercise or full exercise by the underwriters of their overallotment option.

 
   Per Common Unit
   Without Option
   With Option
Public offering price   $     $     $  
Underwriting discount   $     $     $  
Proceeds, before expenses, to
Capital Maritime & Trading Corp.		   $     $     $  

              The expenses of this offering, not including the underwriting discount, are estimated at $2.4 million (exclusive of underwriting discounts and the structuring fee) and are payable by Capital Maritime. The underwriters have agreed to reimburse Capital Maritime for a portion of Capital Maritime's expenses related to the road show undertaken in connection with the marketing of the common units in an amount of up to approximately $0.25 million.

              Capital Maritime will pay a financial advisory fee to Merrill Lynch, Pierce, Fenner & Smith Incorporated of approximately $1.0 million, or $1.2 million if the underwriters exercise their overallotment option in full, for valuation analysis and structuring of our partnership.

Overallotment Option

              Capital Maritime has granted an option to the underwriters to purchase up to 1,762,500 additional common units at the public offering price less the underwriting discount. The underwriters may exercise this option for 30 days from the date of this prospectus solely to cover any overallotments. Please read "Summary—The Transactions" for a more detailed description of the underwriters' overallotment option. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional common units proportionate to that underwriter's initial amount reflected in the above table. Capital Maritime may be deemed to be an underwriter within the meaning of the U.S. Securities Act of 1933 in connection with the sale of the common units covering the exercise of the overallotment option.

No Sales of Similar Securities

              We, our executive officers and directors and Capital Maritime and its affiliates have agreed, with exceptions, not to sell or transfer any common units for 180 days after the date of this prospectus without first obtaining the written consent of the representatives. Specifically, we, our executive officers and directors and Capital Maritime and its affiliates have agreed not to directly or indirectly:


              This lock-up provision applies to common units and to securities convertible into or exchangeable or exercisable for or repayable with common units. It also applies to common units

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owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. The foregoing will not apply to the offer for sale, sale or other issuance of common units or other securities to Capital Maritime or any of its subsidiaries in connection with our acquisition of any assets from Capital Maritime or any of its subsidiaries provided that any such recipient of common units or other securities enters into a lock-up arrangement for the remainder of the 180-day restricted period. In addition, if we issue an earnings release or material news or a material event relating to us occurs during the last 17 days of the 180-day period or if, prior to the expiration of the 180-day period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restrictions imposed by these lock-up agreements may be extended until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event for all such common units.

Nasdaq Global Market Listing

              We have been approved to list the common units on The Nasdaq Global Market under the symbol "CPLP".

              Before this offering, there has been no public market for our common units. The initial public offering price will be determined through negotiations among us and the representatives. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:

              An active trading market for the common units may not develop. It is also possible that after this offering the common units will not trade in the public market at or above the initial public offering price.

              The underwriters do not expect to sell more than 5% of the common units in the aggregate to accounts over which they exercise discretionary authority.

NASD Regulations

              Because more than 10% of the net proceeds of the offering may be paid to members or affiliates of members of the National Association of Securities Dealers, Inc. participating in the offering, the offering will be conducted in accordance with NASD Conduct Rule 2720(c)(3). This rule requires that the public offering price of an equity security be no higher than the price recommended by a qualified independent underwriter who has participated in the preparation of the registration statement and performed its usual standard of due diligence with respect to that registration statement. Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to act as qualified independent underwriter for the offering. The price of the common units will be no higher than recommended by Merrill Lynch, Pierce, Fenner & Smith Incorporated. We, our general partner, our operating subsidiary

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and Capital Maritime have agreed to indemnify Merrill Lynch, Pierce, Fenner & Smith Incorporated against liabilities incurred in connection with acting as qualified independent underwriter, including liabilities under the Securities Act of 1933.

Price Stabilization, Short Positions and Penalty Bids

              Until the distribution of the common units is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common units. However, the representatives may engage in transactions that stabilize the price of the common units, such as bids or purchases to peg, fix or maintain that price.

              If the underwriters create a short position in the common units in connection with this offering, i.e., if they sell more common units than are listed on the cover of this prospectus, the representatives may reduce that short position by purchasing common units in the open market. The representatives may also elect to reduce any short position by exercising all or part of the overallotment option described above. Purchases of the common units to stabilize the common unit price or to reduce a short position may cause the price of the common units to be higher than it might be in the absence of such purchases.

              The representatives may also impose a penalty bid on underwriters and selling group members. This means that if the representatives purchase common units in the open market to reduce the underwriters' short position or to stabilize the price of such common units, they may reclaim the amount of the selling concession from the underwriters and selling group members who sold those common units. The imposition of a penalty bid may also affect the price of the common units in that it discourages resales of those common units.

              Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common units. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Distribution

              A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter, prospective investors may be allowed to place orders online. The underwriters may allocate a limited number of common units for sale to their online brokerage customers. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations. Other than the prospectus in electronic format, the information on any underwriter's website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.

United Kingdom

              This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (e) of the Order (all such persons together being referred to as "relevant persons"). The common units are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire

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such common units will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

              Each of the underwriters has represented and agreed that:

European Economic Area

              In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State") each underwriter represents and warrants that it has not made and will not make an offer to the public of any common units which are the subject of this offering contemplated by this prospectus in that Relevant Member State, except that it may make an offer to the public in that Relevant Member State of any common units at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

provided that no such offer of common units shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

              For the purposes of this provision, the expression an "offer to the public" in relation to any common units in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any common units to be offered so as to enable an investor to decide to purchase any common units, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/ EC and includes any relevant implementing measure in each Relevant Member State.

Other Relationships

              Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with Capital Maritime and its subsidiaries or with us. An affiliate of Fortis Securities LLC is a lender under Capital Maritime's current loan agreements relating to the vessels owned by two of the vessel-owning

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subsidiaries that will be transferred to us in connection with the closing of the offering. Capital Maritime expects to repay borrowings outstanding under such loan agreements with a portion of the net proceeds it will receive from this offering. The amount Capital Maritime expects to repay to the affiliate of Fortis Securities LLC under these loan agreements will exceed 10% of the net proceeds of the offering. In addition, an affiliate of Fortis Securities LLC is expected to be a lender under our new revolving credit facility.

              Bear, Stearns & Co. Inc. has agreed to pay a portion of the aggregate underwriting discount that it will receive in connection with this offering to an entity controlled by an individual Greek national who introduced Bear, Stearns & Co. Inc. to Capital Maritime.

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SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

              We are organized under the laws of the Marshall Islands as a limited partnership. Our general partner is organized under the laws of the Marshall Islands as a limited liability company. The Marshall Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent.

              Most of our directors and the directors and officers of our general partner and those of our subsidiaries are residents of countries other than the United States. Substantially all of our and our subsidiaries' assets and a substantial portion of the assets of our directors and the directors and officers of our general partner are located outside the United States. As a result, it may be difficult or impossible for United States investors to effect service of process within the United States upon us, our directors, our general partner, our subsidiaries or the directors and officers of our general partner or to realize against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. However, we have expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in the City of New York for the purpose of any suit, action or proceeding arising under the securities laws of the United States or any state in the United States, and we have appointed CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, NY 10011, to accept service of process on our behalf in any such action.

              Watson, Farley & Williams (New York) LLP, our counsel as to Marshall Islands law, has advised us that there is uncertainty as to whether the courts of the Marshall Islands would (1) recognize or enforce against us, our general partner or our general partner's directors or officers judgments of courts of the United States based on civil liability provisions of applicable U.S. federal and state securities laws; or (2) impose liabilities against us, our general partner or our general partner's directors and officers in original actions brought in the Marshall Islands, based on these laws.


LEGAL MATTERS

              The validity of the common units and certain other legal matters with respect to the laws of the Republic of the Marshall Islands will be passed upon for us by our counsel as to Marshall Islands law, Watson, Farley & Williams (New York) LLP. Certain other legal matters will be passed upon for us by Cravath, Swaine & Moore LLP, New York, New York. Cravath, Swaine & Moore LLP may rely on the opinion of Watson, Farley & Williams (New York) LLP, for all matters of Marshall Islands law. Certain matters with respect to this offering will be passed upon for the underwriters by Vinson & Elkins L.L.P., New York, New York.


EXPERTS

              The audited balance sheet as of February 2, 2007 of Capital Product Partners L.P. and the audited balance sheet as of February 2, 2007 of Capital GP LLC and the combined financial statements as of December 31, 2006 and 2005, and for the years ended December 31, 2006 and 2005 and the period from August 27, 2003 (inception) to December 31, 2004 of Capital Product Partners included in this prospectus have been audited by Deloitte Hadjipavlou, Sofianos & Cambanis S.A., independent registered public accounting firm, as stated in their reports appearing herein, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

              You may contact Deloitte Hadjipavlou, Sofianos & Cambanis S.A., at address 250-254 Kifissas Ave, 152 31 Halandri, Athens, Greece.

              The section in this prospectus entitled "The Oil Products Tanker Industry" has been reviewed by Clarkson Research Services Ltd., who has confirmed to us that such section accurately describes the international product tanker market, as indicated in the consent of Clarkson Research Services Ltd. filed as an exhibit to the registration statement on Form F-1 under the Securities Act of which this prospectus is a part.

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EXPENSES RELATED TO THIS OFFERING

              The following table sets forth the main costs and expenses, other than the underwriting discounts and commissions, in connection with this offering, which Capital Maritime will be required to pay.

U.S. Securities and Exchange Commission registration fee     8,712
National Association of Securities Dealers, Inc. filing fee     28,876
The Nasdaq Global Market listing fee     100,000
Legal fees and expenses     1,200,000
Accounting fees and expenses     600,000
Printing and engraving costs     140,000
Transfer agent fees and other     15,000
Miscellaneous     350,000
   
Total   $ 2,442,588
   

              All amounts are estimated except the U.S. Securities and Exchange Commission registration fee, the National Association of Securities Dealers Inc. filing fee and The Nasdaq Global Market Listing fee.


WHERE YOU CAN FIND MORE INFORMATION

              We have filed with the SEC a registration statement on Form F-1 regarding the common units. This prospectus does not contain all of the information found in the registration statement. For further information regarding us and the common units offered in this prospectus, you may wish to review the full registration statement, including its exhibits. The registration statement, including the exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of this material can also be obtained upon written request from the Public Reference Section of the SEC at 100 F Street, N.E, Washington, D.C. 20549, at prescribed rates or from the SEC's web site on the Internet at http://www.sec.gov free of charge. Please call the SEC at 1-800-SEC-0330 for further information on public reference room. Our registration statement can also be inspected and copied at the offices of the Nasdaq Global Market, One Liberty Plaza, New York, New York 10006.

              Upon completion of this offering, we will be subject to the information requirements of the Securities Exchange Act of 1934, and, in accordance therewith, we will be required to file with the SEC annual reports on Form 20-F within six months of our fiscal year-end, and provide to the SEC other material information on Form 6-K. We intend to file our annual report on Form 20-F earlier than the SEC currently requires. These reports and other information may be inspected and copied at the public reference facilities maintained by the SEC or obtained from the SEC's website as provided above. We expect to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, which will be operational after this offering, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.

              As a foreign private issuer, we are exempt under the Exchange Act from, among other things, certain rules prescribing the furnishing and content of proxy statements, and our directors and principal unitholders and the executive officers of our general partner are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, including the filing of quarterly reports or current reports on Form 8-K. However, we intend to furnish

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or make available to our unitholders annual reports containing our audited consolidated financial statements prepared in accordance with U.S. GAAP and make available to our unitholders quarterly reports containing our unaudited interim financial information for the first three fiscal quarters of each fiscal year. Our annual report will contain a detailed statement of any transactions with our general partner or its affiliates, and of fees, commissions, compensation and other benefits paid or accrued to our general partner or its affiliates for the fiscal year completed, showing the amount paid or accrued to each recipient and the services performed.

196


INDUSTRY AND MARKET DATA

              Clarkson Research Services Ltd. (or CRS) has provided us statistical and graphical information contained in this prospectus and relating to the product tanker industry. We do not have any knowledge that the information provided by CRS is inaccurate in any material respect. CRS has advised us that this information is drawn from its database and other sources and that: (a) some information in CRS's database is derived from estimates or subjective judgments; (b) the information in the databases of other maritime data collection agencies may differ from the information in CRS's database; and (c) while CRS has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures, and may accordingly contain errors.

197


INDEX TO FINANCIAL STATEMENTS

 
   Page
CAPITAL PRODUCT PARTNERS (PREDECESSOR)    

Report of Independent Registered Public Accounting Firm
 
F-2

Predecessor Combined Balance Sheets as of December 31, 2006 and 2005
 
F-3

Predecessor Combined Statements of Operations for the years ended December 31, 2006 and 2005 and for the period from August 27, 2003 (inception) to December 31, 2004
 
F-4

Predecessor Combined Statements of Changes in Stockholders' Equity for the years ended December 31, 2006 and 2005 and for the period from August 27, 2003 (inception) to December 31, 2004
 
F-5

Predecessor Combined Statements of Cash Flows for the years ended December 31, 2006 and 2005 and for the period from August 27, 2003 (inception) to December 31, 2004
 
F-6

Notes to the Predecessor Combined Financial Statements
 
F-7

CAPITAL PRODUCT PARTNERS L.P.
 
 

Report of Independent Registered Public Accounting Firm
 
F-23

Balance Sheet as of February 2, 2007
 
F-24

Notes to the Balance Sheet
 
F-25

CAPITAL GP L.L.C.
 
 

Report of Independent Registered Public Accounting Firm
 
F-27

Balance Sheet as of February 2, 2007
 
F-28

Notes to the Balance Sheet
 
F-29

F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

              To the Board of Directors and Stockholders of Capital Product Partners, defined as including the following subsidiaries of Capital Maritime & Trading Corp.:

              Shipping Rider Co.

              Canvey Shipmanagement Co.

              Centurion Navigation Limited

              Polarwind Maritime S.A.

              Carnation Shipping Company

              Iraklitos Shipping Company

              Apollonas Shipping Company

              Tempest Maritime Inc.

              We have audited the accompanying combined balance sheets of Capital Product Partners as of December 31, 2006 and 2005 and the related combined statements of operations, stockholder's equity, and cash flows for the years ended December 31, 2006 and 2005 and for the period from August 27, 2003 (inception) to December 31, 2004. The combined financial statements include the accounts of Shipping Rider Co., Canvey Shipmanagement Co., Centurion Navigation Limited, Polarwind Maritime S.A., Carnation Shipping Company, Iraklitos Shipping Company, Apollonas Shipping Company and Tempest Maritime Inc. These companies are under common ownership and common management. These financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these financial statements based on our audit.

              We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether these financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companies' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in these financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

              In our opinion, such combined financial statements present fairly, in all material respects, the combined financial position of Capital Product Partners as of December 31, 2006 and 2005 and the combined results of their operations and their combined cash flows for the years ended December 31, 2006 and 2005 and for the period from August 27, 2003 (inception) to December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

March 5, 2007
Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece

F-2


CAPITAL PRODUCT PARTNERS

PREDECESSOR COMBINED BALANCE SHEETS

(In thousands of United States dollars, except number of shares)

 
   As of December 31,
    
  
 
   Pro Forma
December 31,
2006(1)
  
 
   2005
   2006
  
 
    
    
   (unaudited)

  
Assets                    
Current assets                    
Cash and cash equivalents   $ 7   $ 1,239   $ 1,239  
Trade accounts receivable     —     534     534  
Insurance claims     —     68     68  
Due from related parties (Note 3)     —     3,255     3,255  
Prepayments and other     —     130     130  
Inventories     —     192     192  
   
 
 
 
Total current assets     7     5,418     5,418  
   
 
 
 
Fixed assets                    
Vessels under construction (Note 4)     39,136     29,225     29,225  
Vessels, net (Note 4)     —     168,981     168,981  
   
 
 
 
Total fixed assets     39,136     198,206     198,206  
   
 
 
 
Other non current assets                    
Deferred finance charges, net (Note 7)     367     614     614  
   
 
 
 
Total non current assets     39,503     198,820     198,820  
   
 
 
 
Total assets   $ 39,510   $ 204,238   $ 204,238  
   
 
 
 
Liabilities and Stockholders' Equity                    
Current liabilities                    
Current portion of long-term debt (Note 5)   $ —   $ 4,979   $ 4,979  
Current portion of related party debt (Note 3)     2,254     8,042     8,042  
Dividends payable     —     —     55,000  
Trade accounts payable     4     1,282     1,282  
Due to related parties (Note 3)     562     1,880     1,880  
Accrued loan interest (Note 6)     81     1,369     1,369  
Accrued other liabilities (Note 6)     —     371     371  
Deferred revenue     —     278     278  
   
 
 
 
Total current liabilities     2,901     18,201     73,201  
   
 
 
 
Long-term liabilities                    
Long-term debt (Note 5)     —     52,554     52,554  
Long-term related party debt (Note 3)     13,199     87,498     87,498  
Total long-term liabilities     13,199     140,052     140,052  
   
 
 
 
Total liabilities     16,100     158,253     213,253  
   
 
 
 
Commitments and contingencies (Note 11)     —     —     —  
   
 
 
 
Stockholders' Equity                    
Common stock 3,200 shares issued and outstanding with no par value (Note 8)     —     —     —  
Additional paid in capital (Note 8)     23,447     41,394     41,394  
(Accumulated deficit)/retained earnings     (37 )   4,591     (50,409 )
   
 
 
 
Total stockholders' equity     23,410     45,985     (9,015 )
   
 
 
 
Total liabilities and stockholders' equity   $ 39,510   $ 204,238   $ 204,238  
   
 
 
 
(1)
Gives effect to the payment to our sole stockholder, Capital Maritime and Trading Corp., of an expected dividend of $55,000,000 following the Offering. The pro forma adjustments to the historical balance sheet at December 31, 2006 reflects the accrual of the dividends payable and resulting reduction in stockholder's equity to reflect the impact of the expected dividend.

              The accompanying notes are an integral part of these predecessor combined financial statements.

F-3


CAPITAL PRODUCT PARTNERS

PREDECESSOR COMBINED STATEMENTS OF OPERATIONS

(In thousands of United States dollars, except number of units and
earnings per unit)

 
   Period from August 27, 2003 (inception) to December 31, 2004
   Year ended December 31, 2005
   Year ended December 31, 2006
  
Revenues                    
Time and bareboat charter revenues   $ —   $ —   $ 15,077  
   
 
 
 
Total revenues     —     —     15,077  
   
 
 
 
Expenses:                    
Voyage expenses (Note 9)     —     —     248  
Vessel operating expenses—related party (Note 3 and Note 9)     —     —     656  
Vessel operating expenses (Note 9)     32     5     2,440  
Depreciation of fixed assets (Note 4)     —     —     2,977  
   
 
 
 
Operating income/(expense)     (32 )   (5 )   8,756  
   
 
 
 
Other income (expense), net:                    
Interest expense     —     —     (4,099 )
Interest income     —     —     13  
Foreign currency gain/(loss), net     —     —     (42 )
   
 
 
 
Total other expense, net     —     —     (4,128 )
   
 
 
 
Net income/(loss)   $ (32 ) $ (5 ) $ 4,628  
   
 
 
 
Pro forma earnings per unit (unaudited)                    
General partner's interest in net income               $ 93  
Limited partners' interest in net income               $ 4,535  
Pro forma net income per limited partner unit, basic and diluted(1)               $ 0.22  
Pro forma limited partner units outstanding, basic and diluted(1)                 20,555,522  

Pro forma adjusted earnings per unit (unaudited)
 
 
 
 
 
 
 
 
 
 
Pro forma adjusted net income per limited partner unit, basic and diluted(2)               $ 0.20  
Pro forma adjusted limited partner units outstanding, basic and diluted(2)                 23,074,134  
(1)
Pro forma earnings per unit gives retroactive impact (along with the 2% general partner's interest) to the earnings of the Company for 2006, effecting the ownership structure to be in place subsequent to this offering, assuming the underwriters have not exercised their overallotment option.

(2)
Pro forma adjusted earnings per unit gives effect to our issuance of 2,518,612 units at an assumed offering price of $20.00 per unit (representing the mid-point of the range set forth on the cover of this prospectus), reflecting that number of units sufficient to fund the anticipated $55 million dividend to our sole stockholder existing immediately prior to this offering assuming the underwriters have not exercised their overallotment option.

The accompanying notes are an integral part of these predecessor combined financial statements.

F-4


CAPITAL PRODUCT PARTNERS

PREDECESSOR COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands of United States dollars, except number of shares)

 
    
   Common Stock
    
    
    
  
 
    
    
   (Accumulated
Deficit)/
Retained
Earnings
    
  
 
   Comprehensive
Income
   Number
of Shares
   Par
Value
   Additional
Paid-in
Capital
   Total
Stockholders'
Equity
  
Balance, August 27, 2003 (Inception)   $ —   —   $ —   $ —   $ —   $ —  
   
 
 
 
 
 
 
Net loss     (32 ) —     —     —     (32 )   (32 )
Common stock         3,200                          
Capital contributions     —   —     —     19,235     —     19,235  
Comprehensive loss     (32 )                            
   
 
 
 
 
 
 
Balance, December 31, 2004         3,200     —     19,235     (32 )   19,203  
   
 
 
 
 
 
 
Net loss     (5 ) —     —     —     (5 )   (5 )
   
 
 
 
 
 
 
Capital contributions     —   —     —     4,212     —     4,212  
Comprehensive loss     (5 )                            
Balance, December 31, 2005         3,200     —     23,447     (37 )   23,410  
Net income     4,628   —     —     —     4,628     4,628  
Capital contributions     —   —     —     17,947     —     17,947  
Comprehensive income     4,628                              
   
 
 
 
 
 
 
Balance, December 31, 2006   $ —   3,200   $ —   $ 41,394   $ 4,591   $ 45,985  
   
 
 
 
 
 
 

The accompanying notes are an integral part of these predecessor combined financial statements.

F-5


CAPITAL PRODUCT PARTNERS

PREDECESSOR COMBINED STATEMENTS OF CASH FLOWS

(In thousands of United States dollars)

 
   Period from
August 27, 2003
(inception) to
December 31, 2004
   Year ended
December 31, 2005
   Year ended
December 31, 2006
  
Cash flows from operating activities:                    
Net income/(loss)   $ (32 ) $ (5 ) $ 4,628  
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:                    
Depreciation of fixed assets     —     —     2,977  
Amortization of deferred finance charges     —     —     38  
Changes in operating assets and liabilities:                    
Trade accounts receivable     —     —     (534 )
Insurance claims     —     —     (68 )
Due from related parties     —     —     (3,255 )
Prepayments and other     —     —     (130 )
Inventories     —     —     (192 )
Trade accounts payable     —     4     1,278  
Due to related parties     41     521     1,318  
Accrued interest     —     81     1,288  
Accrued other liabilities     —     —     371  
Deferred revenue     —     —     278  
   
 
 
 
Net cash provided by operating activities     9     601     7,997  
   
 
 
 
Cash flows from investing activities:                    
Vessel acquisitions     —     —     (142,795 )
Vessel advances — new buildings     (24,100 )   (15,036 )   (19,252 )
   
 
 
 
Net cash used in investing activities     (24,100 )   (15,036 )   (162,047 )
   
 
 
 
Cash flows from financing activities:                    
Proceeds from issuance of long-term debt     —     —     77,426  
Payment of long term debt     —     —     (19,893 )
Loan issuance costs     —     (367 )   (285 )
Proceeds from related party debt/funding     4,863     10,590     82,341  
Payment of related party debt/funding     —     —     (2,254 )
Capital contributions     19,235     4,212     17,947  
   
 
 
 
Net cash provided by financing activities     24,098     14,435     155,282  
   
 
 
 
Net increase in cash and cash equivalents     7     —     1,232  
Cash and cash equivalents at beginning of year/period     —     7     7  
   
 
 
 
Cash and cash equivalents at end of year/period   $ 7   $ 7   $ 1,239  
   
 
 
 
Supplemental cash flow information:                    
Cash paid for interest expense:   $ —   $ —   $ 2,935  

The accompanying notes are an integral part of these predecessor combined financial statements.

F-6


CAPITAL PRODUCT PARTNERS

NOTES TO THE PREDECESSOR COMBINED FINANCIAL STATEMENTS

(In thousands of United States dollars, except number of shares)

1. BASIS OF PRESENTATION AND GENERAL INFORMATION

              CAPITAL PRODUCT PARTNERS L.P. (the "Partnership") was formed on January 16, 2007 under the laws of the Marshall Islands for the purpose of acquiring interests in eight wholly owned subsidiaries of Capital Maritime & Trading Corp. ("CMTC"), each of which own newly built, double-hull medium-range product tanker (the "Initial Vessels"). The shares of these eight vessel-owning companies will be contributed by CMTC to the Partnership, which will become their sole shareholder. In exchange, CMTC will receive common units and subordinated units, representing a 98% limited partnership interest in the Partnership and Capital GP L.L.C., a wholly owned subsidiary of CMTC, will receive a 2% general partnership interest and the incentive distribution rights in the Partnership (the "Transaction") in connection with the Partnership's initial public offering ("IPO"). These predecessor combined financial statements have been presented using the historical carrying costs of the contributed companies for all periods presented as each vessel-owning company is under the common control of CMTC. The subsidiaries of CMTC that currently own the vessels are collectively referred to as "Capital Product Partners Predecessor" or the "Company" in these predecessor combined financial statements.

              The predecessor combined financial statements include the following subsidiaries of CMTC from their dates of incorporation. All the subsidiaries are incorporated under the laws of the Marshall Islands and had no activities in 2003 and therefore the first accounting period presented is from the date of incorporation to December 31, 2004.

Company
   Date of
Incorporation
   Name of Vessel
Owned by Subsidiary
   DWT
   Delivery Date
Shipping Rider Co.   9/16/2003   M/T Atlantas   37,000   4/26/2006
Canvey Shipmanagement Co.   3/18/2004   M/T Assos   47,000   5/17/2006
Centurion Navigation Limited   8/27/2003   M/T Aktoras   37,000   7/12/2006
Polarwind Maritime S.A.   10/10/2003   M/T Agisilaos   37,000   8/16/2006
Carnation Shipping Company   11/10/2003   M/T Arionas   37,000   11/2/2006
Apollonas Shipping Company   2/10/2004   M/T Avax   47,000   1/12/2007
Tempest Maritime Inc.   9/12/2003   M/T Aiolos   37,000   3/2/2007
Iraklitos Shipping Company   2/10/2004   M/T Axios   47,000   2/28/2007

              In addition to these vessel-owning subsidiaries, the Partnership intends to purchase from CMTC its interests in seven other wholly owned Marshall Islands incorporated subsidiaries, which own seven additional vessels scheduled for delivery in 2007 and 2008 (the "Committed Vessels").

              The Company is engaged in the seaborne transportation services of crude oil and refined petroleum products, edible oils and chemicals, chartering its vessels under medium to long-term time and bareboat charters. The Company manages its operations from its offices in Athens, Greece.

              The pro forma amount of historical earnings (loss) per unit for the period from August 27, 2003 (inception) to December 31, 2004 and the year ended December 31, 2005, giving retroactive impact to the number of common and subordinated units (along with the 2% general partner interest) that will be issued in connection with the Partnership's IPO is not presented in these combined financial statements, because the ship-owning entities included in these combined financial statements were in the start-up phase until the delivery of M/T Atlantas in April 2006. The Company does not

F-7


believe that a pro forma presentation of earnings (loss) per unit for these predecessor periods would be meaningful as it is not reflective of the Partnership's anticipated earnings and operations after the IPO.

2. SIGNIFICANT ACCOUNTING POLICIES

(a)
Principles of Combination:    The accompanying predecessor combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and rules and regulations of the Securities and Exchange Commission and include the accounts of the legal entities comprising the Company as discussed in Note 1. All significant intra-group balances and transactions have been eliminated upon combination. Intercompany balances and transactions with CMTC and its affiliates have not been eliminated, but are presented as balances and transactions with related parties.

(b)
Use of Estimates:    The preparation of predecessor combined financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. Additionally, these predecessor combined financial statements include allocations for certain expenses, including corporate overhead expenses, not included in the accounts of the Company. The Company considers that such allocations have been made on a reasonable basis, but are not necessarily indicative of the costs that would have been incurred if the Company were an independent publicly listed entity during the periods presented, as the Partnership will incur additional administrative expenses normally incurred by a listed public entity. Accordingly, the predecessor combined financial statements do not purport to be indicative of the future financial position, results of operations or cash flows of the Partnership.

(c)
Other Comprehensive Income:    The Company follows the provisions of Statement of Financial Accounting Standards ("SFAS") No. 130 "Statement of Comprehensive Income" (SFAS 130) which requires separate presentation of certain transactions, which are recorded directly as components of stockholders' equity. The Company has no other comprehensive income and accordingly comprehensive income equals net income for the periods presented.

(d)
Accounting for Revenue, Voyage and Operating Expenses:    The Company generates its revenues from charterers for the charterhire of its vessels. Vessels are chartered using either time charters or bareboat charters. A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charterhire rate, which is generally payable monthly in advance. Some of the Company's time charters also include profit sharing provisions, under which the Company can realize additional revenues in the event that spot rates are higher than the base rates in these time charters. A bareboat charter is a contract in which the vessel owner provides the vessel to the charterer for a fixed period of time at a specified daily rate, which is generally payable monthly in advance, and the customer generally assumes all risk and costs of operation during the lease term.

All of the Company's time charters and bareboat charters are classified as operating leases. Revenues under operating lease arrangements are recognized when a charter agreement exists,

F-8

(e)
Foreign Currency Transactions:    The functional currency of the Company is the U.S. dollar because the Company's vessels operate in international shipping markets that utilize the U.S. dollar as the functional currency. The accounting records of the Company are maintained in U.S. dollars. Transactions involving other currencies during the year are converted into U.S. dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in currencies other than the U.S. dollar, are remeasured into the functional currency using the exchange rate at that date. Gains or losses resulting from foreign currency transactions are included in foreign currency gains and losses, net in the accompanying predecessor combined statements of operations.

(f)
Cash and Cash Equivalents:    The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

(g)
Trade Accounts Receivable:    The amount shown as trade accounts receivable reflects the estimated recoveries from charterers for hire billings, net of allowance for doubtful accounts. As of December 31, 2006, no allowance for doubtful accounts was recorded.

(h)
Inventories:    Inventories consist of consumable bunkers, lubricants, spares and stores and are stated at the lower of cost or market value. The cost is determined by the first-in, first-out method.

(i)
Fixed Assets, Net:    Fixed assets, net consist of vessels and vessels under construction. The vessels are stated at cost, less accumulated depreciation. Vessel cost consists of the contract price for the vessel and any material expenses incurred upon their construction (improvements and delivery expenses, on-site supervision costs incurred during the construction periods, as well as capitalized interest expense during the construction period). The cost of each of the Company's vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessels' remaining economic useful life, after considering the estimated residual value. Management estimates the useful life at 25 years, which is consistent with industry practice.

F-9

(j)
Impairment of Long-lived Assets:    The Company applies SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" ("SFAS 144") which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144 requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss for an asset held for use is recognized when the estimate of undiscounted cash flows expected to be generated by the use and eventual disposition of the asset is less than its carrying amount. Measurement of the impairment loss is based on the fair value of the asset. The Company regularly reviews its vessels for impairment on a vessel by vessel basis. No impairment loss was recorded for any of the periods presented.

(k)
Deferred Finance Charges:    Fees paid to lenders for obtaining new loans or refinancing existing loans are capitalized as deferred finance charges and amortized to interest expense over the term of the respective loan using the effective interest rate method.

(l)
Pension and Retirement Benefit Obligations:    The vessel-owning companies included in the predecessor combined financial statements employ the crew on board under short-term contracts (usually up to seven months) and accordingly, they are not liable for any pension or post retirement benefits.

(m)
Concentration of Credit Risk:    Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable. The Company places its cash and cash equivalents, consisting mostly of deposits, with financial institutions with high credit ratings. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The Company has derived a significant portion of revenues and cash flow from a limited number of charterers. For the year ended December 31, 2006 all of the Company's revenues were derived from two charterers. The Company does not obtain rights to collateral to reduce its credit risk.

(n)
Fair Value of Financial Instruments:    The carrying value of trade receivables, accounts payable and current accrued liabilities approximates fair value because of the short maturities of these instruments. The fair values of long-term variable rate bank loans approximate the recorded values, generally due to their variable interest rates.

(o)
Income Taxes:    The Company is not subject to the payment of any income tax on its income. Instead, a tax is levied based on the tonnage of the vessels, which is included in operating expenses.

(p)
Recent Accounting Pronouncements:    In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs, an Amendment to ARB No 43, Chapter 4 Inventory Pricing" ("SFAS 151"). SFAS 151 requires that abnormal amounts of idle facility expense, freight, handling costs and wasted materials be included in the current period charges, eliminating the option for capitalization into inventory. For the Company, SFAS 151 was effective for inventory costs incurred after January 1, 2006, and did not have a material impact on the Company's predecessor combined financial statements.

F-10

F-11

(q)
Segment Reporting:    The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e. time or bareboat charters. The Company does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

3. TRANSACTIONS WITH RELATED PARTIES

              Capital Ship Management Corp. (the "Manager"), a wholly owned subsidiary of CMTC, provides the vessels with a wide range of services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services for a fixed monthly fee of $20 that begins to be charged one month before the commencement of vessels' operation and amounted to $656 for the year ended December 31, 2006.

F-12


              Transactions with related parties consisted of the following:

 
   As of December 31,
 
   2004
   2005
   2006
I. Due From:                  
Vessels' operation (a)   $ —   $ —   $ 2,730
Manager—loan surplus (b)     —     —     500
Other affiliated companies (c)     —     —     25
   
 
 
Total due from   $ —   $ —   $ 3,255
   
 
 
II. Due To:                  
Manager—temporary funding (d)   $ 4,863   $ —   $ —
CMTC—loans current portion (e)     —     2,254     8,042
CMTC—loans long-term portion (e)     —     13,199     87,498
Manager—payments on behalf of vessel-owning companies (f)     41     562     1,848
Other affiliated companies (c)     —     —     32
   
 
 
Total due to   $ 4,904   $ 16,015   $ 97,420
   
 
 
(a)
Vessels' Operation: The balance in this line-item relates to funds that are received from charterers less disbursements made by the Manager on behalf of the vessel-owning subsidiaries with operations. As of December 31, 2006 five vessels were under operation.

(b)
Manager—Loan Surplus: The balance in this line-item relates to the loan proceeds of M/T Axios in excess of advances made to the shipyard by the Manager. This excess will be used for the vessel's extra costs in accordance with the loan agreement.

(c)
Other Affiliated Companies: The balance in this line-item relates to funds advanced/received to/from entities with common ownership. The amounts are intended to be settled in the ordinary course of business.

(d)
Manager—Temporary Funding: These amounts represent vessels' payments to the shipyard which were temporarily funded by the Manager until the loan proceeds were received by the vessel-owning subsidiaries. The proceeds of $4,863 received from the Manager as of December 31, 2004 were presented under cash flows from financing activities in the predecessor combined statements of cash flows.

(e)
CMTC Loans: For the financing of the construction of the M/T Atlantas, M/T Aktoras, M/T Aiolos, M/T Avax and M/T Assos, CMTC is the borrower under loan agreements with three separate banks and the vessel-owning companies act as guarantors under these loans (related party loans).

              These loans have been financed by related party loans, in the amounts of $15,453 and $95,540 as of December 31, 2005 and 2006 respectively.

F-13

              A summary of the CMTC loans is shown below:

 
  
    
   As of December, 31
 
  
   Vessel
   2005
   2006
(i) Issued on November 25, 2005, maturing in April, 2017   M/T Atlantas   $ 4,500   $ 25,190
(ii) Issued on December 23, 2005, maturing in July, 2016   M/T Aktoras     2,720     25,283
(iii) Issued on October 18, 2005, maturing in February, 2017   M/T Aiolos     2,307     6,920
(iv) Issued on December 23, 2005, maturing in May, 2016   M/T Assos     3,370     30,477
(v) Issued on October 18, 2005, maturing in January, 2017 TotalLess: Current portionLong-term portion   M/T Avax   2,556
15,453
2,254
13,199
   7,670
95,540
8,042
87,498

              All of the above bank loans bear interest at LIBOR plus a margin between 90 and 95 basis points payable quarterly or semi-annually. Each bank loan is secured by a first preferred mortgage on the respective vessel or vessels and a general assignment of the earnings, insurances, mortgage interest insurance and requisition compensation of the respective vessel or vessels. The weighted average interest rate for the year ended December 31, 2005 and 2006 was 5.31% and 6.18% respectively.

              The loan agreements contain other customary ship finance covenants, including restrictions as to: changes in management and ownership of the mortgaged vessels, the incurrence of additional indebtedness, the mortgaging of vessels, the minimum cash requirement, as well as minimum requirements as to the applicable vessels' market value and insured value in relation to the outstanding balance of the applicable loan. Also the borrower may pay dividends or make distributions when no event of default has occurred and the payment of such dividend or distribution has not resulted in a breach of any of the financial covenants. As of December 31, 2005 and 2006, the Company was in compliance with all debt covenants.

              The required annual loan principal payments per bank loan to be made subsequent to December 31, 2006 are as follows:

 
   Bank Loans Repayment Schedule
Year
  (i)
   (ii)
   (iii)
   (iv)
   (v)
   Total
01/01/2007-12/31/2007   $ 1,740   $ 1,605   $ 1,283   $ 1,966   $ 1,448   $ 8,042
01/01/2008-12/31/2008     1,740     1,605     1,710     1,967     1,930     8,952
01/01/2009-12/31/2009     1,740     1,605     1,710     1,966     1,930     8,951
01/01/2010-12/31/2010     1,740     1,605     1,710     1,966     1,930     8,951
01/01/2011-12/31/2011     1,740     1,606     507     1,966     432     6,251
Thereafter     16,490     17,257     —     20,646     —     54,393
   
 
 
 
 
 
Total   $ 25,190   $ 25,283   $ 6,920   $ 30,477   $ 7,670   $ 95,540
   
 
 
 
 
 

F-14

(f)
Manager—Payments on Behalf of Vessel-owning Companies: This payable includes the settlement of vessel obligations related to pre-delivery expenses and amounted to $41, $562 and $1,848 as of December 31, 2004, 2005 and 2006 respectively.

(g)
Management Fees: In addition to the balances due to or from related parties described above, each vessel-owning company has entered into a management agreement with the Manager for a management fee of $20 per month. This fee amounted to $0, $0 and $656 for the period from August 27, 2003 (inception) to December 31, 2004 and the years ended December 31, 2005 and 2006 respectively, which is classified within vessel operating expenses—related party in the predecessor combined statements of operations.

4. VESSELS AND VESSELS UNDER CONSTRUCTION

              An analysis of vessels and vessels under construction is as follows:

 
   As of December 31,
  
 
   2005
   2006
  
Cost:              
Vessels   $ —   $ 171,958  
Advances for vessels under construction     39,136     29,225  
   
 
 
Total cost     39,136     201,183  
   
 
 
Accumulated depreciation     —     (2,977 )
   
 
 
Vessels, net   $ —   $ 168,981  
   
 
 
Vessels under construction   $ 39,136   $ 29,225  
   
 
 

              The Company's delivered vessels (M/T Aktoras, M/T Arionas, M/T Agisilaos, M/T Assos and M/T Atlantas), having total net book value $168,981 as of December 31, 2006 together with the vessels under construction (M/T Aiolos, M/T Avax and M/T Axios) for which the Company has paid advances of $29,225 as of December 31, 2006 have been provided as collateral to secure bank loans.

              In the above presented table the capitalized interest for the years ended December 31, 2005 and 2006 amounted to $81 and $1,455 respectively.

F-15


5. LONG-TERM DEBT

              Long-term debt consists of the following:

 
  
    
   As of December 31,
 
 Bank loans
   Vessel
   2005
   2006
(i) Issued on October 31, 2006, maturing in October 2016   M/T Arionas   $ —   $ 26,180
(ii) Issued on August 14, 2006, maturing in August 2016   M/T Agisilaos     —     25,740
(iii) Predelivery facility issued on July 18, 2006 and refinanced on February 28, 2007 (Vessel's delivery date) TotalLess: Current portionLong-term portion   M/T Axios   —
—
—
—
   5,613
57,533
4,979
52,554

              For the financing of the construction of M/T Agisilaos, M/T Arionas, M/T Axios the vessel-owning companies have entered into loan agreement with one bank, in which the vessel-owning companies act as the borrower and CMTC acts as guarantor.

              The M/T Arionas and M/T Agisilaos loans bear interest at LIBOR plus a margin of 90 basis points. The M/T Axios loan is a pre-delivery bank loan incurred to finance the installment payments due under the shipbuilding contract. This loan bears interest at LIBOR plus a margin of 97.5 basis points and is payable on the delivery date of the vessel out of the post-delivery loan proceeds totaling $28,846, which is payable quarterly over a period of 10 years. Each bank loan is secured by a first preferred mortgage on the respective vessel or vessels and a general assignment of the earnings, insurances and requisition compensation of the respective vessel or vessels. Each also requires additional security, including: pledge and charge on current account; corporate guarantee of CMTC; mortgage interest insurance. The Company's weighted average interest rate for the year ended December 31, 2006 was 6.26%.

              CMTC is the guarantor of the above three vessels' loans which also have other customary ship finance covenants, including restrictions as to: changes in management and ownership of the mortgaged vessels, the incurrence of additional indebtedness, the mortgaging of vessels, a minimum cash requirement, as well as minimum requirements as to the applicable vessels' market value and insured value in relation to the outstanding balance of the applicable loan. Also the vessel-owning companies may pay dividends or make distributions when no event of default has occurred and the payment of such dividend or distribution has not resulted in a breach of any of the financial covenants. As of December 31, 2005 and 2006, the Company was in compliance with all debt covenants.

F-16


              The required annual loan principal payments per bank loan to be made subsequent to December 31, 2006 are as follows:

 
   Bank Loans Repayment Schedule
Year
  (i)
   (ii)
   (iii)
   Total
01/01/2007-12/31/2007   $ 1,762   $ 1,762   $ 1,455   $ 4,979
01/01/2008-12/31/2008     1,762     1,762     1,940     5,464
01/01/2009-12/31/2009     1,762     1,762     1,940     5,464
01/01/2010-12/31/2010     1,762     1,762     278     3,802
01/01/2011-12/31/2011     1,762     1,762     —     3,524
Thereafter     17,370     16,930     —     34,300
   
 
 
 
Total   $ 26,180   $ 25,740   $ 5,613   $ 57,533
   
 
 
 

6. ACCRUED LIABILITIES

              Accrued liabilities consist of the following:

 
   As of December 31,
 
   2005
   2006
Accrued loan interest   $ 81   $ 1,369
Accrued wages and crew expenses     —     196
Accrued other operating expenses     —     130
Accrued voyage expenses and commission     —     30
Accrued insurance     —     15
   
 
Total   $ 81   $ 1,740
   
 

7. DEFERRED FINANCE CHARGES

              Deferred finance charges are analysed as follows:

 
   Deferred Finance Charges
  
Balance as of January 1, 2005   $ —  
   
 
Additions     367  
   
 
Amortization/write-off     —  
   
 
Balance as of December 31, 2005     367  
   
 
Additions     285  
   
 
Amortization/write-off     (38 )
   
 
Balance as of December 31, 2006   $ 614  
   
 

F-17

8. STOCKHOLDERS' EQUITY

9. VOYAGE EXPENSES AND VESSEL OPERATING EXPENSES

              Voyage expenses and vessel operating expenses consist of the following:

 
   For the Period/Year Ended December 31,
 
   2004
   2005
   2006
Voyage expenses   $ —   $ —   $ 248
   
 
 
Voyage expenses consist of:                  
Commissions     —     —     218
Bunkers     —     —     30
Port charges     —     —     —
Other     —     —     —
   
 
 
Total     —     —     248
   
 
 
Vessel operating expenses     32     5     2,440
Vessel operating expenses—related parties     —     —     656
   
 
 
Total     32     5     3,096
   
 
 
Vessel operating expenses consist of:                  
Crew costs and related costs     —     —     1,081
Insurance     —     —     327
Spares, repairs, maintenance and other     —     —     360
Stores and lubricants     —     —     512
Management fees     —     —     656
Other operating expenses     32     5     160
   
 
 
Total   $ 32   $ 5   $ 3,096
   
 
 

10. INCOME TAXES

              Under the laws of the countries of the vessel-owning subsidiaries' incorporation and/or vessels' registration, these companies are not subject to tax on international shipping income. However, they are subject to registration and tonnage taxes, which have been included in vessel operating expenses in the accompanying predecessor combined statements of operations.

              Based on its current operations, the Partnership does not expect to have U.S. source domestic transportation income. However, certain of the Partnership's activities give rise to U.S. source international transportation income, and future expansion of the Partnership's operations could result

F-18


in an increase in the amount of U.S. source international transportation income, as well as give rise to U.S. source domestic transportation income, all of which could be subject to U.S. federal income taxation, unless the exemption from U.S. taxation under Section 883 of the Code applies.

11. COMMITMENTS AND CONTINGENCIES

Commitments:

              The Company is party to legal proceedings, claims and complaints in the ordinary course of its business but does not expect the outcome of any proceedings, claims or complaints individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or liquidity.


Vessel Name
   Time Charter
(T.C.)/
Bare Boat
Charter
(B.C.) (Years)
   Commencement
of Charter
   Charterer
   Profit Sharing*
   Gross Daily Hire Rate
(Without Profit Sharing)
M/T Atlantas   5+3 B.C.   04/2006   B.P. Shipping Ltd   —   $15.2 (5y) & $13.5 (3y)
M/T Aktoras   5+3 B.C.   07/2006   B.P. Shipping Ltd   —   $15.2 (5y) & $13.5 (3y)
M/T Agisilaos   2.5 T.C.   08/2006   B.P. Shipping Ltd    50/50   $17.7
M/T Arionas   2+0.5 T.C.   11/2006   B.P. Shipping Ltd    50/50   $21.3 (2y) & $19.2 (0.5y)
M/T Aiolos   5+3 B.C.   03/2007   B.P. Shipping Ltd   —   $15.2 (5y) & $13.5 (3y)
M/T Avax   0.3+3 T.C.   03/2007   B.P. Shipping Ltd    50/50 only for the 3(y)   $25.0 (0.3y) & $20.8 (3y)
M/T Axios   3 T.C.   03/2007   B.P. Shipping Ltd    50/50   $20.8
M/T Assos   3 T.C.   12/2006   Morgan Stanley    50/50   $20.0
*
Profit sharing refers to an arrangement between vessel-owning companies and charterers to share a predetermined percentage voyage profit in excess of the basic rate.

(c)
Joint and Several Liability:    The vessel-owning subsidiaries are jointly and severally liable for loans of other companies under common control that are not included in the accompanying predecessor combined financial statements amounting to $25,950 and

F-19

Year      
01/01/2007-12/31/2007   $ 4,594
01/01/2008-12/31/2008     5,808
01/01/2009-12/31/2009     3,624
01/01/2010-12/31/2010     3,624
01/01/2011-12/31/2011     3,624
Thereafter     37,132
   
Total   $ 58,406
   

12. SUBSEQUENT EVENTS

F-20


Company
   Date of Incorp.
   DWT
   Expected
Delivery
Date
   Name of
Vessel Owned
by Subsidiary
   Vessel
Purchase
Price
Epicurus Shipping Company   02/11/2004   47,000   05/2007   M/T Atrotos   $ 56,000
Splendor Shipholding S.A.   07/08/2004   47,000   10/2007   M/T Anemos I   $ 56,000
Laredo Maritime Inc.   02/03/2004   47,000   08/2007   M/T Akeraios   $ 56,000
Lorenzo Shipmanagement Inc.   05/26/2004   47,000   10/2007   M/T Apostolos   $ 56,000
Sorrel Shipmanagement Inc.   02/07/2006   51,000   01/2008   M/T Alexandros II   $ 48,000
Wind Dancer Shipping Inc.   02/07/2006   51,000   06/2008   M/T Aristotelis II   $ 48,000
Belerion Maritime Co.   01/24/2006   51,000   08/2008   M/T Aris II   $ 48,000

              The time and bareboat charter agreements related to the Committed Vessels are shown below:

Vessel Name
   Time Charter
(T.C.)/ Bare Boat
Charter (B.C.)
(Years)
   Commencement of
Charter
   Charterer
   Profit Sharing*
   Gross Daily Hire
Rate (Without Profit
Sharing)
M/T Atrotos   3 T.C.   05/2007   Morgan Stanley    50/50   $ 20.0
M/T Akeraios   3 T.C.   08/2007   Morgan Stanley    50/50   $ 20.0
M/T Anemos I   3 T.C.   10/2007   Morgan Stanley    50/50   $ 20.0
M/T Apostolos   3 T.C.   10/2007   Morgan Stanley    50/50   $ 20.0
M/T Alexandros II   10 B.C.   01/2008   O.S.G.   —   $ 13.0
M/T Aristotelis II   10 B.C.   06/2008   O.S.G.   —   $ 13.0
M/T Aris II   10 B.C.   08/2008   O.S.G.   —   $ 13.0
*
Profit sharing refers to an arrangement between vessel-owning companies and charterers to share a predetermined percentage voyage profit in excess of the basic rate.

(c)
Credit Facility and Derivative Instruments

On February 21, 2007 Capital Product Partners L.P. signed a commitment letter with certain lenders, including HSH Nordbank AG, Hamburg for a revolving credit facility, with no principal payments due until June 30, 2012, of up to $370 million to be drawn down in three tranches. The first tranche is eligible to be drawn dawn upon completion of the IPO.

F-21

F-22


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

              To the Unitholders of Capital Product Partners L.P.

              We have audited the accompanying balance sheet of Capital Product Partners L.P. (the "Partnership"), as of February 2, 2007. This balance sheet is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this balance sheet based on our audit.

              We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion.

              In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Capital Product Partners L.P. as of February 2, 2007, in conformity with accounting principles generally accepted in the United States of America.

Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece
February 9, 2007, except for Note 2, as to which the date is February 21, 2007.

F-23


CAPITAL PRODUCT PARTNERS L.P.

BALANCE SHEET

(In United States dollars)

 
   As of
February 2, 2007
Assets      
Current assets      
Investment in Capital Product Operating L.L.C.   $ 1,000
   
Total current assets     1,000
   
Total assets     1,000
   
Liabilities and partners' equity      
Commitments and contingencies (Note 2)     —
   
Partners' equity      
Limited partner     980
General partner     20
   
Total partners' equity     1,000
   
Total liabilities and partners' equity   $ 1,000
   

The accompanying notes are an integral part of this balance sheet.

F-24


CAPITAL PRODUCT PARTNERS L.P.

NOTES TO THE BALANCE SHEET

(In United States dollars)

1. Nature of Operations

              CAPITAL PRODUCT PARTNERS L.P. (the "Partnership") was formed on January 16, 2007, under the laws of the Marshall Islands, by Capital Maritime & Trading Corp. ("CMTC" or the "Limited Partner"), and Capital G.P. L.L.C., the Partnership's general partner (the "General Partner"), which is a wholly owned subsidiary of CMTC. The Partnership was established for the purpose of acquiring interests in eight wholly owned subsidiaries of CMTC, which own eight newly built, double-hull medium-range product tankers (the "Initial Vessels"). The shares of these eight vessel-owning companies will be contributed by CMTC to the Partnership, which will become their sole shareholder. In exchange, CMTC will receive common units and subordinated units, representing a 98% limited partnership interest in the Partnership.

              The Partnership has adopted a December 31 fiscal year end. The General Partner contributed $20 and CMTC contributed $980 to the partnership as of February 2, 2007. The Partnership contributed to Capital Product Operating L.L.C. a wholly owned subsidiary of Partnership the amount of $1,000 as of February 2, 2007. There have been no other transactions involving the Partnership as of February 2, 2007.

2. Subsequent Events

F-25

Company
   Date of Incorporation
   DWT
   Expected
Delivery Date
   Name of Vessel
Owned by Subsidiary
   Vessel
Purchase Price
Epicurus Shipping Company   02/11/2004   47,000   05/2007   M/T Atrotos   $ 56,000,000
Splendor Shipholding S.A.   07/08/2004   47,000   10/2007   M/T Anemos I   $ 56,000,000
Laredo Maritime Inc.   02/03/2004   47,000   08/2007   M/T Akeraios   $ 56,000,000
Lorenzo Shipmanagement Inc.   05/26/2004   47,000   10/2007   M/T Apostolos   $ 56,000,000
Sorrel Shipmanagement Inc.   02/07/2006   51,000   01/2008   M/T Alexandros II   $ 48,000,000
Wind Dancer Shipping Inc.   02/07/2006   51,000   06/2008   M/T Aristotelis II   $ 48,000,000
Belerion Maritime Co.   01/24/2006   51,000   08/2008   M/T Aris II   $ 48,000,000

              The time and bareboat charter agreements related to the Committed Vessels are shown below:

Vessel Name
   Time Charter
(T.C.)/Bare Boat
Charter (B.C.)
(Years)
   Commencement
of Charter
   Charterer
   Profit Sharing*
   Gross Daily Hire
Rate (Without Profit
Sharing)
M/T Atrotos   3 T.C.   05/2007   Morgan Stanley   50/50   $ 20,000
M/T Akeraios   3 T.C.   08/2007   Morgan Stanley   50/50   $ 20,000
M/T Anemos I   3 T.C.   10/2007   Morgan Stanley   50/50   $ 20,000
M/T Apostolos   3 T.C.   10/2007   Morgan Stanley   50/50   $ 20,000
M/T Alexandros II   10 B.C.   01/2008   O.S.G.   —   $ 13,000
M/T Aristotelis II   10 B.C.   06/2008   O.S.G.   —   $ 13,000
M/T Aris II   10 B.C.   08/2008   O.S.G.   —   $ 13,000
*
Profit sharing refers to an arrangement between vessel-owning companies and charterers to share a predetermined percentage voyage profit in excess of the basic rate.

(b)
Credit Facility and Derivative Instruments:

              On February 21, 2007 Capital Product Partners L.P. signed a commitment letter with certain lenders, including HSH Nordbank AG, Hamburg for a revolving credit facility, with no principal payments due until June 30, 2012, of up to $370 million to be draw down in three tranches. The first tranche is eligible to be drawn down upon completion of the IPO. Borrowings under this credit facility are jointly and severally secured by the vessels in the initial fleet, and will bear interest at a rate of 0.75% per annum over US$ LIBOR.

              Furthermore, on February 21, 2007, in connection with the revolving credit facility, CMTC has entered into interest rate swap agreements (agreements that will be transferred to Capital Product Partners L.P. upon the completion of the IPO) to reduce its exposure to cash flow risks from fluctuating interest rates. These changes could occur due to changes in market interest rates for debt with substantially similar credit risk and payment terms. The interest swaps will be accounted for in accordance with the provisions of SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133).

F-26


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

              To the Members of Capital GP L.L.C.

              We have audited the accompanying balance sheet of Capital GP L.L.C. (the "Company"), as of February 2, 2007. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit.

              We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion.

              In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Capital GP L.L.C. as of February 2, 2007, in conformity with accounting principles generally accepted in the United States of America.

Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece
February 9, 2007

F-27


CAPITAL GP L.L.C.

BALANCE SHEET

(In United States dollars)

 
   As of
February 2,
2007
Assets      
Current assets      
Cash   $ 980
Investment in Capital Product Partners L.P.     20
   
Total current assets     1,000
   
Total assets     1,000
   
Liabilities and members' equity      
Commitments and contingencies     —
   
Member's equity      
Member's equity     1,000
   
Total member's equity     1,000
   
Total liabilities and member's equity   $ 1,000
   

The accompanying notes are an integral part of this balance sheet.

F-28


CAPITAL GP L.L.C.

NOTES TO THE BALANCE SHEET

(In United States dollars)

1. Nature of Operations

              CAPITAL GP L.L.C. (the "Company") was formed on January 16, 2007, under the laws of the Marshall Islands, to become the general partner of Capital Product Partners L.P. (or the "Partnership"). The Company is a wholly owned subsidiary of Capital Maritime and Trading Corp (CMTC). As of February 2, 2007, CMTC has contributed $1,000 to the Company in exchange for a 100% ownership interest in the Company. As of February 2, 2007, the Company has invested $20 in the Partnership for its 2% general partner interest. There have been no other transactions involving the Company as of February 2, 2007.

F-29


APPENDIX A

FORM OF FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CAPITAL PRODUCT PARTNERS L.P.


TABLE OF CONTENTS

 
    
   Page

ARTICLE I
DEFINITIONS

SECTION 1.1.
 
Definitions
 
A-1
SECTION 1.2.   Construction   A-14


ARTICLE II
ORGANIZATION

SECTION 2.1.
 
Formation
 
A-14
SECTION 2.2.   Name   A-15
SECTION 2.3.   Registered Office; Registered Agent; Principal Office; Other Offices   A-15
SECTION 2.4.   Purpose and Business   A-15
SECTION 2.5.   Powers   A-15
SECTION 2.6.   Power of Attorney   A-15
SECTION 2.7.   Term   A-16
SECTION 2.8.   Title to Partnership Assets   A-17


ARTICLE III
RIGHTS OF LIMITED PARTNERS

SECTION 3.1.
 
Limitation of Liability
 
A-17
SECTION 3.2.   Management of Business   A-17
SECTION 3.3.   Outside Activities of the Limited Partners   A-17
SECTION 3.4.   Rights of Limited Partners   A-17


ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS

SECTION 4.1.
 
Certificates
 
A-18
SECTION 4.2.   Mutilated, Destroyed, Lost or Stolen Certificates   A-19
SECTION 4.3.   Record Holders   A-19
SECTION 4.4.   Transfer Generally   A-19
SECTION 4.5.   Registration and Transfer of Limited Partner Interests   A-20
SECTION 4.6.   Transfer of the General Partner's General Partner Interest   A-20
SECTION 4.7.   Transfer of Incentive Distribution Rights   A-21
SECTION 4.8.   Restrictions on Transfers   A-21


ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

SECTION 5.1.
 
Organizational Contributions
 
A-21
SECTION 5.2.   Initial Unit Issuances   A-22
SECTION 5.3.   Exercise of the Over-Allotment Option   A-22
SECTION 5.4.   Interest and Withdrawal   A-22
SECTION 5.5.   Issuances of Additional Partnership Securities   A-23
SECTION 5.6.   Limitations on Issuance of Additional Partnership Securities   A-23
SECTION 5.7.   Conversion of Subordinated Units   A-23
         

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SECTION 5.8.   Limited Preemptive Right   A-24
SECTION 5.9.   Splits and Combinations   A-24
SECTION 5.10.   Fully Paid and Non-Assessable Nature of Limited Partner Interests   A-25


ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS

SECTION 6.1.
 
Requirement and Characterization of Distributions; Distributions to Record Holders
 
A-25
SECTION 6.2.   Distributions of Available Cash from Operating Surplus   A-25
SECTION 6.3.   Distributions of Available Cash from Capital Surplus   A-27
SECTION 6.4.   Adjustment of Minimum Quarterly Distribution and Target Distribution Levels   A-27
SECTION 6.5.   Special Provisions Relating to the Holders of Subordinated Units   A-28
SECTION 6.6.   Special Provisions Relating to the Holders of Incentive Distribution Rights   A-28


ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS

SECTION 7.1.
 
Management
 
A-28
SECTION 7.2.   The Board of Directors; Election and Appointment; Term; Manner of Acting   A-29
SECTION 7.3.   Nominations of Elected Directors   A-30
SECTION 7.4.   Removal of Members of Board of Directors   A-31
SECTION 7.5.   Resignations of Members of the Board of Directors   A-31
SECTION 7.6.   Vacancies on the Board of Directors   A-31
SECTION 7.7.   Meetings; Committees; Chairman   A-31
SECTION 7.8.   Compensation of Directors   A-32
SECTION 7.9.   Certificate of Limited Partnership   A-32
SECTION 7.10.   Restrictions on the Authority of the Board of Directors and the General Partner   A-33
SECTION 7.11.   Reimbursement of the General Partner   A-33
SECTION 7.12.   Outside Activities   A-34
SECTION 7.13.   Loans from the General Partner; Loans or Contributions from the Partnership or Group Members   A-35
SECTION 7.14.   Indemnification   A-36
SECTION 7.15.   Liability of Indemnitees   A-37
SECTION 7.16.   Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties   A-38
SECTION 7.17.   Other Matters Concerning the General Partner and the Board of Directors   A-40
SECTION 7.18.   Purchase or Sale of Partnership Securities   A-40
SECTION 7.19.   Registration Rights of the General Partner and its Affiliates   A-40
SECTION 7.20.   Reliance by Third Parties   A-43


ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS

SECTION 8.1.
 
Records and Accounting
 
A-43
SECTION 8.2.   Fiscal Year   A-43
SECTION 8.3.   Reports   A-43
         

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 ARTICLE IX
TAX MATTERS

SECTION 9.1.
 
Tax Elections and Information
 
A-44
SECTION 9.2.   Withholding   A-44
SECTION 9.3.   Conduct of Operations   A-44


ARTICLE X
ADMISSION OF PARTNERS

SECTION 10.1.
 
Admission of Initial Limited Partners
 
A-44
SECTION 10.2.   Admission of Additional Limited Partners   A-44
SECTION 10.3.   Admission of Successor General Partner   A-45
SECTION 10.4.   Amendment of Agreement and Certificate of Limited Partnership   A-45


ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS

SECTION 11.1.
 
Withdrawal of the General Partner
 
A-45
SECTION 11.2.   Removal of the General Partner   A-47
SECTION 11.3.   Interest of Departing General Partner and Successor General Partner   A-47
SECTION 11.4.   Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages   A-48
SECTION 11.5.   Withdrawal of Limited Partners   A-49


ARTICLE XII
DISSOLUTION AND LIQUIDATION

SECTION 12.1.
 
Dissolution
 
A-49
SECTION 12.2.   Continuation of the Business of the Partnership After Dissolution   A-49
SECTION 12.3.   Liquidator   A-50
SECTION 12.4.   Liquidation   A-50
SECTION 12.5.   Cancellation of Certificate of Limited Partnership   A-52
SECTION 12.6.   Return of Contributions   A-52
SECTION 12.7.   Waiver of Partition   A-52


ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

SECTION 13.1.
 
Amendments to be Adopted without Limited Partner Approval
 
A-52
SECTION 13.2.   Amendment Procedures   A-53
SECTION 13.3.   Amendment Requirements   A-54
SECTION 13.4.   Special Meetings   A-54
SECTION 13.5.   Notice of a Meeting   A-55
SECTION 13.6.   Record Date   A-55
SECTION 13.7.   Adjournment   A-55
SECTION 13.8.   Waiver of Notice; Approval of Meeting; Approval of Minutes   A-55
SECTION 13.9.   Quorum and Voting   A-55
SECTION 13.10.   Conduct of a Meeting   A-56
SECTION 13.11.   Action Without a Meeting   A-56
         

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SECTION 13.12.   Right to Vote and Related Matters   A-57


ARTICLE XIV
MERGER

SECTION 14.1.
 
Authority
 
A-57
SECTION 14.2.   Procedure for Merger or Consolidation   A-57
SECTION 14.3.   Approval by Limited Partners of Merger or Consolidation   A-58
SECTION 14.4.   Certificate of Merger   A-59
SECTION 14.5.   Amendment of Partnership Agreement   A-59
SECTION 14.6.   Effect of Merger   A-59


ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

SECTION 15.1.
 
Right to Acquire Limited Partner Interests
 
A-59


ARTICLE XVI
GENERAL PROVISIONS

SECTION 16.1.
 
Addresses and Notices
 
A-61
SECTION 16.2.   Further Action   A-61
SECTION 16.3.   Binding Effect   A-61
SECTION 16.4.   Integration   A-61
SECTION 16.5.   Creditors   A-61
SECTION 16.6.   Waiver   A-61
SECTION 16.7.   Counterparts   A-62
SECTION 16.8.   Applicable Law   A-62
SECTION 16.9.   Invalidity of Provisions   A-62
SECTION 16.10.   Consent of Partners   A-62
SECTION 16.11.   Facsimile Signatures   A-62
SECTION 16.12.   Third-Party Beneficiaries   A-62

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FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF CAPITAL PRODUCT PARTNERS L.P.

              THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CAPITAL PRODUCT PARTNERS L.P., dated as of [            ], 2007, is entered into by and between Capital GP L.L.C., a Marshall Islands limited liability company, as the General Partner, and Capital Maritime & Trading Corp., a Marshall Islands corporation, as the Organizational Limited Partner, together with any other Persons who become Partners in the Partnership or parties hereto as provided herein. In consideration of the covenants, conditions and agreements contained herein, the parties agree as follows:


ARTICLE I

DEFINITIONS

               SECTION 1.1. Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

              "Acquisition" means any transaction in which any Group Member acquires (through an asset acquisition, merger, stock acquisition or other form of investment) control over all or a portion of the assets, properties or business of another Person for the purpose of increasing the operating capacity or asset base of the Partnership Group from the operating capacity or asset base of the Partnership Group existing immediately prior to such transaction; provided however, that any acquisition of properties or assets of another Person that is made solely for investment purposes shall not constitute an Acquisition under this Agreement.

              "Adjusted Operating Surplus" means, with respect to any period, Operating Surplus generated with respect to such period (a) less (i) any net increase in Working Capital Borrowings with respect to such period and (ii) any net decrease in cash reserves for Operating Expenditures with respect to such period to the extent such reduction does not relate to an Operating Expenditure made with respect to such period, and (b) plus (i) any net decrease in Working Capital Borrowings with respect to such period, and (ii) any net increase in cash reserves for Operating Expenditures with respect to such period to the extent such reserve is required by any debt instrument for the repayment of principal, interest or premium. Adjusted Operating Surplus does not include that portion of Operating Surplus included in clause (a)(i) of the definition of Operating Surplus.

              "Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

              "Agreed Value" means the fair market value of the applicable property or other consideration at the time of contribution or distribution, as the case may be, as determined by the Board of Directors.

              "Agreement" means this First Amended and Restated Agreement of Limited Partnership of Capital Product Partners L.P., as it may be amended, supplemented or restated from time to time.

              "Annual Meeting" means the meeting of Limited Partners to be held every year commencing in 2008 to elect the Elected Directors as provided in Section 13.4 and to vote on any other matters brought before the meeting in accordance with this Agreement.

              "Appointed Directors" means the members of the Board of Directors appointed by the General Partner in accordance with the provisions of Article VII.

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              "Associate" means, when used to indicate a relationship with any Person: (a) any corporation or organization of which such Person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same principal residence as such Person.

              "Audit Committee" means a committee of the Board of Directors of the Partnership composed of a minimum of three members of the Board of Directors then serving who meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading.

              "Available Cash" means, with respect to any Quarter ending prior to the Liquidation Date:

              Notwithstanding the foregoing, "Available Cash" with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

              "Board of Directors" means the seven-member board of directors of the Partnership, composed of Appointed Directors and Elected Directors appointed or elected, as the case may be, in accordance with the provisions of Article VII and a majority of whom are not United States citizens or residents, which, pursuant to Section 7.1, and subject to Section 7.10, oversees and directs the operations, management and policies of the Partnership. The Board of Directors shall constitute a committee within the meaning of Section 30(2)(g) of the Marshall Islands Act.

              "Business Day" means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

              "Capital Contribution" means any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner contributes to the Partnership.

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              "Capital Improvement" means any (a) addition or improvement to the capital assets owned by any Group Member or (b) acquisition of existing, or the construction of new, capital assets, in each case if such addition, improvement, acquisition or construction is made to increase the operating capacity or asset base of the Partnership Group from the operating capacity or asset base of the Partnership Group existing immediately prior to such addition, improvement, acquisition or construction.

              "Capital Surplus" has the meaning assigned to such term in Section 6.1(a).

              "Cause" means a court of competent jurisdiction has entered a final, non-appealable judgment finding a Person liable for actual fraud or willful misconduct in its capacity as a general partner of the Partnership or as a member of the Board of Directors, as the case may be.

              "Certificate" means a certificate (i) substantially in the form of Exhibit A to this Agreement, (ii) issued in global or book entry form in accordance with the rules and regulations of the Depositary or (iii) in such other form as may be adopted by the Board of Directors, issued by the Partnership evidencing ownership of one or more Common Units or a certificate, in such form as may be adopted by the Board of Directors, issued by the Partnership evidencing ownership of one or more other Partnership Securities.

              "Certificate of Limited Partnership" means the Certificate of Limited Partnership of the Partnership filed with the Registrar of Corporations of The Marshall Islands as referenced in Section 7.9 as such Certificate of Limited Partnership may be amended, supplemented or restated from time to time.

              "claim" (as used in Section 7.19(c)) has the meaning assigned to such term in Section 7.19(c).

              "Closing Date" means the first date on which Common Units are sold by the Partnership to the Underwriters pursuant to the provisions of the Purchase Agreement.

              "Closing Price" means, in respect of any class of Limited Partner Interests, as of the date of determination, the last sale price on such day, regular way, or in case no such sale takes place on such day, the average of the closing bid and asked prices on such day, regular way, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal National Securities Exchange on which the respective Limited Partner Interests are listed or admitted to trading or, if such Limited Partner Interests are not listed or admitted to trading on any National Securities Exchange, the last quoted price on such day or, if not so quoted, the average of the high bid and low asked prices on such day in the over-the-counter market, as reported by any quotation system then in use with respect to such Limited Partner Interests, or, if on any such day such Limited Partner Interests of such class are not quoted by any such system, the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in such Limited Partner Interests of such class selected by the Board of Directors, or if on any such day no market maker is making a market in such Limited Partner Interests of such class, the fair value of such Limited Partner Interests on such day as determined by the Board of Directors.

              "Code" means the United States Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

              "Combined Interest" has the meaning assigned to such term in Section 11.3(a).

              "Commences Commercial Service" and "Commenced Commercial Service" shall mean the date a Capital Improvement is first put into service by a Group Member following, if applicable, completion of construction and testing.

              "Commission" means the United States Securities and Exchange Commission.

A-3


              "Common Unit" means a Partnership Security representing a fractional part of the Partnership Interests of all Limited Partners, and having the rights and obligations specified with respect to Common Units in this Agreement. The term "Common Unit" does not refer to a Subordinated Unit prior to its conversion into a Common Unit pursuant to the terms hereof.

              "Common Unit Arrearage" means, with respect to any Common Unit, whenever issued, as to any Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to Section 6.2(a)(i).

              "Conflicts Committee" means a committee of the Board of Directors composed entirely of three or more directors who are not (a) security holders, officers or employees of the General Partner, (b) officers, directors or employees of any Affiliate of the General Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units and who also meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading.

              "Contributed Property" means each property or other asset, in such form as may be permitted by the Marshall Islands Act, but excluding cash, contributed to the Partnership.

              "Contribution Agreement" means that certain Contribution and Conveyance Agreement, dated as of the Closing Date, among the General Partner, the Partnership, the Operating Company and Capital Maritime & Trading Corp., together with the additional conveyance documents and instruments contemplated or referenced thereunder.

              "Cumulative Common Unit Arrearage" means, with respect to any Common Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the Subordination Period ending on or before the last day of such Quarter over (b) the sum of any distributions theretofore made pursuant to Section 6.2(a)(ii) and the second sentence of Section 6.3 with respect to an Initial Common Unit (including any distributions to be made in respect of the last of such Quarters).

              "Current Market Price" means, in respect of any class of Limited Partner Interests, as of the date of determination, the average of the daily Closing Prices per Limited Partner Interest of such class for the 20 consecutive Trading Days immediately prior to such date.

              "Departing General Partner" means a former General Partner from and after the effective date of any withdrawal or removal of such former General Partner pursuant to Section 11.1 or 11.2.

              "Depositary" means, with respect to any Units issued in global form, The Depository Trust Company and its successors and permitted assigns.

              "Elected Directors" means the members of the Board of Directors who are elected or appointed as such in accordance with the provisions of Article VII and at least three of whom are not (a) security holders, officers or employees of the General Partner, (b) officers, directors or employees of any Affiliate of the General Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units and who also meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading.

A-4


              "Estimated Maintenance Capital Expenditures" means an estimate made in good faith by the Board of Directors (with the concurrence of the Conflicts Committee) of the average quarterly Maintenance Capital Expenditures that the Partnership will need to incur to maintain the operating capacity or asset base of the Partnership Group, existing at the time the estimate is made. The Board of Directors (with the concurrence of the Conflicts Committee) will be permitted to make such estimate in any manner it determines reasonable. The estimate will be made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of Maintenance Capital Expenditures on a long-term basis. The Partnership shall disclose to its Partners any change in the amount of Estimated Maintenance Capital Expenditures in its reports made in accordance with Section 8.3 to the extent not previously disclosed. Except as provided in the definition of Subordination Period, any adjustments to Estimated Maintenance Capital Expenditures shall be prospective only.

              "Event of Withdrawal" has the meaning assigned to such term in Section 11.1(a).

              "Expansion Capital Expenditures" means cash expenditures for Acquisitions or Capital Improvements. Expansion Capital Expenditures shall not include Maintenance Capital Expenditures. Expansion Capital Expenditures shall include interest (and related fees) on debt incurred and distributions on equity incurred, in each case, to finance the construction of a Capital Improvement and paid during the period beginning on the date that the Partnership enters into a binding obligation to commence construction of the Capital Improvement and ending on the earlier to occur of the date that such Capital Improvement Commences Commercial Service or the date that such Capital Improvement is abandoned or disposed of. Debt incurred or equity issued to fund any such construction period interest payments, or such construction period distributions on equity paid during such period shall also be deemed to be debt or equity, as the case may be, incurred to finance the construction of a Capital Improvement.

              "First Target Distribution" means $0.4313 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2007, it means the product of $0.4313 multiplied by a fraction of which the numerator is the number of days in such period, and of which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with Section 6.4.

              "Fully Diluted Basis" means, when calculating the number of Outstanding Units for any period, a basis that includes, in addition to the Outstanding Units, all Partnership Securities and options, rights, warrants and appreciation rights relating to an equity interest in the Partnership (a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than the Current Market Price on the date of such calculation, (c) that may be converted into or exercised or exchanged for such Units prior to or during the Quarter immediately following the end of the period for which the calculation is being made without the satisfaction of any contingency beyond the control of the holder other than the payment of consideration and the compliance with administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not converted into or exercised or exchanged for such Units during the period for which the calculation is being made; provided, however, that for purposes of determining the number of Outstanding Units on a Fully Diluted Basis when calculating whether the Subordination Period has ended or Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have been Outstanding Units only for the four Quarters that comprise the last four Quarters of the measurement period; and, provided further, that if consideration will be paid to any Group Member in connection with such conversion, exercise or exchange, the number of Units to be included in such calculation shall be that number equal to the difference between (i) the number of Units issuable upon such conversion, exercise or exchange and (ii) the number of Units that such consideration would purchase at the Current Market Price.

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              "General Partner" means Capital GP L.L.C., a Marshall Islands limited liability company, and its successors and permitted assigns that are admitted to the Partnership as general partner of the Partnership, in its capacity as general partner of the Partnership (except as the context otherwise requires).

              "General Partner Interest" means the ownership interest of the General Partner in the Partnership (in its capacity as a general partner and without reference to any Limited Partner Interest held by it), which is evidenced by General Partner Units and includes any and all benefits to which the General Partner is entitled as provided in this Agreement, together with all obligations of the General Partner to comply with the terms and provisions of this Agreement.

              "General Partner Unit" means a fractional part of the General Partner Interest having the rights and obligations specified with respect to the General Partner Interest. A General Partner Unit is not a Unit except as provided in Section 11.2.

              "Group" means a Person that with or through any of its Affiliates or Associates has any agreement, arrangement, understanding or relationship for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or consent solicitation made to 10 or more Persons) or disposing of any Partnership Securities with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, Partnership Securities.

              "Group Member" means a member of the Partnership Group.

              "Group Member Agreement" means the partnership agreement of any Group Member, other than the Partnership, that is a limited or general partnership, the limited liability company agreement of any Group Member that is a limited liability company, the certificate of incorporation and bylaws (or similar organizational documents) of any Group Member that is a corporation, the joint venture agreement or similar governing document of any Group Member that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture, in each case as such may be amended, supplemented or restated from time to time.

              "Holder" as used in Section 7.19, has the meaning assigned to such term in Section 7.19(a).

              "Incentive Distribution Right" means a non-voting Limited Partner Interest issued to the General Partner, which Partnership Interest will confer upon the holder thereof only the rights and obligations specifically provided in this Agreement with respect to Incentive Distribution Rights (and no other rights otherwise available to or other obligations of a holder of a Partnership Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any Partnership matter except as may otherwise be required by law.

              "Incentive Distributions" means any amount of cash distributed to the holders of the Incentive Distribution Rights pursuant to Sections 6.2(a)(v), (vi) and (vii) and 6.2(b)(iii), (iv) and (v).

              "Indemnified Persons" has the meaning assigned to such term in Section 7.19(c).

              "Indemnitee" means (a) the General Partner, (b) any Departing General Partner, (c) any Person who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person who is or was a member, partner, director, officer, fiduciary or trustee of any Person which any of the preceding clauses of this definition describes, (e) any Person who is or was serving at the request of the General Partner or any Departing General Partner or any Affiliate of the General Partner or any Departing General Partner as an officer, director, member, partner, fiduciary or trustee of another Person (provided, however, that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services), (f) the members of the Board of

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Directors, and (g) any other Person the Board of Directors designates as an "Indemnitee" for purposes of this Agreement.

              "Initial Common Units" means the Common Units sold in the Initial Offering.

              "Initial General Partner Interest" has the meaning set forth in Section 5.1.

              "Initial Limited Partner Interest" has the meaning set forth in Section 5.1.

              "Initial Limited Partners" means Capital Maritime & Trading Corp. and the General Partner (with respect to the Incentive Distribution Rights received by it pursuant to Section 5.2(a)), in each case upon being admitted to the Partnership in accordance with Section 10.1.

              "Initial Offering" means the initial offering and sale of Common Units to the public, as described in the Registration Statement.

              "Initial Unit Price" means (a) with respect to the Common Units and the Subordinated Units, the initial public offering price per Common Unit at which the Underwriters offered the Common Units to the public for sale as set forth on the cover page of the prospectus included as part of the Registration Statement and first issued at or after the time the Registration Statement first became effective or (b) with respect to any other class or series of Units, the price per Unit at which such class or series of Units is initially sold by the Partnership, as determined by the Board of Directors, in each case adjusted as the Board of Directors determines to be appropriate to give effect to any distribution, subdivision or combination of Units.

              "Interim Capital Transactions" means the following transactions if they occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working Capital Borrowings and other than for items purchased on open account in the ordinary course of business) by any Group Member and sales of debt securities of any Group Member; (b) sales of equity interests of any Group Member (including the Common Units sold to the Underwriters pursuant to the exercise of the Over-Allotment Option); (c) sales or other voluntary or involuntary dispositions of any assets of any Group Member other than (i) sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business and (ii) sales or other dispositions of assets as part of normal retirements or replacements; (d) the termination of interest rate swap agreements; (e) capital contributions received; and (f) corporate reorganizations or restructurings.

              "Investment Capital Expenditures" means capital expenditures other than Maintenance Capital Expenditures or Expansion Capital Expenditures.

              "Limited Partner" means, unless the context otherwise requires, the Organizational Limited Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing General Partner upon the change of its status from General Partner to Limited Partner pursuant to Section 11.3, in each case, in such Person's capacity as a limited partner of the Partnership; provided, however, that when the term "Limited Partner" is used herein in the context of any vote or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose, include any holder of an Incentive Distribution Right (solely with respect to its Incentive Distribution Rights and not with respect to any other Limited Partner Interest held by such Person) except as may otherwise be required by law. Limited Partners may include custodians, nominees or any other individual or entity in its own or any representative capacity.

              "Limited Partner Interest" means the ownership interest of a Limited Partner in the Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution Rights or other Partnership Securities or a combination thereof or interest therein, and includes any and all benefits to which such Limited Partner is entitled as provided in this Agreement, together with all obligations of such Limited Partner to comply with the terms and provisions of this Agreement; provided, however,

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that when the term "Limited Partner Interest" is used herein in the context of any vote or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose, include any Incentive Distribution Right except as may otherwise be required by law.

              "Liquidation Date" means (a) in the case of an event giving rise to the dissolution of the Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the date on which the applicable time period during which the holders of Outstanding Units have the right to elect to continue the business of the Partnership has expired without such an election being made, and (b) in the case of any other event giving rise to the dissolution of the Partnership, the date on which such event occurs.

              "Liquidator" means one or more Persons selected by the Board of Directors to perform the functions described in Section 12.4.

              "Maintenance Capital Expenditures" means cash expenditures (including expenditures for the addition or improvement to the capital assets owned by any Group Member or for the acquisition of existing, or the construction of new, capital assets) if such expenditure is made to maintain the operating capacity or asset base of the Partnership Group. Maintenance Capital Expenditures shall not include (a) Expansion Capital Expenditures or (b) expenditures made solely for investment purposes (as opposed to maintenance purposes). Maintenance Capital Expenditures shall include interest (and related fees) on debt incurred and distributions on equity incurred, in each case, to finance the construction of a replacement asset and paid during the period beginning on the date that the Group Member enters into a binding obligation to commence constructing a replacement asset and ending on the earlier to occur of the date that such replacement asset Commences Commercial Service or the date that such replacement asset is abandoned or disposed of. Debt incurred to pay or equity issued to fund the construction period interest payments, or such construction period distributions on equity shall also be deemed to be debt or equity, as the case may be, incurred to finance the construction of a replacement asset.

              "Marshall Islands Act" means the Limited Partnership Act of The Republic of the Marshall Islands, as amended, supplemented or restated from time to time, and any successor to such statute.

              "Merger Agreement" has the meaning assigned to such term in Section 14.1.

              "Minimum Quarterly Distribution" means $0.3750 per Unit per Quarter (or with respect to the period commencing on the Closing Date and ending on June 30, 2007, it means the product of $0.3750 multiplied by a fraction of which the numerator is the number of days in such period and of which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with Section 6.4.

              "National Securities Exchange" means an exchange registered with the Commission under Section 6(a) of the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

              "Net Agreed Value" means, (a) in the case of any Contributed Property, the Agreed Value of such property reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed, and (b) in the case of any property distributed to a Partner by the Partnership, the Agreed Value of such property, reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution.

              "Notice of Election to Purchase" has the meaning assigned to such term in Section 15.1(b).

              "Officers" means the officers of the General Partner.

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              "Omnibus Agreement" means that Omnibus Agreement, dated as of the Closing Date, among Capital Maritime & Trading Corp., the Partnership, the General Partner and the Operating Company.

              "Operating Company" means Capital Product Operating L.L.C., a Marshall Islands limited liability company, and any successors thereto.

              "Operating Company Agreement" means the First Amended and Restated Limited Liability Company Agreement of the Operating Company, as it may be amended, supplemented or restated from time to time.

              "Operating Expenditures" means all Partnership Group expenditures, including taxes, reimbursements of the General Partner, repayment of Working Capital Borrowings, debt service payments and capital expenditures, subject to the following:

              Where capital expenditures consist of both (x) Maintenance Capital Expenditures and (y) Expansion Capital Expenditures and/or Investment Capital Expenditures, the General Partner, with the concurrence of the Conflicts Committee, shall determine the allocation between the amounts paid for each.

              "Operating Surplus" means, with respect to any period ending prior to the Liquidation Date, on a cumulative basis and without duplication:

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              Notwithstanding the foregoing, "Operating Surplus" with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

              "Opinion of Counsel" means a written opinion of counsel (who may be regular counsel to the Partnership or the General Partner or any of its Affiliates) acceptable to the Board of Directors.

              "Option Closing Date" means the date or dates on which any Common Units are sold by Capital Maritime & Trading Corp. to the Underwriters upon exercise of the Over-Allotment Option.

              "Organizational Limited Partner" means Capital Maritime & Trading Corp. in its capacity as the organizational limited partner of the Partnership pursuant to this Agreement.

              "Outstanding" means, with respect to Partnership Securities, all Partnership Securities that are issued by the Partnership and reflected as outstanding on the Partnership's books and records as of the date of determination; provided, however, that if at any time any Person or Group (other than the General Partner or its Affiliates) beneficially owns 5% or more of the Outstanding Partnership Securities of any class then Outstanding, all Partnership Securities owned by such Person or Group in excess of 4.9% of the Outstanding Partnership Securities shall not be voted on any matter and shall not be considered to be Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required by law), calculating required votes, except for purposes of nominating a Person for election to the Board of Directors pursuant to Section 7.3, determining the presence of a quorum or for other similar purposes under this Agreement, except that Partnership Securities so owned shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Partnership Securities shall not, however, be treated as a separate class of Partnership Securities for purposes of this Agreement); provided, further, that the foregoing limitation shall not apply to (i) any Person or Group who acquired 5% or more of the Outstanding Partnership Securities of any class then Outstanding directly from the General Partner or its Affiliates, (ii) any Person or Group who acquired 5% or more of any Outstanding Partnership Securities of any class then Outstanding directly or indirectly from a Person or Group described in clause (i) provided that the General Partner shall have notified such Person or Group in writing that such limitation shall not apply, or (iii) any Person or Group who acquired 5% or more of any Partnership Securities issued by the Partnership with the prior approval of the Board of Directors.

              "Over-Allotment Option" means the over-allotment option granted to the Underwriters pursuant to the Purchase Agreement.

              "Partners" means the General Partner and the Limited Partners.

              "Partnership" means Capital Product Partners L.P., a Marshall Islands limited partnership, and any successors thereto.

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              "Partnership Group" means the Partnership and its Subsidiaries, including the Operating Company, treated as a single entity.

              "Partnership Interest" means an interest in the Partnership, which shall include the General Partner Interest and Limited Partner Interests.

              "Partnership Security" means any class or series of equity interest in the Partnership (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in the Partnership), including Common Units, Subordinated Units and Incentive Distribution Rights.

              "Percentage Interest" means as of any date of determination (a) as to the General Partner with respect to General Partner Units and as to any Unitholder with respect to Units, the product obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the quotient obtained by dividing (A) the number of Units held by such Unitholder or the number of General Partner Units held by the General Partner, as the case may be, by (B) the total number of all Outstanding Units and General Partner Units, and (b) as to the holders of other Partnership Securities issued by the Partnership in accordance with Section 5.5, the percentage established as a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right shall at all times be zero.

              "Person" means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, governmental agency or political subdivision thereof or other entity.

              "Pro Rata" means (a) when used with respect to Units or any class thereof, apportioned equally among all designated Units in accordance with their relative Percentage Interests, (b) when used with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in accordance with their relative Percentage Interests and (c) when used with respect to holders of Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution Rights in accordance with the relative number or percentage of Incentive Distribution Rights held by each such holder.

              "Purchase Agreement" means the Purchase Agreement dated [            ], 2007 among the Underwriters, the Partnership, the General Partner, the Operating Company, and Capital Maritime & Trading Corp., providing for the purchase of Common Units by such Underwriters.

              "Purchase Date" means the date determined by the General Partner as the date for purchase of all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests owned by the General Partner and its Affiliates) pursuant to Article XV.

              "Quarter" means, unless the context requires otherwise, a fiscal quarter, or, with respect to the first fiscal quarter including the Closing Date, the portion of such fiscal quarter after the Closing Date, of the Partnership.

              "Record Date" means the date established by the Board of Directors or otherwise in accordance with this Agreement for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of Partnership action in writing without a meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.

              "Record Holder" means (a) the Person in whose name a Common Unit is registered on the books of the Transfer Agent as of the opening of business on a particular Business Day, or (b) with respect to other Partnership Interests, the Person in whose name any such other Partnership Interest is registered on the books that the Board of Directors has caused to be kept by the General Partner as of the opening of business on such Business Day.

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              "Registration Statement" means the Registration Statement on Form F-1 (Registration No. 333-[            ]) as it has been or as it may be amended or supplemented from time to time, filed by the Partnership with the Commission under the Securities Act to register the offering and sale of the Common Units in the Initial Offering.

              "Second Target Distribution" means $0.4688 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2007, it means the product of $0.4688 multiplied by a fraction of which the numerator is equal to the number of days in such period and of which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with Section 6.4.

              "Securities Act" means the Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute.

              "Special Approval" means approval by a majority of the members of the Conflicts Committee.

              "Subordinated Unit" means a Unit representing a fractional part of the Partnership Interests of all Limited Partners and having the rights and obligations specified with respect to Subordinated Units in this Agreement. The term "Subordinated Unit" does not include a Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute a Common Unit until such conversion occurs.

              "Subordination Period" means the period commencing on the Closing Date and ending on the first to occur of the following dates:

              For purposes of determining whether the test in subclause (a)(i)(B) above has been satisfied, Adjusted Operating Surplus will be adjusted upwards or downwards if the Conflicts Committee determines in good faith that the amount of Estimated Maintenance Capital Expenditures used in the determination of Adjusted Operating Surplus in subclause (a)(i)(B) was materially incorrect, based on circumstances prevailing at the time of original determination of Estimated Maintenance Capital Expenditures, for any one or more of the preceding three four-Quarter periods.

              "Subsidiary" means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries (as defined, but excluding

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subsection (d) of this definition) of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary (as defined, but excluding subsection (d) of this definition) of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries (as defined, but excluding subsection (d) of this definition) of such Person, or a combination thereof, (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries (as defined, but excluding subsection (d) of this definition) of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person, or (d) any other Person in which such Person, one or more Subsidiaries (as defined, but excluding subsection (d) of this definition) of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) less than a majority ownership interest or (ii) less than the power to elect or direct the election of a majority of the directors or other governing body of such Person, provided that (A) such Person, one or more Subsidiaries (as defined, but excluding this subsection (d) of this definition) of such Person, or a combination thereof, directly or indirectly, at the date of the determination, has at least a 20% ownership interest in such other Person, (B) such Person accounts for such other Person (under U.S. GAAP, as in effect on the later of the date of investment in such other Person or material expansion of the operations of such other Person) on a consolidated or equity accounting basis, (C) such Person has directly or indirectly material negative control rights regarding such other Person including over such other Person's ability to materially expand its operations beyond that contemplated at the date of investment in such other Person, and (D) such other Person is (i) other than with respect to the Operating Company, formed and maintained for the sole purpose of owning or leasing, operating and chartering no more than 10 vessels for a period of no more than 40 years, and (ii) obligated under its constituent documents, or as a result of a unanimous agreement of its owners, to distribute to its owners all of its income on at least an annual basis (less any cash reserves that are approved by such Person).

              "Surviving Business Entity" has the meaning assigned to such term in Section 14.2(b).

              "Third Target Distribution" means $0.5625 per unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2007, it means the product of $0.5625 multiplied by a fraction of which the numerator is equal to the number of days in such period and of which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with Section 6.4.

              "Trading Day" means, for the purpose of determining the Current Market Price of any class of Limited Partner Interests, a day on which the principal National Securities Exchange on which such class of Limited Partner Interests is listed is open for the transaction of business or, if Limited Partner Interests of a class are not listed on any National Securities Exchange, a day on which banking institutions in New York City generally are open.

              "transfer" has the meaning assigned to such term in Section 4.4(a).

              "Transfer Agent" means such bank, trust company or other Person (including the General Partner or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as registrar and transfer agent for the Common Units; provided, however, that if no Transfer Agent is specifically designated for any other Partnership Securities, the General Partner shall, at the direction of the Board of Directors, act in such capacity.

              "Underwriter" means each Person named as an underwriter in Schedule I to the Purchase Agreement who purchases Common Units pursuant thereto.

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              "Unit" means a Partnership Security that is designated as a "Unit" and shall include Common Units and Subordinated Units but shall not include (i) General Partner Units (or the General Partner Interest represented thereby) or (ii) the Incentive Distribution Rights.

              "Unitholders" means the holders of Units.

              "Unit Majority" means, during the Subordination Period, at least a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates) voting as a class and at least a majority of the Outstanding Subordinated Units voting as a class, and after the end of the Subordination Period, at least a majority of the Outstanding Common Units.

              "Unit Register" means the register of the Partnership for the registration and transfer of Limited Partnership Interests as provided in Section 4.5.

              "Unrecovered Capital" means at any time, with respect to a Unit, the Initial Unit Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in connection with the dissolution and liquidation of the Partnership theretofore made in respect of an Initial Common Unit, adjusted as the Board of Directors determines to be appropriate to give effect to any distribution, subdivision or combination of such Units.

              "U.S. GAAP" means United States generally accepted accounting principles consistently applied.

              "Withdrawal Opinion of Counsel" has the meaning assigned to such term in Section 11.1(b).

              "Working Capital Borrowings" means borrowings used solely for working capital purposes or to pay distributions to Partners made pursuant to a credit facility, commercial paper facility or similar financing arrangement available to a Group Member, provided that when such borrowing is incurred it is the intent of the borrower to repay such borrowing within 12 months from other than additional Working Capital Borrowings.

              SECTION 1.2. Construction. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) the term "include" or "includes" means includes, without limitation, and "including" means including, without limitation; and (d) the terms "hereof", "herein" and "hereunder" refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.


ARTICLE II

ORGANIZATION

              SECTION 2.1. Formation. The General Partner and the Organizational Limited Partner have previously formed the Partnership as a limited partnership pursuant to the provisions of the Marshall Islands Act and hereby amend and restate the original Agreement of Limited Partnership of Capital Product Partners L.P. in its entirety. This amendment and restatement shall become effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution and termination of the Partnership shall be governed by the Marshall Islands Act. All Partnership Interests shall constitute personal property of the owner thereof for all purposes and a Partner has no interest in specific Partnership property.

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              SECTION 2.2. Name. The name of the Partnership shall be "Capital Product Partners L.P." The Partnership's business may be conducted under any other name or names as determined by the Board of Directors. The words "Limited Partnership" or the letters "L.P." or similar words or letters shall be included in the Partnership's name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The Board of Directors may change the name of the Partnership at any time and from time to time in compliance with the requirements of the Marshall Islands Act and shall notify the General Partner and the Limited Partners of such change in the next regular communication to the Limited Partners.

              SECTION 2.3. Registered Office; Registered Agent; Principal Office; Other Offices. Unless and until changed by the Board of Directors, the registered office of the Partnership in The Marshall Islands shall be located at Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH 96960, and the registered agent for service of process on the Partnership in The Marshall Islands at such registered office shall be The Trust Company of The Marshall Islands, Inc. The principal office of the Partnership shall be located at 3 Iassonos Street, Piraeus, 185 37 Greece, or such other place as the Board of Directors may from time to time designate by notice to the General Partner and the Limited Partners. The Partnership may maintain offices at such other place or places within or outside The Marshall Islands as the Board of Directors determines to be necessary or appropriate. The address of the General Partner shall be at 3 Iassonos Street, Piraeus, 185 37 Greece, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.

              SECTION 2.4. Purpose and Business. The purpose and nature of the business to be conducted by the Partnership shall be to (a) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that lawfully may be conducted by a limited partnership organized pursuant to the Marshall Islands Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Partnership pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member. The Board of Directors shall have no duty or obligation to propose or approve, and may decline to propose or approve, the conduct by the Partnership of any business free of any fiduciary duty or obligation whatsoever to the Partnership, the General Partner and any Limited Partner and, in declining to so propose or approve, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or regulation.

              SECTION 2.5. Powers. The Partnership shall be empowered to do any and all acts and things necessary and appropriate for the furtherance and accomplishment of the purposes and business described in Section 2.4 and for the protection and benefit of the Partnership.

              SECTION 2.6. Power of Attorney. (a) Each Limited Partner hereby constitutes and appoints the General Partner, under the supervision of the Board of Directors, and, if a Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any successor to the Liquidator by merger, transfer, assignment, election or otherwise) and each of their authorized officers and attorneys-in-fact, as the case may be, with full power of substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead, to:

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              Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to make an amendment to this Agreement.

              SECTION 2.7. Term. The term of the Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Marshall Islands Act and shall continue in existence until the dissolution of the Partnership in accordance with the provisions of Article XII. The existence of the

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Partnership as a separate legal entity shall continue until the cancellation of the Certificate of Limited Partnership as provided in the Marshall Islands Act.

              SECTION 2.8. Title to Partnership Assets. Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the Board of Directors may determine. The General Partner hereby declares and warrants that any Partnership assets for which record title is held in the name of the General Partner or one or more of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use commercially reasonable efforts to cause record title to such assets (other than those assets in respect of which the Board of Directors determines that the expense and difficulty of conveyancing makes transfer of record title to the Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable; and, provided further, that, prior to the withdrawal or removal of the General Partner or as soon thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer of record title to the Partnership and, prior to any such transfer, will provide for the use of such assets in a manner satisfactory to the Board of Directors. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which record title to such Partnership assets is held.


ARTICLE III

RIGHTS OF LIMITED PARTNERS

              SECTION 3.1. Limitation of Liability. The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or the Marshall Islands Act.

              SECTION 3.2. Management of Business. No Limited Partner, in its capacity as such, shall participate in the operation, management or control (within the meaning of the Marshall Islands Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any officer, director, employee, manager, member, general partner, agent or trustee of the General Partner or any of its Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be participation in the control of the business of the Partnership by a limited partner of the Partnership (within the meaning of Section 30 of the Marshall Islands Act) and shall not affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement.

              SECTION 3.3. Outside Activities of the Limited Partners. Subject to the provisions of Section 7.12 and the Omnibus Agreement, which shall continue to be applicable to the Persons referred to therein, regardless of whether such Persons shall also be Limited Partners, any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership Group. Neither the Partnership nor any of the other Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner.

              SECTION 3.4. Rights of Limited Partners. (a) In addition to other rights provided by this Agreement or by applicable law, and except as limited by Section 3.4(b), each Limited Partner shall

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have the right, for a purpose reasonably related to such Limited Partner's interest as a Limited Partner in the Partnership, upon reasonable written demand and at such Limited Partner's own expense, to:


ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS

              SECTION 4.1. Certificates. Upon the Partnership's issuance of Common Units or Subordinated Units to any Person, the Partnership shall issue, upon the request of such Person, one or more Certificates in the name of such Person evidencing the number of such Units being so issued. In addition, (a) upon the General Partner's request, the Partnership shall issue to it one or more Certificates in the name of the General Partner evidencing its General Partner Units and (b) upon the request of any Person owning Incentive Distribution Rights or any other Partnership Securities other than Common Units or Subordinated Units, the Partnership shall issue to such Person one or more certificates evidencing such Incentive Distribution Rights or other Partnership Securities other than Common Units or Subordinated Units. Certificates shall be executed on behalf of the Partnership by the Chief Financial Officer or the Secretary or any Assistant Secretary of the General Partner. No Common Unit Certificate shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however, that if the Board of Directors elects to issue Common Units in global form, the Common Unit Certificates shall be valid upon receipt of a certificate from the Transfer Agent certifying that the Common Units have been duly registered in accordance with the directions of the Partnership. Subject to the requirements of Section 6.5(b), the Partners holding Certificates evidencing Subordinated Units may exchange such Certificates for Certificates evidencing Common Units on or after the date on which such Subordinated Units are converted into Common Units pursuant to the terms of Section 5.7.

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              SECTION 4.2. Mutilated, Destroyed, Lost or Stolen Certificates. (a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate Officers on behalf of the Partnership shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of Partnership Securities as the Certificate so surrendered.


 
    
    
    (i)   makes proof by affidavit, in form and substance satisfactory to the Partnership, that a previously issued Certificate has been lost, destroyed or stolen;

 
 
(ii)
 
requests the issuance of a new Certificate before the Partnership has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

 
 
(iii)
 
if requested by the Partnership, delivers to the Partnership a bond, in form and substance satisfactory to the Partnership, with surety or sureties and with fixed or open penalty as the Board of Directors may direct to indemnify the Partnership, the Partners, the General Partner and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and

 
 
(iv)
 
satisfies any other reasonable requirements imposed by the Board of Directors.

              If a Limited Partner fails to notify the Partnership within a reasonable period of time after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the Limited Partner Interests represented by the Certificate is registered before the Partnership, the General Partner or the Transfer Agent receives such notification, the Limited Partner shall be precluded from making any claim against the Partnership, the General Partner or the Transfer Agent for such transfer or for a new Certificate.

              SECTION 4.3. Record Holders. The Partnership shall be entitled to recognize the Record Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such Partnership Interest on the part of any other Person, regardless of whether the Partnership shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading. Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Partnership Interests, as between the Partnership on the one hand, and such other Persons on the other, such representative Person shall be the Record Holder of such Partnership Interest.

              SECTION 4.4. Transfer Generally. (a) The term "transfer," when used in this Agreement with respect to a Partnership Interest, shall be deemed to refer to a transaction (i) by which the General Partner assigns its General Partner Interest to another Person or by which a holder of Incentive Distribution Rights assigns its Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii) by which the holder of a Limited Partner Interest (other than an Incentive

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Distribution Right) assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

              SECTION 4.5. Registration and Transfer of Limited Partner Interests. (a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register in which, subject to such reasonable regulations as it may prescribe and subject to the provisions of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the purpose of registering Common Units and transfers of such Common Units as herein provided. The Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions of Section 4.5(b), the appropriate Officers on behalf of the Partnership shall execute and deliver, and in the case of Common Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder's instructions, one or more new Certificates evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so surrendered.

              SECTION 4.6. Transfer of the General Partner's General Partner Interest. (a) Subject to Section 4.6(c) below, prior to March 31, 2017, the General Partner shall not transfer all or any part of its General Partner Interest (represented by General Partner Units) to a Person unless such transfer (i) has been approved by the prior written consent or vote of the holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B) another Person (other than an individual) in connection with (1) the merger or consolidation of the General Partner with or into such other Person or (2) the transfer by the General Partner of all or substantially all of its assets to such other Person.

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              SECTION 4.7. Transfer of Incentive Distribution Rights. Prior to March 31, 2017, a holder of Incentive Distribution Rights may transfer any or all of the Incentive Distribution Rights held by such holder without any consent of the Unitholders to (a) an Affiliate of such holder (other than an individual) or (b) another Person (other than an individual) in connection with (i) the merger or consolidation of such holder of Incentive Distribution Rights with or into such other Person or (ii) the transfer by such holder of all or substantially all of its assets to such other Person. Any other transfer of the Incentive Distribution Rights prior to March 31, 2017, shall require the prior approval of holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates). On or after March 31, 2017, the General Partner or any other holder of Incentive Distribution Rights may transfer any or all of its Incentive Distribution Rights without Unitholder approval. Notwithstanding anything herein to the contrary, no transfer of Incentive Distribution Rights to another Person shall be permitted unless the transferee agrees to be bound by the provisions of this Agreement. The General Partner and any transferee or transferees of the Incentive Distribution Rights may agree in a separate instrument as to the General Partner's exercise of its rights with respect to the Incentive Distribution Rights under Section 11.3 hereof.

              SECTION 4.8. Restrictions on Transfers. (a) Except as provided in Section 4.8(c) below, but notwithstanding the other provisions of this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i) violate the then applicable U.S. federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer or (ii) terminate the existence or qualification of the Partnership or any Group Member under the laws of the jurisdiction of its formation.


ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

              SECTION 5.1. Organizational Contributions. In connection with the formation of the Partnership under the Marshall Islands Act, the General Partner made an initial Capital Contribution to the Partnership in the amount of $20, for a 2% General Partner Interest in the Partnership (the "Initial General Partner Interest") and has been admitted as the General Partner of the Partnership,

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and the Organizational Limited Partner made an initial Capital Contribution to the Partnership in the amount of $980 for a 98% limited partner interest in the Partnership (the "Initial Limited Partner Interest") and has been admitted as a Limited Partner of the Partnership.

              SECTION 5.2. Initial Unit Issuances. (a) On or prior to the Closing Date and pursuant to the Contribution Agreement, (i) Capital Maritime & Trading Corp. shall sell all of the outstanding shares of seven vessel-owning subsidiaries of Capital Maritime & Trading Corp. to the Partnership, (ii) as consideration therefor, the Partnership shall issue to Capital Maritime & Trading Corp. (A) 11,750,000 Common Units, representing a 56.0% limited partner interest in the Partnership, (B) 8,805,521 Subordinated Units, representing a 42.0% limited partner interest in the Partnership, (C) the Incentive Distribution Rights, (D) $25 million in cash representing a cash dividend and (E) the right to receive an additional dividend in the amount of $30 million payable in cash or a number of Common Units necessary to satisfy the Over-Allotment Option or a combination thereof, as described in Section 5.3., (iii) Capital Maritime & Trading Corp.'s Initial Limited Partner Interest will be converted into one Subordinated Unit, (iv) the Initial General Partner Interest will be converted into 419,500 General Partner Units and (v) Capital Maritime & Trading Corp. will transfer the Incentive Distribution Rights to the General Partner.

              SECTION 5.3. Exercise of the Over-Allotment Option. (a) Pursuant to the Contribution Agreement, upon any exercise of the Over-Allotment Option, the Partnership shall issue Common Units to Capital Maritime & Trading Corp. in an amount equal to the number of Common Units to be purchased by all Underwriters at the Option Closing Date. Upon the earlier of (i) the exercise in full of the Over-Allotment Option and (ii) 30 days after the date of the Purchase Agreement, the Partnership shall pay to Capital Maritime & Trading Corp. an additional cash dividend in an amount of $30 million or a number of Common Units necessary to satisfy the Over-Allotment Option or a combination thereof as described in the Contribution Agreement.

              SECTION 5.4. Interest and Withdrawal. No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon termination of the Partnership may be considered and permitted as such by law and then only to the extent provided for in this Agreement. Except to the extent expressly provided in this Agreement, no Partner shall have priority over any other Partner either as to the return of Capital Contributions or as to profits, losses or distributions.

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              SECTION 5.5. Issuances of Additional Partnership Securities. (a) The Partnership may issue additional Partnership Securities and options, rights, warrants and appreciation rights relating to the Partnership Securities for any Partnership purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as the Board of Directors shall determine, all without the approval of any Limited Partners, but subject to the approval of the General Partner in the case where issuances of equity are not reasonably expected to be accretive to equity within twelve months of issuance or which would otherwise have a material adverse impact on the General Partner or the General Partner Interest.

              SECTION 5.6. Limitations on Issuance of Additional Partnership Securities. The Partnership may issue an unlimited number of Partnership Securities (or options, rights, warrants or appreciation rights related thereto) pursuant to Section 5.5 without the approval of the Limited Partners; provided, however, that no fractional units shall be issued by the Partnership.

              SECTION 5.7. Conversion of Subordinated Units. (a) All of the Outstanding Subordinated Units will convert into Common Units on a one-for-one basis on the first day following the distribution

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of Available Cash to Partners pursuant to Section 6.1(a) in respect of any Quarter ending on or after June 30, 2007, in respect of which:


              SECTION 5.8. Limited Preemptive Right. Except as provided in this Section 5.8 and in Section 5.2(b), no Person shall have any preemptive, preferential or other similar right with respect to the issuance of any Partnership Security, whether unissued, held in the treasury or hereafter created. The General Partner shall have the right, which it may from time to time assign in whole or in part to any of its Affiliates, to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the Partnership issues Partnership Securities to Persons other than the General Partner and its Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and its Affiliates equal to that which existed immediately prior to the issuance of such Partnership Securities.

              SECTION 5.9. Splits and Combinations. (a) Subject to Sections 5.9(d) and 6.4 (dealing with adjustments of distribution levels), the Partnership may make a Pro Rata distribution of Partnership Securities to all Record Holders or may effect a subdivision or combination of Partnership Securities so long as, after any such event, each Partner shall have the same Percentage Interest in the Partnership as before such event, and any amounts calculated on a per Unit basis (including any Common Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of Units are proportionately adjusted.

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              SECTION 5.10. Fully Paid and Non-Assessable Nature of Limited Partner Interests. All Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership, except as such non-assessability may be affected by the Marshall Islands Act.


ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

              SECTION 6.1. Requirement and Characterization of Distributions; Distributions to Record Holders. (a) Within 45 days following the end of each Quarter commencing with the Quarter ending on June 30, 2007, an amount equal to 100% of Available Cash with respect to such Quarter shall, subject to Section 51 of the Marshall Islands Act, be distributed in accordance with this Article VI by the Partnership to the Partners as of the Record Date selected by the Board of Directors. All amounts of Available Cash distributed by the Partnership on any date from any source shall be deemed to be Operating Surplus until the sum of all amounts of Available Cash theretofore distributed by the Partnership to the Partners pursuant to Section 6.2 equals the Operating Surplus from the Closing Date through the close of the immediately preceding Quarter. Any remaining amounts of Available Cash distributed by the Partnership on such date shall, except as otherwise provided in Section 6.3, be deemed to be "Capital Surplus."

              SECTION 6.2. Distributions of Available Cash from Operating Surplus. (a) During Subordination Period. Available Cash with respect to any Quarter or portion thereof within the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Sections 6.1 or 6.3 shall, subject

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to Section 51 of the Marshall Islands Act, be distributed as follows, except as otherwise contemplated by Section 5.5 in respect of other Partnership Securities issued pursuant thereto:

              provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of Section 6.4, the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.2(a)(vii).

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provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of Section 6.4, the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.2(b)(v).

              SECTION 6.3. Distributions of Available Cash from Capital Surplus. Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section 6.1(a) shall, subject to Section 51 of the Marshall Islands Act, be distributed, unless the provisions of Section 6.1 require otherwise, 100% to the General Partner and the Unitholders in accordance with their respective Percentage Interests, until a hypothetical holder of a Common Unit acquired on the Closing Date has received with respect to such Common Unit, during the period since the Closing Date through such date, distributions of Available Cash that are deemed to be Capital Surplus in an aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be Capital Surplus shall then be distributed (a) to the General Partner in accordance with its Percentage Interest and (b) to all Unitholders holding Common Units their Pro Rata share of a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in accordance with Section 6.2.

              SECTION 6.4. Adjustment of Minimum Quarterly Distribution and Target Distribution Levels. The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution, Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be proportionately adjusted in the event of any distribution, combination or subdivision (whether effected

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by a distribution payable in Units or otherwise) of Units or other Partnership Securities in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution, shall be reduced in the same proportion that the distribution had to the fair market value of the Common Units prior to the announcement of the distribution. If the Common Units are publicly traded on a National Securities Exchange, the fair market value will be the Current Market Price before the ex-dividend date. If the Common Units are not publicly traded, the fair market value will be determined by the Board of Directors.

              SECTION 6.5. Special Provisions Relating to the Holders of Subordinated Units. (a) Except with respect to the right to vote on or approve matters requiring the vote or approval of a percentage of the holders of Outstanding Common Units and the right to participate in distributions made with respect to Common Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a Unitholder holding Common Units hereunder; provided, however, that immediately upon the conversion of Subordinated Units into Common Units pursuant to Section 5.7, the Unitholder holding a Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common Units hereunder, including the right to vote as a Common Unitholder and the right to participate in distributions made with respect to Common Units.

              SECTION 6.6. Special Provisions Relating to the Holders of Incentive Distribution Rights. Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Incentive Distribution Rights (a) shall possess the rights and obligations provided in this Agreement with respect to a Limited Partner pursuant to Articles III and VII and (b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders of Outstanding Units, except as provided by law, or (ii) be entitled to any distributions other than as provided in Sections 6.2(a)(v), (vi) and (vii), 6.2(b)(iii), (iv) and (v), and 12.4.


ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS

              SECTION 7.1. Management. (a) The Board of Directors shall have the power to oversee and direct the operations, management and policies of the Partnership on an exclusive basis. No Limited Partner shall have any management power or control over the business and affairs of the Partnership. Except as otherwise expressly provided in this Agreement, the business and affairs of the Partnership shall be managed by the General Partner under the direction of the Board of Directors, and the day-to-day activities of the Partnership initially shall be conducted on the Partnership's behalf by the Officers, who shall be agents of the Partnership. The General Partner, except as otherwise expressly provided in this Agreement, hereby irrevocably delegates to the Board of Directors the authority to oversee and direct the operations, management and policies of the Partnership on an exclusive basis that it may now or hereafter possess under applicable law. The General Partner further agrees to take any and all action necessary and appropriate, in the sole discretion of the Board of Directors, to effect any duly authorized actions by the Board of Directors, including executing or filing any agreements, instruments or certificates, delivering all documents, providing all information and taking or refraining

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from taking action as may be necessary or appropriate to achieve the effective delegation of power described in this Section 7.1(a). Each of the Partners and each Person who may acquire an interest in a Partnership Interest hereby approves, consents to, ratifies and confirms such delegation. The delegation by the General Partner to the Board of Directors of management powers over the business and affairs of the Partnership pursuant to the provisions of this Agreement shall not cause the General Partner to cease to be a general partner of the Partnership nor shall it cause the Board of Directors or any member thereof to be a general partner of the Partnership or to have or be subject to the liabilities of a general partner of the Partnership.

              SECTION 7.2. The Board of Directors; Election and Appointment; Term; Manner of Acting. (a) Except as described below with respect to the Board of Directors upon Closing, the Board of Directors shall consist of seven individuals, three of whom shall be Appointed Directors and four of whom shall be Elected Directors. The Elected Directors shall be divided into three classes: Class I, comprising one Elected Director, Class II, comprising one Elected Director, and Class III, comprising two Elected Directors. The Board of Directors upon Closing may consist of six individuals, provided that a seventh director is appointed within twelve months after the date of the Purchase Agreement. The Board of Directors upon Closing shall consist of the following individuals, each of whom shall hold office until his successor is duly elected or appointed, as the case may be, and qualified, in accordance with subclauses (a)(i) and (a)(ii) below, or until his earlier death, resignation or removal: Appointed Directors: Ioannis E. Lazaridis and Evangelos M. Marinakis; Elected Directors: Class I: Nikolaos Syntychakis, Class II: Abel Rasterhoff, Class III: Evangelos Bairactaris and Keith Forman. The vacancy among the Appointed Directors shall be filled as if an Appointed Director had resigned, in accordance with Section 7.6. The successors of the initial members of the Board of Directors shall be appointed or elected, as the case may be, as follows:

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              SECTION 7.3. Nominations of Elected Directors. The Board of Directors shall be entitled to nominate individuals to stand for election as Elected Directors at an Annual Meeting. In addition, any Limited Partner or Group of Limited Partners that beneficially owns 10% or more of the Outstanding Common Units shall be entitled to nominate one or more individuals to stand for election as Elected Directors at an Annual Meeting by providing written notice thereof to the Board of Directors not more than 120 days and not less than 90 days prior to the date of such Annual Meeting; provided, however, that in the event that the date of the Annual Meeting was not publicly announced by the Partnership by mail, press release or otherwise more than 100 days prior to the date of such meeting, such notice, to be timely, must be delivered to the Board of Directors not later than the close of business on the tenth day following the date on which the date of the Annual Meeting was announced. Such notice shall set forth (i) the name and address of the Limited Partner or Limited Partners making the nomination or nominations, (ii) the number of Common Units beneficially owned by such Limited Partner or Limited Partners, (iii) such information regarding the nominee(s) proposed by the Limited Partner or Limited Partners as would be required to be included in a proxy statement relating to the solicitation of proxies for the election of directors filed pursuant to the proxy rules of the Commission had the nominee(s) been nominated or intended to be nominated to the Board of Directors, (iv) the written consent of each nominee to serve as a member of the Board of Directors if so elected and (v) a certification that such nominee(s) qualify as Elected Directors.

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              SECTION 7.4. Removal of Members of Board of Directors. Members of the Board of Directors may only be removed as follows:

              SECTION 7.5. Resignations of Members of the Board of Directors. Any member of the Board of Directors may resign at any time by giving written notice to the Board of Directors. Such resignation shall take effect at the time specified therein.

              SECTION 7.6. Vacancies on the Board of Directors. Vacancies on the Board of Directors may be filled only as follows:

              SECTION 7.7. Meetings; Committees; Chairman. (a) Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors. Notice of such regular meetings shall not be required. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors and shall be called by the Secretary upon the written request of two members of the Board of Directors, on at least 48 hours prior written notice to the other members. Any such notice, or waiver thereof, need not state the purpose of such meeting except as may otherwise be required by law. Attendance of a member of the Board of Directors at a meeting (including pursuant to the penultimate sentence of this Section 7.7(a)) shall constitute a waiver of notice of such meeting, except where such member attends the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by all the members of the Board of Directors. Members of the Board of Directors may participate in and hold meetings by means of conference telephone, videoconference or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meetings shall constitute presence in person at the meeting. The Board of Directors may establish any additional rules governing the conduct of its meetings that are not inconsistent with the provisions of this Agreement.

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              SECTION 7.8. Compensation of Directors. The members of the Board of Directors who are not employees of the Partnership, the General Partner or its Affiliates shall receive such compensation for their services as members of the Board of Directors or members of a committee of the Board of Directors shall determine. In addition, the members of the Board of Directors shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in the course of their service hereunder.

              SECTION 7.9. Certificate of Limited Partnership. The General Partner has caused the Certificate of Limited Partnership to be filed with the Registrar of Corporations of The Marshall Islands as required by the Marshall Islands Act. The General Partner shall use all commercially reasonable efforts to cause to be filed such other certificates or documents that the Board of Directors determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership or other entity in which the limited partners have limited liability) in The Marshall Islands or any other jurisdiction in which the Partnership may elect to do business or own property. To the extent the Board of Directors determines such action to be necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do all things to maintain the Partnership as a limited partnership (or a partnership or other entity in which the limited partners have limited liability) under the laws of The Marshall Islands or of any other jurisdiction in which the Partnership may elect to do business or own property. Subject to the terms of Section 3.4(a), the General Partner shall not be required, before or

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after filing, to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto to any Limited Partner.

              SECTION 7.10. Restrictions on the Authority of the Board of Directors and the General Partner. (a) Except as otherwise provided in this Agreement, neither the Board of Directors nor the General Partner may, without written approval of the specific act by holders of all of the Outstanding Limited Partner Interests or by other written instrument executed and delivered by holders of all of the Outstanding Limited Partner Interests subsequent to the date of this Agreement, take any action in contravention of this Agreement.


 
    
    
    (i)   merge or consolidate the Partnership;

 
 
(ii)
 
dissolve the Partnership;

 
 
(iii)
 
make a sale of assets representing 10% or more of the fair market value of the Partnership's assets prior to the sale;

 
 
(iv)
 
make a purchase of assets representing 10% or more of the fair market value of the Partnership's assets prior to the purchase;

 
 
(v)
 
incur debt if such incurrence would result in the Partnership's over leverage, taking into account customary industry leverage levels, the Partnership's structure and its other assets and liabilities;

 
 
(vi)
 
mortgage, pledge, hypothecate, or grant a security interest in all or substantially all of the Partnership's assets for purposes other than securing indebtedness that does not result in the Partnership's over leverage, taking into account customary industry leverage levels, the Partnership's structure and its other assets and liabilities; and

 
 
(vii)
 
make issuances of equity that are not reasonably expected to be accretive to equity within twelve months of issuance or which would otherwise have a material adverse impact on the General Partner or the General Partner Interest.

              SECTION 7.11. Reimbursement of the General Partner. (a) Except as provided in this Section 7.11 and elsewhere in this Agreement, the General Partner shall not be compensated for its services as a general partner or managing member of any Group Member.

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              SECTION 7.12. Outside Activities. (a) After the Closing Date, the General Partner, for so long as it is the General Partner of the Partnership (i) agrees that its sole business will be to act as a general partner or managing member, as the case may be, of the Partnership and any other partnership or limited liability company of which the Partnership is, directly or indirectly, a partner or member and to undertake activities that are ancillary or related thereto (including being a limited partner in the Partnership), (ii) shall not engage in any business or activity or incur any debts or liabilities except in connection with or incidental to (A) its performance as general partner or managing member, if any, of one or more Group Members or as described in or contemplated by the Registration Statement or (B) the acquiring, owning or disposing of debt or equity securities in any Group Member and (iii) except to the extent permitted in the Omnibus Agreement, shall not, and shall cause its controlled Affiliates not to, acquire, own or operate Medium Range Tankers under Qualifying Contracts (as such terms are defined in the Omnibus Agreement).

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              SECTION 7.13. Loans from the General Partner; Loans or Contributions from the Partnership or Group Members. (a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the Group Member for such periods of time and in such amounts as the General Partner and the Board of Directors may determine; provided, however, that in any such case the lending party may not charge the borrowing party interest at a rate greater than the rate that would be charged the borrowing party or impose terms less favorable to the borrowing party than would be charged or imposed on the borrowing party by unrelated lenders on comparable loans made on an arm's-length basis (without reference to the lending party's financial abilities or guarantees), all as determined by the General Partner and the Board of Directors. The borrowing party shall reimburse the lending party for any costs (other than any additional interest costs) incurred by the lending party in connection with

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the borrowing of such funds. For purposes of this Section 7.13(a) and Section 7.13(b), the term "Group Member" shall include any Affiliate of a Group Member that is controlled by the Group Member.

              SECTION 7.14. Indemnification. (a) To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee; provided, however, that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 7.14, the Indemnitee acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee's conduct was unlawful; and, provided further, that no indemnification pursuant to this Section 7.14 shall be available to the General Partner or its Affiliates (other than a Group Member) with respect to its or their obligations incurred pursuant to the Purchase Agreement, the Omnibus Agreement or the Contribution Agreement (other than obligations incurred by the General Partner on behalf of the Partnership). Any indemnification pursuant to this Section 7.14 shall be made out of the assets of the Partnership, it being agreed that the General Partner shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate such indemnification.

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              SECTION 7.15. Liability of Indemnitees. (a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Partnership, the Limited Partners or any other Persons who have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee's conduct was criminal.

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              SECTION 7.16. Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties. (a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement, whenever a potential conflict of interest exists or arises between the General Partner or any of its Affiliates, or any member of the Board of Directors, on the one hand, and the Partnership, any Group Member or any Partner, on the other, any resolution or course of action in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and shall not constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied by law or equity, if the resolution or course of action in respect of such conflict of interest is (i) approved by Special Approval, (ii) approved by the vote of a majority of the Common Units (excluding Common Units owned by the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (iv) fair and reasonable to the Partnership, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership). The General Partner and the Board of Directors may but shall not be required in connection with the resolution of such conflict of interest to seek Special Approval of such resolution, and the General Partner or the Board of Directors, as the case may be, may also adopt a resolution or course of action that has not received Special Approval. If Special Approval is not sought and the Board of Directors determines that the resolution or course of action taken with respect to a conflict of interest satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall be presumed that, in making its decision the Board of Directors, acted in good faith, and in any proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any other Limited Partner or the Partnership challenging such approval, the Person bringing or prosecuting such proceeding shall have the burden of overcoming such presumption. Notwithstanding anything to the contrary in this Agreement, the existence of the conflicts of interest described in the Registration Statement are hereby approved by all Partners.

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              SECTION 7.17. Other Matters Concerning the General Partner and the Board of Directors. (a) The General Partner and the Board of Directors may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

              SECTION 7.18. Purchase or Sale of Partnership Securities. The Board of Directors may cause the Partnership to purchase or otherwise acquire Partnership Securities; provided, however, that the Board of Directors may not cause any Group Member to purchase Subordinated Units during the Subordination Period. As long as Partnership Securities are held by any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or any Affiliate of the General Partner may purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for its own account, subject to the provisions of Articles IV and X.

              SECTION 7.19. Registration Rights of the General Partner and its Affiliates. (a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes of this Section 7.19, any Person that is an Affiliate of the General Partner at the date hereof notwithstanding that it may later cease to be an Affiliate of the General Partner) holds Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule or regulation to Rule 144) or another exemption from registration is not available to enable such holder of Partnership Securities (the "Holder") to dispose of the number of Partnership Securities it desires to sell at the time it desires to do so without registration under the Securities Act, then at the option and upon the request of the Holder, the Partnership shall file with the Commission as promptly as practicable after receiving such request, and use its reasonable best efforts to cause to become effective and remain effective for a period of not less than six months following its effective date or such shorter period as shall terminate when all Partnership Securities covered by such registration statement have been sold, a registration statement under the Securities Act registering the offering and sale of the number of Partnership Securities specified by the Holder; provided, however, that the Partnership shall not be required to effect more than five registrations pursuant to this Section 7.19(a); and, provided further, that if the

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Conflicts Committee determines in good faith that the requested registration would be materially detrimental to the Partnership and its Partners because such registration would (x) materially interfere in a way materially adverse to the Partnership with a significant acquisition, merger, disposition, corporate reorganization or other similar transaction involving the Partnership, (y) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (z) render the Partnership unable to comply with requirements under applicable securities laws, then the Partnership shall have the right to postpone such requested registration for a period of not more than 90 days after receipt of the Holder's request, such right pursuant to this Section 7.19(a) not to be utilized more than once in any 12-month period. The Partnership shall use its reasonable best efforts to resolve any deferral with respect to any such registration and/or filing. Except as provided in the first sentence of this Section 7.19(a), the Partnership shall be deemed not to have used all its reasonable best efforts to keep the registration statement effective during the applicable period if it voluntarily takes any action that would result in Holders of Partnership Securities covered thereby not being able to offer and sell such Partnership Securities at any time during such period, unless such action is required by applicable law. In connection with any registration pursuant to this Section 7.19(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify the securities subject to such registration under the securities laws of such states as the Holder shall reasonably request (provided, however, that no such qualification shall be required in any jurisdiction where, as a result thereof, the Partnership would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing business in such jurisdiction solely as a result of such registration), and (B) such documents as may be necessary to apply for listing or to list the Partnership Securities subject to such registration on such National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other acts and things that may be necessary or appropriate to enable the Holder to consummate a public sale of such Partnership Securities in such states. Except as set forth in Section 7.19(c), all costs and expenses of any such registration and offering (other than the underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement by the Holder.

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              SECTION 7.20. Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the Board of Directors, the General Partner and any Officer authorized by the General Partner or the Board of Directors to act on behalf of and in the name of the Partnership has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such Person shall be entitled to deal with the Board of Directors, the General Partner or any such Officer as if it were the Partnership's sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Board of Directors, the General Partner or any such Officer in connection with any such dealing. In no event shall any Person dealing with the Board of Directors, the General Partner or any such Officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the Board of Directors, the General Partner or any such Officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the Board of Directors, the General Partner, the Officers or representatives of the General Partner authorized by the General Partner or the Board of Directors shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.


ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

              SECTION 8.1. Records and Accounting. The Partnership shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnership's business, including all books and records necessary to provide to the Limited Partners any information required to be provided pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in the regular course of its business, including the record of the Record Holders of Units or other Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device; provided, however, that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP.

              SECTION 8.2. Fiscal Year. The fiscal year of the Partnership shall be a fiscal year ending December 31.

              SECTION 8.3. Reports. (a) As soon as practicable, but in no event later than 120 days after the close of each fiscal year of the Partnership, the Partnership shall cause to be mailed or made available, by any reasonable means (including posting on the Partnership's website), to each Record Holder of a Unit as of a date selected by the Board of Directors, an annual report containing financial statements of the Partnership for such fiscal year of the Partnership, presented in accordance with U.S. GAAP, including a balance sheet and statements of operations, Partnership equity and cash flows, such statements to be audited by a firm of independent public accountants selected by the Board of Directors.

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ARTICLE IX

TAX MATTERS

              SECTION 9.1. Tax Elections and Information. (a) The Partnership has elected to be treated as an association taxable as a corporation for United States federal income tax purposes. Except as otherwise provided herein, the Board of Directors shall determine whether the Partnership should make any other elections permitted by the Code.

              SECTION 9.2. Withholding. Notwithstanding any other provision of this Agreement, the Board of Directors is authorized to take any action that may be required to cause the Partnership and other Group Members to comply with any withholding requirements established under the Code or any other U.S. federal, state or local or any non-U.S. law including pursuant to Sections 1441, 1442 and 1445 of the Code. To the extent that the Partnership is required or elects to withhold and pay over to any taxing authority any amount resulting from the distribution of income to any Partner, the Board of Directors may treat the amount withheld as a distribution of cash pursuant to Section 6.1 in the amount of such withholding from such Partner.

              SECTION 9.3. Conduct of Operations. The Board of Directors and the General Partner shall use commercially reasonable efforts to conduct the business of the Partnership and its Affiliates in a manner that does not require a holder of Common Units to file a tax return in any jurisdiction with which the holder has no contact other than through ownership of Common Units.


ARTICLE X

ADMISSION OF PARTNERS

              SECTION 10.1. Admission of Initial Limited Partners. Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive Distribution Rights to the General Partner and Capital Maritime & Trading Corp. as described in Sections 5.2 and 5.3, the Board of Directors shall admit such parties to the Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or Incentive Distribution Rights issued to them.

              SECTION 10.2. Admission of Additional Limited Partners. (a) By acceptance of the transfer of any Limited Partner Interests in accordance with Article IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a merger or consolidation pursuant to Article XIV, each transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee holder or an agent or representative acquiring such Limited Partner Interests for the account of another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred or issued to such Person when any such transfer, issuance

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or admission is reflected in the books and records of the Partnership and such Limited Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement, (iv) grants the powers of attorney set forth in this Agreement and (v) makes the consents and waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement. A Person may become a Limited Partner or Record Holder of a Limited Partner Interest without the consent or approval of any of the Partners. A Person may not become a Limited Partner until such Person acquires a Limited Partner Interest and such Person is reflected in the books and records of the Partnership as the Record Holder of such Limited Partner Interest.

              SECTION 10.3. Admission of Successor General Partner. A successor General Partner approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to all of the General Partner Interest (represented by General Partner Units) pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of the General Partner Interest (represented by General Partner Units) pursuant to Section 4.6; provided, however, that no such successor shall be admitted to the Partnership until compliance with the terms of Section 4.6 has occurred and such successor has executed and delivered such other documents or instruments as may be required to effect such admission. Any such successor shall, subject to the terms hereof, carry on the business of the members of the Partnership Group without dissolution.

              SECTION 10.4. Amendment of Agreement and Certificate of Limited Partnership. To effect the admission to the Partnership of any Partner, the General Partner shall take all steps necessary or appropriate under the Marshall Islands Act to amend the records of the Partnership to reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this Agreement and, if required by law, the General Partner shall prepare and file an amendment to the Certificate of Limited Partnership and the General Partner may for this purpose, among others, exercise the power of attorney granted to it subject to the direction of the Board of Directors pursuant to Section 2.6.


ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS

              SECTION 11.1. Withdrawal of the General Partner. (a) The General Partner shall be deemed to have withdrawn from the Partnership upon the occurrence of any one of the following events (each such event herein referred to as an "Event of Withdrawal"):

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              If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.

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              SECTION 11.2. Removal of the General Partner. The General Partner may be removed if such removal is approved by the Unitholders holding at least 662/3% of the Outstanding Units (including Units held by the General Partner and its Affiliates voting as a single class) and a majority vote of the Board of Directors. Any such action by such holders or the Board of Directors for removal of the General Partner must also provide for the election of a successor General Partner by the majority vote of the outstanding Common Units and Subordinated Units (including Units held by the General Partner and its Affiliates) and General Partner Units (which for purposes of the election of a successor General Partner pursuant to this Section 11.2 only, shall be considered Units), voting together as a single class. Such removal shall be effective immediately following the admission of a successor General Partner pursuant to Section 10.3. The removal of the General Partner shall also automatically constitute the removal of the General Partner as general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If a Person is elected as a successor General Partner in accordance with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.3, automatically become a successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. The right of the holders of Outstanding Units to remove the General Partner shall not exist or be exercised unless the Partnership has received an Opinion of Counsel opining as to the matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance with the terms of this Section 11.2 shall be subject to the provisions of Section 10.3.

              SECTION 11.3. Interest of Departing General Partner and Successor General Partner. (a) In the event of (i) withdrawal of the General Partner under circumstances where such withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of Outstanding Units under circumstances where Cause does not exist, if the successor General Partner is elected in accordance with the terms of Section 11.1 or 11.2, the Departing General Partner shall have the option, exercisable prior to the effective date of the departure of such Departing General Partner, to require its successor to purchase its General Partner Interest (represented by General Partner Units) and its general partner interest (or equivalent interest), if any, in the other Group Members and all of the Incentive Distribution Rights (collectively, the "Combined Interest") in exchange for an amount in cash equal to the fair market value of such Combined Interest, such amount to be determined and payable as of the effective date of its departure. If the General Partner is removed by the Unitholders under circumstances where Cause exists or if the General Partner withdraws under circumstances where such withdrawal violates this Agreement, and if a successor General Partner is elected in accordance with the terms of Section 11.1 or 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the former General Partner), such successor shall have the option, exercisable prior to the effective date of the departure of such Departing General Partner (or, in the event the business of the Partnership is continued, prior to the date the business of the Partnership is continued), to purchase the Combined Interest for such fair market value of such Combined Interest of the Departing General Partner. In either event, the Departing General Partner

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shall be entitled to receive all reimbursements due such Departing General Partner pursuant to Section 7.11, including any employee-related liabilities (including severance liabilities), incurred in connection with the termination of any employees employed by the Departing General Partner for the benefit of the Partnership or the other Group Members.

              For purposes of this Section 11.3(a), the fair market value of the Departing General Partner's Combined Interest shall be determined by agreement between the Departing General Partner and its successor or, failing agreement within 30 days after the effective date of such Departing General Partner's departure, by an independent investment banking firm or other independent expert selected by the Departing General Partner and its successor, which, in turn, may rely on other experts, and the determination of which shall be conclusive as to such matter. If such parties cannot agree upon one independent investment banking firm or other independent expert within 45 days after the effective date of such departure, then the Departing General Partner shall designate an independent investment banking firm or other independent expert, the Departing General Partner's successor shall designate an independent investment banking firm or other independent expert, and such firms or experts shall mutually select a third independent investment banking firm or independent expert, which third independent investment banking firm or other independent expert shall determine the fair market value of the Combined Interest of the Departing General Partner. In making its determination, such third independent investment banking firm or other independent expert may consider the then current trading price of Units on any National Securities Exchange on which Units are then listed or admitted to trading, the value of the Partnership's assets, the rights and obligations of the Departing General Partner and other factors it may deem relevant.


              SECTION 11.4. Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages. Notwithstanding any provision of this

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Agreement, if the General Partner is removed as general partner of the Partnership under circumstances where Cause does not exist and no Units held by the General Partner and its Affiliates are voted in favor of such removal, (i) the Subordination Period will end and all Outstanding Subordinated Units will immediately and automatically convert into Common Units on a one-for-one basis, (ii) all Cumulative Common Unit Arrearages on the Common Units will be extinguished and (iii) the General Partner will have the right to convert its General Partner Interest (represented by General Partner Units) and its Incentive Distribution Rights into Common Units or to receive cash in exchange therefor, as provided in Section 11.3.

              SECTION 11.5. Withdrawal of Limited Partners. No Limited Partner shall have any right to withdraw from the Partnership; provided, however, that when a transferee of a Limited Partner's Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited Partner Interest so transferred.


ARTICLE XII

DISSOLUTION AND LIQUIDATION

              SECTION 12.1. Dissolution. The Partnership shall not be dissolved by the admission of additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor General Partner is elected pursuant to Sections 11.1 or 11.2, the Partnership shall not be dissolved and such successor General Partner shall continue the business of the Partnership under the supervision of the Board of Directors. The Partnership shall dissolve, and (subject to Section 12.2) its affairs shall be wound up, upon:

              SECTION 12.2. Continuation of the Business of the Partnership After Dissolution. Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal of the General Partner as provided in Sections 11.1(a)(i) or (iii) and the failure of the Partners to select a successor to such Departing General Partner pursuant to Sections 11.1 or 11.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon an event constituting an Event of Withdrawal as defined in Sections 11.1(a)(iv), (v) or (vi), then, to the maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority may elect to continue the business of the Partnership on the same terms and conditions set forth in this Agreement by appointing as a successor General Partner a Person approved by the holders of a Unit Majority. Unless such an election is made within the applicable time period as set forth above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an election is so made, then:

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              SECTION 12.3. Liquidator. Upon dissolution of the Partnership, unless the business of the Partnership is continued pursuant to Section 12.2, the Board of Directors shall select one or more Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such compensation for its services as may be approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator (if other than the General Partner) shall agree not to resign at any time without 15 days' prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of at least a majority of the Outstanding Common Units and the Subordinated Units voting as a single class. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by the holders of at least a majority of the Outstanding Common Units and Subordinated Units voting as a single class. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly provided in this Article XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Board of Directors and the General Partner under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set forth in Section 7.10(b)) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Partnership as provided for herein.

              SECTION 12.4. Liquidation. The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Section 60 of the Marshall Islands Act and the following:

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    (i)   If the Current Market Price of the Common Units as of the date three trading days prior to the announcement of the proposed liquidation exceeds the Unrecovered Capital for a Common Unit plus the Cumulative Common Unit Arrearage:
 
    
    
    (A)   First, (x) to the General Partner in accordance with its Percentage Interest and (y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to such Current Market Price of a Common Unit;

 
 
(B)
 
Second (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Subordinated Unit then Outstanding an amount equal to such Current Market Price of a Common Unit; and

 
 
(C)
 
Thereafter (x) to the General Partner in accordance with its Percentage Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (i)(C);
 
    
    
    (ii)   If the Current Market Price of the Common Units as of the date three trading days prior to the announcement of the proposed liquidation is equal to or less than the Unrecovered Capital for a Common Unit plus the Cumulative Common Unit Arrearage:
 
    
    
    (A)   First, (x) to the General Partner in accordance with its Percentage Interest and (y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Unrecovered Capital for a Common Unit;

 
 
(B)
 
Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage;

 
 
(C)
 
Third, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partner's Percentage Interest, until there has been distributed in respect of each Subordinated Unit then Outstanding an amount equal to the Unrecovered Capital for a Common Unit (as calculated prior to the distribution specified in clause (ii)(A) above); and
         

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(D)
 
Thereafter, (x) to the General Partner in accordance with its Percentage Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (ii)(D);

              SECTION 12.5. Cancellation of Certificate of Limited Partnership. Upon the completion of the distribution of Partnership cash and property as provided in Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the Marshall Islands shall be canceled and such other actions as may be necessary to terminate the Partnership shall be taken.

              SECTION 12.6. Return of Contributions. The General Partner shall not be personally liable for, and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Partnership assets.

              SECTION 12.7. Waiver of Partition. To the maximum extent permitted by law, each Partner hereby waives any right to partition of the Partnership property.


ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

              SECTION 13.1. Amendments to be Adopted without Limited Partner Approval. Each Limited Partner agrees that the Board of Directors, without the approval of any Limited Partner, but with the approval of the General Partner required for any such amendment, may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:

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              SECTION 13.2. Amendment Procedures. Except as provided in Sections 13.1 and 13.3, all amendments to this Agreement shall be made in accordance with the following requirements. Amendments to this Agreement may be proposed only by the General Partner or the Board of Directors; provided, however, that neither the General Partner nor the Board of Directors shall have a duty or obligation to propose any amendment to this Agreement and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to propose an amendment, to the fullest extent permitted by applicable law shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or regulation. A proposed amendment shall be effective upon its approval by the General Partner, the Board of Directors and the holders of a Unit Majority, unless a greater or different percentage is required under this Agreement or by the Marshall Islands Act. Each proposed amendment that requires the approval of the holders of a specified percentage of Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment. If such an amendment is proposed, the Board of Directors shall seek the written approval of the requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such proposed amendment. The Board of Directors shall notify all Record Holders upon final adoption of any such proposed amendments.

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              SECTION 13.3. Amendment Requirements. (a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision of this Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the General Partner) required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of reducing such voting percentage unless such amendment is approved by the written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units constitute not less than the voting requirement sought to be reduced.


              SECTION 13.4. Special Meetings. All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the General Partner, the Board of Directors or by Limited Partners owning 20% or more of the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners shall call a special meeting by delivering to the Board of Directors one or more requests in writing stating that the signing Limited Partners wish to call a special meeting and indicating the general or specific purposes for which the special meeting is to be called, it being understood that the purposes of such special meeting may only be to vote on matters that require the vote of the Unitholders pursuant to this Agreement. Within 60 days after receipt of such a call from Limited Partners or within such greater time as may be reasonably necessary for the Partnership to comply with any statutes, rules, regulations, listing agreements or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the Board of Directors shall send a notice of the meeting to the Limited Partners either directly or indirectly through the Transfer Agent. A meeting shall be held at a time and place determined by the Board of Directors on a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting. Limited Partners shall not vote on matters that would cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited

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Partners' limited liability under the Marshall Islands Act or the law of any other jurisdiction in which the Partnership is qualified to do business.

              SECTION 13.5. Notice of a Meeting. Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of the class or classes of Units for which a meeting is proposed in writing by mail or other means of written communication in accordance with Section 16.1. The notice shall be deemed to have been given at the time when deposited in the mail or sent by other means of written communication.

              SECTION 13.6. Record Date. For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as provided in Section 13.11, the Board of Directors may set a Record Date, which shall not be less than 10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such National Securities Exchange shall govern) or (b) in the event that approvals are sought without a meeting, the date by which Limited Partners are requested in writing by the Board of Directors to give such approvals. If the Board of Directors does not set a Record Date, then (a) the Record Date for determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the close of business on the day next preceding the day on which notice is given, and (b) the Record Date for determining the Limited Partners entitled to give approvals without a meeting shall be the date the first written approval is deposited with the Partnership in care of the Board of Directors in accordance with Section 13.11.

              SECTION 13.7. Adjournment. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given in accordance with this Article XIII.

              SECTION 13.8. Waiver of Notice; Approval of Meeting; Approval of Minutes. The transactions of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; and except that attendance at a meeting is not a waiver of any right to disapprove the consideration of matters required to be included in the notice of the meeting, but not so included, if the disapproval is expressly made at the meeting.

              SECTION 13.9. Quorum and Voting. The holders of a majority of the Outstanding Units of the class or classes for which a meeting has been called (including Outstanding Units deemed owned by the General Partner) represented in person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or classes unless any such action by the Limited Partners requires approval by holders of a greater percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a majority of the Outstanding Units entitled to vote and be present in person or by proxy at such meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or different percentage is required with respect to such action under the provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the

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aggregate represent at least such greater or different percentage shall be required. The Limited Partners present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment) is approved by the required percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed owned by the General Partner). In the absence of a quorum, any meeting of Limited Partners may be adjourned from time to time by the affirmative vote of holders of at least a majority of the Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the General Partner) represented either in person or by proxy, but no other business may be transacted, except as provided in Section 13.7.

              SECTION 13.10. Conduct of a Meeting. The Board of Directors shall have full power and authority concerning the manner of conducting any meeting of the Limited Partners or solicitation of approvals in writing, including the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The Chairman of the Board of Directors shall serve as chairman of any meeting and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept with the records of the Partnership maintained by the Board of Directors. The Board of Directors may make such other regulations consistent with applicable law and this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in writing, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of proxies and other evidence of the right to vote, and the revocation of approvals in writing.

              SECTION 13.11. Action Without a Meeting. If authorized by the Board of Directors, any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units (including Units deemed owned by the General Partner) that would be necessary to authorize or take such action at a meeting at which all the Limited Partners were present and voted (unless such provision conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such National Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be given to the Limited Partners who have not approved the action in writing. The Board of Directors may specify that any written ballot submitted to Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within the time period, which shall be not less than 20 days, specified by the Board of Directors. If a ballot returned to the Partnership does not vote all of the Units held by the Limited Partners, the Partnership shall be deemed to have failed to receive a ballot for the Units that were not voted. If approval of the taking of any action by the Limited Partners is solicited by any Person other than by or on behalf of the Board of Directors, the written approvals shall have no force and effect unless and until (a) they are deposited with the Partnership in care of the Board of Directors, (b) approvals sufficient to take the action proposed are dated as of a date not more than 90 days prior to the date sufficient approvals are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the Board of Directors to the effect that the exercise of such right and the action proposed to be taken with respect to any particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners' limited liability, and (ii) is otherwise permissible under the applicable statutes then governing the rights, duties and liabilities of the Partnership and the Partners.

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              SECTION 13.12. Right to Vote and Related Matters. (a) Only those Record Holders of the Units on the Record Date set pursuant to Section 13.6 (and also subject to the limitations contained in the definition of "Outstanding") shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to matters as to which the holders of the Outstanding Units have the right to vote or to act. All references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding Units.


ARTICLE XIV

MERGER

              SECTION 14.1. Authority. The Partnership may merge or consolidate with or into one or more corporations, limited liability companies, statutory trusts or associations, real estate investment trusts, common law trusts or unincorporated businesses, including a partnership (whether general or limited (including a limited liability partnership)), formed under the laws of The Marshall Islands or the state of Delaware or any other state of the United States, pursuant to a written agreement of merger or consolidation ("Merger Agreement") in accordance with this Article XIV.

              SECTION 14.2. Procedure for Merger or Consolidation. Merger or consolidation of the Partnership pursuant to this Article XIV requires the approval of the Board of Directors and the prior consent of the General Partner; provided, however, that, to the fullest extent permitted by law, neither the Board of Directors nor the General Partner shall have a duty or obligation to consent to any merger or consolidation of the Partnership and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to consent to a merger or consolidation, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or regulation or at equity. If the Board of Directors and the General Partner shall determine to consent to the merger or consolidation, the Board of Directors and the General Partner shall approve the Merger Agreement, which shall set forth:

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              SECTION 14.3. Approval by Limited Partners of Merger or Consolidation. (a) Except as provided in Sections 14.3(d) and 14.3(e), the Board of Directors, upon its and the General Partner's approval of the Merger Agreement, shall direct that the Merger Agreement be submitted to a vote of Limited Partners, whether at a special meeting or by written consent, in either case in accordance with the requirements of Article XIII. A copy or a summary of the Merger Agreement shall be included in or enclosed with the notice of a special meeting or the written consent.

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              SECTION 14.4. Certificate of Merger. Upon the required approval by the Board of Directors, the General Partner and the Unitholders of a Merger Agreement, a certificate of merger shall be executed and filed in conformity with the requirements of the Marshall Islands Act.

              SECTION 14.5. Amendment of Partnership Agreement. Pursuant to Section 20(2) of the Marshall Islands Act, an agreement of merger or consolidation approved in accordance with Section 20(2) of the Marshall Islands Act may (a) effect any amendment to this Agreement or (b) effect the adoption of a new partnership agreement for a limited partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to this Section 14.5 shall be effective at the effective time or date of the merger or consolidation.

              SECTION 14.6. Effect of Merger. (a) At the effective time of the certificate of merger:


ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

              SECTION 15.1. Right to Acquire Limited Partner Interests. (a) Notwithstanding any other provision of this Agreement, if at any time the General Partner and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then Outstanding, the General Partner shall then

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have the right, which right it may assign and transfer in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its option, to purchase all, but not less than all, of such Limited Partner Interests of such class then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater of (x) the Current Market Price as of the date three days prior to the date that the notice described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day period preceding the date that the notice described in Section 15.1(b) is mailed.

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ARTICLE XVI

GENERAL PROVISIONS

              SECTION 16.1. Addresses and Notices. (a) Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Partner under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication to the Partner at the address described below. Any notice, payment or report to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made, and the obligation to give such notice or report or to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such notice, payment or report to the Record Holder of such Partnership Securities at his address as shown on the records of the Transfer Agent or as otherwise shown on the records of the Partnership, regardless of any claim of any Person who may have an interest in such Partnership Securities by reason of any assignment or otherwise. An affidavit or certificate of making of any notice, payment or report in accordance with the provisions of this Section 16.1 executed by a member of the Board of Directors, the General Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or making of such notice, payment or report. If any notice, payment or report addressed to a Record Holder at the address of such Record Holder appearing on the books and records of the Transfer Agent or the Partnership is returned by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices, payments and reports shall be deemed to have been duly given or made without further mailing (until such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of a change in his address) if they are available for the Partner at the principal office of the Partnership for a period of one year from the date of the giving or making of such notice, payment or report to the other Partners. Any notice to the Partnership shall be deemed given if received by the General Partner or the Board of Directors at the principal office of the Partnership designated pursuant to Section 2.3. The General Partner and the Board of Directors may rely and shall be protected in relying on any notice or other document from a Partner or other Person if believed by it to be genuine.

              SECTION 16.2. Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

              SECTION 16.3. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns.

              SECTION 16.4. Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

              SECTION 16.5. Creditors. None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

              SECTION 16.6. Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

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              SECTION 16.7. Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Limited Partner Interest, pursuant to Section 10.2(a) without execution hereof.

              SECTION 16.8. Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of The Republic of the Marshall Islands, without regard to the principles of conflicts of law.

              SECTION 16.9. Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

              SECTION 16.10. Consent of Partners. Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Partners, such action may be so taken upon the concurrence of less than all of the Partners and each Partner shall be bound by the results of such action.

              SECTION 16.11. Facsimile Signatures. The use of facsimile signatures affixed in the name and on behalf of the transfer agent and registrar of the Partnership on certificates representing Common Units is expressly permitted by this Agreement.

              SECTION 16.12. Third-Party Beneficiaries. Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Indemnitee.

              [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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              IN WITNESS WHEREOF, the parties hereto have executed this First Amended and Restated Agreement of Limited Partnership as a Deed as of the date first written above.

    GENERAL PARTNER:

 
 
Capital GP L.L.C.,

 
 
by
 
 
       
        Name:
        Title:

 
 
ORGANIZATIONAL LIMITED PARTNER:

 
 
Capital Maritime & Trading Corp.,

 
 
by
 
 
       
        Name:
        Title:

 
 
LIMITED PARTNERS:

 
 
All Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner.

 
 
Capital GP L.L.C.,

 
 
by
 
 
       
        Name:
        Title:

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EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
Capital Product Partners L.P.


Certificate Evidency Common Units
Representing Limited Partner Interests in
Capital Product Partners L.P.

 
    
No.   Common Units

              In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited Partnership of Capital Product Partners L.P., as amended, supplemented or restated from time to time (the "Partnership Agreement"), Capital Product Partners L.P., a Marshall Islands limited partnership (the "Partnership"), hereby certifies that                        (the "Holder") is the registered owner of Common Units representing limited partner interests in the Partnership (the "Common Units") transferable on the books of the Partnership, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and limitations of the Common Units are set forth in, and this Certificate and the Common Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be furnished without charge on delivery of written request to the Partnership at, the principal office of the Partnership located c/o Capital Ship Management Corp., 3 Iassonos Street, Piraeus, 185 37 Greece. Capitalized terms used herein but not defined shall have the meanings given them in the Partnership Agreement.

              The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right, power and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv) made the waivers and given the consents and approvals contained in the Partnership Agreement.

              This Certificate shall not be valid for any purpose unless it has been countersigned and registered by the Transfer Agent and Registrar.

Dated:   Capital Product Partners L.P.

Countersigned and Registered by:
 
By:
Capital GP L.L.C.,

its General Partner

 
 
 
By:
 
as Transfer Agent and Registrar		    
Title:

By:
 
 
By:
 
 
Authorized Signature		    
Secretary

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[Reverse of Certificate]


ABBREVIATIONS

              The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as follows according to applicable laws or regulations:

TEN COM — as tenants in common UNIF GIFT/TRANSFERS MIN ACT
        Custodian  
     
 
      (Cust)   (Minor)
TEN ENT — as tenants by the entireties      

JT TEN
—
as joint tenants with right of survivorship and not as tenants in common
under Uniform Gifts/Transfers to CD Minors Act (State)


Additional abbreviations, though not in the above list, may also be used.

ASSIGNMENT OF COMMON UNITS
in
CAPITAL PRODUCT PARTNERS L.P.

FOR VALUE RECEIVED,   hereby assigns, conveys, sells and transfers unto
 
 
 
(Please print or typewrite name and address of Assignee)   (Please insert Social Security or other identifying number of Assignee)
  Common Units representing limited partner interests evidenced by this Certificate,
 
subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint                        as its attorney-in-fact with full power of substitution to transfer the same on the books of Capital Product Partners L.P.
Date:
   NOTE:   The signature to any endorsement hereon must correspond with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15
 
 
 
(Signature)
  
    
(Signature)

              No transfer of the Common Units evidenced hereby will be registered on the books of the Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered for registration or transfer.

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APPENDIX B

GLOSSARY OF TERMS

ABS:   American Bureau of Shipping; ship classification society.
Adjusted operating surplus:   For any period, operating surplus generated during that period is adjusted to:
    (a) Decrease operating surplus by:
      (1) any net increase in working capital borrowings with respect to that period; and
      (2) any net reduction in cash reserves for operating expenditures with respect to that period not relating to an operating expenditure made with respect to that period; and
    (b) increase operating surplus by:
      (1) any net decrease in working capital borrowings with respect to that period; and
      (2) any net increase in cash reserves for operating expenditures with respect to that period required by any debt instrument for the repayment of principal, interest or premium.
    Adjusted operating surplus does not include that portion of operating surplus included in clauses (a)(1) of the definition of operating surplus.
Annual survey:   The inspection of a vessel pursuant to international conventions, by a classification society surveyor, on behalf of the flag state, that takes place every year.
Available cash:   For any quarter ending prior to liquidation:
    (a) the sum of:
      (1) all cash and cash equivalents of Capital Product Partners L.P. and its subsidiaries on hand at the end of that quarter; and
      (2) all additional cash and cash equivalents of Capital Product Partners L.P. and its subsidiaries on hand on the date of determination of available cash for that quarter resulting from working capital borrowings made after the end of that quarter;
    (b) less the amount of cash reserves established by our board of directors to:
      (1) provide for the proper conduct of the business of Capital Product Partners L.P. and its subsidiaries (including reserves for future capital expenditures and for future credit needs of Capital Product Partners L.P. and its subsidiaries) after that quarter;
      (2) comply with applicable law or any debt instrument or other agreement or obligation to which Capital Product Partners L.P. or any of its subsidiaries is a party or its assets are subject; and
      (3) provide funds for minimum quarterly distributions and cumulative common unit arrearages for any one or more of the next four quarters;
         

B-1

    provided, however, that our board of directors may not establish cash reserves for distributions to the subordinated units unless our board of directors has determined that the establishment of reserves will not prevent Capital Product Partners L.P. from distributing the minimum quarterly distribution on all common units and any cumulative common unit arrearages thereon for the next four quarters; and
    provided, further, that disbursements made by Capital Product Partners L.P. or any of its subsidiaries or cash reserves established, increased or reduced after the end of that quarter but on or before the date of determination of available cash for that quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining available cash, within that quarter if our general partner so determines.
Available days:   The total days that a vessel was in our possession for a certain period and available for employment, net of off-hire days associated with major repairs, upgrades, drydockings or special or intermediate surveys.
Bareboat charter:   A charter in which the customer (the charterer) pays a fixed daily rate for a fixed period of time for the full use of the vessel and becomes responsible for all crewing, management and navigation of the vessel and the expenses therefor.
Brokerage commission:   Commission payable by the shipowner to the broker, expressed as a percentage of the freight or hire and is part of the charterparty.
Bunker:   Fuel, consisting of fuel oil and diesel, burned in a vessel's engines.
Capital surplus:   All available cash distributed by us from any source will be treated as distributed from operating surplus until the sum of all available cash distributed since the closing of the initial public offering equals the operating surplus as of the end of the quarter before that distribution. Any excess available cash will be deemed to be capital surplus.
Charter:   The hiring of a vessel, or use of its carrying capacity, for a specified period of time.
Charterer:   A person, firm or company hiring a vessel for the carriage of goods or other purposes.
Charterhire:   The gross revenue earned by a vessel pursuant to a bareboat, time or voyage charter.
Charterparty:   A contract covering the transportation of cargo by sea, including the terms of the carriage, remuneration and other terms.
Classification society:   An independent society which certifies that a vessel has been built and maintained in accordance with the rules of such society and complies with the applicable rules and regulations of the flag state of such vessel and the international conventions of which that country is a member.
CLC:   International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended.
         

B-2

Closing price:   The last sale price on a day, regular way, or in case no sale takes place on that day, the average of the closing bid and asked prices on that day, regular way, as reported in the principal consolidated transaction reporting system for securities listed on the principal national securities exchange on which the units of that class are listed. If the units of that class are not listed on any national securities exchange, the last quoted price on that day. If no quoted price exists, the average of the high bid and low asked prices on that day in the over-the-counter market, as reported by the Nasdaq Global Market or any other system then in use. If on any day the units of that class are not quoted by any organization of that type, the average of the closing bid and asked prices on that day as furnished by a professional market maker making a market in the units of the class selected by our general partner. If on that day no market maker is making a market in the units of that class, the fair value of the units on that day as determined reasonably and in good faith by our board of directors.
COFR:   Certificates of financial responsibility sufficient to meet potential liabilities under OPA 90 and CERCLA, which owners and operators of vessels must establish and maintain with the United States Coast Guard.
Common unit arrearage:   The amount by which the minimum quarterly distribution for a quarter during the subordination period exceeds the distribution of available cash from operating surplus actually made for that quarter on a common unit, cumulative for that quarter and all prior quarters during the subordination period.
Document of compliance:   A document issued to a company which certifies that it complies with the requirements of the ISM Code.
Double-hull:   Hull construction technique by which a ship has an inner and outer hull, separated by void space, usually several feet in width.
Drydocking:   The removal of a vessel from the water for inspection, maintenance and/or repair of submerged parts
DNV:   Det Norske Veritas; ship classification society.
Dwt:   Deadweight, a measure of oil tanker carrying capacity, usually in tons, based upon weight of cargo and other items necessary to submerge the vessel to its maximum permitted draft.
EBITDA:   Earnings before interest, taxes, depreciation and amortization.
Estimated maintenance and replacement capital expenditures:   An estimate made by our board of directors, with the concurrence of the conflicts committee, of the average quarterly maintenance and replacement capital expenditures that Capital Product Partners L.P. will incur over the long-term. The estimate will be made annually and whenever an event occurs that is likely to result in a material adjustment to the amount of maintenance and replacement capital expenditures on a long-term basis. We refer to estimated maintenance and replacement capital expenditures in the partnership agreement as "estimated maintenance capital expenditures."
         

B-3

Expansion capital expenditures:   Cash capital expenditures for acquisitions or capital improvements. Expansion capital expenditures include the cash cost of equity and debt capital during construction of a capital asset. Expansion capital expenditures do not include maintenance and replacement capital expenditures or investment capital expenditures.
Flag state:   The country where a vessel is registered.
Fleet utilization:   The percentage of time that our vessels were available for revenue generating days, determined by dividing operating days by available days for the relevant period.
GAAP:   Accounting principles generally accepted in the United States.
General and administrative expenses:   General and administrative expenses consist of employment costs of shoreside staff and cost of facilities, as well as legal, audit and other administrative costs.
HELCOM:   The Helsinki Commission, which governs safety regulations in the Gulf of Finland
Hire rate:   The agreed sum or rate to be paid by the charterer for the use of the vessel.
Hull:   Shell or body of a ship.
H&M:   Hull and machinery insurance.
Ice Class 1A:   A vessel meeting the requirements for transit through ice with a thickness of 0.8 meters or less.
IMO:   International Maritime Organization, a United Nations agency that issues international trade standards for shipping.
Incentive distribution right:   A non-voting limited partner partnership interest issued to the general partner. The partnership interest will confer upon its holder only the rights and obligations specifically provided in the partnership agreement for incentive distribution rights.
Incentive distributions:   The distributions of available cash from operating surplus initially made to our general partner that are in excess of the general partner's aggregate 2.0% general partner interest.
Interim capital transactions:   The following transactions if they occur prior to liquidation:
    (a) Borrowings, refinancings or refundings of indebtedness and sales of debt securities (other than for working capital borrowings and other than for items purchased on open account in the ordinary course of business) by Capital Product Partners L.P. or any of its subsidiaries;
    (b) sales of equity interests by Capital Product Partners L.P. or any of its subsidiaries;
    (c) sales or other voluntary or involuntary dispositions of any assets of Capital Product Partners L.P. or any of its subsidiaries (other than sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business, and sales or other dispositions of assets as a part of normal retirements or replacements);
    (d) the termination of interest rate swap agreements;
    (e) capital contributions; or
    (f) corporate reorganizations or restructurings.
         

B-4

Intermediate survey:   The inspection of a vessel by a classification society surveyor that takes place every two and a half years after the special survey
Investment capital expenditures:   Capital expenditures other than Maintenance Capital Expenditures or Expansion Capital Expenditures.
ISM Code:   International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, which, among other things, requires vessel owners to obtain a safety management certification for each vessel they manage.
ISPS:   International Security Code for Ports and Ships, which enacts measures to detect and prevent security threats to ships and ports.
Maintenance capital expenditures:   Cash capital expenditures (including expenditures for the addition or improvement to our capital assets or for the acquisition of existing, or the construction of new, capital assets) if such expenditure is made to maintain over the long term the operating capacity of or the revenue generated by Capital Product Partners L.P.'s capital assets, as such assets existed at the time of such expenditure. Maintenance capital expenditures include the cash cost of equity and debt capital during construction of a capital asset. Maintenance capital expenditures do not include expansion capital expenditures or Investment Capital Expenditures..
MARPOL   The International Convention for the Prevention of Pollution from Ships
Medium to long-term charter:   A charter for a term greater than two years and no more than ten years.
Medium-range (MR):   A tanker with a carrying capacity of 30,000-55,000 dwt which is used for carrying a wide variety of products.
Newbuilding:   A new vessel under construction or on order.
Off-hire:   The time during which a vessel is not available for service.
OPA 90:   The United States Oil Pollution Act of 1990, as amended.
Operating costs:   The costs of the vessels including crewing costs, insurance, repairs and maintenance, stores, spares, lubricants and miscellaneous expenses (but excluding capital costs and voyage costs).
Operating days:   The days a vessel is in operation for a period, measured by subtracting idle days from available days.
Operating expenditures:   All cash expenditures of Capital Product Partners L.P. and its subsidiaries, including, but not limited to, taxes, reimbursements of the general partner, repayment of working capital borrowings, debt service payments and capital expenditures, subject to the following:
    (a) Payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness, other than working capital borrowings will not constitute operating expenditures.
    (b) Operating expenditures will not include expansion capital expenditures or actual maintenance capital expenditures but will include estimated maintenance capital expenditures.
    (c) Operating expenditures will not include:
      (1) Payment of transaction expenses and taxes relating to interim capital transactions; or
      (2) Distributions to partners.
         

B-5

    Where capital expenditures consist of both maintenance and replacement capital expenditures and expansion capital expenditures, our board of directors, with the concurrence of the conflicts committee, shall determine the allocation between the portion consisting of maintenance and replacement capital expenditures and the portion consisting of expansion capital expenditures, and the period over which the maintenance and replacement capital expenditures will be deducted as an operating expenditure in calculating operating surplus.
Operating surplus:   For any period prior to liquidation, on a cumulative basis and without duplication:
    (a) the sum of:
      (1) an amount equal to two times the amount needed for any one quarter for us to pay a distribution on all of our units, the general partner's 2% interest and the incentive distribution rights at the same per-unit amount as was distributed immediately preceding the date of determination (or with respect to the period commencing on the closing date and ending on March 31, 2007, it means the product of (x) $0.3750 multiplied by (y) a fraction of which the numerator is the number of days in such period and the denominator is 90 multiplied by (z) the number of units and general partner units outstanding on the record date with respect to such period);
      (2) all cash receipts of Capital Product Partners L.P. and its subsidiaries for the period beginning on the closing date of the initial public offering and ending with the last day of that period, other than cash receipts from interim capital transactions;
      (3) all cash receipts of Capital Product Partners L.P. and its subsidiaries after the end of that period but on or before the date of determination of operating surplus for the period resulting from working capital borrowings;
      (4) interest paid on debt incurred and cash distributions paid on equity securities issued, in each case, to finance all or any portion of the construction of a capital improvement or replacement asset and paid during the period prior to the earlier of the completion of construction or being abandoned or disposed of; and
      (5) interest paid on debt incurred and cash distributions on equity securities issued, in each case, to pay the construction period interest, or to pay construction period distributions or equity issued to finance all or any portion of the construction of a capital improvement or replacement asset as described in (4) above, less
         

B-6

    (b) the sum of:
      (1) operating expenditures for the period beginning on the closing date of the initial public offering and ending with the last day of that period, including estimated maintenance and replacement capital expenditures and the repayment of working capital borrowings, but not (x) the repayment of other borrowings or (y) expenditures incurred in connection with the expansion or increase in the transportation capacity of our fleet; and
      (2) the amount of cash reserves established by our board of directors to provide funds for future operating expenditures; provided however, that disbursements made (including contributions to a member of Capital Product Partners L.P. and its subsidiaries or disbursements on behalf of a member of Capital Product Partners L.P. and its subsidiaries) or cash reserves established, increased or reduced after the end of that period but on or before the date of determination of available cash for that period shall be deemed to have been made, established, increased or reduced for purposes of determining operating surplus, within that period if our board of directors so determines.
P&I:   Protection and indemnity. This denotes the insurance coverage taken by a ship owner or charterer against third party liabilities such as oil pollution, cargo damage, crew injury or loss of life, etc.
P&I Association:   A mutual insurance association providing P&I insurance coverage.
Product tanker:   A tanker designed to carry a wide variety of liquid products, including clean products (such as refined petroleum products and edible oils) and crude oil. Product/chemical tankers also carry acids and other chemicals. The separated cargo tanks in both types of tankers are coated to prevent product contamination and hull corrosion.
Refined petroleum products:   The resulting product recovered in an oil refinery at the various stages of processing crude oil, such as fuel oil, diesel and gasoil, kerosene and gasoline.
Short-term charter:   A charter for a term less than two years.
Sister ships:   One or more vessels of the same specifications typically built at the same shipyard
SOLAS:   International Convention for Safety of Life at Sea, which provides, among other things, rules for the construction and equipment of commercial vessels.
Special survey (S/S):   The extensive inspection of a vessel by a classification society surveyor that takes place every five years.
Spot market:   The market for chartering a vessel for single voyages.
         

B-7

Subordination period:   The subordination period will generally extend from the closing of the initial public offering until the first to occur of:
    (a) the first day of any quarter beginning after March 31, 2011, for which:
      (1) distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;
      (2) the adjusted operating surplus generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the common units and subordinated units that were outstanding during those periods on a fully diluted basis, and the related distribution on the general partner interest in Capital Product Partners L.P.; and
      (3) there are no outstanding cumulative common units arrearages.
    (b) the date on which our general partner is removed as general partner of Capital Product Partners L.P. upon the requisite vote by the limited partners under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of the removal;
      provided, however, that subordinated units may convert into common units before March 31, 2011 as described in "How We Make Cash Distributions—Subordination Period."
Tanker:   A vessel that transports liquid (wet) cargoes, such as refined petroleum products, crude oil, edible oils and light chemicals.
TCE (Time Charter Equivalent):   TCE rate is a shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts. TCE is expressed as per ship per day rate and is calculated as voyage and time charter revenues less voyage expenses during a period divided by the number of our operating days during the period, which is consistent with industry standards.
Time charter:   A charter in which the charterer pays for the use of a ship's cargo capacity for a specified period of time. The owner provides the ship with crew, stores and provisions, ready in all aspects to load cargo and proceed on a voyage as directed by the charterer. The charterer usually pays for bunkering and all voyage-related expenses, including canal tolls and port charges.
Voyage Expenses:   Expenses directly attributable to the vessel voyage which primarily consist of commissions, port and canal dues and bunker expenses.
         

B-8

Worldscale:   Worldwide Tanker Nominal Freight Scale. Worldscale Association, a shipping industry group, publishes a lengthy schedule of rates for popular tanker voyages. The printed figures, called World scale 100's, reflect application of tanker operating cost assumption to the ports and distance/steaming time on route. These "flat rates" appear in US dollars per ton of cargo. Shipowners and spot charterers usually negotiate the hire price of a tanker as percentage of Worldscale 100 for the voyage involved.
Working capital borrowings:   Borrowings used exclusively for working capital purposes or to pay distributions to partners made pursuant to a credit agreement or other arrangement provided that when incurred it is the intent of the borrower to repay such borrowings within 12 months from other than additional working capital borrowings.

B-9

               Through and including                        , 2007 (the 25th day after the date of this prospectus), all dealers effecting transactions in our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

11,750,000 Common Units

LOGO

Capital Product Partners L.P.
Representing Limited Partner Interests

PROSPECTUS

Merrill Lynch & Co.
UBS Investment Bank
Bear, Stearns & Co. Inc.
Wachovia Securities
Raymond James
Stifel Nicolaus
Fortis Securities

, 2007


PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

              The section of the prospectus entitled "The Partnership Agreement—Indemnification" discloses that we will generally indemnify our directors and the officers and other affiliates of our general partner to the fullest extent permitted by the law against all losses, claims, damages or similar events and is incorporated herein by this reference. Reference is also made to the Purchase Agreement filed as Exhibit 1.1 to this registration statement in which Capital Maritime, Capital Product Partners L.P., Capital GP LLC and certain of their affiliates will agree to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments that may be required to be made in respect of these liabilities.

              On February 2, 2007, in connection with the formation of the partnership, Capital Product Partners L.P. issued to (a) Capital GP L.L.C. the 2.0% general partner interest in the partnership for $20 and (b) Capital Maritime & Trading Corp. the 98% limited partner interest in the partnership for $980 in an offering exempt from registration under Section 4(2) of the Securities Act.

              There have been no other sales of unregistered securities since February 2, 2007.

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Exhibit No.
   Description
  1.1   Form of Purchase Agreement
  3.1   Certificate of Limited Partnership of Capital Product Partners L.P.
  3.2   First Amended and Restated Agreement of Limited Partnership of Capital Product Partners L.P. (incorporated by reference to Appendix A to the Prospectus contained within the Registrant's Form F-1.)
  3.3   Certificate of Formation of Capital GP L.L.C.
  3.4   Limited Liability Company Agreement of Capital GP L.L.C.
  3.5   Certificate of Formation of Capital Product Operating GP L.L.C.
  5.1   Opinion of Watson, Farley & Williams (New York) LLP as to the legality of the securities being registered
  8.1   Opinion of Cravath, Swaine & Moore LLP relating to tax matters
  8.2   Opinion of Watson, Farley & Williams (New York) LLP relating to tax matters
10.1   Form of New Revolving Credit Facility
10.2   Form of Omnibus Agreement
10.3   Form of Management Agreement with Capital Ship Management
10.4   Form of Administrative Services Agreement with Capital Ship Management
10.5   Form of Contribution Agreement for Initial Fleet
10.6   Form of Share Purchase Agreement for 2007 and 2008 Vessels
21.1   List of Subsidiaries of Capital Product Partners L.P.
23.1   Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
23.2   Consent of Watson, Farley & Williams (New York) LLP (contained in Exhibit 5.1 and 8.2)
23.3   Consent of Cravath, Swaine & Moore LLP (contained in Exhibit 8.1)
23.4   Consent of Clarkson Research Services Ltd.
99.1   Consent of Director Nominee Nikolaos Syntychakis
99.2   Consent of Director Nominee Abel Rasterhoff
99.3   Consent of Director Nominee Keith Forman

              The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the purchase agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

              Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or

II-2


controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

              The undersigned registrant hereby undertakes that:

II-3


SIGNATURES

              Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Piraeus, Country of Greece on the 19th day of March, 2007.

    CAPITAL PRODUCT PARTNERS L.P.,

 
 
By:
 
Capital GP L.L.C., its general partner

 
 
 
 
/s/  IOANNIS E. LAZARIDIS      
        Name: Ioannis E. Lazaridis
        Title: Chief Executive Officer and Chief Financial Officer of Capital GP L.L.C.


POWER OF ATTORNEY

              Each person whose signature appears below appoints Ioannis E. Lazaridis as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any registration statement (including any amendments thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his or her substitute, may lawfully do or cause to be done by virtue hereof.

              Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature
   Title
   Date

 
 
 
 
 
/s/  IOANNIS E. LAZARIDIS      
Ioannis E. Lazaridis		   Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer) of Capital GP L.L.C. and Director   March 19, 2007

/s/  EVANGELOS M. MARINAKIS      
Evangelos M. Marinakis
 
Director and Chairman of the Board
 
March 19, 2007

/s/  EVANGELOS BAIRACTARIS      
Evangelos Bairactaris
 
Director
 
March 19, 2007

II-4


SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT

              Pursuant to the Securities Act of 1933, as amended, the undersigned, a duly authorized representative of Capital Product Partners L.P. in the United States, has signed the Registration Statement in the City of Newark, State of Delaware on the 19th day of March, 2007.

    PUGLISI & ASSOCIATES

 
 
By:
/s/  DONALD J. PUGLISI      
    Name: DONALD J. PUGLISI
    Title: Managing Director

II-5



QuickLinks

M/T "Assos" 47,872 dwt built May 2006 Hyundai MIPO Dockyard Co., Ltd, South Korea
M/T "Avax" 47,834 dwt built January 2007 Hyundai MIPO Dockyard Co., Ltd, South Korea
M/T "Agisilaos" 37,662 dwt built August 2006 Hyundai MIPO Dockyard Co., Ltd, South Korea
TABLE OF CONTENTS
SUMMARY
Capital Product Partners L.P.
Business Opportunities
Competitive Strengths
Business Strategies
Risk Factors
The Transactions
Management of Capital Product Partners L.P.
Principal Executive Offices and Internet Address; SEC Filing Requirements
Summary of Conflicts of Interest and Fiduciary Duties
The Offering
Summary Historical Financial Data
Forecasted Cash Available for Distribution
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
CAPITALIZATION
DILUTION
OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS
Capital Product Partners L.P. Statement of Forecasted Results of Operations and Cash Available for Distribution (unaudited)
HOW WE MAKE CASH DISTRIBUTIONS
SELECTED HISTORICAL FINANCIAL DATA
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE OIL PRODUCTS TANKER INDUSTRY
Global Oil Demand
PRODUCTS AND CHEMICALS MARKET
Oil Products: Ton Mile Development (1995-2006E)
Growth in World Seaborne Oil Trade
The Major Seaborne Refined Petroleum Products Trades, 2005
Growth in U.S. Seaborne Imports of Refined Petroleum Products
Chinese Refined Products Imports
Chinese Vegoil Imports
Products Tanker Timecharter Rates
Product Tanker Asset Values
BUSINESS
MANAGEMENT
SELLING UNITHOLDER AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
CONFLICTS OF INTEREST AND FIDUCIARY DUTIES
DESCRIPTION OF THE COMMON UNITS
THE PARTNERSHIP AGREEMENT
UNITS ELIGIBLE FOR FUTURE SALE
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
NON-UNITED STATES TAX CONSIDERATIONS
UNDERWRITING
SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES
LEGAL MATTERS
EXPERTS
EXPENSES RELATED TO THIS OFFERING
WHERE YOU CAN FIND MORE INFORMATION
INDUSTRY AND MARKET DATA
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CAPITAL PRODUCT PARTNERS PREDECESSOR COMBINED BALANCE SHEETS (In thousands of United States dollars, except number of shares)
CAPITAL PRODUCT PARTNERS PREDECESSOR COMBINED STATEMENTS OF OPERATIONS (In thousands of United States dollars, except number of units and earnings per unit)
CAPITAL PRODUCT PARTNERS PREDECESSOR COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands of United States dollars, except number of shares)
CAPITAL PRODUCT PARTNERS PREDECESSOR COMBINED STATEMENTS OF CASH FLOWS (In thousands of United States dollars)
CAPITAL PRODUCT PARTNERS NOTES TO THE PREDECESSOR COMBINED FINANCIAL STATEMENTS (In thousands of United States dollars, except number of shares)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CAPITAL PRODUCT PARTNERS L.P. BALANCE SHEET (In United States dollars)
CAPITAL PRODUCT PARTNERS L.P. NOTES TO THE BALANCE SHEET (In United States dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CAPITAL GP L.L.C. BALANCE SHEET (In United States dollars)
CAPITAL GP L.L.C. NOTES TO THE BALANCE SHEET (In United States dollars)
APPENDIX A FORM OF FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CAPITAL PRODUCT PARTNERS L.P.
TABLE OF CONTENTS
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CAPITAL PRODUCT PARTNERS L.P.
ARTICLE I DEFINITIONS
ARTICLE II ORGANIZATION
ARTICLE III RIGHTS OF LIMITED PARTNERS
ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS
ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS
ARTICLE IX TAX MATTERS
ARTICLE X ADMISSION OF PARTNERS
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS
ARTICLE XII DISSOLUTION AND LIQUIDATION
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
ARTICLE XIV MERGER
ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
ARTICLE XVI GENERAL PROVISIONS
EXHIBIT A to the First Amended and Restated Agreement of Limited Partnership of Capital Product Partners L.P.
Certificate Evidency Common Units Representing Limited Partner Interests in Capital Product Partners L.P.
ABBREVIATIONS
Additional abbreviations, though not in the above list, may also be used. ASSIGNMENT OF COMMON UNITS in CAPITAL PRODUCT PARTNERS L.P.
APPENDIX B
GLOSSARY OF TERMS
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT

Exhibit 1.1

 

CAPITAL PRODUCT PARTNERS L.P.

 

(a Marshall Islands limited partnership)

 

[11,750,000] Common Units representing limited partner interests

 

FORM OF PURCHASE AGREEMENT

 

 

Dated: • , 2007

 


 

 

CAPITAL PRODUCT PARTNERS L.P.

 

(a Marshall Islands limited partnership)

 

[11,750,000] Common Units representing limited partner interests

 

PURCHASE AGREEMENT

 

• , 2007

 

MERRILL LYNCH & CO.

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

UBS SECURITIES LLC

as Representatives of the several Underwriters

c/o                               Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

4 World Financial Center
New York, New York  10080

c/o          UBS Securities LLC

299 Park Avenue

New York, New York 10171

 

Ladies and Gentlemen:

 

Capital Product Partners L.P., a Marshall Islands limited partnership (the “Partnership”), Capital GP L.L.C., a Marshall Islands limited liability company (the “General Partner”), Capital Product Operating L.L.C., a Marshall Islands limited liability company (the “Operating Company”), Capital Ship Management Corp., a Panama corporation (the “Manager”), Capital Maritime & Trading Corp., a Marshall Islands corporation (“Capital Maritime” and, together with the Partnership, the General Partner, and the Operating Company, the “Capital Parties”), confirm their respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and UBS Securities LLC (“UBS”) and each of the other Underwriters named in Schedule A hereto (collectively, the “Underwriters,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch and UBS are acting as Representatives (in such capacity, the “Representatives”), with respect to (i) the sale by Capital Maritime and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of common units representing limited partner interests in the Partnership (“Common Units”) set forth in Schedule A hereto and (ii) the grant by Capital Maritime to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of [1,762,500] additional Common Units to cover overallotments, if any.  The aforesaid [1,762,500] Common Units to be purchased by the Underwriters from Capital Maritime (the “Initial Units”) and all or any part of the [1,762,500] Common Units subject to the option described in Section 2(b) hereof (the “Option Units”) are hereinafter called, collectively, the “Units.”

 

The Partnership and Capital Maritime understand that the Underwriters propose to make a public offering of the Units as soon as the Representatives deem advisable after this Agreement has been executed and delivered.

 


 

It is understood and agreed to by all parties that the Partnership was formed by Capital Maritime to own and operate medium-range product tankers under medium- to long-term charters, including those medium-range product tankers and related charters owned by the Operating Subsidiaries (as defined below) and those medium-range product tankers and related charters to be owned by the Newbuilding Subsidiaries (as defined below) (collectively, the “Transferred Business”), as described more particularly in the Prospectus.  It is further understood and agreed by all parties that as of the date hereof:

 

(a)           Capital Maritime directly owns a 100% membership interest in the General Partner and a 98% limited partner interest in the Partnership;

 

(b)           the General Partner directly owns a 2% general partner interest in the Partnership;

 

(c)           the Partnership directly owns a 100% membership interest in the Operating Company;

 

(d)           Capital Maritime directly owns 100% of the outstanding capital stock of each of the vessel-owning subsidiaries listed on Schedule C hereto (collectively, the “Operating Subsidiaries” and each, an “Operating Subsidiary”); and

 

(e)           Capital Maritime directly owns 100% of the outstanding capital stock of each of the subsidiaries listed on Schedule D hereto (collectively, the “Newbuilding Subsidiaries” and each, a “Newbuilding Subsidiary”):

 

Immediately prior to or at the Closing Time (as defined in Section 2(c) hereof), the parties thereto will enter into a Contribution and Conveyance Agreement (the “Contribution Agreement”).  The transactions to be effected pursuant to the terms of the Contribution Agreement and this Agreement, including without limitation the public offering of the Initial Units contemplated hereby (the “Offering”), are referred to as the “Transactions.”  In connection with the Transactions, the parties to the Transactions have entered or will enter into various conveyances, agreements and related documents (collectively with the Contribution Agreement, the “Contribution Documents”) pursuant to which:

 

(a)           Capital Maritime will convey all of the outstanding capital stock of the Operating Subsidiaries to the Partnership, and as consideration therefore, the Partnership will issue to Capital Maritime (i) [11,750,000] Common Units representing a 56.0% limited partner interest in the Partnership, (ii) [8,805,521] Subordinated Units (as defined in the Partnership Agreement (as defined below)) representing a 42.0% limited partner interest in the Partnership, (iii) the Incentive Distribution Rights (as defined in the Partnership Agreement), (iv) $25 million in cash representing a cash dividend and (v) the right to receive an additional dividend in the amount of $30 million payable in cash or Common Units or a combination thereof, as described in the Contribution Agreement and the Partnership Agreement;

 

(b)           Capital Maritime’s original 98% limited partner interest in the Partnership will be converted into one (1) Subordinated Unit;

 

(c)           the General Partner’s original 2% general partner interest in the Partnership will be converted into [419,500] General Partner Units (as defined in the Partnership Agreement); and

 

(d)           Capital Maritime will transfer the Incentive Distribution Rights to the General Partner.

 

In addition, immediately prior to or at the Closing Time:

 

(a)           Capital Maritime, the General Partner, the Partnership and the Operating Company will enter into an omnibus agreement (the “Omnibus Agreement”), which will set forth certain agreements

 

2


 

concerning competition among the parties thereto and concerning the indemnification of the Partnership by Capital Maritime for certain liabilities following the closing of the Offering;

 

(b)           the Partnership and the Manager, will enter into a management agreement (the “Management Agreement”) pursuant to which the Manager will provide certain commercial and technical management services to the Partnership and the Operating Company;

 

(c)           the Partnership and the Manager, will enter into an administrative services agreement (the “Administrative Services Agreement”) pursuant to which the Manager will provide certain advisory and administrative services to the Partnership and the Operating Company;

 

(d)           Capital Maritime and the Partnership will enter into a share purchase agreement (the “Share Purchase Agreement”) pursuant to which the Partnership will purchase from Capital Maritime all of the outstanding shares of capital stock of the Newbuilding Subsidiaries upon delivery of each Newbuilding Vessel (as defined below) to the applicable Newbuilding Subsidiary; and

 

(e)           the Partnership, as borrower, and the Operating Subsidiaries, as guarantors, will enter into a revolving credit facility with HSH Nordbank AG, Hamburg, and other lenders (the “Credit Facility”).

 

The Contribution Documents, the Omnibus Agreement, the Management Agreement, the Administrative Services Agreement, the Share Purchase Agreement and the Credit Facility shall be collectively referred to herein as the “Transaction Documents.”  The General Partner, the Partnership, the Operating Company, the Operating Subsidiaries and the Newbuilding Subsidiaries are hereinafter referred to collectively as the “Partnership Entities.”  The Capital Parties, the Operating Subsidiaries and the Newbuilding Subsidiaries are hereinafter referred to collectively as the “Capital Entities.”

 

The Partnership has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form F-1 (No. 333- • ), including the related preliminary prospectus or prospectuses, covering the registration of the Units under the Securities Act of 1933, as amended (the “1933 Act”).  Promptly after execution and delivery of this Agreement, the Partnership will prepare and file a prospectus in accordance with the provisions of Rule 430A (“Rule 430A”) of the rules and regulations of the Commission under the 1933 Act (the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933 Act Regulations.  The information included in such prospectus that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective pursuant to paragraph (b) of Rule 430A is referred to as “Rule 430A Information.”  Each prospectus used before such registration statement became effective, and any prospectus that omitted the Rule 430A Information, that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “preliminary prospectus.”  Such registration statement, including the amendments thereto, the exhibits and any schedules thereto, at the time it became effective, and including the Rule 430A Information, is herein called the “Registration Statement.”  Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the “Rule 462(b) Registration Statement,” and after such filing the term “Registration Statement” shall include the Rule 462(b) Registration Statement.  The final prospectus  in the form first furnished to the Underwriters for use in connection with the offering of the Units is herein called the “Prospectus.”  For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).

 

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SECTION 1.           Representations and Warranties.

 

(a)           Representations and Warranties by the Capital Parties and the Manager.  Each of the Capital Parties and, with respect to subsections (v), (vi), (xvi), (xvii), (xviii), (xx), (xxi), (xxii), (xxiii), (xxiv), (xxvi), (xxxii) and (xxxiii) hereof, insofar as the statement in such subsections relate to the Manager, the Manager represents and warrants to each Underwriter as of the date hereof, the Applicable Time referred to in subsection (i) hereof, as of the Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows:

 

(i)            Compliance with Registration Requirements.  Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment thereto has become effective under the 1933 Act, and no stop order suspending the effectiveness of the Registration Statement, any Rule 462(b) Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Capital Parties, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with.

 

At the respective times, the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto became effective and at the Closing Time (and, if any Option Units are purchased, at the Date of Delivery), the Registration Statement, the Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued and at the Closing Time (and, if any Option Units are purchased, at the Date of Delivery), included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

As of the Applicable Time (as defined below), each of the statements made by the Partnership in the most recent preliminary prospectus, and to be made in the Prospectus and any further amendments or supplements to the Registration Statement or Prospectus within the coverage of Rule 175(b) of the 1933 Act Regulations, including any projections of results of operations or statements with respect to future available cash or future cash distributions of the Partnership or the anticipated ratio of taxable income to distributions, was made or will be made with a reasonable basis and in good faith.

 

As of the Applicable Time, neither (x) the Issuer General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time and the Statutory Prospectus (as defined below) as of the Applicable Time and the information included on Schedules B and E hereto, all considered together (collectively, the “General Disclosure Package”), nor (y) any individual Issuer Limited Use Free Writing Prospectus (as defined below), when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

As used in this subsection and elsewhere in this Agreement:

 

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“Applicable Time” means  • :00 [a/p]m (Eastern time) on  • , 2007 or such other time as agreed by the Partnership and the Representatives.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Units that (A) is required to be filed with the Commission by the Partnership, (B) is a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) whether or not required to be filed with the Commission or (C) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Units or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Partnership’s records pursuant to Rule 433(g).

 

“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a Bona Fide Electronic Road Show (as defined below)), as evidenced by its being specified in Schedule E hereto.

 

“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

 

“Statutory Prospectus” as of any time means the prospectus relating to the Units that is included in the Registration Statement immediately prior to that time, including any document incorporated by reference therein.

 

The Partnership has made available a “bona fide electronic road show,” as defined in Rule 433, in compliance with Rule 433(d)(8)(ii) (the “Bona Fide Electronic Road Show”) such that no filing of any “road show” (as defined in Rule 433(h)) is required in connection with the offering of the Units.

 

Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Units or until any earlier date that the issuer notified or notifies the Representatives as described in Section 3(e), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

 

The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement, the General Disclosure Package or the Prospectus made in reliance upon and in conformity with written information furnished to Capital Maritime or the Partnership by any Underwriter through the Representatives expressly for use therein.

 

Each preliminary prospectus (including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto) complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

At the time of filing the Registration Statement, any 462(b) Registration Statement and any post-effective amendments thereto, at the earliest time thereafter that the Partnership or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the

 

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1933 Act Regulations) of the Units and at the date hereof, the Partnership was not and is not an “ineligible issuer,” as defined in Rule 405 of the 1933 Act Regulations.

 

(ii)           Independent Accountants.  The accountants who certified the financial statements and supporting schedules included in the Registration Statement are independent registered public accountants as required by the 1933 Act and the 1933 Act Regulations.

 

(iii)          No Restrictions.  There are no restrictions on subsequent transfers of the Units under the laws of the Republic of the Marshall Islands.

 

(iv)          Financial Statements.  The financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus, together with the related schedules and notes, present fairly the financial position of the entities purported to be shown thereby on the basis stated therein at the dates indicated; said financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved.  The supporting schedules, if any, present fairly in accordance with GAAP the information required to be stated therein.  The selected financial data and the summary financial information included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement.  The pro forma balance sheet and the related notes thereto included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.  All disclosures contained in the Registration Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Item 10 of Regulation S-K under the 1933 Act, to the extent applicable.

 

(v)           No Material Adverse Change in Business.  Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, properties, business affairs or business prospects of the Capital Entities considered as one enterprise, whether or not arising in the ordinary course of business, that would have or could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Partnership Entities considered as one enterprise (a “Material Adverse Effect”), (B) there have been no transactions entered into by the Capital Entities or the Manager, other than those in the ordinary course of business, that are material with respect to the Partnership Entities considered as one enterprise, and (C) there has been no dividend or distribution of any kind declared, paid or made by the Partnership on any class of its outstanding general partner or limited partner interests.

 

(vi)          Formation and Qualification of the Capital Entities and the Manager.  Each of the Capital Entities has been duly formed or incorporated, as applicable, and is validly existing as a limited partnership, limited liability company or corporation, as applicable, and is in good standing under the laws of its jurisdiction of formation or incorporation, and the Manager has been duly organized and is validly existing as a corporation in good standing under the laws of the Republic of Panama, and each of the Capital Entities and the Manager has full partnership, limited liability company or corporate power and authority, as applicable, necessary to enter into and perform its obligations under the Transaction Documents to which it is a party, to own, lease and operate the properties included in the Transferred Business that it owns, leases or operates and to conduct the Transferred Business as described in the Prospectus and to enter into and perform its obligations under this Agreement.  Each of the Capital Entities and the Manager is duly qualified to transact business and is in good standing as a foreign limited partnership, foreign

 

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limited liability company or foreign corporation, as applicable, in each other jurisdiction in which such qualification is required for the conduct of the Transferred Business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect or subject the limited partners of the Partnership to any material liability or disability.

 

(vii)         Power and Authority to Act as General Partner.  The General Partner has, and as of each Date of Delivery will have, full power and authority to act as general partner of the Partnership in all material respects as described in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(viii)        Ownership of General Partner.  At each Date of Delivery, Capital Maritime will own all of the issued and outstanding membership interests of the General Partner; such membership interests will have been duly authorized and validly issued in accordance with the limited liability company agreement of the General Partner (the “General Partner LLC Agreement”) and will be fully paid (to the extent required by such limited liability company agreements) and nonassessable (except as such nonassessability may be affected by matters described in Section 51 of the Marshall Islands Limited Liability Company Act (the “Marshall Islands LLC Act”)); and Capital Maritime will own such membership interests free and clear of all liens, encumbrances, security interests, pledges, mortgages, charges or other claims (collectively, “Liens”).

 

(ix)           Ownership of the General Partner Interest in the Partnership. At each Date of Delivery, the General Partner will be the sole general partner of the Partnership with a 2.0% general partner interest in the Partnership; such general partner interest will have been duly authorized and validly issued in accordance with the agreement of limited partnership of the Partnership (the “Partnership Agreement”); and the General Partner will own such general partner interest free and clear of all Liens (except restrictions on transferability as described in the Prospectus or the Partnership Agreement).

 

(x)            Authorization and Ownership of Units, Sponsor Units and Incentive Distribution Rights; Description of Common Units.  The Sponsor Units (as defined below) and the Incentive Distribution Rights (as defined in the Partnership Agreement) and the limited partner interests represented thereby have been duly authorized for issuance and sale to Capital Maritime pursuant to the Contribution Agreement and, when issued and delivered by the Partnership pursuant to the Contribution Agreement against payment of the consideration set forth therein, the Sponsor Units and the Incentive Distribution Rights will be validly issued and fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such nonassessability may be affected by matters described in Section 41 of the Marshall Islands Limited Partnership Act (the “Marshall Islands LP Act”)).  At the initial Date of Delivery, after giving effect to the transactions contemplated by the Contribution Agreement, but prior to giving effect to the sale by Capital Maritime of the Units to the Underwriters pursuant to this Agreement, Capital Maritime will own [11,750,000] Common Units (including the Initial Units) and [8,805,522] Subordinated Units (collectively, the “Sponsor Units”), and the General Partner will own the Incentive Distribution Rights, in each case free and clear of all Liens (except restrictions on transferability as described in the Prospectus or the Partnership Agreement).  At the initial Date of Delivery, after giving effect to the Transactions, Capital Maritime will own [8,805,522] Subordinated Units (the “Retained Sponsor Units”), and the General Partner will own the Incentive Distribution Rights, in each case free and clear of all Liens (except restrictions on transferability as described in the Prospectus or the Partnership Agreement); the Option Units and the limited partner interests represented thereby have been duly authorized for issuance and sale to Capital Maritime pursuant to the Contribution Agreement and the Partnership Agreement and, upon exercise of the option

 

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provided in Section 2(b), when issued and delivered by the Partnership to Capital Maritime pursuant to the Contribution Agreement and the Partnership Agreement and sold and delivered by Capital Maritime to the Underwriters pursuant to Section 2(b), the Option Units will be validly issued and fully paid and non-assessable (except as such nonassessability may be affected by matters described in Section 41 of the Marshall Islands LP Act); the Common Units conform to all statements relating thereto contained in the Prospectus, and such description conforms to the rights set forth in the Partnership Agreement; no holder of the Units will be subject to personal liability by reason of being such a holder.

 

(xi)           Ownership of the Operating Company.  At each Date of Delivery, the Partnership will own all of the issued and outstanding membership interests of the Operating Company; such membership interests will have been duly authorized and validly issued in accordance with the limited liability company agreement of the Operating Company (the “Operating Company LLC Agreement”) and will be fully paid (to the extent required by the Operating Company LLC Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Section 51 of the Marshall Islands LLC Act); and the Partnership will own such membership interests free and clear of all Liens.  The only subsidiaries of the Partnership are the Operating Company and the Operating Subsidiaries.

 

(xii)          Ownership of the Operating Subsidiaries.  At each Date of Delivery, after giving effect to the Transactions, the Operating Company will own all of the issued and outstanding shares of capital stock of each of the Operating Subsidiaries; such shares of capital stock will be duly authorized and validly issued in accordance with the articles of incorporation and by-laws of the Operating Subsidiaries (collectively, the “Operating Subsidiaries’ Organizational Documents”) and will be fully paid and nonassessable; and the Operating Company will own such shares of capital stock free and clear of all Liens.

 

(xiii)         Ownership of the Newbuilding Subsidiaries.  Capital Maritime owns all of the issued and outstanding shares of capital stock of each of the Newbuilding Subsidiaries; such shares of capital stock are duly authorized and validly issued in accordance with the articles of incorporation and by-laws of the Newbuilding Subsidiaries (collectively, the “Newbuilding Subsidiaries’ Organizational Documents”) and are fully paid and nonassessable; and Capital Maritime owns such shares of capital stock free and clear of all Liens.  Upon the closing of the transactions contemplated by the Share Purchase Agreement, the Operating Company will own all of the issued and outstanding shares of capital stock of each of the Newbuilding Subsidiaries free and clear of all Liens.

 

(xiv)        Capitalization.  At the initial Date of Delivery, after giving effect to the Transactions and assuming no exercise of the option provided in Section 2(b), the issued and outstanding limited partner interests of the Partnership will consist of [11,750,000] Common Units, [8,805,522] Subordinated Units and the Incentive Distribution Rights, and the issued and outstanding general partner interests of the Partnership will consist of [419,500] General Partner Units.  Assuming no exercise of the option provided in Section 2(b), other than the Retained Sponsor Units and the Incentive Distribution Rights, the Initial Units will be the only limited partner interests in the Partnership issued and outstanding at the initial Date of Delivery.

 

(xv)          No Preemptive Rights or Options; No Registration Rights.  Except as identified in the Registration Statement, the General Disclosure Package and the Prospectus, there are no (A) preemptive rights or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any equity securities of the Partnership Entities or (B) outstanding options or warrants to purchase any securities of the Partnership Entities.  There are no persons with

 

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registration rights or similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Partnership under the 1933 Act.

 

(xvi)        Authority and Authorization.  Each of the Capital Parties and the Manager has the legal right and power, and all authorization and approval required by law, to enter into this Agreement.  The Partnership has all requisite partnership power and authority to issue, sell and deliver the Sponsor Units and the Option Units to Capital Maritime in accordance with and upon the terms and conditions set forth in the Contribution Agreement and the Partnership Agreement.  Capital Maritime has all requisite corporate power and authority to sell and deliver the Units to the Underwriters in accordance with and upon the terms and conditions set forth in this Agreement.  At each Date of Delivery, all corporate, partnership and limited liability company action (including unitholder, stockholder, member or partner action), as the case may be, required to be taken by any of the Capital Entities for the authorization, issuance, sale and delivery of the Units, and by the Capital Entities and the Manager for the execution and delivery of the Operative Agreements (as defined below) and the consummation of the transactions (including the Transactions) contemplated by this Agreement and the Operative Agreements shall have been validly taken.

 

(xvii)       Authorization of Agreement.  This Agreement has been duly authorized, executed and delivered by each of the Capital Parties and the Manager.

 

(xviii)      Authorization, Execution, Delivery and Enforceability of Operative Agreements. At or before the initial Date of Delivery:

 

(A)          the Transaction Documents will have been duly authorized, executed and delivered by the Capital Entities that are parties thereto and, if applicable, the Manager, and each will be a valid and legally binding agreement of the parties thereto, enforceable against such parties in accordance with its terms; and
 
(B)           the Partnership Agreement, General Partner LLC Agreement and the Operating Company LLC Agreement (collectively, the “Organizational Agreements”) will have been duly authorized, executed and delivered by the parties thereto, and will be valid and legally binding agreements of such parties, enforceable against such parties in accordance with their terms;
 
provided that, with respect to each agreement described in this subsection, the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).  The Transaction Documents and the Organizational Agreements are collectively referred to herein as the “Operative Agreements.”
 

(xix)         Enforceability of Other Agreements.  Each of the agreements listed on Schedule F (collectively, the “Other Agreements”) has been, or will be at the time of Closing, duly authorized, executed and delivered by each of the Capital Entities party thereto and, assuming the due authorization, execution and delivery by the other parties thereto, is, or will be at the time of Closing, a valid and legally binding agreement of such Capital Entity, enforceable against it in accordance with its terms, except where the failure to be enforceable would not have or reasonably be expected to have a Material Adverse Effect or a material adverse effect on the transactions contemplated by this Agreement; provided that, with respect to each agreement described in this subsection, the enforceability thereof may be limited by bankruptcy, insolvency,

 

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fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and, provided further, that the indemnity, contribution and exoneration provisions contained in any of such agreements may be limited by applicable laws.

 

(xx)          No Conflicts.  None of (A) the offering, issuance or sale by the Partnership of the Units or the offering or sale by Capital Maritime of the Units, (B) the execution, delivery and performance of this Agreement and the Operative Agreements by the Capital Entities that are parties thereto and, if applicable, the Manager or (C) the consummation of any other transactions contemplated by this Agreement or the Operative Agreements (including the Transactions), (1) conflicts or will conflict with or constitutes or will constitute a violation of the Organizational Agreements or the partnership agreement, limited liability company agreement, certificate of formation or conversion, certificate or articles of incorporation, by-laws or other constituent document of any of the Capital Entities or the Manager (collectively, the “Organizational Documents”), (2) conflicts or will conflict with or constitutes or will constitute a breach or violation of, or a default (or an event that, with notice or lapse of time or both, would constitute such a default) under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which any of the Capital Entities or the Manager is a party or by which any of them or any of their respective properties may be bound, including the Other Agreements, (3) violates or will violate any statute, law or regulation or any order, judgment, decree or injunction of any court or governmental agency or body directed to any of the Capital Entities or the Manager or any of their properties in a proceeding to which any of them or their property is a party or (4) results or will result in the creation or imposition of any Lien upon any property or assets of any of the Capital Entities (other than Liens arising under the Credit Facility), which conflicts, breaches, violations, defaults or Liens, in the case of clauses (2) or (4), would, individually or in the aggregate, have a Material Adverse Effect or a material adverse effect on the ability of any of the Capital Entities or the Manager to consummate the transactions (including the Transactions) provided for in this Agreement or the Operative Agreements to be consummated on or prior to the applicable Date of Delivery.

 

(xxi)         No Consents.  No permit, consent, approval, authorization, order, registration, filing or qualification (“Consent”) of or with any court, governmental agency or body having jurisdiction over any of the Capital Entities or any of their properties or assets is required in connection with the offering, issuance or sale by the Partnership and Capital Maritime of the Units, the execution, delivery and performance of this Agreement and the Operative Agreements by the Capital Entities that are parties thereto and, if applicable, the Manager, on or prior to the applicable Date of Delivery, the performance of the Other Agreements by the Capital Entities that are parties thereto or the consummation of the transactions contemplated by this Agreement or the Operative Agreements (including the Transactions) to be consummated on or prior to the applicable Date of Delivery except (A) for such permits, consents, approvals and similar authorizations required under the 1933 Act, the Securities Exchange Act of 1934 (the “1934 Act”) and state securities or “Blue Sky” laws, (B) for such consents that have been, or prior to the Date of Delivery will be, obtained, (C) for such consents that, if not obtained, would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect and (D) as disclosed in the General Disclosure Package.

 

(xxii)        No Defaults.  None of the Capital Entities or the Manager is in (A) violation of its Organizational Documents, (B) violation of any statute, law, rule or regulation, or any judgment, order, injunction or decree of any court, governmental agency or body or arbitrator having jurisdiction over any of the Partnership Entities or any of their properties or assets or

 

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(C) breach, default (or an event which, with notice or lapse of time or both, would constitute such an event) or violation in the performance of any obligation, agreement or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument relating to the Transferred Business to which it is a party or by which it or any of its properties may be bound, which in the case of clauses (B) and (C) would, if continued, have a Material Adverse Effect or could materially impair the ability of any of the Capital Entities or the Manager to perform their obligations under this Agreement, the Operative Agreements or the Other Agreements.

 

(xxiii)       Absence of Labor Dispute.  No labor dispute with the employees of the Partnership Entities or the Manager exists or, to the knowledge of the Capital Parties and the Manager, is imminent, and none of the Partnership Entities or the Manager is aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers, customers or contractors, which, in any case, would result in a Material Adverse Effect.

 

(xxiv)       Absence of Proceedings.  There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Capital Parties, threatened, against or affecting any of the Partnership Entities, which is required to be disclosed in the Registration Statement (other than as disclosed therein), or which might result in a Material Adverse Effect, or which might materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in this Agreement, including the Transactions, or the performance by any of the Capital Entities or the Manager of its obligations hereunder or under the Operative Agreements or the Other Agreements; the aggregate of all pending legal or governmental proceedings to which any of the Partnership Entities is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, could not result in a Material Adverse Effect.

 

(xxv)        Accuracy of Exhibits.  There are no contracts or documents which are required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement which have not been so described and filed as required.

 

(xxvi)       Possession of Intellectual Property.  The Partnership Entities and the Manager own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the Transferred Business, and none of the Capital Parties or the Manager has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Partnership Entities and the Manager, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.

 

(xxvii)      Absence of Further Requirements.  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Partnership of its obligations hereunder, in connection with the offering, issuance or sale of the Units hereunder or

 

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the consummation of the transactions contemplated by this Agreement (including the Transactions), except such as have been already obtained or as may be required under the 1933 Act or the 1933 Act Regulations or state securities laws.

 

(xxviii)     Absence of Manipulation.  None of the Capital Entities nor any affiliate of the Capital Entities has taken, nor will any of them take, directly or indirectly, any action which is designed to or which has constituted or which would be expected to cause or result in stabilization or manipulation of the price of any security of the Partnership to facilitate the sale or resale of the Units.

 

(xxix)       Sufficiency of the Transaction Documents. The Transaction Documents will be legally sufficient to transfer or convey to the Partnership and the Operating Company satisfactory title to, or valid rights to use or manage all properties not already held by it that are, individually or in the aggregate, required to enable the Partnership and its subsidiaries to conduct their operations, including the Transferred Business, in all material respects as contemplated by the Registration Statement, the General Disclosure Package and the Prospectus, subject to the conditions, reservations, encumbrances and limitations described therein or contained in the Transaction Documents.  The Partnership and the Operating Company, upon execution and delivery of the Transaction Documents, will succeed in all material respects to the business, assets, properties, liabilities and operations of the Transferred Business as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus and in the Contribution Documents and Share Purchase Agreement.

 

(xxx)        Vessel Title and Registration.  At each Date of Delivery, after giving effect to the Transactions, each of the vessels listed on Schedule C hereto (the “Vessels”) will be duly registered as a vessel under the laws of the jurisdiction set forth opposite its name on Schedule C in the sole ownership of the Operating Subsidiary set forth opposite its name on Schedule C; on such date, each Operating Subsidiary will have good and marketable title to the applicable Vessel, free and clear of all Liens and defects of the title of record; and each such Vessel will be in good standing with respect to the payment of past and current taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction except for such Liens, defects of the title of record, failure to pay such taxes, fees and other amounts (A) as described, and subject to the limitations contained, in the Prospectus, (B) those liens arising under the Credit Facility or (C) as do not, individually or in the aggregate, materially affect the value of any such vessel and do not materially interfere with the use of any such Vessel as it has been used in the past and is proposed to be used in the future, as described in the Prospectus (the liens described in clauses (A), (B) and (C) above being “Permitted Liens”).

 

(xxxi)       Newbuilding Vessel Title and Registration.  Upon the closing of the transactions contemplated by the Share Purchase Agreement, each of the vessels listed on Schedule D hereto (the “Newbuilding Vessels”) will be duly registered as a vessel under the laws of the jurisdiction set forth opposite its name on Schedule D in the sole ownership of the Newbuilding Subsidiary set forth opposite its name on Schedule D; on such date, each Newbuilding Subsidiary will have good and marketable title to the applicable Newbuilding Vessel, free and clear of all Liens and defects of the title of record; and each such Newbuilding Vessel will be in good standing with respect to the payment of past and current taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction except for Permitted Liens.

 

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(xxxii)      Permits.  Each of the Partnership Entities and the Manager has, or at each Date of Delivery will have, such permits, consents (as defined above), licenses, franchises, concessions, certificates and authorizations (“Permits”) of, and has or will have made all declarations and filings with, all Federal, provincial, state, local or foreign governmental or regulatory authorities, all self-regulatory organizations and all courts and other tribunals, as are necessary to own or lease its properties and to conduct its business in the manner described in the Registration Statement, the General Disclosure Package and the Prospectus, subject to such qualifications as may be set forth in the Registration Statement, the General Disclosure Package and the Prospectus and except for such Permits, declarations and filings that, if not obtained, would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect; except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, each of the Partnership Entities and the Manager has, or at each Date of Delivery will have, fulfilled and performed all its material obligations with respect to such Permits which are or will be due to have been fulfilled and performed by such date and no event has occurred that would prevent the Permits from being renewed or reissued or that allows, or after notice or lapse of time would allow, revocation or termination thereof or results or would result in any impairment of the rights of the holder of any such Permit, except for such non-renewals, non-issues, revocations, terminations and impairments that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect, and none of such Permits contains any restriction that is materially burdensome to the Partnership Entities, taken as a whole.

 

(xxxiii)     Environmental Laws.  Except as described in the Registration Statement and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) none of the Partnership Entities is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any final and legally binding judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products or asbestos-containing materials (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Partnership Entities and the Manager have all permits, authorizations and approvals required under any applicable Environmental Laws to conduct their respective businesses as described in the General Disclosure Package and the Prospectus and are each in compliance with such requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against any of the Partnership Entities and (D) to the knowledge of the Capital Parties, there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting any of the Partnership Entities or the Manager relating to Hazardous Materials or any Environmental Laws.

 

(xxxiv)     Insurance.  The Partnership Entities carry or are entitled to the benefits of insurance relating to the Transferred Business, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect.   The Capital Entities have no reason to believe that they will not be able (A) to renew their

 

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existing insurance coverage relating to the Transferred Business as and when such policies expire or (B) to obtain comparable coverage relating to the Transferred Business from similar institutions as may be necessary or appropriate to conduct such business as now conducted and at a cost that would not result in a Material Adverse Change.  None of the Capital Entities has been denied any insurance coverage which it has sought or for which it has applied relating to the Transferred Business.

 

(xxxv)      Prohibition on Dividends.  Except as provided in the Credit Facility and by Section 40 of the Marshall Islands LLC Act, neither the Operating Company nor any Operating Subsidiary is prohibited, directly or indirectly, from paying any dividends to the Partnership or the Operating Company, as the case may be, from making any other distribution on such subsidiary’s equity securities, from repaying to the Partnership or the Operating Company any loans or advances to such subsidiary from the Partnership or the Operating Company or from transferring any of such subsidiary’s property or assets to the Partnership, the Operating Company or any other subsidiary of the Partnership.  Except as provided in the Credit Facility, upon the closing of the transactions contemplated by the Share Purchase Agreement, none of the Newbuilding Subsidiaries will be prohibited, directly or indirectly, from paying any dividends to the Partnership or the Operating Company, as the case may be, from making any other distribution on such subsidiary’s equity securities, from repaying to the Partnership or the Operating Company any loans or advances to such subsidiary from the Partnership or the Operating Company or from transferring any of such subsidiary’s property or assets to the Partnership, the Operating Company or any other subsidiary of the Partnership.

 

(xxxvi)     Accounting Controls.  The Partnership Entities maintain a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the Prospectus, since the end of the Partnership’s most recent audited fiscal year, there has been (1) no material weakness in the Partnership Entities’ internal control over financial reporting (whether or not remediated) and (2) no change in the Partnership Entities’ internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Partnership Entities’ internal control over financial reporting.

 

(xxxvii)    Compliance with the Sarbanes-Oxley Act.  The Partnership has taken all necessary actions to ensure that, upon the effectiveness of the Registration Statement, it will be in compliance with all provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the provisions thereof (the “Sarbanes-Oxley Act”) that are then in effect and which the Partnership is required to comply with as of the effectiveness of the Registration Statement, and is actively taking steps to ensure that it will be in compliance with other provisions of the Sarbanes-Oxley Act not currently in effect, upon the effectiveness of such provisions, or which will become applicable to the Partnership at all times after the effectiveness of the Registration Statement.

 

(xxxviii)   Payment of Taxes.  Each of the Partnership Entities has filed (or has obtained extensions with respect to) all material foreign, federal, state and local income and franchise tax returns required to be filed through the date of this Agreement, which returns are correct and complete in all material respects, and has timely paid all taxes due from it, other than

 

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those (A) that are being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles or (B) that, if not paid, would not have a Material Adverse Effect.

 

(xxxix)        Investment Company Act.  None of the Partnership Entities is now, and after giving effect to the Transactions will be an “investment company” or a company “controlled by” an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

 

(xl)           Passive Foreign Investment Company.  After giving effect to the Transactions, and after giving effect to the exercise in full of the option provided in Section 2(b) hereof, the Partnership will not be a Passive Foreign Investment Company (“PFIC”) within the meaning of Section 1296 of the Internal Revenue Code, and based on the Partnership’s current and expected assets, income and operations as described in the Prospectus, the Partnership does not believe that it is likely to become a PFIC.

 

(xli)          Section 883 Exemption.  After giving effect to the Transactions and the exercise in full of the option provided in Section 2(b) hereof, the Partnership will qualify for the exemption from U.S. federal income tax on its U.S. source international transportation income under Section 883 of the Internal Revenue Code, provided less than 50 percent of its Common Units are owned by “5-percent shareholders” (other than Capital Maritime or its affiliates) as defined in Treasury Regulation 1.883-2(d)(3) for more than half the number of days during the year of the Offering.

 

(xlii)         Tax Status.  None of the Partnership Entities, other than the General Partner and the Partnership, is currently classified as an association taxable as a corporation for United States federal income tax purposes.  Each of the Partnership Entities, other than the General Partner and the Partnership, has properly elected to be classified as a disregarded entity if it has one owner or as a partnership if it has more than one owner for United States federal income tax purposes (other than any Partnership Entity that is classified other than as a corporation without regard to whether it has made such an election).

 

(xliii)        Foreign Corrupt Practices Act.  None of the Partnership Entities nor, to the knowledge of the Capital Parties, any director, officer, agent, employee, affiliate or other person acting on behalf of any Partnership Entity is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and each of the Partnership Entities, and to the knowledge of the Capital Parties, the affiliates of the Partnership Entities have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(xliv)       Money Laundering Laws.  The operations of the Partnership Entities are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder

 

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and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any of the Partnership Entities with respect to the Money Laundering Laws is pending or, to the best knowledge of the Capital Parties, threatened.

 

(xlv)        OFAC.  None of the Partnership Entities is, and, to the knowledge of the Capital Parties, any director, officer, agent, employee, affiliate or person acting on behalf of the Partnership Entities is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and Capital Maritime will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

 

(xlvi)       Statistical and Market-Related Data.  Any statistical and market-related data included in the Registration Statement, the General Disclosure Package and the Prospectus are based on or derived from sources that the Capital Parties believe to be reliable and accurate.

 

(xlvii)      Private Placement. The offer, sale and issuance of the Sponsor Units, the Incentive Distribution Rights and the Option Units to Capital Maritime pursuant to the Contribution Agreement and the Partnership Agreement are exempt from the registration requirements of the 1933 Act and the securities laws of any state having jurisdiction with respect thereto, and none of the Capital Entities has taken or will take any action that would cause the loss of such exemption.

 

(b)           Additional Representations and Warranties by Capital Maritime.  Capital Maritime also represents and warrants to each Underwriter as of the date hereof, as of the Applicable Time and as of the Closing Time, and agrees with each Underwriter, as follows:

 

(i)            No Inside Information.  Capital Maritime is not prompted to sell the Units by any information concerning the any of the Capital Entities which is not set forth in the General Disclosure Package or the Prospectus.

 

(ii)           Valid Title.  At the initial Date of Delivery, after giving effect to the sale of the Operating Subsidiaries to the Partnership as contemplated by the Contribution Agreement, Capital Maritime will have valid title to the Initial Units, free and clear of all Liens and will have and the legal right and power to sell, transfer and deliver the Initial Units or a valid security entitlement in respect of such Initial Units.  Upon exercise of the option described in Section 2(b) hereof, after giving effect to the sale by the Partnership of the Option Units to Capital Maritime as contemplated by the Partnership Agreement, Capital Maritime will have valid title to the Option Units, free and clear of all Liens and will have and the legal right and power to sell, transfer and deliver the Option Units or a valid security entitlement in respect of such Option Units.

 

(iii)          Delivery of Units.  Upon payment of the purchase price for the Units, delivery of such Units, as directed by the Underwriters, to Cede & Co. (“Cede”) or such other nominee as may be designated by The Depository Trust Company (“DTC”), registration of such Units in the name of Cede or such other nominee, and the crediting of such Units on the books of DTC to securities accounts of the Underwriters, (A) DTC shall be a “protected purchaser,” within the meaning of Section 8-303 of the New York Uniform Commercial Code (the “UCC”), of such Units and will acquire its interest in the Units (including, without limitation, all rights that Capital

 

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Maritime had or has the power to transfer in such Units) free and clear of any adverse claim within the meaning of Section 8-102 of the UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid security entitlement in respect of such Units and (C) no action (whether framed in conversion, replevin, constructive trust, equitable lien, or other theory) based on any “adverse claim,” within the meaning of Section 8-102 of the UCC, to such Units may be asserted against the Underwriters with respect to such security entitlement; for purposes of this representation, Capital Maritime may assume that when such payment, delivery and crediting occur, (1) such Units will have been registered in the name of Cede or another nominee designated by DTC, in each case on the Partnership’s unit registry in accordance with its certificate of formation, agreement of limited partnership and applicable law, (2) DTC will be registered as a “clearing corporation,” within the meaning of Section 8-102 of the UCC, and (3) appropriate entries to the accounts of the several Underwriters on the records of DTC will have been made pursuant to the UCC.

 

(iv)          Restriction on Sale of Securities.  During a period of 180 days from the date of the Prospectus, Capital Maritime will not, without the prior written consent of the Representatives, (A) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any Common Units or any securities convertible into or exercisable or exchangeable for Common Units or file, or cause to be filed, any registration statement under the 1933 Act with respect to any of the foregoing or (B) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Units, whether any such swap or transaction described in clause (A) or (B) above is to be settled by delivery of Common Units or such other securities, in cash or otherwise.  The foregoing sentence shall not apply to the Units to be sold hereunder.  Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period the Partnership issues an earnings release or material news or a material event relating to the Partnership occurs or (2) prior to the expiration of the 180-day restricted period, the Partnership announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day restricted period, the restrictions imposed in this subsection shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

(v)           No Association with NASD.  Neither Capital Maritime nor any of its affiliates directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, or is a person associated with (within the meaning of Article I (dd) of the By-laws of the National Association of Securities Dealers, Inc. (the “NASD”)), any member firm of the National Association of Securities Dealers, Inc.

 

(c)           Officer’s Certificates.  Any certificate signed by any officer of any of the Capital Entities delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Capital Entities to each Underwriter as to the matters covered thereby.

 

SECTION 2.           Sale and Delivery to Underwriters; Closing.

 

(a)           Initial Units.  On the basis of the representations and warranties herein contained and subject to the terms and conditions herein  set forth, Capital Maritime agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Capital Maritime, at the price per Unit set forth in Schedule B, the number of Initial Units set forth in Schedule A opposite the name of such Underwriter, plus any additional number of Initial Units which

 

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such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, bears to the total number of Initial Units, subject, in each case, to such adjustments among the Underwriters as the Representatives in their sole discretion shall make to eliminate any sales or purchases of fractional securities.

 

(b)           Option Units.  In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions set forth herein, Capital Maritime hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional [1,762,500] Common Units, at the price per Unit set forth in Schedule B, less an amount per Unit equal to any dividends or distributions declared by the Partnership and payable on the Initial Units but not payable on the Option Units.  The option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering overallotments which may be made in connection with the offering and distribution of the Initial Units upon notice by the Representatives to the Partnership and Capital Maritime setting forth the number of Option Units as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Units.  Any such time and date of delivery (a “Date of Delivery”) shall be determined by the Representatives, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time, as hereinafter defined.  If the option is exercised as to all or any portion of the Option Units, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Units then being purchased which the number of Initial Units set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Units, subject in each case to such adjustments as the Representatives in their discretion shall make to eliminate any sales or purchases of fractional Common Units.

 

(c)           Payment.  Payment of the purchase price for, and delivery of certificates for, the Initial Units shall be made at the offices of Vinson & Elkins L.L.P., 666 Fifth Avenue, 26th Floor, New York, New York 10103, or at such other place as shall be agreed upon by the Representatives and the Partnership and Capital Maritime, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Partnership and Capital Maritime (such time and date of payment and delivery being herein called “Closing Time”).

 

In addition, in the event that any or all of the Option Units are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Units shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representatives and the Partnership and Capital Maritime, on each Date of Delivery as specified in the notice from the Representatives to the Partnership and Capital Maritime.

 

Payment for the Initial Units shall be made to Capital Maritime by wire transfer of immediately available funds to a bank account designated by Capital Maritime against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Initial Units to be purchased by them.  In the event that any or all of the Option Units are purchased by the Underwriters, payment shall be made to Capital Maritime by wire transfer of immediately available funds to a bank account designated by Capital Maritime against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Option Units to be purchased by them.  It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of and receipt for, and to make payment of the purchase price for, the Initial Units and the Option Units, if any, which it has agreed to purchase.  Merrill Lynch, individually and not as a Representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Initial Units or the Option Units, if any, to be purchased by any Underwriter whose funds have not been received by the Closing

 

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Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder.

 

(d)           Denominations; Registration.  Certificates for the Initial Units and the Option Units, if any, shall be in such denominations and registered in such names as the Representatives may request in writing at least one full business day before the Closing Time or the relevant Date of Delivery, as the case may be.  The certificates for the Initial Units and the Option Units, if any, will be made available for examination and packaging by the Representatives in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time or the relevant Date of Delivery, as the case may be.

 

(e)           Appointment of Qualified Independent Underwriter.  The Partnership and Capital Maritime hereby confirm their engagement of Merrill Lynch as, and Merrill Lynch hereby confirms its agreement with the Partnership and Capital Maritime to render services as, a “qualified independent underwriter” within the meaning of Rule 2720 of the Conduct Rules of the NASD with respect to the offering and sale of the Units.  Merrill Lynch, solely in its capacity as qualified independent underwriter and not otherwise, is referred to herein as the “Independent Underwriter.”

 

SECTION 3.           Covenants of the Partnership and Capital Maritime.  The Partnership covenants and, with respect to subparagraphs (i), (m) and (o) below, Capital Maritime covenants with each Underwriter as follows:

 

(a)           Compliance with Securities Regulations and Commission Requests.  The Partnership, subject to Section 3(b), will comply with the requirements of Rule 430A, and will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Units for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Partnership becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Units.  The Partnership will effect the filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus.  The Partnership will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment.

 

(b)           Filing of Amendments and Exchange Act Documents.  The Partnership will give the Representatives notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b)) or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, and will furnish the Representatives with copies of any such documents a reasonable amount of time under the circumstances prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object.  The Partnership has given the Representatives notice of any filings made pursuant to the 1934 Act or the rules and regulations thereunder within 48 hours prior to the Applicable Time; the Partnership will give the Representatives notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall object.

 

(c)           Delivery of Registration Statements.  The Partnership has furnished or will deliver to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration

 

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Statement as originally filed and of each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters.  The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(d)           Delivery of Prospectuses.  The Partnership has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Partnership hereby consents to the use of such copies for purposes permitted by the 1933 Act.  The Partnership will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request.  The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(e)           Continued Compliance with Securities Laws.  The Partnership will comply with the 1933 Act and the 1933 Act Regulations so as to permit the completion of the distribution of the Units as contemplated in this Agreement and in the Prospectus.  If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Units, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Partnership, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Partnership will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Partnership will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement relating to the Units or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances, prevailing at that subsequent time, not misleading, the Partnership will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(f)            Blue Sky Qualifications.  The Partnership will use its best efforts, in cooperation with the Underwriters, to qualify the Units for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect for a period of not less than one year from the later of the effective date of the Registration Statement and any Rule 462(b) Registration Statement; provided, however, that the Partnership shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

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(g)           Rule 158.  The Partnership will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

 

(h)           Rule 463. The Partnership will file with the Commission such information in Form 20-F as may be required by Rule 463 under the Act.

 

(i)            Use of Proceeds.  Capital Maritime will use the net proceeds received by it from the sale of any Option Units in the manner specified in the Prospectus under “Use of Proceeds.”

 

(j)            Reporting Requirements.  The Partnership, during the period when the Prospectus is required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the rules and regulations of the Commission thereunder.

 

(k)           Listing.  The Partnership will use its best efforts to effect the listing of the Common Units (including the Option Units) on the Nasdaq Global Market.

 

(l)            Restriction on Sale of Securities.  During a period of 180 days from the date of the Prospectus, the Partnership will not, without the prior written consent of the Representatives, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any Common Units or any securities convertible into or exercisable or exchangeable for Common Units or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Units, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Units or such other securities, in cash or otherwise.  The foregoing sentence shall not apply to (A) the Units to be sold hereunder or (B) any offer for sale, sale or other issuance of common units or other securities to Capital Maritime or any of its subsidiaries in connection with the acquisition by the Partnership of any assets from Capital Maritime or any of its subsidiaries, provided that any such recipient of common units or other securities enters into a lock-up arrangement for the remainder of the 180-day restricted period.  Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period the Partnership issues an earnings release or material news or a material event relating to the Partnership occurs or (2) prior to the expiration of the 180-day restricted period, the Partnership announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day restricted period, the restrictions imposed in this subsection shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

(m)          Issuer Free Writing Prospectuses.  Each of the Partnership and Capital Maritime represents and agrees that, unless it obtains the prior consent of the Representatives, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Partnership and the Representatives, it has not made and will not make any offer relating to the Units that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission or, in the case of Capital Maritime, whether or not required to be filed with the Commission.  Any such free writing prospectus consented to by the Representatives or by the Partnership and the Representatives, as the case may be, is hereinafter referred to as a “Permitted Free Writing Prospectus.”  Each of the Partnership and Capital Maritime represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus

 

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as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping.

 

(n)           Investment Company; PFIC. For a period of five years after the latest Date of Delivery, the Partnership will use its reasonable best efforts to ensure that (i) no Partnership Entity, nor any subsidiary thereof, shall become an “investment company” as defined in the 1940 Act, and (ii) the Partnership shall not become a PFIC.

 

(o)           Share Purchase Agreement.  Capital Maritime and the Partnership will consummate the transactions contemplated in the Share Purchase Agreement in accordance with the terms of that agreement.

 

SECTION 4.           Payment of Expenses.

 

(a)           Expenses.  Capital Maritime will pay or cause to be paid all expenses incident to the performance of the Capital Parties’ obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, any agreement among Underwriters and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Units, (iii) the preparation, issuance and delivery of the certificates for the Units to the Underwriters, including any unit or other transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Units to the Underwriters, (iv) the fees and disbursements of the Capital Parties’ and the Manager’s counsel, accountants and other advisors, (v) the qualification of the Units under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Permitted Free Writing Prospectus and of the Prospectus and any amendments or supplements thereto and any costs associated with electronic delivery of any of the foregoing by the Underwriters to investors, (vii) the preparation, printing and delivery to the Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of any transfer agent or registrar for the Units, (ix) the costs and expenses of the Partnership relating to investor presentations on any “road show” undertaken in connection with the marketing of the Units, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the officers of the Capital Parties and the Manager and any such consultants, and the cost of aircraft and other transportation chartered in connection with the road show, (x) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review by the NASD of the terms of the sale of the Units and (xi) the fees and expenses incurred in connection with the listing of the Units on the Nasdaq Global Market. Notwithstanding the foregoing, the Underwriters will reimburse Capital Maritime for certain actual expenses that are incurred by Capital Maritime in connection with the transactions described in Subsection (ix) in an amount of up to $250,000.  Such reimbursement shall be made by wire transfer of immediately available funds to such accounts or accounts designated by Capital Maritime or such other method as agreed to by the parties to this Agreement following delivery of reasonably satisfactory documentation of the expenses to the Representatives.

 

(b)           Termination of Agreement.  If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5, Section 9(a) or Section 11 hereof, Capital Maritime shall reimburse the Underwriters for all of the out-of-pocket accountable expenses actually incurred by the Underwriters, including the reasonable fees and disbursements of counsel for the Underwriters.

 

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(c)           Allocation of Expenses.  The provisions of this Section shall not affect any agreement that the Partnership and Capital Maritime may make for the sharing of such costs and expenses.

 

SECTION 5.           Conditions of Underwriters’ Obligations.  The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Capital Parties and the Manager contained in Section 1 hereof or in certificates of any officer of the Capital Entities delivered pursuant to the provisions hereof, to the performance by the Capital Parties of their covenants and other obligations hereunder, and to the following further conditions:

 

(a)           Effectiveness of Registration Statement.  The Registration Statement, including any Rule 462(b) Registration Statement, has become effective and at the Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters.  A prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) without reliance on Rule 424(b)(8) or a post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A.

 

(b)           Opinion of U.S. Counsel for the Partnership and Capital Maritime.  At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Cravath, Swaine & Moore LLP, U.S. counsel for the Partnership and Capital Maritime, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in the form attached hereto as Exhibit A.

 

(c)           Opinion of Marshall Islands and Liberia Counsel for the Partnership.  At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Watson, Farley & Williams (New York) LLP, Marshall Islands and Liberia counsel for the Partnership and Capital Maritime, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in the form attached hereto as Exhibit B.

 

(d)           Opinion of Panama Counsel for the Partnership.  At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Patton, Moreno & Asvat, Panama counsel for the Manager, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in the form attached hereto as Exhibit C.

 

(e)           Opinion of Greek Counsel for the Partnership.  At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of G.E. Bairactaris & Partners, Greek counsel for the Partnership and Capital Maritime, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in the form attached hereto as Exhibit D.

 

(f)            Opinion of English Counsel for Underwriters.  At Closing Time, the Representatives shall have received the favorable opinion of Watson, Farley & Williams LLP, English counsel for the Partnership and Capital Maritime, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in the form attached hereto as Exhibit E.

 

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(g)           Opinion of Counsel for Underwriters.  At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Vinson & Elkins L.L.P., counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters with respect to such matters as the Representatives may reasonably require.  In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and the federal law of the United States, upon the opinions of counsel satisfactory to the Representatives.  Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Partnership and its subsidiaries and certificates of public officials.

 

(h)           Officers’ Certificates.  At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus or the General Disclosure Package, any Material Adverse Effect, and the Representatives shall have received:

 

(i)            a certificate of the President or a Vice President of the General Partner and of the chief financial or chief accounting officer of the General Partner, dated as of the Closing Time, to the effect that (A) there has been no such change that results in a Material Adverse Effect, (B) the representations and warranties with respect to the Partnership Entities in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (C) each of the Partnership Entities has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (D) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to their knowledge, contemplated by the Commission; and

 

(ii)           a certificate of the President or a Vice President of Capital Maritime and of the chief financial or chief accounting officer of Capital Maritime, dated as of the Closing Time, to the effect that (A) there has been no such change that results in a Material Adverse Effect, (B) the representations and warranties with respect to Capital Maritime, the Manager and the Newbuilding Subsidiaries in Sections 1(a) and (b) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (C) each of Capital Maritime and the Manager has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (D) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to their knowledge, contemplated by the Commission; and

 

(i)            Accountants’ Comfort Letter.  At the time of the execution of this Agreement, the Representatives shall have received from Deloitte Hadjipavlou, Sofianos & Cambanis S.A., an independent registered public accounting firm (“Deloitte”), a letter dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus.

 

(j)            Bring-down Comfort Letter.  At Closing Time, the Representatives shall have received from Deloitte, a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (j) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time.

 

(k)         Approval of Listing.  At Closing Time, the Units shall have been approved for listing on the Nasdaq Global Market, subject only to official notice of issuance.

 

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(l)          No Objection.  The NASD has confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

 

(m)        Lock-up Agreements.  At the date of this Agreement, the Representatives shall have received an agreement substantially in the form of Exhibit F hereto signed by the persons listed on Schedule G hereto.

 

(n)         Conditions to Purchase of Option Units.  In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Units, the representations and warranties of the Capital Parties and the Manager contained herein and the statements in any certificates furnished by any Capital Entity hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received:

 

(i)            General Partner Officers’ Certificate.  A certificate, dated such Date of Delivery, of the President or a Vice President of the General Partner and of the chief financial or chief accounting officer of the General Partner confirming that the certificate delivered at the Closing Time pursuant to Section 5(i)(i) hereof remains true and correct as of such Date of Delivery.

 

(ii)           Capital Maritime Officers’ Certificate.  A certificate, dated such Date of Delivery, of an Attorney-in-Fact on behalf of Capital Maritime confirming that the certificate delivered at Closing Time pursuant to Section 5(i)(ii) remains true and correct as of such Date of Delivery.

 

(iii)          Opinions of Counsel for the Partnership, Capital Maritime and the Manager.  The favorable opinion of Cravath, Swaine & Moore LLP, U.S. counsel for the Partnership and Capital Maritime, together with the favorable opinions of Watson, Farley & Williams (New York) LLP, Marshall Islands and Liberia counsel for the Partnership and Capital Maritime, Patton, Moreno & Asvat, Panama counsel for the Partnership and Capital Maritime, G.E. Bairactaris & Partners, Greek Counsel for the Partnership and Capital Maritime, and Watson, Farley & Williams (New York) LLP, English counsel for the Partnership and Capital Maritime, each in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Units to be purchased on such Date of Delivery and otherwise to the same effect as the opinions required by Sections 5(b) through (g) hereof.

 

(iv)          Opinion of Counsel for Underwriters.  The favorable opinion of Vinson & Elkins L.L.P., counsel for the Underwriters, dated such Date of Delivery, relating to the Option Units to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(h) hereof.

 

(vi)          Bring-down Comfort Letter.  A letter from Deloitte, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(j) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three days prior to such Date of Delivery.

 

(o)           Additional Documents.  At Closing Time and at each Date of Delivery, counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Units as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Capital Entities in connection with the issuance and sale of the Units as herein contemplated and the transactions contemplated in the Operative

 

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Agreements shall be satisfactory in form and substance to the Representatives and counsel for the Underwriters.

 

(p)           Termination of Agreement.  If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Units on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to purchase the relevant Option Units, may be terminated by the Representatives by notice to the Partnership and Capital Maritime at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such  termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect.

 

SECTION 6.           Indemnification.

 

(a)           Indemnification of Underwriters.  (1) The Capital Parties, jointly and severally, agree to indemnify and hold harmless each Underwriter, its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each, an “Affiliate”), its selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

(i)            against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)           against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Capital Parties;

 

(iii)          against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representatives), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Partnership by any Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information, or any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto).

 

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(2)           In addition to and without limitation of the Capital Parties’ obligation to indemnify Merrill Lynch as an Underwriter, the Capital Parties also jointly and severally, agree to indemnify and hold harmless the Independent Underwriter, its Affiliates and selling agents and each person, if any, who controls the Independent Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and all loss, liability, claim, damage and expense whatsoever, as incurred, incurred as a result of the Independent Underwriter’s participation as a “qualified independent underwriter” within the meaning of Rule 2720 of the Conduct Rules of the NASD in connection with the offering of the Units.

 

(b)           Indemnification of Capital Parties, Directors and Officers.  Each Underwriter severally agrees to indemnify and hold harmless the Capital Parties, their directors, each of the officers of the General Partner who signed the Registration Statement, and each person, if any, who controls the Capital Parties within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a)(1) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information or any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Partnership by such Underwriter through the Representatives expressly for use therein.

 

(c)           Actions against Parties; Notification.  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  In the case of parties indemnified pursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be selected by the Representatives, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Capital Parties.  An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances; provided, that, if indemnity is sought pursuant to Section 6(a)(2), then, in addition to the fees and expenses of such counsel for the indemnified parties, the indemnifying party shall be liable for the reasonable fees and expenses of not more than one counsel (in addition to any local counsel) separate from its own counsel and that of the other indemnified parties for the Independent Underwriter in its capacity as a “qualified independent underwriter” and all persons, if any, who control the Independent Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of 1934 Act in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances if, in the reasonable judgment of the Independent Underwriter, there may exist a conflict of interest between the Independent Underwriter and the other indemnified parties.  Any such separate counsel for the Independent Underwriter and such control persons of the Independent Underwriter shall be designated in writing by the Independent Underwriter.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)           Settlement without Consent if Failure to Reimburse.  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(1)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

(e)           Other Agreements with Respect to Indemnification.  The provisions of this Section shall not affect any agreement among the Capital Parties with respect to indemnification.

 

SECTION 7.           Contribution.  If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such

 

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indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Capital Parties on the one hand and the Underwriters on the other hand from the offering of the Units pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Capital Parties on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

The relative benefits received by the Capital Parties on the one hand and the Underwriters on the other hand in connection with the offering of the Units pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Units pursuant to this Agreement (before deducting expenses) received by Capital Maritime and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus bear to the aggregate initial public offering price of the Units as set forth on the cover of the Prospectus.

 

The relative fault of the Capital Parties on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Capital Parties or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Capital Parties and the Underwriters agree that Merrill Lynch will not receive any additional benefits hereunder for serving as the Independent Underwriter in connection with the offering and sale of the Units.

 

The Capital Parties and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Units underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

 

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Capital Parties, each officer of the General Partner who signed the Registration Statement, and each person, if any, who controls the Capital Parties within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Capital Parties.  The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Initial Units set forth opposite their respective names in Schedule A hereto and not joint.

 

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The provisions of this Section shall not affect any agreement among the Capital Parties with respect to contribution.

 

SECTION 8.           Representations, Warranties and Agreements to Survive.  All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Capital Parties or the Manager submitted pursuant hereto, shall remain operative and in full force and effect regardless of (a) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors, any person controlling the Capital Parties and (b) delivery of and payment for the Units.

 

SECTION 9.           Termination of Agreement.

 

(a)           Termination; General.  The Representatives may terminate this Agreement, by notice to the Partnership and Capital Maritime, at any time at or prior to Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus or General Disclosure Package, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Partnership and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable or inadvisable to market the Units or to enforce contracts for the sale of the Units, or (iii) if trading in any securities of the Partnership has been suspended or materially limited by the Commission or the Nasdaq Global Market, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq Global Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, or (v) if a banking moratorium has been declared by either Federal or New York authorities.

 

(b)           Liabilities.  If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect.

 

SECTION 10.         Default by One or More of the Underwriters.  If one or more of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase the Units which it or they are obligated to purchase under this Agreement (the “Defaulted Units”), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Units in such amounts as may be agreed upon and upon the terms set forth herein; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then:

 

(i)            if the number of Defaulted Units does not exceed 10% of the number of Units to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or

 

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(ii)           if the number of Defaulted Units exceeds 10% of the number of Units to be purchased on such date, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase and of Capital Maritime to sell the Option Units to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Underwriter.

 

No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.

 

In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Partnership to sell the relevant Option Units, as the case may be, either the (i) Representatives or (ii) the Partnership and Capital Maritime shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements.  As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.

 

SECTION 11.         Default by Capital Maritime.  (a) If Capital Maritime shall fail at Closing Time or at a Date of Delivery to sell and deliver the number of Units which Capital Maritime is obligated to sell hereunder, then the Underwriters may, at option of the Representatives, by notice from the Representatives to the Partnership, terminate this Agreement without any liability on the fault of any non-defaulting party except that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect.  No action taken pursuant to this Section 11 shall relieve Capital Maritime so defaulting from liability, if any, in respect of such default.

 

In the event of a default by Capital Maritime as referred to in this Section 11, each of the Representatives and the Partnership shall have the right to postpone Closing Time or Date of Delivery for a period not exceeding seven days in order to effect any required change in the Registration Statement or Prospectus or in any other documents or arrangements.

 

(b)  In the event that the Underwriters exercise their overallotment option to purchase any or all of the Option Units and Capital Maritime shall fail at Closing Time or at the Date of Delivery to sell the number of Option Units that it is obligated to sell hereunder, then this Agreement shall terminate without any liability on the part of any nondefaulting party; provided, however, that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect.  No action taken pursuant to this Section shall relieve Capital Maritime from liability, if any, in respect of such default.

 

SECTION 12.         Tax Disclosure.  Notwithstanding any other provision of this Agreement, immediately upon commencement of discussions with respect to the transactions contemplated hereby, the Partnership (and each employee, representative or other agent of the Partnership) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Partnership relating to such tax treatment and tax structure.  For purposes of the foregoing, the term “tax treatment” is the purported or claimed federal income tax treatment of the transactions contemplated hereby, and the term “tax structure” includes any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transactions contemplated hereby.

 

SECTION 13.         Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of

 

30


 

telecommunication.  Notices to the Underwriters shall be directed to the Representatives at 4 World Financial Center, New York, New York 10080, attention of Global Origination Counsel, fax: 212-449-3207 and at 299 Park Avenue, New York, New York 10171, attention of • , fax: • ; and notices to the Capital Parties shall be directed to the Partnership at 3 Iassonos Street, Piraeus 18537 Greece, attention of Ioannis E. Lazaridis.

 

SECTION 14.         No Advisory or Fiduciary Relationship.  Each of the Capital Parties acknowledges and agrees that (a) the purchase and sale of the Units pursuant to this Agreement, including the determination of the public offering price of the Units and any related discounts and commissions, is an arm’s-length commercial transaction between the Partnership and Capital Maritime, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of any of the Capital Parties, or their respective partners, members, stockholders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of any Capital Party with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Capital Parties on other matters) and no Underwriter has any obligation to the Capital Parties with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of each of the Capital Parties, and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby, and the Capital Parties have consulted their own respective legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.

 

SECTION 15.         Parties.  This Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Capital Parties, the Manager and their respective successors.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Partnership and Capital Maritime and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal Representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.  This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters, the Partnership and Capital Maritime and their respective successors, and said controlling persons and officers and directors and their heirs and legal Representatives, and for the benefit of no other person, firm or corporation.  No purchaser of units from any Underwriter shall be deemed to be a successor by reason merely of such purchase.

 

SECTION 16.         GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 17.         Jurisdiction and Waiver of Jury Trial.  Except as set forth below, no proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Capital Parties and the Manager hereby consent to the jurisdiction of such courts and personal service with respect thereto.  The Capital Parties and the Manager hereby consent to personal jurisdiction, service and venue in any court in which any proceeding arising out of or in any way relating to this Agreement is brought by any third party against the Underwriters.  The Capital Parties and the Manager hereby waive all right to trial by jury in any proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement.  The Capital Parties and the Manager agree that a final judgment in any such proceeding brought in any such court shall be conclusive and binding upon them

 

31


 

and may be enforced in any other courts in the jurisdiction of which the Capital Parties and the Manager are or may be subject, by suit upon such judgment.

 

SECTION 18.         TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

 

SECTION 19.         Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

 

SECTION 20.         Effect of Headings.  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

32


 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Capital Parties and the Manager a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters and the Capital Parties and the Manager in accordance with its terms.

 

 

Very truly yours,

 

 

 

 

 

 

 

CAPITAL PRODUCT PARTNERS L.P.

 

 

 

 

By:

CAPITAL GP L.L.C., its general partner

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

CAPITAL GP L.L.C.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

CAPITAL PRODUCT OPERATING L.L.C.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

CAPITAL MARITIME & TRADING CORP.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

CAPITAL SHIP MANAGEMENT CORP.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

33


 

CONFIRMED AND ACCEPTED,

 

as of the date first above written:

 

 

 

MERRILL LYNCH & CO.

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

 

INCORPORATED

 

 

 

By:

MERRILL LYNCH, PIERCE, FENNER & SMITH

 

INCORPORATED

 

 

 

By

 

 

Authorized Signatory

 

 

 

UBS SECURITIES LLC

 

 

 

By

 

 

Authorized Signatory

 

 

 

By

 

 

Authorized Signatory

 

 

For themselves and as Representatives of the other Underwriters named in Schedule A hereto.

 

34

 

SCHEDULE A

 

Name of Underwriter

 

Number of
Initial Units

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

 

 

UBS Securities LLC

 

 

 

Bear, Stearns & Co. Inc.

 

 

 

Wachovia Capital Markets, LLC

 

 

 

Raymond James & Associates, Inc.

 

 

 

Stifel, Nicolaus & Company, Incorporated

 

 

 

Fortis Securities LLC

 

 

 

Total

 

[11,750,000

]

 

Sch A-1


 

SCHEDULE B

 

CAPITAL PRODUCT PARTNERS L.P.

 

[11,750,000] Common Units representing limited partner interests

 

1.             The initial public offering price per Unit, determined as provided in Section 2, shall be $•.

 

2.                                      The purchase price per Unit to be paid by the several Underwriters shall be $•, being an amount equal to the initial public offering price set forth above less $• per Unit; provided that the purchase price per Unit for any Option Units purchased upon the exercise of the overallotment option described in Section 2(b) shall be reduced by an amount per Unit equal to any dividends or distributions declared by the Partnership and payable on the Initial Units but not payable on the Option Units.

 

Sch B-1


 

SCHEDULE C

 

OPERATING SUBSIDIARIES AND VESSELS

 

Operating Subsidiary

 

Vessel

 

Jurisdiction of Registration of Vessel

Shipping Rider Co.

 

Atlantas

 

Marshall Islands and Isle of Man

Centurion Navigation Limited

 

Aktoras

 

Marshall Islands and Isle of Man

Polarwind Maritime S.A.

 

Agisilaos

 

Marshall Islands

Canvey Shipmanagement Co.

 

Assos

 

Liberia

Carnation Shipping Company

 

Arionas

 

Marshall Islands

Iraklitos Shipping Company

 

Axios

 

Liberia

Tempest Maritime, Inc.

 

Aiolos

 

Marshall Islands and Isle of Man

Apollonas Shipping Company

 

Avax

 

Liberia

 

Sch C-1


 

SCHEDULE D

 

NEWBUILDING SUBSIDIARIES AND VESSELS

 

Newbuilding Subsidiary

 

Newbuilding Vessel

 

Jurisdiction of Registration

Epicurus Shipping Company

 

Atrotos

 

Liberia

Laredo Maritime Inc.

 

Akeraios

 

Liberia

Splendor Shipholding S.A.,

 

Anemos I

 

Liberia

Lorenzo Shipmanagement Inc.

 

Apostolos

 

Liberia

Sorrel Shipmanagement Inc.

 

Alexandros II

 

Marshall Islands

Wind Dancer Shipping Inc.

 

Aristotelis II

 

Marshall Islands

Belerion Maritime Co.

 

Aris II

 

Marshall Islands

 

Sch D-1


 

SCHEDULE E

 

LIST OF ISSUER GENERAL USE FREE WRITING PROSPECTUSES

 

Sch E-1


 

SCHEDULE F

 

OTHER AGREEMENTS

 

[list of all time and bareboat charters and shipbuilding contracts]

 

Sch F-1


 

SCHEDULE G

 

LIST OF PERSONS AND ENTITIES SUBJECT TO LOCK-UP

 

Capital Maritime & Trading Corp.

Evangelos M. Marinakis

Ioannis E. Lazaridis

Nikolaos Syntychakis

Evangelos G. Bairactairis

Abel Rasterhoff

Keith Forman

 

Sch G-1


 

EXHIBIT A

 

FORM OF OPINION OF CRAVATH, SWAINE & MOORE LLP,
U.S. COUNSEL TO THE PARTNERSHIP AND CAPITAL MARITIME

 

Ex A-1


 

EXHIBIT B

 

FORM OF OPINION OF WATSON, FARLEY & WILLIAMS (NEW YORK) LLP,

MARSHALL ISLANDS AND LIBERIA COUNSEL TO

THE PARTNERSHIP AND CAPITAL MARITIME

 

Ex B-1


 

EXHIBIT C

 

FORM OF OPINION OF PATTON, MORENO & ASVAT,

PANAMA COUNSEL TO THE MANAGER

 

Ex C-1


 

EXHIBIT D

 

FORM OF OPINION OF G.E. BAIRACTARIS & PARTNERS,

GREEK COUNSEL TO THE PARTNERSHIP AND CAPITAL MARITIME

 

Ex D-1


 

EXHIBIT E

 

FORM OF WATSON, FARLEY & WILLIAMS LLP,

ENGLISH COUNSEL TO THE PARTNERSHIP AND CAPITAL MARITIME

 

Ex E-1


 

EXHIBIT F

 

FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER UNITHOLDERS

 

•, 2007

 

MERRILL LYNCH & CO.

Merrill Lynch, Pierce, Fenner & Smith

Incorporated,

UBS SECURITIES LLC

as Representatives of the several

Underwriters to be named in the

within-mentioned Purchase Agreement

c/o

Merrill Lynch & Co.

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

4 World Financial Center

New York, New York 10080

c/o    UBS Securities LLC

299 Park Avenue

New York, New York 10171

 

Re:          Proposed Public Offering by Capital Product Partners L.P.

 

Dear Sirs:

 

The undersigned, a unitholder of Capital Product Partners L.P., a Marshall Islands limited partnership (the “Partnership”), or an officer and/or director of Capital GP L.L.C., a Marshall Islands limited liability company and the general partner of the Partnership (the “General Partner”), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and UBS Securities LLC (“UBS”) propose to enter into a Purchase Agreement (the “Purchase Agreement”) with the Capital Parties and the Manager providing for the public offering of common units representing limited partner interests in the Partnership (the “Common Units”).  Terms used but not defined herein have the meanings given to them in the Purchase Agreement.

 

In recognition of the benefit that such an offering will confer upon the undersigned as a unitholder of the Partnership or as an officer and/or director of the General Partner, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with each underwriter to be named in the Purchase Agreement that, during a period of 180 days from the date of the Purchase Agreement, the undersigned will not, without the prior written consent of Merrill Lynch and UBS, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any of the Partnership’s Common Units or any securities convertible into or exchangeable or exercisable for Common Units, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or file, or cause to be filed, any registration statement under the Units Act of 1933, as amended, with respect to any of the foregoing (collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Common Units or other securities, in cash or otherwise.

 

Ex F-1


 

Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities without the prior written consent of Merrill Lynch and UBS, provided that (1) Merrill Lynch and UBS receive a signed lock-up agreement for the balance of the lock-up period from each donee, trustee, distributee, or transferee, as the case may be, (2) any such transfer shall not involve a disposition for value, (3) such transfers are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers:

 

(i)                                     as a bona fide gift or gifts; or

 

(ii)                                  to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); or

 

(iii)                               as a distribution to limited partners or stockholders of the undersigned; or

 

(iv)                              to the undersigned’s affiliates or to any investment fund or other entity controlled or managed by the undersigned.

 

Notwithstanding the foregoing, if:

 

(1)           during the last 17 days of the 180-day lock-up period, the Partnership issues an earnings release or material news or a material event relating to the Partnership occurs; or

 

(2)           prior to the expiration of the 180-day lock-up period, the Partnership announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day lock-up period,

 

the restrictions imposed by this lock-up agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, as applicable, unless Merrill Lynch and UBS waive, in writing, such extension.

 

The undersigned hereby acknowledges and agrees that written notice of any extension of the 180-day lock-up period pursuant to the previous paragraph will be delivered by Merrill Lynch and UBS to the Partnership (in accordance with Section 12 of the Purchase Agreement) and that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up agreement during the period from the date of this lock-up agreement to and including the 34th day following the expiration of the initial 180-day lock-up period, it will give notice thereof to the Partnership and will not consummate such transaction or take any such action unless it has received written confirmation from the Partnership that the 180-day lock-up period (as may have been extended pursuant to the previous paragraph) has expired.

 

The undersigned also agrees and consents to the entry of stop transfer instructions with the Partnership’s transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions.

 

Ex F-2


 

 

Very truly yours,

 

 

 

 

Signature:

 

 

 

 

 

Print Name:

 

 

Ex F-3



EXHIBIT 3.1

 

CERTIFICATE OF LIMITED PARTNERSHIP

PURSUANT TO SECTION 10 OF PART III, DIVISION 2, OF THE

ASSOCIATIONS LAW OF THE REPUBLIC OF THE MARSHALL ISLANDS

(LIMITED PARTNERSHIP ACT)

 

Pursuant to the provisions of the Marshall Islands Limited Partnership Act, the undersigned desires to form a Limited Partnership and certifies the following:

 

1.                                      The name of the Limited Partnership is Capital Product Partners L.P. (the “Limited Partnership”).

 

2.                                      The registered address of the Limited Partnership in the Marshall Islands is: Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960. The name of the Limited Partnership’s Registered Agent in the Marshall Islands upon whom process may be served at such address is: The Trust Company of the Marshall Islands, Inc.

 

3.                                      The name and the business, residence or mailing address of the sole general partner is:

 

Capital GP L.L.C.
c/o Capital Ship Management Corp.
3 lassonos Street
Piraeus, 185 37
Greece

 

4.                                      The name and title of the person authorized to sign this Certificate of Limited Partnership for the general partner is:

 

Daniel C. Rodgers
Attorney-in-Fact

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership on this 16th day of January, 2007, and he hereby affirms and acknowledges, under penalty of perjury, that this Certificate of Limited Partnership is the act and deed of Capital GP L.L.C. and that the facts stated herein are true.

 

CAPITAL GP L.L.C.

By: Capital Maritime & Trading Corp., its Sole Member

 

By:

/s/

Daniel C. Rodgers

 

 

 

Daniel C. Rodgers

 

 

Attorney-in-Fact

 



 

EXHIBIT 3.3

 

Certificate of Formation

of

Capital GP L.L.C.

 

Under Section 9 of The Marshall Islands Limited Liability Company Act

 

1.                                      The name of the Limited Liability Company is: Capital GP L.L.C.

 

2.                                      The address of its registered agent in the Marshall Islands is Trust Company Complex, Ajeltake Islands, Ajeltake Road, Majuro, Marshall Islands MH 96960. The name of its registered agent at such address is The Trust Company of the Marshall Islands, Inc.

 

3.                                      The formation date of the Limited Liability Company is the date of the filing of this Certificate of Formation with the Registrar of Corporations.

 

WHEREFORE, the undersigned has executed this Certificate of Formation on the 16th day of January, 2007.

 

 

/s/ Daniel C. Rodgers

 

Daniel C. Rodgers

Authorized Person

 



Exhibit 3.4

 

Limited Liability Company Agreement

 

of

 

Capital GP L.L.C.

 

A Marshall Islands Limited Liability Company

 

Dated: as of January 16, 2007

 


 

TABLE OF CONTENTS

 

1

DEFINITIONS

1

 

 

 

 

 

1.1

Defined Terms.

1

 

1.2

Number and Gender.

2

 

 

 

 

2

ORGANIZATION

2

 

 

 

 

 

2.1

Formation.

2

 

2.2

Name.

2

 

2.3

Purposes.

3

 

2.4

Registered Office; Registered Agent.

3

 

2.5

Principal Office.

3

 

2.6

Term.

3

 

2.7

Liability to Third Parties.

3

 

2.8

LLC Certificate; Transfer of Ownership Interest; Pledge of Ownership Interest.

3

 

 

 

 

3

CAPITAL CONTRIBUTIONS

4

 

 

 

 

 

3.1

Initial Capital Contributions.

4

 

3.2

Additional Capital Contributions.

4

 

3.3

Liability Limited to Capital Contributions.

4

 

 

 

 

4

MANAGEMENT

5

 

 

 

 

 

4.1

Management By Member(s).

5

 

4.2

Delegation of Authority and Duties.

5

 

4.3

Execution of Documents.

6

 

4.4

Indemnification.

7

 

4.5

Liability of Officers.

7

 

 

 

 

5

DISTRIBUTIONS

7

 

 

 

 

 

5.1

Distributions/Available Cash.

7

 

 

 

 

6

BOOKS AND RECORDS; FISCAL YEAR; BANK ACCOUNTS; TAX MATTERS

8

 

 

 

 

 

6.1

Books and Records.

8

 

6.2

Fiscal Year.

8

 

6.3

Bank Accounts.

8

 

6.4

Tax Matters.

8

 

 

 

 

7

MISCELLANEOUS

8

 

 

 

 

 

7.1

Complete Agreement.

8

 

7.2

Governing Law.

9

 

7.3

Headings.

9

 

7:4

Severability.

9

 

7.5

No Third Party Beneficiary.

9

 

7.6

Amendment.

9

 

 

 

 

Exhibits:

 

 

 

Exhibit 1: Certificate of Formation

 

 

Exhibit 2: LLC Certificate

 

 

 

i


 

LIMITED LIABILITY COMPANY AGREEMENT

 

This Limited Liability Company Agreement (the “Agreement”) is made and entered into effective as of the 16th day of January, 2007, by CAPITAL MARITIME & TRADING CORP., a Marshall Islands corporation (“CMTC”).

 

RECITALS

 

WHEREAS, CMTC desires to form the Company pursuant to the Act; and

 

WHEREAS, subject to the terms and conditions of this Agreement, it is intended that that Company may engage in any lawful activity permitted by the Act.

 

NOW, THEREFORE, it is agreed as follows:

 

1                                         DEFINITIONS

 

1.1                               Defined Terms.

 

When used in this Agreement, the following terms shall have the meanings set forth below:

 

(a)                                  “Act” shall mean the Marshall Islands Limited Liability Company Act (of the Republic of the Marshall Islands Associations Law), as the same may be amended from time to time.

 

(b)                                 “Agreement” shall mean this Limited Liability Company Agreement, as amended, modified, supplemented or restated from to time in accordance with its terms.

 

(c)                                  “Capital Contributions” means the total amount of cash and/or assets which a Member contributes to the Company as capital pursuant to this Agreement.

 

(d)                                 “Certificate of Formation” shall mean the Certificate of Formation in the form of Exhibit 1 hereto to be filed pursuant to the Act with the Republic of the Marshall Islands Registrar of Corporations pursuant to which the Company shall be formed as a Marshall Islands limited liability company.

 

(e)                                  “Company” shall mean Capital GP L.L.C., a Marshall Islands limited liability company.

 

(f)                                    “Indemnified Party” shall have the meaning set forth in Section 4.4 of this Agreement.

 


 

(g)                                 “LLC Certificate” shall have the meaning set forth in Section 2.8(a) of this Agreement.

 

(h)                                 “Member” means CMTC and any Person who, at the time of reference thereto, has been admitted to the Company as a Member in accordance with this Agreement, including any Transferee, and shall have the same meaning as the term “Member” under the Act, but shall not include any Person who has ceased to be a Member of the Company.

 

(i)                                     “Officers” shall have the meaning set forth in Section 4.2(a) of this Agreement.

 

(j)                                     “Person” shall mean a natural person, corporation, partnership, joint venture, trust, estate, unincorporated association, limited liability company, or any other juridical entity.

 

(k)                                  “Transferee” shall have the meaning set forth in Section 2.8(b) of this Agreement.

 

1.2                               Number and Gender.

 

As the context requires, all words used herein in the singular number shall extend to and include the plural, all words used in the plural number shall extend to and include the singular, and all words used in any gender shall extend to and include the other gender or be neutral.

 

2                                         ORGANIZATION

 

2.1                               Formation.

 

By its execution of this Agreement, CMTC authorizes Daniel C. Rodgers of Watson, Farley & Williams (New York) LLP to file the Certificate of Formation pursuant to the Act with the Republic of the Marshall Islands Registrar of Corporations and, upon such filing, the Company will be formed as a Marshall Islands limited liability company.

 

2.2                               Name.

 

The name of the Company shall be “Capital GP L.L.C.” and all Company business shall be conducted in that name or such other names that comply with applicable law as the Member may from time to time designate.

 

2


 

2.3                               Purposes.

 

The purposes for which the Company is established is to engage in any lawful activity permitted by the Act.

 

2.4                               Registered Office; Registered Agent.

 

The registered office of the Company required by the Act to be maintained in the Republic of the Marshall Islands shall be the office of the initial registered agent named in the Certificate of Formation or such other office as the Member may designate from time to time in the manner provided by law. The registered agent of the Company required by the Act to be maintained in the Republic of the Marshall Islands shall be the initial registered agent named in the Certificate of Formation or such other person or persons as the Member may designate from time to time in the manner provided by law.

 

2.5                               Principal Office.

 

The principal office of the Company shall be c/o Capital Ship Management Corp., 3 Iassonos Street, Piraeus, 185 37 Greece.

 

2.6                               Term.

 

The Company shall commence on the date the Certificate of Formation is accepted for filing by the Republic of the Marshall Islands Registrar of Corporations and shall have perpetual existence, unless the Company is dissolved in accordance with the Act.

 

2.7                               Liability to Third Parties.

 

No Member shall be liable for the debts, obligations or liabilities of the Company, including, without limitation, under a judgment, decree or order of a court.

 

2.8                               LLC Certificate; Transfer of Ownership Interest; Pledge of Ownership Interest.

 

(a)                                  A Member’s ownership of its limited liability company interest in the Company shall be evidenced by a certificate of limited liability interest (“LLC Certificate”) substantially in the form of Exhibit 2 hereto.

 

3


 

(b)                                 Subject to the provisions of Section 2.8(c) herein, upon the endorsement by a Member on such LLC Certificate (or on a separate transfer power) in favor of a third party (a “Transferee”) and the delivery of such LLC Certificate (and such separate power, if applicable) to such Transferee, such Member shall be deemed to have assigned and transferred all its right, title and interest in the Company and in this Agreement to such Transferee and all references in this Agreement to such Member shall be deemed to refer to such Transferee, in each case effective as of the date of such LLC Certificate delivery. A Member’s right, title and interest in the Company shall not be transferred other than as provided in this Section 2.8(b).

 

(c)                                  The pledge of, or granting of a security interest, lien or other encumbrance in or against, any or all of the limited liability company interest of a Member in the Company shall not cause such Member to cease to be a Member until the secured party shall have lawfully exercised its remedies under the security agreement and completed the endorsement in favor of a Transferee. Until the exercise of such remedies, the secured party shall not have the power to exercise any rights or powers of a Member.

 

3                                         CAPITAL CONTRIBUTIONS

 

3.1                               Initial Capital Contributions.

 

CMTC shall make an initial capital contribution of U.S.$1,000 to the Company and upon the Company’s receipt and in consideration thereof, an LLC Certificate shall be issued in favor of CMTC as provided for in Section 2.8 above.

 

3.2                               Additional Capital Contributions.

 

A Member may contribute such additional sums and/or assets, if any, as it shall determine in its sole discretion.

 

3.3                               Liability Limited to Capital Contributions.

 

No Member shall have any obligation to contribute money to the Company or any personal liability with respect to any liability or obligation of the Company.

 

4


 

4                                         MANAGEMENT

 

4.1                               Management By Member(s).

 

The management of the Company shall be vested exclusively in its Member(s). The Member(s) may make all decisions and take all actions for the Company as they deem necessary or appropriate in their sole discretion to enable the Company to carry out the purposes for which the Company was formed including, without limitation, the following:

 

(a)                                  adopting resolutions in the name and on behalf of the Company authorizing any decisions or actions taken pursuant to this Section 4.1;

 

(b)                                 entering into, making and performing such contracts, agreements, undertakings and financial guarantees in the name and on behalf of the Company;

 

(c)                                  setting aside reserves, opening and maintaining bank and investment accounts and arrangements, drawing checks and other orders for the payment of money, and designating individuals with authority to sign or give instructions with respect to those accounts and arrangements;

 

(d)                                 collecting sums due to the Company;

 

(e)                                  selecting, removing, and changing the authority and responsibility of lawyers, auditors and other advisers and consultants; and

 

(f)                                    granting signatory authority to and issuing Powers of Attorney in favor of such persons as they may deem necessary or appropriate to carry out and implement any decisions or actions taken pursuant to this Section 4.1.

 

4.2          Delegation of Authority and Duties.

 

(a)                                  The Member(s) may, from time to time as they deem advisable, appoint and elect (as well as remove or replace at any time with or without cause for any reason) a President, a Treasurer and a Secretary and such officer positions assigned to individuals (collectively, the “Officers”). Any two or more offices may be held by the same person. The Officers shall serve with or without compensation for their services to the Company as the Member(s) shall determine. If so appointed by the Member(s), the Officers shall have authority and duties as may from time to time be assigned to them.

 

5


 

(b)                                 Unless the Member(s) decide otherwise, if the title of any person authorized to act on behalf of the Company under this Section 4.2 is one commonly used for officers of a business corporation formed under the Marshall Islands Business Corporation Act, the assignment of such title shall constitute the delegation to such person of the authority and duties that are normally associated with that office, subject to any specific delegation of, or restriction on, authority and duties made pursuant to this Section 4.2. Any delegation or restriction pursuant to this Section 4.2(b) may be revoked at any time by the Member(s), with or without cause for any reason.

 

(c)                                  Any person dealing with the Company may rely upon the authority of the Member(s) or any Officer designated in writing as such by the Member(s) in accordance with this Section 4.2 in taking any action in the name of the Company without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement.

 

(d)                                 Unless authorized to do so by this Agreement or the Member(s), no Officer, agent or employee of the Company shall have any power or authority to bind the Company in any way, to pledge its credit, or to render it liable pecuniarily for any purpose.

 

4.3                               Execution of Documents.

 

(a)                                  Any agreements, contracts or other documents or correspondence executed by the Company, including an LLC Certificate, shall be signed by the individual executing same as follows:

 

CAPITAL GP L.L.C.

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

Title:

 

 

 

(b)                                 Any agreements, contracts or other documents or correspondence executed on behalf of the Company by the sole Member of the Company, including an LLC Certificate, shall be signed by such sole Member as follows:

 

6


 

CAPITAL GP L.L.C.

 

 

By: CAPITAL MARITIME & TRADING CORP., its Sole Member

 

 

 

 

 

By:

 

 

 

(Authorized Signatory)

 

 

 

4.4                               Indemnification.

 

Subject to Section 4.5 below, the Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Member and each Officer, employee or duly appointed attorney-in-fact of the Company (individually, an “Indemnified Party”) from and against all costs, losses, liabilities, and damages paid or incurred by such Indemnified Party in connection with the affairs of the Company.

 

4.5                                Liability of Officers.

 

(a)                                  No Officer shall be personally liable for the debts and obligations of the Company.

 

(b)                                 No Officer shall be liable, responsible or accountable in damages or otherwise to the Company or any Member for any action taken or any failure to act (even if such action or failure to act constituted the simple negligence of that Officer) on behalf of the Company within the scope of the authority conferred on such Officer by this Agreement or by law, unless such act or failure to act constituted gross negligence or was performed or omitted willfully or intentionally or in bad faith.

 

5                                         DISTRIBUTIONS

 

5.1                               Distributions/Available Cash.

 

The Member(s) shall in their sole discretion determine from time to time to what extent (if any) the Company’s cash on hand exceeds the current and anticipated needs of the Company. To the extent any such excess exists, the Member(s) may make distributions to themselves as Member(s), subject to the Act.

 

7


 

6              BOOKS AND RECORDS; FISCAL YEAR; BANK ACCOUNTS; TAX MATTERS

 

6.1                               Books and Records.

 

The books and records of the Company shall, at the cost and expense of the Company, be kept at the principal office of the Company or at such other location as the Member(s) may from time to time determine.

 

6.2                               Fiscal Year.

 

Unless otherwise determined by the Member(s), the Company’s books and records shall be kept on a December 31 calendar year basis and shall reflect all Company transactions and be appropriate and adequate for conducting the Company’s affairs.

 

6.3                               Bank Accounts.

 

All funds of the Company will be deposited in its name in an account or accounts maintained with such bank or banks selected by the Member(s). Checks shall be drawn upon the Company account or accounts only for the purposes of the Company and may be signed by such persons as may be designated by the Member(s).

 

6.4                               Tax Matters.

 

CMTC intends and acknowledges that, for so long as it remains the sole Member of the Company, the Company shall be disregarded as a separate entity from CMTC for U.S. federal income tax purposes and CMTC shall file such elections with the U.S. federal tax authorities as may be required to assure such tax status.

 

7                                         MISCELLANEOUS

 

7.1                               Complete Agreement.

 

This Agreement and the exhibits hereto constitute the complete and exclusive statement of the agreement regarding the operation of the Company and replace and supersede all prior agreements regarding the operation of the Company.

 

8


 

7.2                               Governing Law.

 

This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the Marshall Islands without giving regard to principles of conflicts of law.

 

7.3                               Headings.

 

All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

 

7.4                               Severability.

 

If any provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, such provision will be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

7.5                               No Third Party Beneficiary.

 

This Agreement is made solely and specifically for the benefit of CMTC and its successors and assigns and no other Persons shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

 

7.6                               Amendment.

 

All amendments to this Agreement must be in writing and signed by all of the Member(s).

 

9


 

WHEREFORE, this Limited Liability Company Agreement has been executed by a duly authorized representative of CMTC as of the date first set forth above.

 

CAPITAL MARITIME & TRADING CORP.

 

 

 

 

 

By: /s/ Ioannis E. Lazardis

 

 

 

 

 

Name: Ioannis E. Lazardis

 

 

Title: Chief Financial Officer

 

 

10


 

Exhibit 1

 

Certificate of Formation

 

of

 

Capital GP L.L.C.

 

Under Section 9 of The Marshall Islands Limited Liability Company Act

 

1.                                       The name of the Limited Liability Company is: Capital GP L.L.C.

 

2.                                       The address of its registered agent in the Marshall Islands is Trust Company Complex, Ajeltake Islands, Ajeltake Road, Majuro, Marshall Islands MH 96960. The name of its registered agent at such address is The Trust Company of the Marshall Islands, Inc.

 

3.                                       The formation date of the Limited Liability Company is the date of the filing of this Certificate of Formation with the Registrar of Corporations.

 

WHEREFORE, the undersigned has executed this Certificate of Formation on the • day of January, 2007.

 

Authorized Person

 


 

Exhibit 2

 

Certificate of Limited Liability Interest

 

of

 

Capital GP L.L.C.

 

ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS

 

This Certificate evidences the ownership of [  •  ] of [  •  ]% of the limited liability interests in Capital GP L.L.C. (the “Company”) subject to the Certificate of Formation and Limited Liability Company Agreement of the Company.

 

Witness the signature of the Company.

 

Dated:

 

 

CAPITAL GP L.L.C.

 

 

By:

 

 

 

Name:

 

Title:

 


 

For value Received, the undersigned hereby sells, assigns and transfers unto                             all of its limited liability company ownership interest in Capital GP L.L.C. represented by the within Certificate.

 

Dated:

 

 

By:

 

 

 

In Presence of

 

 

 



 

EXHIBIT 3.5

 

Certificate of Formation

of

Capital Product Operating GP L.L.C.

 

Under Section 9 of The Marshall Islands Limited Liability Company Act

 

1.                                       The name of the Limited Liability Company is: Capital Product Operating GP L.L.C.

 

2.                                       The address of its registered agent in the Marshall Islands is Trust Company Complex, Ajeltake Islands, Ajeltake Road, Majuro, Marshall Islands MH 96960. The name of its registered agent at such address is The Trust Company of the Marshall Islands, Inc.

 

3.                                       The formation date of the Limited Liability Company is the date of the filing of this Certificate of Formation with the Registrar of Corporations.

 

WHEREFORE, the undersigned has executed this Certificate of Formation on the 16th day of January, 2007.

 

 

/s/ Daniel C. Rodgers

 

Daniel C. Rodgers

Authorized Person

 


CERTIFICATE OF AMENDMENT

 

TO

 

CERTIFICATE OF FORMATION

 

OF

 

CAPITAL PRODUCT OPERATING GP L.L.C.

 

Pursuant to Section 10 of the Marshall Islands

Limited Liability Company Act of 1996

 

The undersigned, Ioannis E. Lazaridis, the Chief Financial Officer of Capital Maritime & Trading Corp., acting as the Sole Member of Capital GP L.L.C., acting as the General Partner of Capital Product Partners L.P., acting as the Sole Member of CAPITAL PRODUCT OPERATING GP L.L.C. (the “Company”), a limited liability company formed and existing under the Marshall Islands Limited Liability Company Act of 1996, for the purpose of amending the Certificate of Formation of the Company, hereby certifies:

 

(a)   The name of the Company is “CAPITAL PRODUCT OPERATING GP L.L.C.”

 

(b)   The Certificate of Formation of the Company was originally filed with the Office of the Registrar of Corporations of the Marshall Islands on January 16, 2007.

 

(c)   The Certificate of Formation of the Company is hereby amended to change the name of the Company to: “CAPITAL PRODUCT OPERATING L.L.C.”

 

(d)   This Certificate of Amendment shall be effective upon filing with the Registrar or Deputy Registrar of Corporations.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on this 24th day of January, 2007, and he hereby affirms and acknowledges, under penalty of perjury, that this Certificate of Amendment is the act and deed of the Company and that the facts stated herein are true.

 

CAPITAL PRODUCTS OPERATING GP L.L.C.

By: Capital Product Partners L.P., its Sole Member

By: Capital GP L.L.C., its General Partner

By: Capital Maritime & Trading Corp., its Sole Member

 

 

By:

/s/ Ioannis E. Lazaridis

 

Ioannis E. Lazaridis

 

Chief Financial Officer

 

 

 



Exhibit 5.1

 

 

 

Watson, Farley & Williams (New York) LLP

 

 

100 Park Avenue

 

 

New York, New York 10017

 

 

Tel (212) 922 2200

 

 

Fax (212) 922 1512

March 19, 2007

 

 

 

 

 

Capital Product Partners L.P.

 

 

c/o Capital Ship Management Corp.

 

 

3 Iassonos Street

 

 

Piraeus, 185 37

 

 

Greece

 

 

 

 

Capital Product Partners L.P. - Registration Statement on Form F-1

 

Dear Sirs:

 

We have acted as special counsel as to matters of the law of the Republic of The Marshall Islands (“Marshall Islands Law”) for Capital Product Partners L.P. (the “Partnership”) in connection with the preparation of a Registration Statement on Form F-1 (the “Registration Statement”) to be filed by the Partnership with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Act of 1933, as amended (the “Act”), and the rules and regulations thereunder, with respect to the issuance and sale of up to 13,512,500 common units (the “Common Units”) of the Partnership.

 

In so acting, we have examined originals, or copies, certified to our satisfaction, of (i) the form of the First Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of the Partnership, (ii) the form of the Company’s Registration Statement and the prospectus (the “Prospectus”) included therein, (iii) the form of the underwriting agreement (the “Underwriting Agreement”) to be executed among the Partnership, the representatives of the underwriters named therein, Capital Maritime & Trading Corp., Capital GP L.L.C. (the “General Partner”), and Capital Product Operating L.L.C. relating to the issuance and sale of the Common Units, and (iv) originals, or copies certified to our satisfaction, of all such records of the Partnership, agreements and other documents, certificates of public officials, officers and representatives of the Partnership, the General Partner and other appropriate persons, and such other documents as we have deemed necessary as a basis for the opinions hereinafter expressed.  In such examinations, we have assumed without independent investigation, (a) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as photostatic or facsimile copies, and the authenticity of the originals of such copies and (b) the accuracy of the factual representations made to us by officers and other representatives of the Partnership and the General Partner, whether evidenced by certificates or otherwise.  In addition, for purposes of our opinion below, we have assumed due execution and delivery of the Partnership


 

Agreement and the Underwriting Agreement by the parties thereto substantially in the form examined by us, the filing by the Company with the SEC of the Registration Statement and Prospectus substantially in the form examined by us, and the declaration by the SEC of the effectiveness of such Registration Statement.

 

This opinion is limited to Marshall Islands Law and is as of the effective date of the Registration Statement.

 

Based on the foregoing and having regard to legal considerations which we deem relevant, we are of the opinion that when issued and delivered against payment therefor in accordance with the terms of the Partnership Agreement, the Underwriting Agreement and the Registration Statement and Prospectus, the Common Units will be duly authorized, validly issued, fully paid and non-assessable.

 

We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name under the heading “Legal Matters” in the Prospectus.  In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act.

 

Very truly yours,

 

 

/s/

 

Watson Farley & Williams (New York) LLP

 

 

2



Exhibit 8.1

 

C R A V A T H,  S W A I N E  &  M O O R E  L L P

[New York Office]

 

March 19, 2007

 

Capital Product Partners L.P.

 

Ladies and Gentlemen:

 

You have requested our opinion regarding certain U.S. federal income tax matters relating to Capital Product Partners L.P. (the “Company”) and the holders of common units of the Company.

 

In formulating our opinion as to these matters, we have examined such documents as we have deemed appropriate, including the Registration Statement and amendments to such Registration Statement filed by the Company on Form F-1 with the Securities and Exchange Commission through the date hereof (the “Registration Statement”).  We also have obtained such additional information as we have deemed relevant and necessary from representatives of the Company.  In addition, we have examined, and relied as to matters of fact upon, originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, documents and other instruments and made such other inquiries as we have deemed necessary or appropriate to enable us to render the opinion set forth below.  In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents.  We have not, however, undertaken any independent investigation of any factual matter set forth in any of the foregoing.

 

The legal conclusions as to the application of the U.S. federal income tax law under the captions “Business-Taxation of the Partnership” and “Material U.S. Federal Income Tax Considerations” in the Registration Statement (subject to the qualifications set forth in such discussions) constitute the opinion of Cravath, Swaine & Moore LLP.  Our opinion does not relate to any factual or accounting matters, determination or conclusions.

 


 

Our opinion and the tax discussion set forth in the Registration Statement are based on the current provisions of the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder, published pronouncements of the Internal Revenue Service and case law, any of which may be changed at any time with retroactive effect.  We disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in applicable law, regulations or interpretations thereof.  No opinion is expressed on any matters other than those described above.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the captions “Business--Taxation of the Partnership,” “Material U.S. Federal Income Tax Considerations” and “Legal Matters” in the Registration Statement.

 

 

 

 

Very truly yours,

 

 

 

 

 

 

 

 

/s/ Cravath, Swaine & Moore LLP

 

 

 

 

 

 

 

 

 

 

 

 

Capital Product Partners L.P.

 

 

3, Iassonos Street

 

 

Piraeus, Athens

 

 

18537

 

 

GREECE

 

 

 

2



Exhibit 8.2

 

 

Watson, Farley & Williams (New York) LLP

 

 

100 Park Avenue

 

 

New York, New York 10017

 

 

Tel (212) 922 2200

 

 

Fax (212) 922 1512

March 19, 2007

 

 

 

 

 

Capital Product Partners L.P.

 

 

c/o Capital Ship Management Corp.

 

 

3 Iassonos Street

 

 

Piraeus, 185 37

 

 

Greece

 

 

 

 

Capital Product Partners L.P. - Registration Statement on Form F-1

 

Dear Sirs:

 

We have acted as special counsel as to matters of the law of the Republic of The Marshall Islands (“Marshall Islands Law”) for Capital Product Partners L.P. (the “Partnership”) in connection with the preparation of a Registration Statement on Form F-1 (the “Registration Statement”) to be filed by the Partnership with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Act of 1933, as amended (the “Act”), and the rules and regulations thereunder, with respect to the issuance and sale of up to 13,512,500 common units (the “Common Units”) of the Partnership.

 

In so acting, we have examined originals, or copies, certified to our satisfaction, of the Registration Statement and the prospectus (the “Prospectus”) included therein, and originals, or copies certified to our satisfaction, of all such records of the Partnership, agreements and other documents, certificates of public officials, officers and representatives of the Partnership, Capital GP L.L.C. (the “General Partner”), and other appropriate persons, and such other documents as we have deemed necessary as a basis for the opinions hereinafter expressed.  In such examinations, we have assumed without independent investigation, (a) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as photostatic or facsimile copies, and the authenticity of the originals of such copies and (b) the accuracy of the factual representations made to us by officers and other representatives of the Partnership and the General Partner, whether evidenced by certificates or otherwise.

 

This opinion is limited to Marshall Islands Law and is as of the effective date of the Registration Statement.

 

Based on the facts as set forth in the Prospectus and having regard to legal considerations which we deem relevant, we hereby confirm that the opinions attributed to Watson, Farley & Williams (New


 

York) LLP set forth in the Prospectus under the captions “Business - Taxation of the Partnership - Marshall Islands Taxation” and “Non-United States Tax Considerations - Marshall Islands Tax Consequences” are the opinions of Watson, Farley & Williams (New York) LLP and accurately state our views as to the tax matters discussed therein.  In addition, such opinions fairly present the information expected to be relevant to holders of the Common Units offered pursuant to the Prospectus and fairly summarize the legal matters referred to therein.

 

Our opinions as set forth in the Prospectus are based on the current provisions of Marshall Islands law, which may be changed at any time with retroactive effect.  No opinion is expressed on any matters other than those specifically referred to above.

 

We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name in the Prospectus under the captions “Business - Taxation of the Partnership - Marshall Islands Taxation” and “Non-United States Tax Considerations - Marshall Islands Tax Consequences”.  In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act.

 

Very truly yours,

 

 

/s/

 

Watson Farley & Williams (New York) LLP

 

 

2



Exhibit 10.1

 

Date              March 2007

 

 

CAPITAL PRODUCT PARTNERS L.P.

as Borrower

 

 

- and -

 

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

 

- and -

 

 

HSH NORDBANK AG

as Swap Bank

 

 

- and -

 

 

HSH NORDBANK AG

as Bookrunner

 

 

- and -

 

 

HSH NORDBANK AG

as Agent and Security Trustee

 

 

___________________________________

 

FORM OF LOAN AGREEMENT

____________________________________

 

relating to revolving credit and term loan facilities not

exceeding US$370,000,000 in aggregate to initially

finance the acquisition cost of fifteen medium range product tankers

 

 

WATSON, FARLEY & WILLIAMS

Piraeus

 


 

INDEX

 

Clause

 

 

Page

 

 

 

 

1

INTERPRETATION

 

1

 

 

 

 

2

FACILITY

 

20

 

 

 

 

3

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

 

20

 

 

 

 

4

DRAWDOWN

 

22

 

 

 

 

5

INTEREST

 

23

 

 

 

 

6

INTEREST PERIODS

 

25

 

 

 

 

7

DEFAULT INTEREST

 

26

 

 

 

 

8

CONVERSION TO TERM LOAN; REPAYMENT AND PREPAYMENT

 

27

 

 

 

 

9

CONDITIONS PRECEDENT

 

29

 

 

 

 

10

REPRESENTATIONS AND WARRANTIES

 

30

 

 

 

 

11

GENERAL UNDERTAKINGS

 

32

 

 

 

 

12

CORPORATE UNDERTAKINGS

 

35

 

 

 

 

13

INSURANCE

 

37

 

 

 

 

14

SHIP COVENANTS

 

42

 

 

 

 

15

SECURITY COVER

 

46

 

 

 

 

16

PAYMENTS AND CALCULATIONS

 

47

 

 

 

 

17

APPLICATION OF RECEIPTS

 

49

 

 

 

 

18

APPLICATION OF EARNINGS

 

50

 

 

 

 

19

EVENTS OF DEFAULT

 

51

 

 

 

 

20

FEES AND EXPENSES

 

55

 

 

 

 

21

INDEMNITIES

 

56

 

 

 

 

22

NO SET-OFF OR TAX DEDUCTION

 

58

 

 

 

 

23

ILLEGALITY, ETC

 

58

 

 

 

 

24

INCREASED COSTS

 

59

 

 

 

 

25

SET OFF

 

60

 

 

 

 

26

TRANSFERS AND CHANGES IN LENDING OFFICES

 

61

 

2


 

27

VARIATIONS AND WAIVERS

 

64

 

 

 

 

28

NOTICES

 

65

 

 

 

 

29

SUPPLEMENTAL

 

66

 

 

 

 

30

LAW AND JURISDICTION

 

66

 

 

 

 

SCHEDULE 1 LENDERS AND COMMITMENTS

 

68

 

 

 

 

SCHEDULE 2 DRAWDOWN NOTICE

 

69

 

 

 

 

SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS

 

70

 

 

 

 

SCHEDULE 4 TRANSFER CERTIFICATE

 

76

 

 

 

 

SCHEDULE 5 DESIGNATION NOTICE

 

80

 

 

 

 

SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE

 

81

 

 

 

 

EXECUTION PAGES

 

82

 

3


 

THIS LOAN AGREEMENT is made on                March 2007

 

BETWEEN:

 

(1)                                  CAPITAL PRODUCT PARTNERS L.P. being a limited partnership formed in the Republic of the Marshall Islands whose registered office is at Trust Company House, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands as Borrower.

 

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

 

(3)                                  HSH NORDBANK AG as Swap Bank.

 

(4)                                  HSH NORDBANK AG as Bookrunner.

 

(5)                                  HSH NORDBANK AG as Agent and Security Trustee.

 

WHEREAS

 

(A)                              The Lenders have agreed to make available to the Borrower a revolving credit facility (initially divided into 3 tranches) of up to US$370,000,000 initially for the purpose of part-financing or refinancing the acquisition cost of 15 medium range product tankers owned or to be owned by subsidiaries of the Borrower.  Subject to the terms and conditions of this Agreement all amounts outstanding under the revolving credit facility on the Termination Date shall on that date be converted into a term loan facility which shall be repaid over a period of 5 years (or, through the operation of Clause 4.9, 2 years) in accordance with the terms of this Agreement.

 

(B)                                To the extent initially borrowed for the purposes referred to in Recital (A) and prepaid, the Borrower shall be entitled to reborrow the prepaid amounts in order to provide the Borrower with additional liquidity for its general working capital and corporate purposes.

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

1.1                               Definitions.  Subject to Clause 1.5, in this Agreement:

“Accounting Information”  means the annual audited consolidated accounts to be provided by the Borrower to the Agent in accordance with Clause 11.6(a)(i) of this Agreement or the quarterly unaudited management accounts of the Borrower to be provided by the Borrower to the Agent in accordance with Clause 11.6(b)(i) of this Agreement (as the context may require);

 

“Advance”  means the principal amount of each borrowing by the Borrower under this Agreement;

 

“Affected Lender”  has the meaning given in Clause 5.5;

 

“Agency and Trust Agreement”  means the agency and trust agreement executed or to be executed between the Borrower, the Lenders, the Swap Bank, the Agent and the Security Trustee in such form as the Lenders may approve or require;

 


 

“AGISILAOS”  means the medium range product tanker of approximately 37,000 deadweight tons registered in the ownership of Polarwind under the Marshall Islands flag with the name “AGISILAOS”;

 

“AIOLOS”  means the medium range product tanker of approximately 37,000 deadweight tons registered in the ownership of Tempest under the Marshall Islands flag with the name “AIOLOS” and dual registered on the Isle of Man flag in the name of BP;

 

“AKERAIOS”  means the newbuilding medium range product tanker of approximately 47,000 deadweight tons currently being constructed by the Builder and having Builder’s Hull No. 0413 which is to be purchased by Laredo pursuant to the Akeraios Shipbuilding Contract and which is to be registered in the ownership of Laredo under an Approved Flag with the name “AKERAIOS”;

 

“Akeraios Shipbuilding Contract”  means the shipbuilding contract dated 16 February 2004 in respect of the construction by the relevant Builder of “AKERAIOS” and its purchase by Laredo, as supplemented from time to time;

 

“AKTORAS”  means the medium range product tanker of approximately 37,000 deadweight tons registered in the ownership of Centurion under the Marshall Islands flag with the name “AKTORAS” and which is dual registered on the Isle of Man flag in the name of BP;

 

“ALEXANDROS II”  means the newbuilding medium range product tanker of approximately 51,000 deadweight tons currently being constructed by the relevant Builder and having Builder’s Hull No. 0413 which is to be purchased by Sorrel pursuant to the Alexandros II Shipping Contract and which is to be registered in the ownership of Sorrel under an Approved Flag with the name “ALEXANDROS II”;

 

“Alexandros II Shipbuilding Contract”  means the shipbuilding contract dated [•] in respect of the construction by the relevant Builder of “ALEXANDROS II” and its purchase by Sorrel, as supplemented from time to time;

 

“ANEMOS I”  means the newbuilding medium range product tanker of approximately 47,000 deadweight tons currently being constructed by the relevant Builder and having Builder’s Hull No. 0447 which is to be purchased by Splendor pursuant to the Anemos Shipbuilding Contract and which is to be registered in the ownership of Splendor under an Approved Flag with the name “ANEMOS I”;

 

“Anemos Shipbuilding Contract”  means the shipbuilding contract dated 15 July 2004 and made between the Builder and Splendor in respect of the construction by the relevant Builder of “ANEMOS I” and its purchase by Splendor, as supplemented from time to time;

 

“APOSTOLOS”  means the newbuilding medium range product tanker of approximately 47,000 deadweight tons currently being constructed by the Builder and having Builder’s Hull No. 0446 which is to be purchased by Lorenzo pursuant to the Apostolos Shipbuilding Contract and which is to be registered in the ownership of Lorenzo under an Approved Flag with the name “APOSTOLOS”;

 

“Apostolos Shipbuilding Contract”  means the shipbuilding contract dated 15 July 2004 and made between the relevant Builder and Lorenzo in respect of the construction by the Builder of “APOSTOLOS” and its purchase by Lorenzo, as supplemented from time to time;

 

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“Approved Broker”  means each of H. Clarksons & Company Limited, RS Platou, Galbraith’s Limited, E.A. Gibson Shipbrokers and Barry Rogliano Salles and in the plural means all of them;

 

“Approved Flag”  means the Liberian or Marshall Islands flag or such flag as the Agent may, with the authorisation of all the Lenders, approve as the flag on which a Ship shall be registered, such approval not to be unreasonably withheld;

 

“Approved Flag State”  means any country in which the Agent may with the authorisation of all the Lenders, approve that a Ship be registered, such approval not to be unreasonably withheld;

 

“Approved Manager”  means, in relation to a Ship, Capital Ship Management Corp., a company incorporated in Panama having its registered office at Hong Kong Bank Building, 6th floor, Samuel Lewis Avenue, Panama, Republic of Panama, or any other company which the Lenders may approve (such approval not to be unreasonably withheld) from time to time as the commercial, technical and/or operational manager of that Ship;

 

“Approved Manager’s Undertaking”  means, in relation to each Ship, a letter of undertaking executed or to be executed by the Approved Manager in favour of the Security Trustee in the terms required by the Security Trustee agreeing certain matters in relation to the Approved Manager serving as the manager of the Ship and subordinating the rights of the Approved Manager against such Ship and the Owner thereof to the rights of the Creditor Parties under the Finance Documents, in such form as the Security Trustee, with the authorisation of the Majority Lenders, may approve or require and in the plural means all of them;

 

“ARIONAS”  means the medium range product tanker of approximately 37,000 deadweight tons registered in the ownership of Carnation under the Marshall Islands flag with the name “ARIONAS”;

 

“ARIS II”  means the newbuilding medium range product tanker of approximately 51,000 deadweight tons currently being constructed by the relevant Builder and having Builder’s Hull No. [•] which is to be purchased by Belerion pursuant to the Aris II Shipbuilding Contract and which is to be registered in the ownership of Belerion under an Approved Flag with the name “ARIS II”;

 

“Aris II Shipbuilding Contract”  means the shipbuilding contract dated [•] in respect of the construction by the relevant Builder of “ARIS II” and its purchase by Belerion, as supplemented from time to time;

 

“ARISTOTELIS II”  means the newbuilding medium range product tanker of approximately 51,000 deadweight tons currently being constructed by the relevant Builder and having Builder’s Hull No. [•] which is to be purchased by Wind Dancer pursuant to the Aristotelis Shipbuilding Contract and which is to be registered in the ownership of Wind Dancer under an Approved Flag with the name “ARISTOTELIS II”;

 

“Aristotelis Shipbuilding Contract”  means the shipbuilding contract dated [•], the construction by the relevant Builder of “ARISTOTELIS” and its purchase by Wind Dancer, as supplemented from time to time;

 

“ASSOS”  means the medium range product tanker of approximately 47,000 deadweight tons registered in the ownership of Canvey under Liberian flag with the name “ASSOS”;

 

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“ATLANTAS”  means medium range product tanker of approximately 37,000 deadweight tons registered in the ownership of Rider under the Marshall Island flag with the name “ATLANTAS” and dual registered on the Isle of Man flag in the name of BP;

 

“ATROTOS”  means the newbuilding medium range product tanker of approximately 47,000 deadweight tons currently being constructed by the Builder and having Builder’s Hull No. 0412 which is to be purchased by Epicurus pursuant to the Atrotos Shipping Contract and which is to be registered in the ownership of Epicurus under an Approved Flag with the name “ATROTOS”;

 

“Atrotos Shipbuilding Contract”  means the shipbuilding contract dated 16 February 2004 in respect of the construction by the relevant Builder of “ATROTOS” and its purchase by Epicurus, as supplemented from time to time;

 

“Availability Period”  means the period commencing on the date of this Agreement and ending on

 

30 June 2012 (as such date may be extended in accordance with Clause 4.9), or such later date as the Agent may, with the authorisation of all the Lenders, agree with the Borrower;

 

“AVAX”  means the medium range product tanker of approximately 47,000 deadweight tons registered in the ownership of Apollonas under the Liberian flag with the name “AVAX”;

 

“AXIOS”  means the MR product tanker of approximately 37,000 deadweight tons registered in the ownership of Iraklitos under the Liberian flag with the name “AXIOS”;

 

“Balloon Instalment”  has the meaning given to that term in Clause 8.2(b);

 

“Bareboat Charter”  means, in relation to:

 

(a)           “ATLANTAS”, a bareboat charter in respect of that Ship dated 20 April 2006 and made between Rider and BP;

 

(b)           “AKTORAS”, a bareboat charter in respect of that Ship dated 20 April 2006 anad made between Centurion and BP;

 

(c)           “AIOLOS”, a bareboat charter in respect of that Ship dated 21 July 2006 and made between Tempest and BP;

 

(d)           each of “ALEXANDROS II”, “ARISTOTELIS II” and “ARIS II”, a bareboat charter to be made between the Owner of the relevant Ship and OSG or a fully owned subisidiary of OSG,

 

and, in the plural, means all of them;

 

“Bareboat Charter Security Agreement”  means, in relation to any Ship which is subject to a bareboat charter (other than any Bareboat Charter to which BP or OSG is a party) (which charter may be entered into by the relevant Owner in accordance with Clause 14.17,, an agreement or agreements whereby the Security Trustee receives an assignment of the rights of the relevant Owner under the bareboat charter and certain undertakings from that Owner and the relevant charterer and, if so agreed by the Security Trustee (acting with the authorisation of the Lenders), agrees to give certain

 

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undertakings to that charterer, in each case, in such form as the Majority Lenders may approve or require and, in the plural, means all of them;

 

“Borrower”  means Capital Product Partners L.P., a limited partnership formed under the laws of the Marshall Islands and having its registered office at Trust Company House, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands;

 

“BP”  means BP Shipping Limited, a company incorporated in England whose registered office is at Chartsey Road, Sunbury Upon Thames, Middlesex TW16 7BP, United Kingdom;

 

“Builder”  means, in relation to:

 

(a)                                  the Tranche B New Ships, Hyundai Mipo Dockyard Co., Ltd., a company organised and existing under the laws of the  Republic of Korea, with its principal office at 1381, Bangeo-Dong, Dong-ku, Ulsan, Korea; and

 

(b)                                 the Tranche C New Ships, STX Shipbuilding Co., Ltd., a corporation incorporated and existing under the laws of the Republic of Korea having its registered office at 100, Wonpo-Dong, Jinhae, Gyeongsangnam-Do, Korea;

 

“Business Day”  means a day on which banks are open in London, Hamburg, Athens and (in relation to any payment to be made to the Builder) Seoul 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”  means any charterparty in respect of a Ship of a duration (or capable of being or exceeding a duration) of 11 months or more, made on terms and with a charterer acceptable in all respects to the Lenders, such acceptance not to be unreasonably withheld;

 

“Charterparty Assignment”  means, in relation to:

 

(a)                                  an Existing Ship (at all times during the term of the Existing Charter relative thereto), an assignment of the rights of the Owner of that Existing Ship under the Existing Charter relative to that Existing Ship executed or to be executed by the relevant Owner in favour of the Security Trustee; and

 

(b)                                 each New Ship and each Existing Ship (after the expiry of the Existing Charter relative thereto), an assignment of the rights of the relevant Owner under any Charterparty in respect of such Ship with a duration of at least 11 consecutive months executed or to be executed by the relevant Owner in favour of the Security Trustee,

 

in each case, in such form as the Lenders may approve or require and, in the plural, means all of them;

 

“Commitment”  means, in relation to a Lender, the amount set opposite its name in 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, acting with the authorisation of all the Lenders, approves or requires);

 

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

 

“Contractual Currency”  has the meaning given in Clause 21.5;

 

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

 

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

 

“Delivery Date”  means, in relation to a Ship, the date on which title to and possession of that Ship is transferred from the Builder to the relevant Owner;

 

“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

 

(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 5, as a Designated Transaction for the purposes of the Finance Documents;

 

“Distribution Declaration Date” means, in respect of each quarterly period during each Financial Year, a date (being a Business Day) falling no later than 60 days after the end of the relevant preceding financial quarter;

 

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

 

“Drawdown Date”  means, in relation to an Advance, the date requested by the Borrower for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

 

“Drawdown Notice”  means a notice in the form set out in Schedule 2 (or in any other form which the Agent, acting with the authorisation of all the Lenders, 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 the Ship or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):

 

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

 

(b)                                 all moneys which are at any time payable under Insurances in respect of loss of earnings; and

 

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(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, with respect to an Owner, an account in the name of that Owner with the Agent in Hamburg which is designated by the Agent in writing as the Earnings Account with respect to that Owner for the purposes of this Agreement and in the plural means all of them;

 

“Earnings Account Pledge”  means, in relation to an Earnings Account, a deed of pledge of that Earnings Account, in such form as the Lender may approve or require, and in the plural means all of them;

 

“EBITDA”  means, in respect of the relevant period, the aggregate amount of consolidated or combined pre-tax profits of the Group before extraordinary or exceptional items, depreciation, interest, repayment of principal in respect of any loan, rentals under finance leases and similar charges payable;

 

“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:

 

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

 

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

 

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“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 Charter”  means, in relation to: [note: the OSG charters have not been added.please do]

 

(a)           each of “ATLANTAS”, “AKTORAS” AND “AIOLOS”, the Bareboat Charter relative to such Ship;

 

(b)           “AGISILAOS”, a time charter dated [•], made between Polarwind and BP as charterer;

 

(c)           “ASSOS”, a time charter dated [•], made between Canvey and [Morgan Stanley];

 

(e)           “ARIONAS”, a time charter dated [•], made between Carnation and BP;

 

(f)            “AVAX”, a time charter dated [•], made between Apollonas and BP; and

 

(g)           “AXIOS”, a time charter dated [•], made between Iraklitos and BP,

 

and in the plural means all of them;

 

“Existing Owners”  means each of:

 

(a)           Apollonas Shipping Company (“Apollonas”);

 

(b)           Canvey Shipmanagement Co. (“Canvey”);

 

(c)           Carnation Shipping Company (“Carnation”);

 

(d)           Centurion Navigation Limited (“Centurion”);

 

(e)           Iraklitos Shipping Company (“Iraklitos”);

 

(f)            Polarwind Maritime S.A. (“Polarwind”);

 

(g)           Shipping Rider Co. (“Rider”); and

 

(h)           Tempest Marine Inc. (“Tempest”),

 

each a corporation incorporated under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company House, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands,

 

and, in the singular, means one of them;

 

“Existing Ships”  means, together, “ATLANTAS”, “AKTORAS”, “AGISILAOS”, “ASSOS”, “ARIONAS”, “AVAX”, “AXIOS” and “AIOLOS” and in the singular means any of them;

 

“Fee Letter” means a letter issued or to be issued by the Borrower to the Agent in which the Borrower agrees to pay certain fees to the Agent in connection with this Agreement;

 

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“Finance Documents”  means:

 

(a)           this Agreement;

 

(b)           the Master Agreement;

 

(c)           the Agency and Trust Agreement;

 

(d)           the Guarantees;

 

(e)           the Master Agreement Assignment;

 

(f)            the General Assignments;

 

(g)           the Mortgages;

 

(h)           the Earnings Account Pledges;

 

(i)            the Retention Account Pledge;

 

(j)            the Swap Account Pledge;

 

(k)           any Charterparty Assignments;

 

(l)            any Bareboat Charter Security Agreements;

 

(m)          the Approved Manager’s Undertakings; and

 

(n)                                 any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, an Owner or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders 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;

 

(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;

 

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“Fleet Vessels”  means all of the vessels (including, but not limited to, the Ships) from time to time wholly owned by members of the Group (each a “Fleet Vessel”);

 

“General Assignment”  means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation, in such form as the Lenders may approve or require 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, each Owner) from time to time during the Security Period  and “member of the Group” shall be construed accordingly;

 

“Guarantee”  means, in relation to an Owner, the guarantee to be given by that Owner in favour of the Security Trustee, guaranteeing the obligations of the Borrower under this Agreement and the other Finance Documents, in such form as the Lenders may approve or require and in the plural means all of them;

 

“Insurances”  means, in relation to a Ship:

 

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

 

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

 

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

 

“IPO”  means a successful initial public offering of the common units of the Borrower on the Nasdaq National Market in New York identified in the Form F-1 registration statement and the prospectus filed or to be filed by the Borrower with the US Securities and Exchange Commission;

 

“ISM Code”  means, in relation to its application to each Owner, its Ship and its operation:

 

(a)                                  ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

 

(b)                                 all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing  the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995,

 

as the same may be amended, supplemented or replaced from time to time;

 

“ISM Code Documentation”  includes:

 

(a)                                  the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to the Ships or either or them within the periods specified by the ISM Code; and

 

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(b)           all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

 

(c)           any other documents which are prepared or which are otherwise relevant to establish and maintain the Ships’ or the Owners’ compliance with the ISM Code which the Agent may require;

 

“ISM SMS”  means the safety management system for each Ship which is required to be developed, implemented and maintained under the ISM Code;

 

“ISPS Code”  means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924 (22) of the International Maritime Organisation (“IMO”) adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;

 

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

 

“Lender”  means, subject to Clause 26.6:

 

(a)           a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

 

(b)           the holder for the time being of a Transfer Certificate;

 

“LIBOR”  means, for an Interest Period:

 

(a)           the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on the appropriate page of the Reuters Monitor Money Rates Service at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars; or

 

(b)           if no rate is quoted on the appropriate page of the Reuters Monitor Money Rates Service, 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 Lender as the rate at which deposits in Dollars are offered to that Lender by leading banks in the London Interbank Market at that Lender’s request at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

 

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

 

(a)           cash in hand or held with banks or other financial institutions of the Borrower and/or any other member of the Group 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,

 

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Dollars, Japanese Yen, Swiss Francs, Euros or Sterling) issued by a prime international bank; and

 

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

 

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

 

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

 

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

 

“Loan”  means the principal amount of the Advances for the time being outstanding under this Agreement;

 

“Major Casualty”  means, in relation to a Ship, any casualty to the 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 $ 750,000 or the equivalent in any other currency;

 

“Majority Lenders”  means:

 

(a)                                  at any time when no Advances are outstanding, Lenders whose Commitments total 66 2/3 per cent. of the Total Commitments; and

 

(b)                                 at any other time, Lenders whose Contributions total 66 2/3 per cent. of the Loan;

 

“Margin”  means 0.75 per cent. per annum;

 

“Market Value”  means, in respect of each Ship and each Fleet Vessel, the market value thereof determined from time to time in accordance with Clause 15.4;

 

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

 

“Master Agreement Assignment” means the assignment of the Master Agreement in such form as the Lenders may approve or require;

 

“Mortgage”  means, in relation to a Ship, the first preferred ship mortgage on the Ship under the relevant Approved Flag executed by the Owner of that Ship in favour of the Security Trustee, in such form as the Lenders may approve or require;

 

“Negotiation Period”  has the meaning given in Clause 5.8;

 

“Net Interest Expenses”  means, in respect of the relevant period:

 

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(a)                                  the aggregate of all interest payable by any member of the Group on any Financial Indebtedness (excluding any amounts owing by one member of the Group to another member of the Group) and any net amounts payable under interest rate hedge agreements, less

 

(b)                                 the aggregate of all interest received by any member of the Group arising from any Liquid Assets and any net amounts received by any member of the Group under interest rate hedge agreements;

 

“New Ships”  means, together, the Tranche B New Ships and the Tranche C New Ships and in the singular means any of them;

 

“New Ships Owners”  means each of:

 

(a)           Belerion Maritime Co. (“Belerion”);

 

(b)           Epicurus Shipping Company (“Epicurus”);

 

(c)           Laredo Maritime Inc. (“Laredo”);

 

(d)           Lorenzo Shipmanagement Inc. (“Lorenzo”);

 

(e)           Sorrel Shipmanagement Inc. (“Sorrel”);

 

(f)            Splendor Shipholding S.A. (“Splendor”); and

 

(g)           Wind Dancer Shipping Inc. (“Wind Dancer”),

 

each a corporation incorporated under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company House, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands,

 

and, in the singular means any one of them;

 

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

 

“OSG”  means Overseas Shipholding Group Inc., a corporation incorporated in [•] acting through its office at [•] or any wholly owned subsidiary of Overseas Shipholding Group Inc.;

 

“Owner”  means, in relation to:

 

(a)           “AGISILAOS”, Polarwind;

 

(b)           “AIOLOS”, Tempest;

 

(c)           “AKERAIOS”, Laredo;

 

(d)           “AKTORAS”, Centurion;

 

(e)           “ALEXANDROS II”, Sorrel;

 

(f)            “ANEMOS I”, Splendor;

 

(g)           “APOSTOLOS”, Lorenzo;

 

(h)           “ARIONAS”, Carnation;

 

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(i)            “ARIS II”, Belerion;

 

(j)            “ARISTOTELIS II”, Wind Dancer;

 

(k)           “ASSOS”, Canvey;

 

(l)            “ATLANTAS”, Rider;

 

(m)          “ATROTOS”, Epicurus;

 

(n)           “AVAX”, Apollonas; and

 

(o)           “AXIOS”, Iraklitos,

 

and, in the plural, means all of them;

 

“Partnership Agreement”  means the first amended and restated agreement of limited partnership in respect of the Borrower made between Capital GP L.L.C., a Marshall Islands limited liability company, as general partner, and Capital Maritime and Trading Corp., a Marshall Islands corporation, as organisational limited partner;

 

“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 45 days overdue (unless the overdue amount is being contested by the relevant Owner in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(e);

 

(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 Borrower 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;

 

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

 

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

 

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

 

“Potential Event of Default”  means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

 

“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;

 

“Relevant Distribution Declaration Date”  has the meaning given in Clause 8.2(a);

 

“Relevant Person”  has the meaning given in Clause 19.9;

 

“Repayment Date”  means a date on which a repayment is required to be made under Clause 8;

 

“Repayment Instalment”  has the meaning given to that item in Clause 8.2(b);

 

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

 

“Retention Account” means an account in the name of the Borrower with the Agent in Hamburg designated “Capital Product Partners L.P. - Retention Account” which is designated by the Agent in writing as the Retention Account for the purposes of this Agreement and to which transfers are only to be made in the circumstances referred to in Clause 8.2(a);

 

“Retention Account Pledge” means a pledge agreement creating security in favour of the Security Trustee in respect of the Retention Account in such form as the Lenders may approve or require;

 

“Revolving Facility”  means the aggregate principal amount of up to $370,000,000 which may be drawn by the Borrower in accordance with the terms and conditions of this Agreement or, as the context may require, the aggregate principal amount of the Advances outstanding under this Agreement at any time prior to the conversion of the Revolving Facility into the Term Loan pursuant to Clause 8.1;

 

“Secured Liabilities”  means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial

 

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discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

 

“Security Cover Ratio”  means the ratio which is determined at any time by comparing the aggregate Market Value of the Ships subject to a Mortgage at the relevant time against the Loan;

 

“Security Interest”  means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Security Trustee”  means HSH Nordbank AG or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

 

“Ships”  means, together, the Existing Ships and the New Ships, and in the singular means any of them;

 

“Shipbuilding Contracts”  means, together, the Atrotos Shipbuilding Contract, the Akeraios Shipbuilding Contract, the Anemos I Shipbuilding Contract, the Apostolos

 

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Shipbuilding Contract, the Alexandros II Shipbuilding Contract, the Aristotelis Shipbuilding Contract and the Aris II Shipbuilding Contract and in the singular means any of them;

 

“Swap Account” means an account in the name of the Borrower with the Agent in Hamburg designated “Capital Product Partners L.P. - Swap Account”, which is designated by the Agent as the Swap Account for the purposes of this Agreement;

 

“Swap Account Pledge” means a pledge agreement creating security in favour of the Security Trustee in respect of the Swap Account in such form as the Lenders may approve or require;

 

“Swap Bank”  means HSH Nordbank AG acting through its office at Martensdamm 6, D-24103 Kiel, Germany;

 

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

 

“Term Loan”  means, on the Termination Date, the aggregate principal amount of all the Advances (following the conversion of the Revolving Facility to the Term Loan pursuant to Clause 8.1) and, at all times thereafter, the Loan for the time being outstanding under this Agreement;

 

“Termination Date”  means 30 June 2012 (as such date may be extended pursuant to Clause 4.9);

 

“Total Indebtedness”“  means the aggregate Financial Indebtedness of the Group as stated in the most recent Accounting Information;

 

“Total Loss”  means, in relation to a Ship:

 

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

 

(b)                                 any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension;

 

(c)                                  any condemnation of the Ship by any tribunal or by any person or person claiming to be a 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 of the Owner owning the Ship;

 

“Total Loss Date”  means, in relation to a Ship:

 

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

 

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

 

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(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 Owner owning the Ship, 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;

 

“Tranche A”  means an amount of up to $60,000,000 to be made available by the Lenders to the Borrower in up to two Advances pursuant to the terms of this Agreement and which shall (inter alia) by used to pay a dividend to Capital Maritime & Trading Corp. or, as the context may require, the aggregate principal amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche B”  means an amount of up to $224,000,000 to be made available by the Lenders to the Borrower in up to four Advances pursuant to the terms of this Agreement and which shall be on-lent by the Borrower to the Owners of the Tranche B New Ships to assist such Owners in their acquisition of the Tranche B New Ships or, as the context may require, the aggregate principal amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche B New Ships”  means together, “ATROTOS”, “AKERAIOS”, “ANEMOS I” and “APOSTOLOS” and in the singular means any of them;

 

“Tranche C”  means an amount of up to $86,000,000 to be made available by the Lenders to the Borrower in up to three Advances pursuant to the terms of this Agreement and which shall be on-lent by the Borrower to the Owners of the Tranche C New Ships to assist such Owners in their acquisition of the Tranche C New Ships or, as the context may require, the aggregate principal amount thereof outstanding at the relevant time under this Agreement;

 

“Tranche C New Ships”  means, together, “ALEXANDROS II”, “ARISTOTELIS” and “ARIS II” and in the singular means any of them;

 

“Tranches”  mean together,  Tranche A, Tranche B and Tranche C, and in the singular means any of them;

 

“Transaction”  has the meaning given in the Master Agreement;

 

“Transfer Certificate”  has the meaning given in Clause 26.2;

 

“Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Agreement; and

 

“US GAAP”  means generally accepted accounting principles as from time to time in effect in the United States of America.

 

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;

 

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“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 the Ship is assessed for the purpose of such claims;

 

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

 

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

 

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

 

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

 

“months”  shall be construed in accordance with Clause 1.3;

 

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

 

“parent company”  has the meaning given in Clause 1.4;

 

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

 

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

 

“protection and indemnity risks”  means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 

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

 

“subsidiary”  has the meaning given in Clause 1.4;

 

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

 

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

 

“war risks”  means the risks according to Institute War and Strike Clauses (Hull Time) (1/10/83) or (1/11/95), or equivalent conditions, including, but not limited to risk of mines, blocking and trapping, missing vessel, confiscation and all risks excluded from the standard form of English or other marine policy.

 

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

 

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

 

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

 

and “month” and “monthly” shall be construed accordingly.

 

1.4                               Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

 

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

 

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

 

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

 

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

 

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(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 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 of facilities.  Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower revolving credit and term loan facilities not exceeding $370,000,000 in aggregate at any time.  The revolving credit facility shall initially be made available in three Tranches as follows:

 

(a)                                  Tranche A shall be in an amount not exceeding $60,000,000;

 

(b)                                 Tranche B shall be in an amount not exceeding $224,000,000;

 

(c)                                  Tranche C shall be in an amount not exceeding $86,000,000; and

 

(d)                                 Tranche A may be drawn in up to two Advances, Tranche B may be drawn in up to four Advances and Tranche C may be drawn in up to three Advances.

 

2.2                               Consolidation of Tranches.  On the Drawdown Date of the last Advance under Tranche C, all the Tranches shall be consolidated to form a single tranche constituting the Revolving Facility.

 

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

 

3.1                               Interests of Lenders and Swap Bank several.  The rights of the Lenders and the Swap Bank under this Agreement and the Master Agreement are several; accordingly:

 

(a)                                  each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement; and

 

(b)                                 the Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under the Master Agreement,

 

without joining the Agent, the Security Trustee, any other Lender or the Swap Bank as additional parties in the proceedings.

 

3.2                               Proceedings by individual Lender or Swap Bank.  However, without the prior consent of the Majority Lenders, no Lender and the Swap Bank may bring proceedings in respect of:

 

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

 

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

 

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

 

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

 

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

 

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

 

3.4                               Parties bound by certain actions of Majority Lenders.  Every Lender, the Swap Bank, the Borrower and each Security Party shall be bound by:

 

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

 

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

 

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

 

3.5                               Reliance on action of Agent.  However, the Borrower and each Security Party:

 

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

 

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

 

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

 

4                                         DRAWDOWN

 

4.1                               Request for Advance.  Subject to the following conditions, the Borrower may request an Advance to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) 3 Business Days prior to the intended Drawdown Date.

 

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

 

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

 

(b)                                 each Advance under Tranche B shall be used in financing the acquisition of a Tranche B New Ship and such Advance shall be in an amount equal to the least of (i) $56,000,000, (ii) an amount, which when aggregated with all the other Advances under Tranche B which are then outstanding, is equal to $224,000,000 and (iii) the

 

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Loan does not exceed 67.5 per cent. of the aggregate Market Value of all the Ships then subject to a Mortgage (including, without limitation, the Tranche B New Ship to be financed by the relevant Advance);

 

(c)                                  each Advance under Tranche C shall be used in financing the acquisition of a Tranche C New Ship and such Advance shall be in an amount equal to the least of (i) $28,700,000, (ii) an amount, which when aggregated with all the other Advances under Tranche C which are then outstanding, is equal to $86,000,000 and (iii) the Loan does not exceed 60 per cent. of the aggregate Market Value of all the Ships then subject to a Mortgage (including, without limitation, the Tranche C New Ship to be financed by the relevant Advance)  Provided that the Borrower may draw down an Advance under Tranche C to finance the acquisition by Sorrel of “ALEXANDROS II” in the amount of $48,000,000 if, after such Advance is drawn down, the then outstanding amount of the Revolving Facility does not exceed 65 per cent. of the aggregate Market Value of all Ships then subject to a Mortgage (including “ALEXANDROS II”) and, in such circumstances, the Lenders will not be under an obligation to make available to the Borrower a further Advance under Tranche C unless the Borrower has first applied an amount of at least $19,300,000 in prepayment of the Loan or has provided additional security over an unencumbered vessel in accordance with Clause 8.11;

 

(d)                                 any Advance which is drawn after the consolidation of the Tranches pursuant to Clause 2.2 shall be in an amount:

 

(i)                                     be in an amount of at least $2,000,000 or a higher integral multiple of $1,000,000;

 

(ii)                                  which, when aggregated with the then outstanding amount of the Revolving Facility, does not exceed the lesser of (A) 67.5 per cent. of the aggregate Market Value of the Ships then subject to a Mortgage and (B) the Total Commitments; and

 

(e)                                  if any part of the Total Commitments has not been borrowed before the end of the Availability period, the Total Commitments shall on that date be permanently cancelled by an amount equal to such undrawn amount.

 

4.3                               Purpose of Advances.  The Borrower undertakes with each Creditor Party to use each Advance only for the purposes stated in the Recitals to this Agreement.

 

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

 

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

 

(b)                                 the amount of that Lender’s participation in the Advance; and

 

(c)                                  the duration of the first Interest Period.

 

4.5                               Drawdown Notice irrevocable.  A Drawdown Notice must be signed by a director or other authorised person of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

 

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

 

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

 

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

 

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

 

4.8                               Disbursement of Advance to third party.   The payment by the Agent under Clause 4.7 to the Builder shall constitute the making of the Advance and the Borrower shall thereupon become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.

 

4.9                               Extension of Termination Date.  If on 30 June 2012 (for the purposes of this Clause 4.9, the “Original Termination Agreement”) the outstanding principal amount of the Revolving Facility does not exceed 60 per cent. of the aggregate Market Value of the Ships then subject to a Mortgage (determined by taking the average of the aggregate Market Value of the Ships on the Original Termination Date and on the date falling 6 months prior to the Original Termination Date), the Borrower may, by giving the Agent notice in writing, request the extension of the Original Termination Date for a further period of up to 3 years.  If the Majority Lenders, acting in their sole and absolute discretion, agree to extend the Original Termination Date in accordance with this Clause 4.9 the Agent shall send to the Borrower a notice in writing advising it of the period by which the Original Termination Date will be extended  Provided that the new termination date shall be no later than 30 June 2015 and at all times thereafter the term “Termination Date” shall be read and construed to mean the new extended termination date.

 

5                                         INTEREST

 

5.1                               Payment of normal interest.  Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

 

5.2                               Normal rate of interest.  Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of the applicable Margin and 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                               Market disruption.  The following provisions of this Clause 5 apply if:

 

(a)                                  no rate is quoted on the appropriate page of the Reuters Monitor Money Rates Service and at least half of the total number of Lenders at any time do not, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

 

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(b)                                 at least 1 Business Day before the start of an Interest Period, the majority of the Lenders (in numbers) who together have Contributions amounting to more than 50 per cent. of the Loan (or, if no Advance is outstanding at the relevant time, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period; or

 

(c)                                  at least 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.

 

5.6                               Notification of market disruption.  The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.5 which have caused its notice to be given.

 

5.7                               Suspension of drawdown.  If the Agent’s notice under Clause 5.6 is served before an Advance is made:

 

(a)                                  in a case falling within paragraph (a) of Clause 5.5, the Lenders’ obligations to make the Advance;

 

(b)                                 in a case falling within paragraph (b) of Clause 5.5, the Affected Lender’s obligation to participate in the Advance,

 

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

 

5.8                               Negotiation of alternative rate of interest.  If the Agent’s notice under Clause 5.6 is served after an Advance is made, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.6 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution to the relevant Advance or Advances during the Interest Period concerned.

 

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

 

5.10                        Alternative rate of interest in absence of agreement.  If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant  circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution to the relevant Advance or Advances plus the Margin; and the procedure provided for by this Clause 5.10 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

 

5.11                        Notice of prepayment.  If the Borrower does not agree with an interest rate set by the Agent under Clause 5.10, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay the relevant Advance or Advances at the end of the interest period set by the Agent.

 

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5.12                        Prepayment; termination of Commitments.  A notice under Clause 5.11 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’ notice of intended prepayment; and:

 

(a)                                  on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender so far as they relate to the relevant Advance shall be cancelled; and

 

(b)                                 on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

5.13                        Application 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 applicable to an Advance shall commence on the relevant Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

6.2                               Duration of normal Interest Periods.  Subject to Clauses 6.3 and 6.4, each Interest Period in respect of each Advance shall be:

 

(a)                                  1, 3 or 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;

 

(b)                                 in the case of the first Interest Period applicable to the second and any subsequent Advance of a Tranche, a period ending on the last day of the then current Interest Period applicable to such Tranche, whereupon all of the Advances in respect of such Tranche shall be consolidated and treated as a single advance;

 

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

 

(d)                                 such other period as the Borrower may request from the Agent, which may be agreed by the Agent

 

Provided that no more than 6 Interest Periods in aggregate of 1-month’s duration may be current at any time.

 

6.3                               Duration 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 in relation to the relevant Tranche shall end on that Repayment Date.

 

6.4                               Non-availability of matching deposits for Interest Period selected.  If, after the Borrower has selected an Interest Period longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the third 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

 

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

 

(i)                                     LIBOR; or

 

(ii)                                  if the Agent determines that Dollar deposits for any such period are not being made available to a Lender or (as the case may be) Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Agent from such other sources as the Agent may from time to time determine.

 

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

 

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

 

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

 

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

 

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8                                         CONVERSION TO TERM LOAN;  REPAYMENT AND PREPAYMENT

 

8.1                               Conversion to Term Loan.  On the Termination Date, the Revolving Facility shall be converted into the Term Loan.

 

8.2                               Mandatory amortisation and amount of repayments of Term Loan.  The following provisions of this Clause 8.2 shall apply to the repayment of the Loan:

 

(a)                                  if on a Distribution Declaration Date falling before the Termination Date, the Security Cover Ratio (expressed as a percentage) is less than 125 per cent., then the Borrower shall repay the Loan in an amount which, once repaid, shall eliminate the shortfall.  If a repayment is required pursuant to this Clause 8.2(a) on any Distribution Declaration Date (being the “Relevant Distribution Declaration Date”), then the Borrower shall transfer the amount of the repayment due under this Clause 8.2(a) into the Retention Account no later than 5 Business Days after the Relevant Distribution Declaration Date.  On the last day of the first Interest Period to expire which is current as at the Relevant Distribution Declaration Date the Agent shall apply all amounts standing to the credit of the Retention Account in or towards repayment of the Loan and the payment of interest thereon in accordance with Clause 18.4; and

 

(b)                                 after the Termination Date, the Term Loan shall be repaid by up to 20 equal consecutive three-monthly repayment instalments (each a “Repayment Instalment” and together the “Repayment Instalments”) and a final balloon instalment (the “Balloon Instalment”). The Balloon Instalment shall be equal to 50 per cent of the Revolving Facility on the Termination Date and each Repayment Instalment shall be in an amount equal to one-twentieth of the Balloon Instalment  Provided that if the Termination Date is extended pursuant to Clause 4.9, the Balloon Instalment shall remain unchanged but each Repayment Instalment shall be in an amount equal to one-eighth of the Balloon Instalment.

 

8.3                               Repayment Dates.  The first Repayment Instalment shall be repaid on the date falling 3 months after the Termination Date, each subsequent Repayment Instalment shall be repaid at 3-monthly intervals thereafter and the Balloon Instalment, together with the Final Repayment Instalment, shall be repaid on the date falling on the earlier of (a) the tenth anniversary of the first Drawdown Date and (b) 30 June 2017.

 

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

 

8.5                               Optional facility cancellation.  The Borrower shall be entitled, upon giving to the Agent not less than 3 Business Days prior written notice (which notice shall be irrevocable), to cancel, in whole or in part, and, if in part, by an amount not less than $1,000,000 or a higher multiple of $1,000,000, the undrawn balance of the Revolving Facility.  Upon such cancellation taking effect on expiry of such notice the several obligations of the Lenders to make their respective Commitments available in relation to the portion of the Total Commitments to which such notice relates shall terminate and the commitment fee referred to in Clause 20.1(a)) on such portion shall cease to accrue.

 

8.6                               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 in respect thereof.

 

8.7                               Conditions for voluntary prepayment.  The conditions referred to in Clause 8.6 are that:

 

(a)                                  a partial prepayment shall be $1,000,000 or a multiple of $1,000,000;

 

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(b)                                 the Agent has received from the Borrower at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date to be the last day of an Interest Period relative to the amount being so prepaid); and

 

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

 

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

 

8.9                               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 8.7(c).

 

8.10                        Mandatory prepayment.  The Borrower shall be obliged to prepay the Relevant Amount if a Ship is sold or becomes a Total Loss:

 

(a)                                  in the case of a sale, on or before the date on which the sale is completed by delivery of that Ship to the buyer; or

 

(b)                                 in the case of a Total Loss, on the earlier of the date falling 150 days after the 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 8.10, “Relevant Amount”  means an amount which, after giving credit for the amount of the prepayment made pursuant to this Clause 8.10, results in the Security Cover Ratio being equal to the higher of (i) the Security Cover Ratio maintained immediately prior to the prepayment made pursuant to this Clause 8.10 and (ii) the Security Cover Ratio referred to in Clause 15.1.

 

8.11                        “ALEXANDROS II” - mandatory prepayment.  If the Borrower draws down an Advance of $48,000,000 in connection with the delivery of “ALEXANDROS II” in accordance with Clause 4.2(c), the Borrower shall within 6 months from the Drawdown Date of such Advance apply an amount of at least $19,300,000 in prepayment of the Loan or provide to the Security Trustee additional security over an unencumbered vessel whose Market Value and technical characteristics are, in the reasonable opinion of the Majority Lenders, equivalent to any of the Tranche C New Ships with such Security Interests being documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.

 

8.12                        Amounts payable on prepayment.  A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or penalty.

 

8.13                        Application of partial prepayment.  Each partial prepayment made after the Termination Date shall be applied to reduce pro rata each Repayment Instalment and the Balloon Instalment.

 

8.14                        Reborrowing.

 

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(a)                                  No amount of the Term Loan prepaid may be reborrowed.

 

(b)                                 Subject to the terms of this Agreement, any amount of the Revolving Facility repaid or prepaid may be reborrowed.

 

8.15                        Unwinding of Designated Transactions.  On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions to the extent necessary to ensure that the notional principal amount of the continuing Designated Transactions thereafter remaining does not 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 8.2.

 

8.16                        Prepayment of Swap Benefit.  If a Designated Transaction is terminated in circumstances where the Swap Bank would be obliged to pay an amount to the Borrower under the Master Agreement, the Borrower hereby agrees that such payment shall be applied in prepayment of the Loan in accordance with Clause 8.13  and authorises the Swap Bank to pay such amount to the Agent for such purpose.

 

9                                         CONDITIONS PRECEDENT

 

9.1                               Documents, fees and no default.  Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:

 

(a)                                  that on or before the date of this Agreement, the Agent receives the fees referred to in Clause 20.1 which are due and payable at that time;

 

(b)                                 that, on or before the service of the Drawdown Notice in respect of the first Advance of Tranche A, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

 

(c)                                  that, on or before the service of the Drawdown Notice in respect of each Advance of Tranche B, the Agent receives the documents described in Part B of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

 

(d)                                 that, on or before the service of the Drawdown Notice in respect of each Advance of Tranche C, the Agent receives the documents described in Part C of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

 

(e)                                  that both at the date of each Drawdown Notice and at each Drawdown Date:

 

(i)                                     no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Advance; and

 

(ii)                                  the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

 

(iii)                               none of the circumstances contemplated by Clause 5.5 has occurred and is continuing;

 

(iv)                              there has been no material adverse change in the financial condition, state of affairs or prospects of the Borrower or any Owner from that applying at the date of this Agreement;

 

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(v)                                 the Borrower has entered into Designated Transactions with the Swap Bank in order to hedge all the interest rate risk under this Agreement as at the relevant Drawdown Date (immediately following the drawdown of the relevant Advance); and

 

(vi)                              the Agent receives any fees referred to in Clause 20.1 which are due and payable at that time;

 

(f)                                    that, if the ratio set out in Clause 15.1 were applied immediately following the making of the relevant Advance, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

 

(g)                                 that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the relevant Drawdown Date.

 

9.2                               Waiver of conditions precedent.  If the Majority Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the relevant Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

 

10                                  REPRESENTATIONS AND WARRANTIES

 

10.1                        General.  The Borrower represents and warrants to each Creditor Party as follows.

 

10.2                        Status.  The Borrower is a limited partnership (comprised of a single general partner and multiple limited partners) formed and validly existing and in good standing under the laws of the Republic of Marshall Islands.

 

10.3                        Capital.  Following the IPO, the Borrower’s capital will consist of [•]common units held by public unitholders, [•]subordinated units held by Capital Maritime & Trading Corp. and a general partner interest held by Capital GP L.L.C.

 

10.4                        Corporate power.  The Borrower (or, in the case of paragraphs (a) and (b), each Existing Owner) has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

 

(a)                                  to own and register the Existing Ship owned by it under the relevant Approved Flag;

 

(b)                                 to enter into, and perform its obligations under, the Existing Charter to which it is a party;

 

(c)                                  to execute the Finance Documents to which the Borrower is a party; and

 

(d)                                 to borrow under this Agreement, to enter into Designated Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party.

 

10.5                        Consents in force.  All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

 

10.6                        Legal validity; effective Security Interests.  The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

 

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(a)                                  constitute the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b)                                 create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

 

subject to any relevant insolvency laws affecting creditors’ rights generally.

 

10.7                        No third party Security Interests.  Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document to which the Borrower is a party:

 

(a)                                  the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

 

(b)                                 no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

 

10.8                        No conflicts.  The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

 

(a)                                  any law or regulation; or

 

(b)                                 the constitutional documents of the Borrower; or

 

(c)                                  any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

 

10.9                        No withholding taxes.  All payments which the Borrower is liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

 

10.10                 No default.  No Event of Default has occurred and is continuing.

 

10.11                 Information.  All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.

 

10.12                 No litigation.  No legal or administrative action involving the Borrower has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken.

 

10.13                 Validity and completeness of Existing Charters.

 

(a)                                  each Existing Charter constitutes valid, binding and enforceable obligations of the parties thereto respectively in accordance with its terms; and

 

(b)                                 no amendments or additions to any Existing Charter have been agreed (other than those notified to the Agent prior to the date of this Agreement) nor has any party thereto waived any of their respective rights under any Existing Charter.

 

10.14                 Compliance with certain undertakings.  At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and 11.14.

 

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10.15                 Taxes paid.  The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower and its business.

 

10.16                 ISM and ISPS Code compliance.  All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, any Owner, the Approved Manager and any Existing Ship have been complied with.

 

10.17                 No money laundering.  Without prejudice to the generality of Clause 4.3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

 

11                                  GENERAL UNDERTAKINGS

 

11.1                        General.  The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit (which permission shall not be unreasonably withheld in connection with Clause 11.13).

 

11.2                        Title; negative pledge and pari passu ranking.  The Borrower will:

 

(a)                                  hold the legal title to, and own the entire beneficial interest in, each Owner free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents;

 

(b)                                 not create or permit to arise any Security Interest over any other asset, present or future other than in the normal course of its business of acquiring and financing vessels; and

 

(c)                                  procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

 

11.3                        No disposal of assets.  The Borrower will not transfer, lease or otherwise dispose of:

 

(a)                                  all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not if such transfer, lease or disposal results in the Borrower being in breach of any of the financial covenants referred to in Clause 12.5 or in the occurrence of an Event of Default; or

 

(b)                                 any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

 

11.4                        No other liabilities or obligations to be incurred.  The Borrower will not incur any liability or obligation except liabilities and obligations under the Finance Documents and liabilities or obligations reasonably incurred in the ordinary course of its business of acquiring, operating and financing vessels, acquiring shares in vessel owning companies and financing such acquisitions and all other matters reasonably incidental thereto (which shall include, without limitation, but subject to Clause 12.8, any Financial Indebtedness which may be incurred by the Borrower in the ordinary course of its business).

 

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11.5                        Information provided to be accurate.  All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

 

11.6                        Provision of financial statements.  The Borrower will send or procure there are sent to the Agent:

 

(a)                                  as soon as possible, but in no event later than 180 days after the end of each financial year of the Borrower (commencing with the financial statements for the year ending 31 December 2007) the audited consolidated annual accounts of the Group

 

(b)                                 as soon as possible, but in no event later than 90 days after the end of each 3-month period in each financial year of the Borrower (commencing with the financial statements for the 3-month period ending 31 March 2007):

 

(i)                                     the unaudited consolidated management accounts of the Group for that 3-month period certified as to their correctness by the chief financial officer of the Borrower; and

 

(c)                                  promptly after each request by the Agent, such further financial information about the Borrower, the Ships and the Owners (including, but not limited to, charter arrangements, Financial Indebtedness and operating expenses) as the Agent may require.

 

11.7                        Form of financial statements.  All accounts (audited and unaudited) delivered under Clause 11.6 will:

 

(a)                                  be prepared in accordance with all applicable laws and US GAAP consistently applied;

 

(b)                                 give a true and fair view of the state of affairs of the relevant person at the date of those accounts and of its profit for the period to which those accounts relate; and

 

(c)                                  fully disclose or provide for all significant liabilities of the relevant person and its subsidiaries.

 

11.8                        Creditor notices.  The Borrower will send to the Agent, at the same time as they are despatched, copies of all communications which are despatched to all of its creditors or to the whole or any class of them.

 

11.9                        Consents.  The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

 

(a)                                  for the Borrower to perform its obligations under any Finance  Document to which it is party;

 

(b)                                 for the validity or enforceability of any Finance Document to which it is party; and

 

(c)                                  for each Owner to continue to own and operate the Ship owned by it,

and the Borrower will comply (or procure compliance as the case may be) with the terms of all such consents.

 

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11.10                 Maintenance of Security Interests.  The Borrower will:

 

(a)                                  at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

 

(b)                                 without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

 

11.11                 Notification of litigation.  The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, the Approved Manager or the Ships, their Earnings or their Insurances as soon as such action is instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

 

11.12                 No amendment to Master Agreement;  Transactions.  The Borrower will not:

 

(a)                                  agree to any amendment or supplement to, or waive or fail to enforce, the Master Agreement or any of its provisions; or

 

(b)                                 enter into any Transaction pursuant to the Master Agreement except Designated Transactions.

 

11.13                 No amendment to the Existing Charters.  The Borrower will ensure that no Existing Owner shall agree to any material amendment or supplement to, or waive or fail to enforce, any Existing Charter or any of its provisions

 

11.14                 Principal place of business.  The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated at Clause 28.2(a) and the Borrower will not establish nor do anything as a result of which it would be deemed to have, a place of business in England or the United States of America.

 

11.15                 Confirmation of no default.  The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of the Borrower and which:

 

(a)                                  states that no Event of Default has occurred; or

 

(b)                                 states that no Event of Default has occurred, except for a specified event or matter, of which all material details are given,

 

the Agent may serve requests under this Clause 11.15 from time to time;  this Clause 11.15 does not affect the Borrower’s obligations under Clause 11.16.

 

11.16                 Notification of default.  The Borrower will notify the Agent as soon as the Borrower becomes aware of:

 

(a)                                  the occurrence of an Event of Default; or

 

(b)                                 any matter which indicates that an Event of Default may have occurred,

 

and will thereafter keep the Agent fully up-to-date with all developments.

 

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11.17                 Provision of further information.  The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

 

(a)                                  to the Borrower, the Ships, their Insurances, their Earnings or the Owners; or

 

(b)                                 to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Agent, the Security Trustee or any Lender at any time.

 

11.18                 General and administrative costs.  The Borrower shall ensure that the payment of all the general and administrative costs of the Borrower and the Owners in connection with the ownership and operation of the Ships (including, without limitation, the payment of the management fees pursuant to the Management Agreements) shall be fully subordinated to the payment obligations of the Borrower and the Owners under this Agreement and the other Finance Documents throughout the Security Period.

 

11.19                 Provision of copies of SEC filings.  The Borrower will send to the Agent copies of all filings made with, and reports submitted to, the US Securities and Exchange Commission promptly after making such filings or submitting such reports  Provided that any such filings or reports which are made available to the public shall be considered to have been delivered to the Agent., subject to the Borrower first having notified the Agent that such filings or reports have been made or submitted.

 

11.20                 Provision of copies and translation of documents.  The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

 

11.21                 Hedging of interest rate risks.  The Borrower shall from time to time enter into Designated Transactions with the Swap Bank in order to hedge all the interest rate risk under this Agreement.

 

12                                  CORPORATE UNDERTAKINGS

 

12.1                        General.  The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit (such permission not to be unreasonably withheld in the case of Clause 12.3(d)).

 

12.2                        Maintenance of status.  The Borrower will maintain its separate existence as a limited partnership and remain in good standing under the laws of the Republic of the Marshall Islands.

 

12.3                        Negative undertakings.  The Borrower will not:

 

(a)                                  change the nature of its business; or

 

(b)                                 pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital Provided that the Borrower may make a distribution if:

 

(i)                                     the Borrower has first submitted to the Agent a Compliance Certificate (with supporting evidence satisfactory to the Agent) which confirms that (A) no Event of Default has occurred or is continuing and (B) the making of such distribution will not result in the Borrower being in breach of any of the

 

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financial covenants referred to in Clause 12.5 or in the occurrence of an Event of Default; and

 

(ii)                                  the Agent is satisfied that the Security Cover Ratio referred to in Clause 15.1 is maintained at the time the distribution is made;

 

(c)                                  provide any form of credit or financial assistance to:

 

(i)                                     a person who is directly or indirectly interested in the Borrower’s share or loan capital; or

 

(ii)                                  any company in or with which such a person is directly or indirectly interested or connected,

 

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length  Provided that this shall not prevent or restrict the Borrower from on-lending the Loan to the Owners;

 

(d)                                 allow any Owner to open or maintain any account with any bank or financial institution except accounts with the Agent or any other Creditor Party for the purposes of the Finance Documents or other accounts already opened with other banks for the purposes of previous financings;

 

(e)                                  cause the common units of the Borrower to cease to be listed on the Nasdaq National Market in New York unless the common units of the Borrower are listed instead on any other internationally recognised stock exchange acceptable to the Lenders, such acceptance not to be unreasonably withheld.

 

12.4                        Subordination of rights of Borrower.  All rights which the Borrower at any time has against any Owner or its assets shall be fully subordinated to the rights of the Creditor Parties under the Finance Documents;  and in particular, the Borrower shall not during the Security Period:

 

(a)                                  claim, or in a bankruptcy of any Owner prove for, any amount payable to the Borrower by any Owner, whether in respect of the on-lending of the Loan or any other transaction;

 

(b)                                 take or enforce any Security Interest for any such amount; or

 

(c)                                  claim to set-off any such amount against any amount payable by the Borrower to any Owner.

 

12.5                        Financial Covenants.  The Borrower shall ensure that at all times:

 

(a)                                  the ratio of Total Indebtedness less cash and cash equivalents to the aggregate Market Value of all the Fleet Vessels shall not exceed 0.725:1;

 

(b)                                 the ratio of EBITDA to Net Interest Expenses (calculated on a trailing 4-quarter basis (or such other period as the Agent (acting upon the instructions of the Majority Lenders) may otherwise reasonably require)) shall be no less than 2:1; and

 

(c)                                  at all times the Borrower and all the other members of the Group shall maintain immediately freely available and unencumbered bank or cash deposits in an aggregate amount of not less than the product of $500,000 and the number of Ships which are

 

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subject to a Mortgage at the relevant time, 50 per cent. of such liquidity may be constituted by undrawn Commitments under the Revolving Facility.

 

12.6                        Compliance Check.  Compliance with the undertakings contained in Clause 12.5 shall be determined by reference to the unaudited consolidated accounts for the first 3 financial quarters in each Financial Year of the Borrower and for the fourth financial quarter in each Financial Year of the Borrower, the audited consolidated accounts for that Financial Year of the Group delivered to the Agent pursuant to this Agreement.  At the same time as it delivers those consolidated accounts, the Borrower shall deliver to the Agent a Compliance Certificate signed by the chief financial officer of the Borrower.

 

12.7                        Maintenance of ownership of Owners.  The Borrower shall remain the ultimate legal owner of the entire issued and allotted share capital of each Owner which at the relevant time is party to a Guarantee free from any Security Interest.

 

12.8                        Free Syndication market.  The Borrower shall not, and shall ensure that no Owner and no member of the Group shall, until the earlier of 30 September 2007 and the date on which the Agent declares that the primary syndication of the Loan has closed:

 

(a)                                  syndicate or issue or attempt to syndicate or issue; or

 

(b)                                 announce or authorise the announcement of the syndication or issuance of; or

 

(c)                                  engage in discussions concerning the syndication or issuance of,

 

 

any Financial Indebtedness with any banks or financial institutions in the commercial banking market Provided that this shall not restrict the Borrower from completing the IPO or arranging other financing during such period.

 

13                                  INSURANCE

 

13.1                        General.  The Borrower undertakes with each Creditor Party to procure that each Owner will comply with the following provisions of this Clause 13 at all times during the Security Period (after the Ship which is owned or to be owned by that Owner has been delivered to it under the relevant Shipbuilding Contract) except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit or except as provided in the Bareboat Charters with BP or any future bareboat charter with BP.

 

13.2                        Maintenance of obligatory insurances.  The Borrower shall procure that each Owner will keep the Ship owned by it insured at the expense of that Owner against:

 

(a)                                  fire and usual marine risks (including hull and machinery and excess risks); and

 

(b)                                 war risks; and

 

(c)                                  protection and indemnity risks in excess of the limit of cover for oil pollution liability risks included within the protection and indemnity risks; and

 

(d)                                 any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for that Owner to insure and which are specified by the Security Trustee by notice to that Owner.

 

13.3                        Terms of obligatory insurances.  The Borrower shall procure that each Owner will effect such insurances:

 

(a)                                  in Dollars;

 

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(b)                                 in the case of fire and usual marine risks and war risks, in such amounts as shall from time to time be approved by the Agent but in any event in an amount not less than the greater of (i) the Market Value of the Ship owned by that Owner for the time being and (ii) such amount, which when aggregated with the amount for which any other Ship then subject to a Mortgage is insured, is equal to 120 per cent. of the Loan; and

 

(c)                                  in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

 

(d)                                 in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship owned by that Owner;

 

(e)                                  on such terms as shall from time to time be approved in writing by the Agent (including, without limitation, a blocking and trapping clause); and

 

(f)                                    through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

 

13.4                        Further protections for the Creditor Parties.  In addition to the terms set out in Clause 13.3, the Borrower shall procure that the obligatory insurances shall:

 

(a)                                  (except in relation to risks referred to in Clause 13.2(c)) name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(b)                                 name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

 

(c)                                  provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

 

(d)                                 provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the Owners or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

 

(e)                                  provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee;

 

(f)                                    provide that the Security Trustee may make proof of loss if the Owners fail to do so;  and

 

(g)                                 provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee

 

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for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

 

13.5                        Renewal of obligatory insurances.  The Borrower shall procure that each Owner shall:

 

(a)                                  at least 21 days before the expiry of any obligatory insurance:

 

(i)                                     notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Owner proposes to renew that insurance and of the proposed terms of renewal; and

 

(ii)                                  in case of any substantial change in insurance cover, obtain the Majority Lenders’ approval to the matters referred to in paragraph (i) above;

 

(b)                                 at least 14 days before the expiry of any obligatory insurance, renew the insurance; and

 

(c)                                  procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

 

13.6                        Copies of policies; letters of undertaking.  The Borrower shall procure that each Owner shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters of undertaking in a form required by the Majority Lenders and including undertakings by the approved brokers that:

 

(a)                                  they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

 

(b)                                 they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

 

(c)                                  they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

 

(d)                                 they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Owner or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

 

(e)                                  they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Owner under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.

 

13.7                        Copies of certificates of entry.  The Borrower shall procure that each Owner shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by that Owner is entered provides the Security Trustee with:

 

(a)                                  a certified copy of the certificate of entry for that Ship; and

 

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(b)                                 a letter or letters of undertaking in such form as may be required by the Majority Lenders; and

 

(c)                                  where required to be issued under the terms of insurance/indemnity provided by that Owner’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in relation to its Ship in accordance with the requirements of such protection and indemnity association; and

 

(d)                                 a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

 

13.8                        Deposit of original policies.  The Borrower shall procure that each Owner shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

 

13.9                        Payment of premiums.  The Borrower shall procure that each Owner shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

 

13.10                 Guarantees.  The Borrower shall procure that each Owner shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

13.11                 Restrictions on employment.  The Borrower shall procure that no Owner shall employ the Ship owned by it, nor shall permit her to be employed, outside the cover provided by any obligatory insurances.

 

13.12                 Compliance with terms of insurances.  The Borrower shall procure that no Owner shall do or omit to do (or permits to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and in particular:

 

(a)                                  the Borrower shall procure that each Owner shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

 

(b)                                 the Borrower shall procure that no Owner shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;

 

(c)                                  the Borrower shall procure that each Owner shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

 

(d)                                 the Borrower shall procure that no Owner shall employ the Ship owned by it, nor shall allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

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13.13                 Alteration to terms of insurances.  The Borrower shall procure that no Owner shall either make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee.

 

13.14                 Settlement of claims.  The Borrower shall procure that no Owner shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall procure that the relevant Owner shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

13.15                 Provision of copies of communications.  The Borrower shall procure that each Owner shall provide the Security Trustee, at the time of each such communication, copies of all written communications between that Owner and:

 

(a)                                  the approved brokers; and

 

(b)                                 the approved protection and indemnity and/or war risks associations; and

 

(c)                                  the approved insurance companies and/or underwriters, which relate directly or indirectly to:

 

(i)                                     that Owner’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

(ii)                                  any credit arrangements made between that Owner and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

13.16                 Provision of information.  In addition, the Borrower shall procure that each Owner shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

 

(a)                                  obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

(b)                                 effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances,

 

and the Borrower shall procure that each Owner shall, forthwith upon demand, indemnify the Security Trustee in respect of all reasonable fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above.

 

13.17                 Mortgagee’s interest, additional perils.  The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in an amount equal to 120 per cent. of the Loan in the case of the mortgagee’s interest marine insurance referred to in paragraph (a) below and in an amount equal to 110 per cent. of the Loan in the case of the mortgagee’s interest additional perils policy referred to in paragraph (b) below, on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:

 

(a)                                  a mortgagee’s interest marine insurance in relation to each Ship in such amount as the Security Trustee may consider appropriate, providing for the indemnification of the

 

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Security Trustee for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to any Ship or a liability of any Ship or of any Owner, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

 

(i)                                     any act or omission on the part of an Owner, of any operator, charterer, manager or sub-manager of the Ship owned by it or of any officer, employee or agent of that Owner or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

 

(ii)                                  any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of an Owner, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Owner or of such a person, including the casting away or damaging of the Ship owned by it and/or the Ship owned by it being unseaworthy; and/or

 

(iii)                               any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing;

 

(b)                                 a mortgagee’s interest additional perils policy in relation to each Ship in such amount as the Security Trustee may consider appropriate, providing for the indemnification of the Security Trustee against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest over a Ship and/or any other matter capable of being insured against under a mortgagee’s interest additional perils policy whether or not similar to the foregoing,

 

and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

13.18                 Review of insurance requirements.  The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting the Borrower or any Ship and its or their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Owners may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrower.

 

13.19                 Modification of insurance requirements.  The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders reasonably consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

 

13.20                 Compliance with mortgagee’s instructions.  The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the relevant Owner implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19.

 

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14                                  SHIP COVENANTS

 

14.1                        General.  The Borrower also undertakes with each Creditor Party to procure that each Owner complies with the following provisions of this Clause 14 at all times during the Security Period (after the Ship has been delivered to it under the Shipbuilding Contract) except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit (in the case of the Clauses 14.2, 14.3(b) and 14.13(e), such permission not to be unreasonably withheld).

 

14.2                        Ship’s name and registration.  The Borrower shall procure that each Owner shall keep the Ship owned by it registered in its name under the relevant Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of that Ship.

 

14.3                        Repair and classification.  The Borrower shall procure that each Owner shall keep the Ship owned by it in a good and safe condition and state of repair:

 

(a)                                  consistent with first-class ship ownership and management practice;

 

(b)                                 so as to maintain the highest class with a first class classification society acceptable to the Majority Lenders free of overdue recommendations and conditions; and

 

(c)                                  so as to comply with all laws and regulations applicable to vessels registered at ports in the relevant Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code, the ISM Code Documentation and the ISPS Code.

 

14.4                        Modification.  The Borrower shall procure that no Owner shall make any modification or repairs to, or replacement of, any Ship or equipment installed on her which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce her value.

 

14.5                        Removal of parts.  The Borrower shall procure that no Owner shall remove any material part of any Ship, or any item of equipment installed on, any Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the relevant Ship the property of the relevant Owner and subject to the security constituted by the Mortgage and the Deed of Covenant Provided that an Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.

 

14.6                        Surveys.  The Borrower shall procure that each Owner shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Majority Lenders provide the Security Trustee, with copies of all survey reports.

 

14.7                        Technical Survey.  Without prejudice to the Owners’ obligations pursuant to Clause 14.6, if the survey report to be delivered as a condition to the drawdown of the Advance which shall be used to (inter alia) finance or refinance a Ship (as referred to in the applicable paragraph of Schedule 3) is not satisfactory to the Agent (acting reasonably), the Borrower shall procure that the relevant Owner shall promptly following the request of the Agent (to be made within 6 months of the Delivery Date of the relevant Ship or, as the case may be, the Drawdown Date relative to the Advance which was used (inter alia) to finance or refinance such Ship) submit the Ship owned by it for a technical survey by an independent surveyor or surveyors appointed by the Agent. All fees and expenses incurred in relation to the appointment

 

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of the surveyor or surveyors and the preparation and issue of all technical reports pursuant to this Clause 14.7 shall be for the account of the Borrower.

 

14.8                        Inspection.  The Borrower shall procure that each Owner shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections  Provided that  so long as a Ship is found to be in a satisfactory condition to the Agent (acting reasonably) and no continuing Event of Default or Potential Event of Default shall be in existence, the Borrower or the relevant Owner, as the case may be, shall not be obliged to pay the fees and expenses incurred in connection with the inspection of the relevant Ship more than once in any twelve-month period.

 

14.9                        Prevention of and release from arrest.  The Borrower shall procure that each Owner shall promptly discharge:

 

(a)                                  all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;

 

(b)                                 all taxes, dues and other amounts charged in respect of the Ship owned by it, the Earnings or the Insurances; and

 

(c)                                  all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances,

 

and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of her detention in exercise or purported exercise of any lien or claim, the Borrower shall procure her release by providing bail or otherwise as the circumstances may require.

 

14.10                 Compliance with laws etc.  The Borrower shall procure that each Owner shall:

 

(a)                                  comply, or procure compliance with the ISM Code, all Environmental Laws, the ISPS Code and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Owner;

 

(b)                                 not employ the Ship owned by it nor allow her employment in any manner contrary to any law or regulation in any relevant jurisdiction including, but not limited, to the ISM Code and the ISPS Code; and

 

(c)                                  in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Majority Lenders has been given and that Owner has (at its expense) effected any special, additional or modified insurance cover which the Majority Lenders may require.

 

14.11                 Provision of information.  The Borrower shall procure that each Owner shall promptly provide the Security Trustee with any information which the Majority Lenders request regarding:

 

(a)                                  the Ship owned by it, her employment, position and engagements;

 

(b)                                 the Earnings and payments and amounts due to the master and crew of the Ship owned by it;

 

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(c)                                  any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;

 

(d)                                 any towages and salvages; and

 

(e)                                  its compliance or the compliance of the Ship owned by it with the ISM Code and the ISPS Code,

 

                                                and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship owned by it and of any current charter guarantee, and copies of the ISM Code Documentation and the ISCC.

 

14.12                 Notification of certain events.  The Borrower shall procure that each Owner shall immediately notify the Security Trustee by letter of:

 

(a)                                  any casualty which is or is likely to be or to become a Major Casualty;

 

(b)                                 any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

(c)                                  any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

 

(d)                                 any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on that Ship or her Earnings or any requisition of that Ship for hire,

 

(e)                                  any intended dry docking of the Ship owned by it where the cost of the dry docking will, or is likely to, exceed $500,000 (or the equivalent in any other currency) in aggregate;

 

(f)                                    any Environmental Claim made against that Owner or in connection with the Ship owned by it, or any Environmental Incident;

 

(g)                                 any claim for breach of the ISM Code or the ISPS Code being made against that Owner, the Approved Manager or otherwise in connection with the Ship owned by it; or

 

(h)                                 any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

 

and that Owner shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Owner’s, the Approved Manager’s or any other person’s response to any of those events or matters.

 

14.13                 Restrictions on, appointment of managers  etc.  The Borrower shall procure that no Owner shall:

 

(a)                                  enter into any charter in relation to the Ship owned by it under which more than 2 months’ hire (or the equivalent) is payable in advance;

 

(b)                                 charter the Ship owned by it otherwise than on bona fide arm’s length terms at the time when the Ship is fixed;

 

(c)                                  appoint a manager of the Ship owned by it other than the Approved Manager;

 

(d)                                 de-activate or lay up the Ship owned by it; or

 

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(e)                                  put the Ship owned by it into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $750,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise.

 

14.14                 Notice of Mortgage.  The Borrower shall procure that each Owner shall keep the Mortgage registered against the Ship owned by it as a valid first priority or, as the case may be, preferred mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Owner to the Security Trustee.

 

14.15                 Sharing of Earnings.  The Borrower shall procure that no Owner shall:

 

(a)                                  enter into any agreement or arrangement for the sharing of any Earnings;

 

(b)                                 enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Owner to any Earnings; or

 

(c)                                  enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.

 

14.16                 Time Charter Assignment.  If any Owner enters into any Charterparty or a bareboat charter in respect of its Ship, the Borrower shall procure that the relevant Owner shall, at the request of the Agent, execute in favour of the Security Trustee a Charterparty Assignment or, in the case of a bareboat charter, a Bareboat Charter Security Agreement, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Part A of Schedule 3 hereof as the Agent may require.

 

14.17                 Bareboat Charterers.  The Borrower may freely procure for any Owner to enter into any bareboat charter in respect of its Ship with any of the charterers which is a party to an Existing Charter or with a company that it is an affiliate or subsidiary of any charterer which is a party to an Existing Charter  or any other company which in the reasonable opinion of the Majority Lenders is equivalent to any such charterer or any other company which may be approved by the Majority Lenders (acting reasonably) and subject that such bareboat charterer enters into and executes a Bareboat Charter Security Agreement except in circumstances where the Majority Lenders (acting reasonably) may agree otherwise.

 

15                                  SECURITY COVER

 

15.1                        Provision of additional security cover; prepayment of Loan.  The Borrower undertakes with each Creditor Party that, if the Agent notifies the Borrower that at any time after the Drawdown Date of the first Advance to be drawn under this Agreement the aggregate Market Value of the Ships subject to a Mortgage is below 125 per cent. of the Loan, the Borrower will, within 1 month after the date on which the Agent’s notice is served, either:

 

(a)                                  provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which consists of either (i) cash pledged to the Security Trustee or (ii) a Security Interest (including, but not limited to, a first priority or, as the case may be, preferred mortgage over another vessel), covering such asset or assets and documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require; or

 

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(b)                                 prepay in accordance with Clause 8 such part (at least) of the Loan as will eliminate the shortfall.

 

15.2                        Meaning of additional security.  In Clause 15.1 “security” means a Security Interest over an asset or assets (whether securing the Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower’s liabilities under the Finance Documents.

 

15.3                        Requirement for additional documents.  The Borrower shall not be deemed to have complied with Clause 15.1(a) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 3, Part A and such legal opinions in terms acceptable to the Majority Lenders from such lawyers as they may select.

 

15.4                        Valuation of Ships.  The market value of a Ship at any date is that shown by the average of two valuations prepared:

 

(a)                                  as at a date not more than 14 days previously;

 

(b)                                 by 2 Approved Brokers, one appointed by the Borrower and the other by the Agent;

 

(c)                                  with or without physical inspection of the relevant Ship (as the Agent may require);

 

(d)                                 on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment; and

 

(e)                                  after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,

 

Provided  that if the difference between the 2 valuations obtained at any one time pursuant to this Clause 15.4 is greater than 15 per cent. a valuation shall be commissioned from a third Approved Broker appointed by the Agent.  Such valuation shall be conducted in accordance with this Clause 15.4 and the Market Value of the Ship in such circumstances shall be the average of the initial 2 valuations and the valuation provided by the third Approved Broker.

 

15.5                        Value of additional security.  The net realisable value of any additional security which is provided under Clause 15.1 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.4.

 

15.6                        Valuations binding.  Any valuation under Clause 15.1(a), 15.4 or 15.5 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of a security which does not consist of or include a Security Interest.

 

15.7                        Provision of information.  The Borrower shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5 with any information which the Agent or the Approved Broker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

 

15.8                        Payment of valuation expenses.  Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the reasonable fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all reasonable legal and other expenses incurred by any Creditor Party in connection with any matter arising out of

 

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this Clause  Provided that (so long as no Event of Default or Potential Event of Default shall have occurred and be continuing) the Borrower shall not be obliged to pay such fees or expenses in respect of more than one set of valuations of each Ship in any twelve-month period.

 

15.9                        Frequency of valuations.  The Borrower acknowledges and agrees that the Agent may commission valuations of the Ships at such times as the Majority Lenders shall reasonably deem necessary and, in any event, not less often than once during each 12-month period of the Security Period.

 

16                                  PAYMENTS AND CALCULATIONS

 

16.1                        Currency and method of payments.  All payments to be made:

 

(a)                                  by the Lenders to the Agent; or

 

(b)                                 by the Borrower to the Agent, the Security Trustee or any Lender,

 

                                                under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

(i)                                     by not later than 11.00 a.m. (New York City time) on the due date;

 

(ii)                                  in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

 

(iii)                               in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to the account of the Agent at JP Morgan Chase Bank, New York, SWIFT Code CHASUS33 (Account No 001-1-331808 under reference “Capital Product Partners L.P. - US$370m Facility”), or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

 

(iv)                              in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

 

16.2                        Payment on non-Business Day.  If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

 

(a)                                  the due date shall be extended to the next succeeding Business Day; or

 

(b)                                 if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

 

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

 

16.3                        Basis for calculation of periodic payments.  All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

 

16.4                        Distribution of payments to Creditor Parties.  Subject to Clauses 16.5, 16.6 and 16.7:

 

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(a)                                  any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be or the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

 

(b)                                 amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

 

16.5                        Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

 

16.6                        Agent only obliged to pay when monies received.  Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.

 

16.7                        Refund to Agent of monies not received.  If and to the extent that the Agent makes available a sum to the Borrower or a Lender, without first having received that sum, the Borrower or (as the case may be) the Lender concerned shall, on demand:

 

(a)                                  refund the sum in full to the Agent; and

 

(b)                                 pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

 

16.8                        Agent may assume receipt.  Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

 

16.9                        Creditor Party accounts.  Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

16.10                 Agent’s memorandum account.  The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent and the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

16.11                 Accounts prima facie evidence.  If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that that amount is owing to that Creditor Party.

 

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17                                  APPLICATION OF RECEIPTS

 

17.1                        Normal order of application.  Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

 

(a)                                  FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreement in the following order and proportions:

 

(i)                                     first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in the Master Agreement);

 

(ii)                                  secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents  and the Master Agreement (and, for this purpose, the expression “interest” shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Swap Bank at the time of application or distribution under this Clause 17); and

 

(iii)                               thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

 

(b)                                 SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or the Master Agreement but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and

 

THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

 

17.2                        Variation of order of application.  The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

17.3                        Notice of variation of order of application.  The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

 

17.4                        Appropriation rights overriden.  This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

 

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18                                  APPLICATION OF EARNINGS

 

18.1                        Payment of Earnings.  The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (subject only to the provisions of the General Assignments), all the Earnings of each Ship are paid to the Earnings Account for that Ship and all payments by the Swap Bank to the Borrower under a Designated Transaction are paid to the Swap Account.   Any monies standing to the credit of the Earnings Accounts shall be freely available to the Owners subject to there not being any Event of Default or Potential Event of Default in existence at the relevant time.

 

18.2                        Retentions.  The Borrower undertakes with each Creditor Party (only if the circumstances referred to in Clause 8.2(a) shall apply at the relevant time) to ensure that no later than 3 Business Days after a Relevant Distribution Declaration Date, there shall be transferred to the Retention Account out of the aggregate Earnings received in the Earnings Accounts, the repayment instalment falling due under Clause 8.2(a) at that time.

 

18.3                        Application of Earnings.  The Borrower undertakes with the Lenders to procure that money from time to time credited to, or for the time being standing to the credit of, an Earnings Account shall, unless and until an Event of Default or Potential Event of Default shall have occurred (whereupon the provisions of Clause 17.1 shall be and become applicable), be available for application in the following manner:

 

(a)                                  in or towards meeting the costs and expenses from time to time incurred by or on behalf of the relevant Owner in connection with the operation of the Ship owned by it;

 

(b)                                 in or towards making payments of all amounts due and payable by the Borrower under this Agreement other than the payments of principal and interest pursuant to Clauses 8.2 and 5.1;

(c)                                  in or towards making any transfers to the Retention Account in accordance with Clause 18.2; and

 

(d)                                 as to any surplus from time to time arising on an Earnings Account following application as aforesaid, to be paid to the relevant Owner or to whomsoever it may direct.

 

18.4                        Application of retentions.  Until an Event of Default occurs, the Agent shall on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 so much of the then balance on the Retention Account as equals any repayment instalment due in accordance with Clause 8.2(a) on that interest payment date in discharge of the Borrower’s liability for that repayment instalment.

 

18.5                        Interest accrued on Retention Account.  Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on the Retention Account.

 

18.6                        Release of accrued interest.  Interest accruing under Clause 18.5 shall be released to the Borrower on each interest payment date unless an Event of Default or a Potential Event of Default has occurred or the then credit balance on the Retention Account is less than what would have been the balance had the full amount required by Clause 18.2 been transferred in that and each previous month.

 

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18.7                        Location of accounts.  The Borrower shall promptly:

 

(a)                                  comply or procure compliance by the Owners with any requirement of the Agent as to the location or re-location of the Retention Account, the Swap Account and the Earnings Accounts (or any of them); and

 

(b)                                 execute any documents which the Agent specifies to create or maintain in favour of the Lenders a Security Interest over the Retention Account, the Swap Account and the Earnings Accounts (or any of them).

 

19                                  EVENTS OF DEFAULT

 

19.1                        Events of Default.  An Event of Default occurs if:

 

(a)                                  the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

 

(b)                                 any breach occurs of Clause 9.2, 11.2, 11.3, 12.2, 12.3, 12.5, 13.2, 13.3, 15.1 or 18.1; or

 

(c)                                  any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b) above) if, in the reasonable opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied  20 days after written notice from the Agent requesting action to remedy the same; or

 

(d)                                 (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c) above); or

 

(e)                                  any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

 

(f)                                    any of the following occurs in relation to any Financial Indebtedness of a Relevant Person exceeding $750,000 (or, in the case of the Borrower, $5,000,000) (or, in either case, the equivalent in any other currency) in aggregate:

 

(i)                                     any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

 

(ii)                                  any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

 

(iii)                               a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

 

(iv)                              any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

 

(v)                                 any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

 

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(g)                                 any of the following occurs in relation to a Relevant Person:

 

(i)                                     a Relevant Person becomes, in the reasonable opinion of the Majority Lenders, unable to pay its debts as they fall due; or

 

(ii)                                  any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $1,000,000 or more or the equivalent in another currency unless such execution, attachment, arrest, sequestration or distress is dismissed, withdrawn, released or lifted within 10 Business Days of the occurrence of such event; or

 

(iii)                               any administrative or other receiver is appointed over any asset of a Relevant Person; or

 

(iv)                              a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or an Owner which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

 

(v)                                 a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

 

(vi)                              a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

 

(vii)                           any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

 

(viii)                        in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

 

(h)                                 the Borrower or any Owner ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

 

(i)                                     it becomes unlawful in any Pertinent Jurisdiction or impossible:

 

(i)                                     for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

 

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(ii)                                  for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

 

(j)                                     any official consent necessary to enable any Owner to own, operate or charter the Ship owned by it or to enable any Owner or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

 

(k)                                  if the common units of the Borrower cease to be quoted on the Nasdaq National Market in New York or any other internationally recognised stock exchange acceptable to the Lenders or if the whole of the issued share capital of any Owner whose Ship is at the relevant time subject to a Mortgage is not wholly owned by the Borrower; or

 

(l)                                     any provision which the Majority Lenders reasonably consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

 

(m)                               the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Agent, acting with the authorisation of the Majority Lenders; or

 

(n)                                 an Event of Default (as defined in Section 14 of the Master Agreement) occurs which remains unremedied 5 Business Days after the occurrence thereof; or

 

(o)                                 the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

 

(p)                                 any other event occurs or any other circumstances arise or develop including, without limitation:

 

(i)                                     a material adverse change in the financial position, state of affairs or prospects of the Borrower or the Owners; or

 

(ii)                                  any accident or other event involving a Ship or another vessel owned, chartered or operated by a Relevant Person,

 

in the light of which the Majority Lenders reasonably consider that there is a significant risk that any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

 

19.2                        Actions following an Event of Default.  On, or at any time after, the occurrence of an Event of Default:

 

(a)                                  the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

 

(i)                                     serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

 

(ii)                                  serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

 

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(iii)                               take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

 

(b)                                 the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law.

 

19.3                        Termination of Commitments.  On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

 

19.4                        Acceleration of Loan.  On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

 

19.5                        Multiple notices; action without notice.  The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

19.6                        Notification of Creditor Parties and Security Parties.  The Agent shall send to each Lender, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

 

19.7                        Lender’s rights unimpaired.  Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

 

19.8                        Exclusion of Creditor Party Liability.  No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

 

(a)                                  for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

 

(b)                                 as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

 

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party’s own officers and employees or ( as the case may be) such receiver’s or manager’s own partners or employees.

 

19.9                        Relevant Persons.  In this Clause 19 “a Relevant Person” means the Borrower, an Owner and any company which is a subsidiary of the Borrower or an Owner.

 

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19.10                 Interpretation.  In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

 

20                                  FEES AND EXPENSES

 

20.1                        Arrangement, agency and commitment fees.  The Borrower shall pay to the Agent:

 

(a)                                  a commitment fee for distribution among the Lenders pro rata to their Commitments at the rate of 0.20 per cent. per annum on the amount of the Total Commitments less the amount of the Loan for the period from (and including) the date of this Agreement up to and including the Termination Date, such fee to be paid quarterly in arrears and on the last day of such period; and

 

(b)                                 arrangement and agency fees as are referred to in the Fee Letter, such fees to be in such amount and to be payable at the times and in the manner referred to in the Fee Letter.

 

20.2                        Costs of negotiation, preparation etc.  The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document (including, for the avoidance of doubt, any expenses incurred by the Lenders in obtaining the legal opinions referred to in Schedule 3) or with any transaction contemplated by a Finance Document or a related document.

 

20.3                        Costs of variations, amendments, enforcement etc.  The Borrower shall pay to the Agent, on the Agent’s demand, the amount of all expenses incurred by a Lender in connection with:

 

(a)                                  any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

 

(b)                                 any consent or waiver by the Lenders, the Majority Lenders or the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

 

(c)                                  the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

 

(d)                                 where the Agent, in its absolute opinion, considers that there has been a material change to the insurances in respect of any Ship, the review of the insurances or any Ship pursuant to Clause 13.18; and

 

(e)                                  any step taken by any Lender concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

 

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

 

20.4                        Documentary taxes.  The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

 

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20.5                        Certification of amounts.  A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

21                                  INDEMNITIES

 

21.1                        Indemnities regarding borrowing and repayment of Loan.  The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

(a)                                  an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

 

(b)                                 the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

 

(c)                                  any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7); and

 

(d)                                 the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19,

 

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

 

21.2                        Breakage costs.  Without limiting its generality, Clause 21.1 covers any liability, expense or loss, including a loss of a prospective profit, incurred by a Lender:

 

(a)                                  in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

 

(b)                                 in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

 

21.3                        Miscellaneous indemnities.  The Borrower shall fully indemnify the Agent and the Security Trustee severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, the Agent or the Security Trustee, in any country, in relation to:

 

(a)                                  any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; and

 

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(b)                                 any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document,

 

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the Agent’s or (as the case may be) the Security Trustee’s own officers or employees.

 

21.4                        Extension of indemnities; environmental indemnity.  Without prejudice to its generality, Clause 21.3 covers:

 

(a)                                  any matter which would be covered by Clause 20.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

 

(b)                                 any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment, the ISM Code or the ISPS Code.

 

21.5                        Currency indemnity.  If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

 

(a)                                  making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

 

(b)                                 obtaining an order or judgment from any court or other tribunal; or

 

(c)                                  enforcing any such order or judgment,

 

the Borrower shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

 

In this Clause 21.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

 

This Clause 21.5 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

21.6                        Certification of amounts.  A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

21.7                        Sums deemed due to a Lender.  For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

 

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22                                  NO SET-OFF OR TAX DEDUCTION

 

22.1                        No deductions.  All amounts due from the Borrower under a Finance Document shall be paid:

 

(a)                                  without any form of set-off, cross-claim or condition; and

 

(b)                                 free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

 

22.2                        Grossing-up for taxes.  If the Borrower is required by law to make a tax deduction from any payment:

 

(a)                                  the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

 

(b)                                 the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and

 

(c)                                  the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

 

22.3                        Evidence of payment of taxes.  Within 1 month after making any tax deduction, the Borrower shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

 

22.4                        Exclusion of tax on overall net income.  In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income.

 

23                                  ILLEGALITY, ETC

 

23.1                        Illegality.  This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

 

(a)                                  unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

 

(b)                                 contrary to, or inconsistent with, any regulation,

 

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

 

23.2                        Notification of illegality.  The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

 

23.3                        Prepayment; termination of Commitment.  On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution in accordance with Clause 8.

 

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24                                  INCREASED COSTS

 

24.1                        Increased costs.  This Clause 24 applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

 

(a)                                  the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

 

(b)                                 the effect of complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement including, without limitation, the implementation of any regulations which may replace those set out in the statement of the Basle Committee on Banking Regulations and Supervisory Practices dated July 1998 and entitled “International Convergence of Capital Measurement and Capital Structures”) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

 

is that the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”, that is to say,:

 

(i)                                     an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or

 

(ii)                                  a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

 

(iii)                               an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

 

(iv)                              a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement,

 

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22.

 

For the purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

 

24.2                        Notification to Borrower of claim for increased costs.  The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

 

24.3                        Payment of increased costs.  The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

 

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24.4                        Notice of prepayment.  If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrower may give the Agent not less than 15 days’ notice of its intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

 

24.5                        Prepayment; termination of Commitment.  A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

 

(a)                                  on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

 

(b)                                 on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

24.6                        Application of prepayment.  Clause 8 shall apply in relation to the prepayment.

 

25                                  SET-OFF

 

25.1                        Application of credit balances.  Each Creditor Party may following the occurrence of an Event of Default and without prior notice:

 

(a)                                  apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

 

(b)                                 for that purpose:

 

(i)                                     break, or alter the maturity of, all or any part of a deposit of the Borrower;

 

(ii)                                  convert or translate all or any part of a deposit or other credit balance into Dollars; and

 

(iii)                               enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

 

25.2                        Existing rights unaffected.  No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

 

25.3                        Sums deemed due to a Lender.  For the purposes of this Clause 25, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

 

26                                  TRANSFERS AND CHANGES IN LENDING OFFICES

 

26.1                        Transfer by Borrower.  The Borrower may not, without the consent of the Agent, given on the instructions of all the Lenders:

 

(a)                                  transfer any of its rights or obligations under any Finance Document; or

 

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(b)                                 enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

 

26.2                        Transfer by a Lender.  Subject to Clause 26.4 and the other terms and conditions of this Clause 26.2, a Lender (the “Transferor Lender”) may at any time cause:

 

(a)                                  its rights in respect of all or part of its Contribution; or

 

(b)                                 its obligations in respect of all or part of its Commitment; or

 

(c)                                  a combination of (a) and (b),

 

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank, financial institution, pension scheme or single purpose vehicle (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

 

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Agreement.

 

A transfer pursuant to this Clause 26.2 shall:

 

(i)                                     require the prior written the consent of the Agent;

 

(ii)                                  the Contribution or Commitment (or the combination of the two) being transferred by the Transferor Lender to the Transferee Lender shall not be less than $30,000,000;

 

(iii)                               be effected without the consent of, but with notice to, the Borrower and without any cost to the Borrower:

 

(A)                              following the occurrence of an Event of Default;
 
(B)                                if such transfer is to a subsidiary or any other company or financial institution which is in the same ownership or control as the Transferor Lender; and
 

(iv)                              require the consent of the Borrower (such consent not to be unreasonably withheld or delayed) in all other circumstances.

 

26.3                        Transfer Certificate, delivery and notification.  As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

 

(a)                                  sign the Transfer Certificate on behalf of itself the Borrower, the Security Parties, the Security Trustee and each of the other Lenders;

 

(b)                                 on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

 

(c)                                  send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

 

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26.4                        Effective Date of Transfer Certificate.  A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

 

26.5                        No transfer without Transfer Certificate.  No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

 

26.6                        Lender re-organisation; waiver of Transfer Certificate.  However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

 

26.7                        Effect of Transfer Certificate.  A Transfer Certificate takes effect in accordance with English law as follows:

 

(a)                                  to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

 

(b)                                 the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

 

(c)                                  the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

 

(d)                                 the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

 

(e)                                  any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

 

(f)                                    the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

 

(g)                                 in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

 

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The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

 

26.8                        Maintenance of register of Lenders.  During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice.

 

26.9                        Reliance on register of Lenders.  The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

 

26.10                 Authorisation of Agent to sign Transfer Certificates.  The Borrower, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

 

26.11                 Registration fee.  In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $3,000 (and all costs, fees and expenses incidental to the transfer (including, but not limited to legal fees and expenses)) from the Transferor Lender or (at the Agent’s option) the Transferee Lender.

 

26.12                 Sub-participation; subrogation assignment.   A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

 

26.13                 Disclosure of information.  A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

 

26.14                 Change of lending office.  A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

 

(a)                                  the date on which the Agent receives the notice; and

 

(b)                                 the date, if any, specified in the notice as the date on which the change will come into effect.

 

26.15                 Notification.  On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

 

27                                  VARIATIONS AND WAIVERS

 

27.1                        Variations, waivers etc. by Majority Lenders.  Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the

 

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Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

 

27.2                        Variations, waivers etc. requiring agreement of all Lenders.  However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

 

(a)                                  a change in the Margin or in the definition of LIBOR;

 

(b)                                 a change to the date for, the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

 

(c)                                  a change to any Lender’s Commitment;

 

(d)                                 an extension of the Availability Period;

 

(e)                                  a change to the definition of “Majority Lenders” or “Finance Documents”;

 

(f)                                    a change to the preamble or to Clause 2, 3, 4, 5.1, 17, 18 or 30;

 

(g)                                 a change to this Clause 27;

 

(h)                                 any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

 

(i)                                     any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

 

27.3                        Exclusion of other or implied variations.  Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

 

(a)                                  a provision of this Agreement or another Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred by any Finance Document or by the general law,

 

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

 

28                                  NOTICES

 

28.1                        General.  Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

 

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28.2                        Addresses for communications.  A notice shall be sent:

 

(a)

 

to the Borrower:

 

c/o Capital Ship Management Corp.
3 Iassonos - Street

185 37 Piraeus

 

 

 

 

 

 

 

 

 

 

 

 

Greece

 

 

 

 

 

 

 

 

 

Fax No: +30 210 4285 679

 

 

 

 

for the attention of: the Chief Financial Officer

 

 

 

 

 

(b)

 

to a Lender:

 

at the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate.

 

 

 

 

 

(c)

 

to the Swap Bank:

 

Martensdamm 6

 

 

 

 

D-24103 Kiel

 

 

 

 

Germany

 

 

 

 

 

 

 

 

 

Fax No: +49 40 3333 34086

 

 

 

 

 

(d)

 

to the Agent

 

HSH Nordbank AG

 

 

and Security Trustee:

 

Shipping, Greek clients

 

 

 

 

Gerhart-Hamptmann-Platz 50

 

 

 

 

D-20095 Hamburg

 

 

 

 

Germany

 

 

 

 

 

 

 

 

 

Fax No: +49 40 3333 34118

 

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders and the Security Parties.

 

28.3                        Effective date of notices.  Subject to Clauses 28.4 and 28.5:

 

(a)                                  a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

 

(b)                                 a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

 

28.4                        Service outside business hours.  However, if under Clause 28.3 a notice would be deemed to be served:

 

(a)                                  on a day which is not a business day in the place of receipt; or

 

(b)                                 on such a business day, but after 5 p.m. local time,

 

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

28.5                        Illegible notices.  Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

 

28.6                        Valid notices.  A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

 

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(a)                                  the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice;  or

(b)                                 in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

 

28.7                        English language.  Any notice under or in connection with a Finance Document shall be in English.

 

28.8                        Meaning of “notice”.  In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

 

29                                  SUPPLEMENTAL

 

29.1                        Rights cumulative, non-exclusive.  The rights and remedies which the Finance Documents give to each Creditor Party are:

 

(a)                                  cumulative;

 

(b)                                 may be exercised as often as appears expedient; and

 

(c)                                  shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

 

29.2                        Severability of provisions.  If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

 

29.3                        Third party rights.  A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

29.4                        Counterparts.  A Finance Document may be executed in any number of counterparts.

 

30                                  LAW AND JURISDICTION

 

30.1                        English law.  This Agreement shall be governed by, and construed in accordance with, English law.

 

30.2                        Exclusive English jurisdiction.  Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

 

30.3                        Choice of forum for the exclusive benefit of the Creditor Parties.  Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

 

(a)                                  to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

 

(b)                                 to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

 

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No Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

 

30.4                        Process agent.  The Borrower irrevocably appoints Curzon Maritime Ltd. at its office for the time being, presently at 30/33 Minories Street, St. Clare House, London EC3N 1DJ, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

 

30.5                        Creditor Party rights unaffected.  Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

 

30.6                           Meaning of “proceedings”.  In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

 

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

 

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SCHEDULE 1

 

LENDERS AND COMMITMENTS

 

Lender

 

Lending Office

 

Commitment
($)

 

Percentage of Total
Commitments
(%)

 

HSH Nordbank AG

 

Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany

 

Fax No: +(49) 40 33 33 34118

 

[•]

 

[•]

 

 

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SCHEDULE 2

 

DRAWDOWN NOTICE

 

To:                            HSH Norbank AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

Germany

 

Attention: Loans Administration

 

200[  ]

 

DRAWDOWN NOTICE

 

1                                         We refer to the loan agreement (the “Loan Agreement”) dated                March 2007 and made between us, as Borrower, the Lenders referred to therein, HSH Nordbank AG as Swap Bank and you as Bookrunner, Agent and Security Trustee in connection with revolving credit and term loan facilities of up to US$370,000,000 in aggregate.  Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

 

2                                         We request to borrow an Advance under Tranche [         ] as follows:

 

(a)                                  Amount: US$[           ];

 

(b)                                 Drawdown Date:  [              ];

 

(c)                                  Duration of the first Interest Period shall be [        ] months;

 

(d)                                 Payment instructions : account of [                      ] and numbered [                                 ] with [                ] of [                     ].

 

3                                         We represent and warrant that:

 

(a)                                  the representations and warranties in Clause 10 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing; and

 

(b)                                 no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan.

 

4                                         This notice cannot be revoked without the prior consent of the Majority Lenders.

 

5                                         [We authorise you to deduct any facility fees referred to in Clause 20.1 from the amount of the Advance].

 

 

Attorney-in-Fact

for and on behalf of

CAPITAL PRODUCT PARTNERS L.P.

 

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SCHEDULE 3

 

CONDITION PRECEDENT DOCUMENTS

 

PART A

 

The following are the documents referred to in Clause 9.1(b) required before the Drawdown Date of the first Advance of Tranche A.

 

1                                         A duly executed original of each of:

 

(a)                                  this Agreement;

 

(b)                                 the Agency and Trust Deed;

 

(c)                                  the Master Agreement;

 

(d)                                 the Master Agreement Assignment;

 

(e)                                  the Fee Letter;

 

(f)                                    the Guarantees to be entered into by the Existing Owners;

 

(g)                                 the Mortgages, the General Assignments and the Charterparty Assignments relative to the Existing Ships (and each document to be delivered pursuant to each such Finance Document);

 

(h)                                 the Earnings Account Pledges relative to the Existing Ships;

 

(i)                                     the Retention Account Pledge; and

 

(j)                                     the Swap Account Pledge.

 

2                                         Copies of the certificate of limited partnership (in the case of the Borrower), the certificate of incorporation (in the case of each Existing Owner) and the constitutional documents of the Borrower and each Existing Owner.

 

3                                         Copies of resolutions of the directors of the Borrower and the directors and shareholders of each Existing Owner authorising the execution of each of the Finance Documents to which the Borrower or that Owner is a party and, in the case of the Borrower, authorising named officers to give the Drawdown Notices and other notices under this Agreement.

 

4                                         The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower or an Existing Owner.

 

5                                         Copies of all consents which the Borrower or any Existing Owner requires to enter into, or make any payment under, any Finance Document.

 

6                                         The originals of any mandates or other documents required in connection with the opening or operation of each Earnings Account relative to an Existing Ship, the Retention Account and the Swap Account.

 

7                                         Evidence satisfactory to the Agent that each Existing Owner is a direct or indirect wholly-owned subsidiary of the Borrower.

 

8                                         Documentary evidence that:

 

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(a)                                  each Existing Ship is definitively and permanently registered in the name of its Owner under Marshall Islands flag or, in the case of each of “ASSOS” and “AXIOS”, Liberian flag and, in the case of each of “AKTORAS”, “AIOLOS” and “ATLANTAS”, additionally that such Ship is dual registered in the name of BP under Isle of Man flag;

 

(b)                                 each Existing Ship is in the absolute and unencumbered ownership of its Owner save as contemplated by the Finance Documents to which that Owner is a party;

 

(c)                                  each Existing Ship maintains the highest available class with a classification society which is a member of the IACS as the Agent may approve free of all overdue recommendations and conditions of such classification society;

 

(d)                                 each Mortgage relative to an Existing Ship has been duly registered against that Existing Ship as a valid first preferred mortgage in accordance with the laws of the Marshall Islands or, in the case of each of “ASSOS” and “AXIOS”, Liberia; and

 

(e)                                  each Existing Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of such insurances have been complied with.

 

9                                         A copy of the Management Agreement and a duly executed original of the Approved Manager’s Undertaking in relation to each Existing Ship.

 

10                                  Copies of:

 

(a)                                  the document of compliance (DOC) and safety management certificate (SMC) referred to in paragraph (a) of the definition of the ISM Code Documentation in respect of each Existing Ship and the Approved Manager certified as true and in effect by the Owner of such Existing Ship; and

 

(b)                                 the ISPS Code Documentation in respect of each Existing Ship and the Owner thereof certified as true and in effect by that Owner.

 

11                                  Two valuations (at the cost of the Borrower) of each Existing Ship addressed to the Agent, stated to be for the purpose of this Agreement and dated not earlier than 4 weeks before the Drawdown Date for the first Advance of Tranche A, each from an Approved Broker (such valuations to be made in accordance with Clause 15.4).

 

12                                  A survey report in respect of each Existing Ship prepared (at the cost of the Borrower) by an independent marine surveyor appointed by the Agent dated no later than 20 days prior to the Drawdown Date for the first Advance of Tranche A in form, scope and substance satisfactory to the Agent and its technical advisers.

 

13                                  Documentary evidence that the IPO has been completed.

 

14                                  Copies of all the Existing Charter duly executed by the parties thereto.

 

15                                  A copy of the Partnership Agreement duly executed by the parties thereto.

 

16                                  All documentation required by each Creditor Party in relation to the Borrower and any Security Party pursuant to that Creditor Party’s “know your customer” requirements.

 

17                                  Documentary evidence that the agent for service of process named in Clause 29 has accepted its appointment.

 

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18                                  Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Marshall Islands, Liberia and such other relevant jurisdictions as the Agent may require.

 

19                                  A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances of the Existing Ships as the Agent may require.

 

20                                  If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

 

PART B

 

The following are the documents referred to in Clause 9.1(c) required before the Drawdown Date of each Advance under Tranche B.

 

In Part B of Schedule 3, the following definitions shall have the following meanings:

 

“Relevant Owner” means the Owner of the Relevant Ship; and

 

“Relevant Ship” means, in relation to each Advance under Tranche B, the Tranche B New Ship which is to act as security for such Advance.

 

1                                         Copies of resolutions of the shareholders and directors of the Relevant Owner and the Borrower authorising the execution of each of the Finance Documents to which such Owner is a party and, in the case of the Borrower, approving the borrowing of the relevant Advance and authorising named directors or attorneys to give the Drawdown Notices and other notices under this Agreement.

 

2                                         The original of any power of attorney under which any Finance Document is executed on behalf of the Relevant Owner.

 

3                                         Copies of all consents which the Relevant Owner or the Borrower requires to enter into, or make any payment under, any Finance Document.

 

4                                         A duly executed original of the Guarantee of the Relevant Owner and of the Mortgage and the General Assignment relative to the Relevant Ship, the Earnings Account Pledge and of each document to be delivered pursuant to each such Finance Document.

 

5                                         If applicable, a duly executed original of the Charterparty Assignment or the Bareboat Charter Security Agreement in respect of the Relevant Ship and of each document to be delivered pursuant to each such Finance Document.

 

6                                         Evidence satisfactory to the Agent that the Relevant Owner is a direct or indirect wholly-owned subsidiary of the Borrower.

 

7                                         The originals of any documents required in connection with the opening of the Earnings Account in respect of the Relevant Ship.

 

8                                         Documentary evidence that:

 

(a)                                  the Relevant Ship is registered in the ownership of the Relevant Owner under an Approved Flag;

 

(b)                                 the Relevant Ship is in the absolute and unencumbered ownership of the Relevant Owner save as contemplated by the Finance Documents;

 

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(c)                                  the Relevant Ship maintains the highest available class with a classification society which is a member of the IACS as the Agent may approve free of all overdue recommendations and conditions of such classification society;

 

(d)                                 the Mortgage relating to the Relevant Ship has been duly registered or recorded against the Relevant Ship as a valid first preferred ship mortgage in accordance with the laws of the relevant Approved Flag State; and

 

(e)                                  the Relevant Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.

 

9                                         A copy of the Management Agreement and a duly executed original of the Approved Manager’s Undertaking in relation to the Relevant Ship.

 

10                                  Copies of:

 

(a)                                  the document of compliance (DOC) and safety management certificate (SMC) referred to in paragraph (a) of the definition of the ISM Code Documentation in respect of the Relevant Ship and the Approved Manager certified as true and in effect by the Relevant Owner; and

 

(b)                                 the ISPS Code Documentation in respect of the Relevant Ship and the Relevant Owner certified as true and in effect by the Relevant Owner.

 

11                                  Two valuations (at the cost of the Borrowers) of the Relevant Ship, addressed to the Agent, stated to be for the purposes of this Agreement and dated not earlier than 4 weeks before the Drawdown Date relative to the relevant Advance, each from an Approved Broker (such valuations to be made in accordance with Clause 15.4).

 

12                                  A survey report in respect of the Relevant Ship prepared (at the cost of the Borrower) by an independent marine surveyor appointed by the Agent dated no later than 20 days prior to the Drawdown Date of the relevant Advance in form, scope and substance satisfactory to the Agent and its technical advisers.

 

13                                  At the cost of the Borrower, a favourable opinion from an independent insurance consultant acceptable to the Lenders on such matters relating to the insurances for the Relevant Ship as the Agent may require.

 

14                                  Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Approved Flag State in which the Relevant Ship is registered and such other relevant jurisdictions as the Agent may require.

 

15                                  If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

 

PART C

 

The following are the documents referred to in Clause 9.1(d) required before the Drawdown Date of each Advance under Tranche C.

 

In Part C of Schedule 3, the following definitions shall have the following meanings:

 

“Relevant Owner” means the owner of the Relevant Ship; and

 

“Relevant Ship” means, in relation to each Advance under Tranche C, the Tranche C New Ship which is to act as security for such Advance.

 

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1                                         Copies of resolutions of the shareholders and directors of each Relevant Owner and the Borrower authorising the execution of each of the Finance Documents to which such Owner is a party and, in the case of the Borrower, approving the borrowing of the relevant Advance and authorising named directors or attorneys to give the Drawdown Notices and other notices under this Agreement.

 

2                                         The original of any power of attorney under which any Finance Document is executed on behalf of the Relevant Owner.

 

3                                         Copies of all consents which each Relevant Owner or the Borrower requires to enter into, or make any payment under, any Finance Document.

 

4                                         A duly executed original of the Guarantee of the Relevant Owner and of the Mortgage and the General Assignment relative to the Relevant Ship, the Owner’s Earnings Account Pledge and of each document to be delivered pursuant to each such Finance Document.

 

5                                         If applicable, a duly executed original of the Charterparty Assignment or the Bareboat Charter Security Agreement in respect of the Relevant Ship and of each document to be delivered pursuant to each such Finance Document.

 

6                                         Evidence satisfactory to the Agent that the Relevant Owner is a direct or indirect wholly-owned subsidiary of the Borrower.

 

7                                         The originals of any documents required in connection with the opening of the Earnings Account in respect of the Relevant Ship.

 

8                                         Documentary evidence that:

 

(a)                                  the Relevant Ship is registered in the ownership of the Relevant Owner under an Approved Flag;

 

(b)                                 the Relevant Ship is in the absolute and unencumbered ownership of the Relevant Owner save as contemplated by the Finance Documents;

 

(c)                                  the Relevant Ship maintains the highest available class with a classification society which is a member of the IACS as the Agent may approve free of all overdue recommendations and conditions of such classification society;

 

(d)                                 the Mortgage relating to the Relevant Ship has been duly registered or recorded against the Relevant Ship as a valid first preferred ship mortgage in accordance with the laws of the relevant Approved Flag State; and

 

(e)                                  the Relevant Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.

 

9                                         A copy of the Management Agreement and a duly executed original of the Approved Manager’s Undertaking in relation to the Relevant Ship.

 

10                                  Copies of:

 

(a)                                  the document of compliance (DOC) and safety management certificate (SMC) referred to in paragraph (a) of the definition of the ISM Code Documentation in respect of the Relevant Ship and the Approved Manager certified as true and in effect by the Relevant Owner; and

 

76


 

(b)                                 the ISPS Code Documentation in respect of the Relevant Ship and the Relevant Owner certified as true and in effect by the Relevant Owner.

 

11                                  Two valuations (at the cost of the Borrowers) of the Relevant Ship, addressed to the Agent, stated to be for the purposes of this Agreement and dated not earlier than 4 weeks before the Drawdown Date relative to the relevant Advance, each from an Approved Broker (such valuations to be made in accordance with Clause 15.4).

 

12                                  A survey report in respect of the Relevant Ship prepared (at the cost of the Borrower) by an independent marine surveyor appointed by the Agent dated no later than 20 days prior to the Drawdown Date of the relevant Advance in form, scope and substance satisfactory to the Agent and its technical advisers.

 

13                                  At the cost of the Borrower, a favourable opinion from an independent insurance consultant acceptable to the Lenders on such matters relating to the insurances for each Relevant Ship as the Agent may require.

 

14                                  Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Approved Flag State in which the Relevant Ship is registered and such other relevant jurisdictions as the Agent may require.

 

15                                  If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

 

Every copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrower.

 

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SCHEDULE 4

 

TRANSFER CERTIFICATE

 

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

 

To:                              HSH NORDBANK AG for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below.

 

[                ] 200[   ]

 

1                                         This Certificate relates to a Loan Agreement (the “Loan Agreement”) dated      March 2007 and made between (1) Capital Product Partners L.P. (the “Borrower”), (2) the banks and financial institutions named therein, (3) HSH Nordbank AG as Swap Bank and (4) HSH Nordbank AG as Bookrunner, Agent and Security Trustee and, for revolving credit and term loan facilities of up to US$370,000,000 in aggregate.

 

2                                         In this Certificate:

 

                                                “the Relevant Parties” means the Agent, the Borrower, [each Security Party], the Security Trustee, and each Lender;

 

                                                “the Transferor” means [full name] of [lending office];

 

                                                “the Transferee” means [full name] of [lending office].

 

                                                Terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate.

 

3                                         The effective date of this Certificate is ..........200[ ]    Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

 

4                                         The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [    ] per cent. of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below:

 

Contribution

 

Amount transferred

 

5                                         By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[         ]] [from [     ] per cent. of its Commitment, which percentage represents $[           ]] and the Transferee acquires a Commitment of $[              ].

 

6                                         The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance

 

 

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Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect.

 

7                                         The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

 

8                                         The Transferor:

 

(a)                                  warrants to the Transferee and each Relevant Party:

 

(i)                                     that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

 

(ii)                                  that this Certificate is valid and binding as regards the Transferor;

 

(b)                                 warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above;

 

(c)                                  undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Certificate or for a similar purpose.

 

9                                         The Transferee:

 

(a)                                  confirms that it has received a copy of the Loan Agreement and each other Finance Document;

 

(b)                                 agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, any Lender in the event that:

 

(i)                                     the Finance Documents prove to be invalid or ineffective,

 

(ii)                                  the Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents;

 

(iii)                               it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or Security Party under the Finance Documents;

 

(c)                                  agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee or any Lender in the event that this Certificate proves to be invalid or ineffective;

 

(d)                                 warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and

 

(e)                                  confirms the accuracy of the administrative details set out below regarding the Transferee.

 

10                                  The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security

 

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Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent’s or the Security Trustee’s own officers or employees.

 

11                                  The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it.

 

[Name of Transferor]

 

[Name of Transferee]

 

 

 

By:

 

By:

 

 

 

Date:

 

Date:

 

 

 

 

Agent

 

Signed for itself and for and on behalf of itself

as Agent and for every other Relevant Party

 

HSH Nordbank AG

 

By:

 

Date:

 

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Administrative Details of Transferee

 

Name of Transferee:

 

Lending Office:

 

Contact Person

(Loan Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Contact Person

(Credit Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Account for payments:

 

 

Note:                   This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor’s interest in the security constituted by the Finance Documents in the Transferor’s or Transferee’s jurisdiction.  It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

 

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SCHEDULE 5

 

DESIGNATION NOTICE

 

To:          HSH Norbank AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

Germany

 

[•]

 

Dear Sirs

 

Loan Agreement dated [•] March 2007 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders and (iii) yourselves as Swap Bank, Bookrunner, Agent and Security Trustee in respect of revolving credit and term loan facilities of up to US$370,000,000 in aggregate (the “Loan Agreement”)

 

We refer to:

 

1                                         the Loan Agreement;

 

2                                         the Master Agreement dated [•] made between ourselves and HSH Nordbank AG; and

 

3                                         a Confirmation delivered pursuant to the said Master Agreement dated [•] and addressed by HSH Nordbank AG to us.

 

In accordance with the terms of the Loan Agreement, we hereby give you notice of the said Confirmation and hereby confirm that the Transaction evidenced by it will be designated as a “Designated Transaction” for the purposes of the Loan Agreement and the Finance Documents.

 

Yours faithfully,

 

 

for and on behalf of

CAPITAL PRODUCT PARTNERS L.P.

 

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SCHEDULE 6

 

FORM OF COMPLIANCE CERTIFICATE

 

To:          HSH NORDBANK AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

Germany

 

From:   Capital Product Partners L.P.

 

 

Dated:    [•]

Dear Sirs

 

USD 370,000,000 Loan Agreement
dated [•] 2007 (the “Agreement”)

1                                We refer to the Agreement. This is a Compliance Certificate and attached hereto are the calculations which will provide evidence of compliance. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2                                We refer to clauses 12.5 and 15.1 of the Agreement and hereby certify that:

(1)                        Leverage Ratio

Requirement:  Leverage Ratio of not more than 72.50%.

Satisfied [YES] : [NO]

(2)                        Minimum Liquidity

Requirement:  maintain on a consolidated basis liquidity in a minimum amount determined in accordance with Clause 12.5(c) of the Agreement.

Satisfied [YES] : [NO]

(3)                        Interest Coverage

Requirement:  maintain a ratio of EBITDA to Net Interest Expenses on a trailing 4-quarter basis of not less than 2.00 to 1.00.

Satisfied [YES] : [NO]

(4)                        Collateral Maintenance

Requirement:  Market Value of the Ships subject to a Mortgage is not less than 125% of the Loan.

Satisfied [YES] : [NO]

3                                We confirm that no Event of Default is continuing and that no Event of Default would occur out of the distribution of dividend.*

 

*                                       If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

 

83


 

Chief Financial Officer

 

 

for and on behalf of

[name of auditors of the Company]**

 

 

**                                  Only applicable if the Compliance Certificate accompanies the audited financial statements and is to be signed by the auditors.  To be agreed with the Company's auditors prior to signing the Agreement.

 

84


 

EXECUTION PAGES

 

BORROWER

 

 

 

SIGNED by

)

for and on behalf of

)

CAPITAL PRODUCT

)

PARTNERS L.P.

)

 

 

LENDERS

 

 

 

SIGNED by

)

for and on behalf of

)

HSH NORDBANK AG

)

 

 

SIGNED by

)

for and on behalf of

)

[•]

)

 

 

SIGNED by

)

for and on behalf of

)

[•]

)

 

 

SIGNED by

)

for and on behalf of

)

[•]

)

 

 

SIGNED by

)

for and on behalf of

)

[•]

)

 

 

SWAP BANK

 

 

 

SIGNED by

)

for and on behalf of

)

HSH NORDBANK AG

)

 

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BOOKRUNNER

 

 

 

SIGNED by

)

for and on behalf of

)

HSH NORDBANK AG

)

 

 

AGENT

 

 

 

SIGNED by

)

for and on behalf of

)

HSH NORDBANK AG

)

 

 

SECURITY TRUSTEE

 

 

 

SIGNED by

)

for and on behalf of

)

HSH NORDBANK AG

)

 

 

Witness to all the above

)

Signatures:

)

 

 

Name:

 

 

 

Address:

 

 

86



Exhibit 10.2

 

 

 

 

FORM OF

 

OMNIBUS AGREEMENT

 

 

AMONG

 

 

CAPITAL MARITIME & TRADING CORP.

 

 

CAPITAL GP L.L.C.

 

 

CAPITAL PRODUCT OPERATING L.L.C.

 

 

AND

 

 

CAPITAL PRODUCT PARTNERS L.P.

 

 

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

Page

ARTICLE I

 

 

 

 

 

 

Definitions

 

 

 

 

 

 

SECTION 1.1. Definitions

 

4

 

 

 

 

ARTICLE II

 

 

 

 

 

 

Medium Range Tanker Restricted Business Opportunities

 

 

 

 

 

 

SECTION 2.1. Medium Range Tanker Restricted Businesses

8

SECTION 2.2. Permitted Exceptions

 

8

 

 

 

 

ARTICLE III

 

 

 

 

 

 

Non-Medium Range Tanker Restricted Business Opportunities

 

 

 

 

 

 

SECTION 3.1. Non-Medium Range Tanker Restricted Businesses

 

10

SECTION 3.2. Permitted Exceptions

 

10

 

 

 

 

ARTICLE IV

 

 

 

 

 

 

Business Opportunities Procedures

 

 

 

SECTION 4.1. Procedures

 

11

SECTION 4.2. Scope Of Prohibition

 

13

SECTION 4.3. Enforcement

 

13

 

 

 

 

ARTICLE V

 

 

 

 

 

 

Rights Of First Offer

 

 

 

 

 

 

SECTION 5.1. Rights Of First Offer

 

14

SECTION 5.2. Procedures For Rights Of First Offer

 

14

 

 

 

 

ARTICLE VI

 

 

 

 

 

 

Indemnification

 

 

 

 

 

 

SECTION 6.1. Capital Maritime Indemnification

 

15

SECTION 6.2. Limitation Regarding Indemnification

 

15

SECTION 6.3. Indemnification Procedures

 

15

 

 

 

 

ARTICLE VII

 

 

 

 

 

 

Miscellaneous

 

 

 

 

 

 

SECTION 7.1. Choice Of Law; Submission To Jurisdiction

 

17

SECTION 7.2. Notice

 

17

SECTION 7.3. Entire Agreement

 

17

SECTION 7.4. Termination

 

17

SECTION 7.5. Waiver; Effect Of Waiver Or Consent

 

17

SECTION 7.6. Amendment Or Modification

 

18

SECTION 7.7. Assignment

 

18

SECTION 7.8. Counterparts

 

18

SECTION 7.9. Severability

 

18

SECTION 7.10. Gender, Parts, Articles And Sections

 

18

SECTION 7.11. Further Assurances

 

18

SECTION 7.12. Withholding Or Granting Of Consent

 

18

SECTION 7.13. Laws And Regulations

 

19

SECTION 7.14. Negotiation Of Rights Of Capital Maritime, Limited Partners, Assignees, And Third Parties

 

19

 

i


 

OMNIBUS AGREEMENT

 

THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date (as defined herein), among Capital Maritime & Trading Corp., a Marshall Islands corporation (“Capital Maritime”), Capital GP L.L.C., a Marshall Islands limited liability company (including any permitted successors and assigns under the MLP Agreement (as defined herein), the “General Partner”), Capital Product Operating L.L.C., a Marshall Islands limited liability company (the “OLLC”), and Capital Product Partners L.P., a Marshall Islands limited partnership (the “MLP”).

 

R E C I T A L S:

 

1.             The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles II and IV, with respect to (a) those business opportunities that the Capital Maritime Entities (as defined herein) will not pursue during the term of this Agreement and (b) the procedures whereby such business opportunities are to be offered to the Partnership Group (as defined herein) and accepted or declined.

 

2.             The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles III and IV, with respect to (a) those business opportunities that the Partnership Group will not pursue during the term of this Agreement and (b) the procedures whereby such business opportunities are to be offered to Capital Maritime and accepted or declined.

 

3.             The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article V, with respect to (a) Capital Maritime’s right of first offer relating to certain Medium Range Tanker Assets (as defined herein) and (b) the MLP’s right of first offer relating to certain Medium Range Tanker Assets that Capital Maritime might own.

 

4.             The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article VI, with respect to certain indemnification obligations of Capital Maritime.

 

In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

3


 

ARTICLE I

 

Definitions

 

SECTION 1.1.  Definitions.  As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

“Acquiring Party” has the meaning given such term in Section 4.1(a).

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Agreement” means this Omnibus Agreement, as it may be amended, modified, or supplemented from time to time in accordance with Section 7.6 hereof.

 

“Board” means the Board of Directors of the MLP.

 

“Break-up Costs” means the aggregate amount of any and all additional taxes, flag administration, financing, legal and other similar costs (except with respect to Section 2.2(b)(i) where Break-up Costs shall be deemed to include only administrative costs associated with transfer and re-flagging, including related legal costs) to (a) the Capital Maritime Entities that would be required to transfer Medium Range Tanker Assets acquired by the Capital Maritime Entities as part of a larger transaction to a Partnership Group Member pursuant to Section 2.2(b)(i) or 2.2(c), or (b) the Partnership Group that would be required to transfer Non-Medium Range Tanker Assets acquired by the Partnership Group as part of a larger transaction to a Capital Maritime Entity pursuant to Section 3.2(b).

 

“Capital Maritime Entities” means Capital Maritime and any Person controlled, directly or indirectly, by Capital Maritime other than the Partnership Entities.

 

“Change of Control” means, with respect to any Person (the “Applicable Person”), any of the following events:  (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding Voting Securities of the surviving Person or its parent immediately

 

4


 

after such transaction; and (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), other than Capital Maritime or its Affiliates with respect to the General Partner, being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation which would not constitute a Change of Control under clause (b) above.

 

“Closing Date” means the date of the closing of the initial public offering of common units representing limited partner interests in the MLP.

 

“Conflicts Committee” means the Conflicts Committee of the Board of Directors of the MLP.

 

“Contribution Assets” has the meaning given such term in Section 6.1.

 

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Covered Environmental Losses” means all Losses suffered or incurred by the Partnership Group by reason of, arising out of or resulting from:

 

(i) any violation or correction of violation of Environmental Laws; or

 

(ii) any event or condition relating to environmental or human health and safety matters, in each case, associated with the ownership or operation by the Capital Maritime Entities of the Contribution Assets (including, without limitation, the presence of Hazardous Substances on, under, about or migrating to or from the Contribution Assets or the disposal or release of, or exposure to, Hazardous Substances generated by or otherwise related to operation of the Contribution Assets), including, without limitation, (a) the cost and expense of any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation or other corrective action required or necessary under Environmental Laws, (b) the cost or expense of the preparation and implementation of any closure, remedial, corrective action or other plans required or necessary under Environmental Laws and (c) the cost and expense for any environmental or toxic tort (including, without limitation, personal injury or property damage claims) pre-trial, trial or appellate legal or litigation support work;

 

but only to the extent that such violation complained of under clause (i), or such events or conditions included in clause (ii), occurred before the Closing Date; and, provided that, in no event shall Losses to the extent arising from a change in any Environmental Law after the Closing Date be deemed “Covered Environmental Losses.”

 

“Environmental Laws” means all international, federal, state, foreign and local laws, statutes, rules, regulations, treaties, conventions, orders, judgments and ordinances relating to protection of natural resources, health and safety and the environment, each in effect and as amended through the Closing Date.

 

5


 

“Event of Loss” means any of the following events:  (a) the actual or constructive total loss of a  Non-Medium Range Tanker or the agreed or compromised total loss of a  Non-Medium Range Tanker; (b) the destruction of a Non-Medium Range Tanker; (c) the damage to a Non-Medium Range Tanker to an extent (determined in good faith by the Board within 90 days after the occurrence of such damage) as shall make repair thereof uneconomical or shall render such Non-Medium Range Tanker permanently unfit for normal use (other than obsolescence); or (d) the condemnation, confiscation, requisition, seizure, forfeiture or other taking of title to or use of a Non-Medium Range Tanker that shall not be revoked within six months.  An Event of Loss shall be deemed to have occurred:  (i) in the event of the destruction or other actual total loss of a Non-Medium Range Tanker, on the date of such loss; (ii) in the event of a constructive, agreed or compromised total loss of a Non-Medium Range Tanker, on the date of determination of such total loss pursuant to the relevant insurance policy; (iii) in the case of any event referred to in clause (c) above, upon such determination by the Board; or (iv) in the case of any event referred in clause (d) above, on the date six months after the occurrence of such event.

 

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

 

“First Offer Negotiation Period” has the meaning given such term in Section 5.2.

 

“General Partner” is defined in the introduction to this Agreement.

 

“Hazardous Substances” means (a) substances defined in or regulated under applicable Environmental Laws; (b) petroleum and petroleum products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d) any substances with respect to which a federal, state, foreign or local agency requires environmental investigation, monitoring, reporting or remediation; (e) any hazardous waste or solid waste, within the meaning of any Environmental Law; (f) any solid, hazardous, dangerous or toxic chemical, material, waste or substance, within the meaning of and regulated by any Environmental Law; (g) any radioactive material; and (h) any asbestos-containing materials.

 

“Losses” means losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court costs and reasonable attorneys’ and experts’ fees) of any and every kind or character; provided, however, that such term shall not include any special, indirect, incidental or consequential damages.

 

“Medium Range Tanker” means any product tanker with a carrying capacity of 30,000-55,000 dwt.

 

“Medium Range Tanker Assets” means any Medium Range Tanker and its related charter.

 

“MLP” is defined in the introduction to this Agreement.

 

6


 

“MLP Agreement” means the First Amended and Restated Agreement of Limited Partnership of the MLP, dated as of the Closing Date, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement.  No amendment or modification to the MLP Agreement subsequent to the Closing Date shall be given effect for purposes of this Agreement unless consented to by each of the Parties to this Agreement.

 

“Non-Medium Range Tanker” means (i) any tanker other than a product tanker with a carrying capacity of 30,000-55,000 dwt, or (ii) any Medium Range Tanker not subject to a Qualifying Contract.

 

“Non-Medium Range Tanker Assets” means any Non-Medium Range Tanker and its related charter.

 

“Offer” has the meaning given such term in Section 4.1.

 

“Offered Assets” has the meaning given such term in Section 4.1.

 

“Offeree” has the meaning given such term in Section 4.1.

 

“Offer Period” has the meaning given such term in Section 4.1.

 

“OLLC” is defined in the introduction to this Agreement.

 

“Qualifying Contract” means a time or bareboat charter with a remaining duration, excluding any extension options, of at least two years.

 

“Parties” means the parties to this Agreement and their successors and permitted assigns.

 

“Partnership Entities” means the General Partner, the MLP, the OLLC and any Person controlled by any such entity.

 

“Partnership Group” means the MLP, the OLLC and any Person controlled by any such entity.

 

“Partnership Group Member” means any Person in the Partnership Group.

 

“Person” means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity.

 

“Potential Transferee” has the meaning given such term in Section 5.2.

 

“Re-Charter” means the charter of a Medium Range Tanker pursuant to a Qualifying Contract in the event that its existing charter expires or is terminated early.

 

“Replacement Non-Medium Range Tanker” means any non-medium range tanker that replaces any Non-Medium Range Tanker upon an Event of Loss.

 

7


 

“Sale Assets” has the meaning given such term in Section 5.2.

 

“Transfer” means any transfer, assignment, sale or other disposition of any Medium Range Tanker by a Capital Maritime Entity or of any Non-Medium Range Tanker by a Partnership Group Member; provided, however, that such term shall not include:  (a) transfers, assignments, sales or other dispositions from a Capital Maritime Entity to another Capital Maritime Entity, or from a Partnership Group Member to another Partnership Group Member; (b) transfers, assignments, sales or other dispositions pursuant to the terms of any related charter or other agreement with a charter party; (c) transfers, assignments, sales or other dispositions pursuant to Article II or III of this Agreement; or (d) grants of security interests in or mortgages or liens on such Medium Range Tanker Assets or Non-Medium Range Tanker Assets in favor of a bona fide third party lender (but not the foreclosing of any such security interest, mortgage or lien).

 

“Transfer Notice” has the meaning given such term in Section 5.2.

 

“Transferring Party” has the meaning given such term in Section 5.2.

 

“Voting Securities” means securities of any class of Person entitling the holders thereof to vote in the election of members of the board of directors or other similar governing body of the Person.

 

ARTICLE II

 

Medium Range Tanker Restricted B usiness Opportunities

 

SECTION 2.1.  Medium Range Tanker Restricted Businesses.  Subject to Section 7.4 and except as permitted by Section 2.2, each of the Capital Maritime Entities shall be prohibited from acquiring, owning or operating Medium Range Tankers under Qualifying Contracts.

 

SECTION 2.2.  Permitted Exceptions.  Notwithstanding any provision of Section  2.1 to the contrary, the Capital Maritime Entities may engage in the following activities under any of the following circumstances:

 

(a) acquiring, owning, chartering or operating Medium Range Tankers that are not subject to a Qualifying Contract;
 

(b) (i) acquiring one or more Medium Range Tankers that are subject to Qualifying Contracts after the date of this Agreement if the Capital Maritime Entity offers to sell to the Partnership Group Members each such Medium Range Tanker Asset for the acquisition price at the time it is acquired plus any applicable Break-up Costs, in accordance with the procedures set forth in Section 4.1; or (ii) putting a Medium Range Tanker that the Capital Maritime Entity owns or operates under a Qualifying Contract if the Capital Maritime Entity offers to sell to the Partnership Group Members each such Medium Range Tanker for its fair market value at the

 

8


 

time it is made subject to a Qualifying Contract and, in each case, at each renewal or extension of that Qualifying Contract, in accordance with the procedures set forth in Section 4.1;

 

(c) acquiring one or more Medium Range Tankers that are subject to Qualifying Contracts as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those Medium Range Tanker Assets provided, however, that:
 
(i) if less than a majority of the value of the total assets or business acquired is attributable to those Medium Range Tanker Assets, as determined in good faith by the board of directors of Capital Maritime, the Capital Maritime Entity must offer to sell to the Partnership Group Members such Medium Range Tanker Assets for fair market value plus any applicable Break-up Costs in accordance with the procedures set forth in Section 4.1.
 
(ii) if a majority or more of the value of the total assets or business acquired is attributable to those Medium Range Tanker Assets, as determined in good faith by the board of directors of Capital Maritime; Capital Maritime shall notify the MLP in writing, of the proposed acquisition. The MLP shall, not later than the 10th calendar day following receipt of such notice, notify Capital Maritime if any of the Partnership Group Members wish to acquire the Medium Range Tanker Assets forming part of the business or package of assets in cooperation and simultaneously with Capital Maritime acquiring the Non-Medium Range Tanker Assets forming part of that business or package of assets.  If the MLP does not notify Capital Maritime of its intent to pursue the acquisition within 10 calendar days, Capital Maritime  may proceed with the acquisition as provided in subsection (i) above.
 
(d) acquiring a non-controlling interest in any company, business or pool of assets;
 
(e) acquiring, owning or operating the Medium Range Tanker Assets subject to the Agreement to Purchase Future Vessels dated as of     , 2007, between Capital Maritime and the MLP if the MLP fails to purchase (or to cause other Partnership Group Members to purchase) such Medium Range Tanker Assets under such agreement;
 
(f) acquiring, owning or operating Medium Range Tankers subject to a Qualifying Contract that are subject to an offer to purchase by a Capital Maritime Entity as described in Section 2.2(b) and (c), in each case (i) pending the applicable offer of such Medium Range Tanker Asset to the Partnership Group Members and the Partnership Group Members’ determination pursuant to Section 4.1 whether to purchase the Medium Range Tanker Assets and, if the Partnership Group Members determine to purchase such Medium Range Tanker Asset, pending the closing of

 

9


 

such purchase; or (ii) if the Board has elected to cause any Partnership Group Member to acquire or operate such Medium Range Tanker Assets;
 
(g) providing ship management services relating to any vessel whatsoever, including to Medium Range Tanker Assets, owned by any Capital Maritime Entity; or
 
(h) acquiring, operating or chartering Medium Range Tankers that are subject to Qualifying Contracts if the Board has previously advised Capital Maritime that it consents to such acquisition, operation or charter.
 

ARTICLE III

 

Non-Medium Range Tanker Restricted Business Opportunities

 

SECTION 3.1.  Non-Medium Range Tanker Restricted Businesses.  Subject to Section 7.4 and except as permitted by Section 3.2, each Partnership Group Member shall be prohibited from acquiring, owning or operating or chartering Non-Medium Range Tankers.

 

SECTION 3.2.  Permitted Exceptions.  Notwithstanding any provision of Section  3.1 to the contrary, the Partnership Group Members may engage in the following activities under any of the following circumstances:

 

(a) owning, chartering or operating any Non-Medium Range Tanker Assets so owned, operated or chartered at the date of this Agreement, including any Replacement Non-Medium Range Tanker;
 
(b) acquiring one or more Non-Medium Range Tanker Asset as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels, provided, however, that:
 
(i) if less than a majority of the value of the total assets or business acquired is attributable to Non-Medium Range Tanker Assets, as determined in good faith by the MLP, the Partnership Group Member must offer to sell such Non-Medium Range Tanker Assets and related charters to Capital Maritime or any other Capital Maritime Entity for their fair market value plus any applicable Break-up Costs in accordance with the procedures set forth in Section 4.1.
 
(ii) if a majority or more of the value of the total assets or business acquired is attributable to Non-Medium Range Tanker Assets, as determined in good faith by the MLP; the Partnership Group Members shall notify Capital Maritime in writing of the proposed acquisition. Capital Maritime shall, not later than the 10th calendar day following receipt of such notice, notify the Partnership Group Members if it or any

 

10


 

other Capital Maritime Entity wishes to acquire the Non-Medium Range Tanker Assets forming part of the business or package of assets in cooperation and simultaneously with the Partnership Group Members acquiring the Medium Range Tanker Assets forming part of that business or package of assets. If Capital Maritime does not notify the Partnership Group Member of its intent to pursue the acquisition within 10 calendar days, the Partnership Group Member may proceed with the acquisition as provided in subsection (i) above.
 
(c) acquiring a non-controlling interest in any company, business or pool of assets;
 
(d) owning, operating or chartering any Non-Medium Range Tanker Assets that are subject to an offer to purchase by Capital Maritime as described in Section 3.2(b) pending the applicable offer of such Non-Medium Range Tanker Assets to Capital Maritime and Capital Maritime’s determination pursuant to Section 4.1 whether to purchase the Non-Medium Range Tanker Assets and, if Capital Maritime elects to purchase or cause any Capital Maritime Entity to purchase such Non-Medium Range Tanker Assets, pending the closing of such purchase; and
 
(e) acquiring, operating or chartering Non-Medium Range Tankers if Capital Maritime has previously advised the MLP that it consents to such acquisition, operation or charter.
 

ARTICLE IV

 

Business Opportunities Procedures

 

SECTION 4.1.  Procedures.  In the event that (a) a Partnership Group Member acquires Non-Medium Range Tanker Assets in accordance with Section 3.2(b), or (b) a Capital Maritime Entity acquires Medium Range Tanker Assets in accordance with Section 2.2(b) or (c)(i), then (i) simultaneously or in any event not later than 30 calendar days after the consummation of the acquisition (in the case of clause (a) or (b) above), such acquiring Party (the “Acquiring Party”) shall notify (a) Capital Maritime, in the case of an acquisition by a Partnership Group Member or (b) the Board, in the case of an acquisition by a Capital Maritime Entity and offer such party to be notified (each an “Offeree”) the opportunity for any Capital Maritime Entity or Partnership Group Member, as applicable, to purchase such Non-Medium Range Tanker Assets or Medium Range Tanker Assets, as applicable (the “Offered Assets”), for their fair market value (or, in the case of an acquisition in accordance with Section 2.2(b)(i), the acquisition price) (plus, in the case of an acquisition in accordance with Section 2.2(b)(i) or 2.2(c) or 3.2(b), any applicable Break-up Costs), in each case on commercially reasonable terms in accordance with this Section (the “Offer”).  The Offer shall set forth the Acquiring Party’s proposed terms relating to the purchase of the Offered Assets by the applicable Capital Maritime Entity or Partnership Group Member,

 

11


 

including any liabilities to be assumed by the applicable Capital Maritime Entity or Partnership Group Member as part of the Offer.  As soon as practicable after the Offer is made, the Acquiring Party will deliver to the Offeree all information prepared by or on behalf of or in the possession of such Acquiring Party relating to the Offered Assets and reasonably requested by the Offeree.  As soon as practicable, but in any event, within 30 calendar days after receipt of such notification, the Offeree shall notify the Acquiring Party in writing that either:

 

(a) Capital Maritime has elected not to purchase (or not to cause any of its permitted Affiliates to purchase) or the Board has elected not to cause any Partnership Group Member to purchase, as applicable, such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement (including Section 2.2(b)(ii)), be forever free, subject to the provisions of this Agreement, to continue to own, operate and charter such Offered Assets; or
 
(b) Capital Maritime has elected to purchase (or to cause any of its permitted Affiliates to purchase) or the Board has elected to cause any Partnership Group Member to purchase, as applicable, such Offered Assets, in which event the following procedures shall be followed:
 
(i) After the receipt of the Offer by the Offeree, the Acquiring Party and the Offeree shall negotiate in good faith, the fair market value (and any applicable Break-up Costs), of the Offered Assets that are subject to the Offer and the other terms of the Offer on which the Offered Assets will be sold to the applicable Capital Maritime Entity or Partnership Group Member.  If the Acquiring Party and the Offeree agree on the fair market value (and any applicable Break-up Costs), of the Offered Assets that are subject to the Offer and the other terms of the Offer during the 30-day period (the “Offer Period”) after receipt by the Acquiring Party of Capital Maritime’s election to purchase (or election to cause any of its permitted Affiliates to purchase) or of the Board’s election to cause any Partnership Group Member to purchase, as applicable, the Offered Assets, Capital Maritime shall purchase (or cause any of its permitted Affiliates to purchase) or the Board shall cause any Partnership Group Member to purchase, as applicable, the Offered Assets on such terms as soon as commercially practicable after such agreement has been reached.
 
(ii) If the Acquiring Party and the Offeree are unable to agree on the fair market value (and any applicable Break-up Costs), of the Offered Assets that are subject to the Offer or on any other terms of the Offer during the Offer Period, the Acquiring Party and the Offeree will engage an independent ship broker and/or an independent investment banking firm prior to the end of the Offer Period to determine the fair market value (and any applicable Break-up Costs), of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree.  In determining the fair market value of the Offered Assets and

 

12


 

other terms on which the Offered Assets are to be sold, the ship broker or investment banking firm, as applicable, will have access to the proposed sale and purchase values and terms for the Offer submitted by the Acquiring Party and the Offeree, respectively, and to all information prepared by or on behalf of the Acquiring Party relating to the Offered Assets and reasonably requested by such ship broker or investment banking firm.  Such ship broker or investment banking firm will determine the fair market value (and any applicable Break-up Costs) of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree within 30 calendar days of its engagement and furnish the Acquiring Party and the Offeree its determination.  The fees and expenses of the ship broker or investment banking firm, as applicable, will be divided equally between the Acquiring Party and the Offeree.  Upon receipt of such determination, the Offeree will have the option, but not the obligation:
 

(A) in the case that the Offeree is Capital Maritime, to purchase or cause any of its permitted Affiliates to purchase, or in the case that the Offeree is the Board, to cause any Partnership Group Member to purchase the Offered Assets for the fair market value (and any applicable Break-up Costs), and on the other terms determined by the ship broker or investment banking firm, as soon as commercially practicable after determinations have been made; or

 

(B) in the case that the Offeree is Capital Maritime, to elect not to cause any of its permitted Affiliates to purchase, or in the case that the Offeree is the Board, not to cause any Partnership Group Member to purchase such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement, be forever free to continue to own and operate such Offered Assets.

 

SECTION 4.2.  Scope Of Prohibition.  If any Party or its Affiliates engages in the ownership or operation of Medium Range Tankers under Qualifying Contract in the case of a Capital Maritime Entity, or Non-Medium Range Tankers in the case of a Partnership Group Member, pursuant to any of the exceptions described in Section 2.2 or 3.2, as applicable, the Party and its Affiliates may not subsequently expand that portion of their business other than pursuant to the exceptions contained in such Section 2.2 or 3.2.  Except as otherwise provided in this Agreement or the MLP Agreement, each party and its Affiliates shall be free to engage in any business activity whatsoever, including those that may be in direct competition with the Capital Maritime Entities or the Partnership Group.

 

SECTION 4.3.  Enforcement.  Each Party agrees and acknowledges that the other Parties do not have an adequate remedy at law for the breach by any such Party of its covenants and agreements set forth in this Article IV, and that any breach by any

 

13


 

such Party of its covenants and agreements set forth in this Article IV would result in irreparable injury to such other Parties.  Each Party further agrees and acknowledges that any other Party may, in addition to the other remedies which may be available to such other Party, file a suit in equity to enjoin such Party from such breach, and consent to the issuance of injunctive relief to enforce the provisions of Article IV of this Agreement.

 

ARTICLE V

 

Rights Of First Offer

 

SECTION 5.1.  Rights Of First Offer.  (a)  The Partnership Group hereby grants Capital Maritime a right of first offer on any proposed Transfer by any Partnership Group Member of any Medium Range Tanker Assets or any Non-Medium Range Tanker Assets owned or acquired by any Partnership Group Member.  The Capital Maritime Entities hereby grant the MLP a right of first offer on any proposed Transfer or Re-Charter of any Medium Range Tanker Assets owned or acquired by any Capital Maritime Entity.

 

(b)   The Parties acknowledge that all potential Transfers or Re-Charter of Medium Range Tanker Assets pursuant to this Article V are subject to obtaining any and all written consents of governmental authorities and other non-affiliated third parties and to the terms of all existing agreements in respect of such Medium Range Tanker Assets, as applicable.

 

SECTION 5.2.  Procedures For Rights Of First Offer.  In the event that a Partnership Group Member or a Capital Maritime Entity (as applicable, the “Transferring Party”) proposes to Transfer or Re-Charter any Medium Range Tanker Assets (the “Sale Assets”), prior to engaging in any negotiation for such Transfer with any non-affiliated third party or otherwise offering to Transfer the Sale Assets to any non-affiliated third party, such Transferring Party shall give Capital Maritime or the MLP, as applicable (the “Potential Transferee”), written notice setting forth all material terms and conditions (including, without limitation, the purchase price (in the event of a Transfer) or the terms of the charter agreement (in the event of a Re-Charter) and a description of the Sale Asset(s) on which such Transferring Party desires to Transfer or Re-Charter the Sale Assets (the “Transfer Notice”).  The Transferring Party then shall be obligated to negotiate in good faith for a 10-day period following the delivery by the Transferring Party of the Transfer Notice (the “First Offer Negotiation Period”) to reach an agreement for the Transfer or Re-Charter of such Sale Assets to the Potential Transferee or any of its Affiliates on the terms and conditions set forth in the Transfer Notice.  If no such agreement with respect to the Sale Assets is reached during the First Offer Negotiation Period, and the Transferring Party has not Transferred, or agreed in writing to Transfer, such Sale Assets to a third party within 180 calendar days after the end of the First Offer Negotiation Period on terms generally no less favorable to the Transferring Party than those include in the Transfer Notice, then the Transferring Party shall not thereafter Transfer any of the Sale Assets without first offering such assets to the applicable Potential Transferee in the manner provided above.

 

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ARTICLE VI

 

Indemnification

 

SECTION 6.1.  Capital Maritime Indemnification.  Subject to the provisions of Section  6.2 and Section 6.3, Capital Maritime shall indemnify, defend and hold harmless the Partnership Group from and against:

 

(a) any Covered Environmental Losses relating to the assets contributed by the Capital Maritime Entities to the Partnership Group prior to or on the Closing Date (the “Contribution Assets”) to the extent that Capital Maritime is notified by the MLP of any such Covered Environmental Losses within five (5) years after the Closing Date; (b) Losses to the Partnership Group arising from (i) the failure of the Partnership Group, immediately after the Closing Date, to be the owner of such valid leasehold interests or fee ownership interests in and to the Contribution Assets as are necessary to enable the Partnership Entities to own and operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Capital Maritime Entities immediately prior to the Closing Date or (ii) the failure of the Partnership Entities to have by the Closing Date any consent or governmental permit necessary to allow the Partnership Entities to own or operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Capital Maritime Entities immediately prior to the Closing Date, in each of clauses (i) and (ii) above, to the extent that Capital Maritime is notified by the MLP of such Losses within three (3) years after the Closing Date; and (d) all federal, state, foreign and local income tax liabilities attributable to the operation of the Contribution Assets prior to the Closing Date, including any such income tax liabilities of the Capital Maritime Entities that may result from the consummation of the formation transactions for the Partnership Group and the MLP, but excluding any federal, state, foreign and local income taxes reserved on the books of the Partnership Group on the Closing Date.
 

SECTION 6.2.  Limitation Regarding Indemnification.  The aggregate liability of Capital Maritime under Section 6.1(a) above shall not exceed $5,000,000 million.  Furthermore, no claim may be made against Capital Maritime for indemnification pursuant to Section 6.1(a) unless the aggregate dollar amount of all claims for indemnification pursuant to such section shall exceed $500,000, in which case Capital Maritime shall be liable for claims for indemnification only to the extent such aggregate amount exceeds $500,000.

 

SECTION 6.3.  Indemnification Procedures.  (a)  The Partnership Group Members agree that within a reasonable period of time after they become aware of facts giving rise to a claim for indemnification pursuant to Section 6.1, they will provide notice thereof in writing to Capital Maritime specifying the nature of and specific basis for such claim.

 

15


 

(b)   Capital Maritime shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Partnership Group that are covered by the indemnification set forth in Section 6.1, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld) of the Partnership Group unless it includes a full release of the Partnership Group from such matter or issues, as the case may be.

 

(c)   The Partnership Group Members agree to cooperate fully with Capital Maritime with respect to all aspects of the defense of any claims covered by the indemnification set forth in Section 6.1, including, without limitation, the prompt furnishing to Capital Maritime of any correspondence or other notice relating thereto that the Partnership Group may receive, permitting the names of the members of the Partnership Group to be utilized in connection with such defense, the making available to Capital Maritime of any files, records or other information of the Partnership Group that Capital Maritime considers relevant to such defense and the making available to Capital Maritime of any employees of the Partnership Group; provided, however, that in connection therewith Capital Maritime agrees to use reasonable efforts to minimize the impact thereof on the operations of the Partnership Group and further agrees to maintain the confidentiality of all files, records and other information furnished by a Partnership Group Member pursuant to this Section 6.3.  In no event shall the obligation of the Partnership Group to cooperate with Capital Maritime as set forth in the immediately preceding sentence be construed as imposing upon the Partnership Group an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article VI; provided, however, that the Partnership Group Members may, at their own option, cost and expense, hire and pay for counsel in connection with any such defense.  Capital Maritime agrees to keep any such counsel hired by the Partnership Group reasonably informed as to the status of any such defense (including providing such counsel with such information related to any such defense as such counsel may reasonably request) but Capital Maritime shall have the right to retain sole control over such defense.

 

In determining the amount of any Loss for which any of the members of the Partnership Group is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by (i) any insurance proceeds realized by the Partnership Group, and such correlative insurance benefit shall be net of any incremental insurance premium that becomes due and payable by the Partnership Group as a result of such claim, and (ii) all amounts recovered by the Partnership Group under contractual indemnities from third Persons.  The Partnership hereby agrees to use commercially reasonable efforts to realize any applicable insurance proceeds or amounts recoverable under such contractual indemnities; provided, however, that the costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of the Partnership Group in connection with such efforts shall be promptly reimbursed by Capital Maritime in advance of any determination of whether such insurance proceeds or other amounts will be recoverable.

 

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ARTICLE VII

Miscellaneous

 

SECTION 7.1.  Choice Of Law; Submission To Jurisdiction.  This Agreement shall be subject to and governed by the laws of the state of New York.  Each party hereby submits to the jurisdiction of the state and federal courts located in the state of New York and to venue in New York, New York.

 

SECTION 7.2.  Notice.  All notices or requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by depositing same in the mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by private-courier, prepaid, or by telecopier to such party.  Notice given by personal delivery or mail shall be effective upon actual receipt.  Couriered notices shall be deemed delivered on the date the courier represents that delivery will occur.  Notice given by telecopier shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours.  All notices to be sent to a party pursuant to this Agreement shall be sent to or made at the address set forth below such party’s signature to this Agreement, or at such other address as such party may stipulate to the other parties in the manner provided in this Section.

 

SECTION 7.3.  Entire Agreement.  This Agreement constitutes the entire agreement of the parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.

 

SECTION 7.4.  Termination.  Upon a Change of Control of the General Partner or of the MLP, the provisions of Articles II, III, IV and V of this Agreement (but not less than all of such Articles) shall terminate immediately.  Upon a Change of Control of Capital Maritime, the provisions of Articles II, III, IV and V of this Agreement (but not less than all of such Articles) shall terminate at the time that is the later of (i) the date on which all of the MLP’s outstanding subordinated units have converted to common units of the MLP and (ii) one year following the date of the Change of Control of Capital Maritime; provided, however, that in no event shall the provisions of Articles II, III, IV and V of this Agreement terminate upon a Change of Control of Capital Maritime prior to the date that is three years following the date of this Agreement.

 

SECTION 7.5.  Waiver; Effect Of Waiver Or Consent.  Any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto or (b) waive compliance with any agreement or condition contained herein.  Except as otherwise specifically provided herein, any such extension or waiver shall be valid only if set forth in a written instrument duly executed by the party or parties to be bound thereby; provided, however, that the MLP and the OLLC may not, without the prior approval of the Conflicts Committee, agree to any extension or waiver of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the MLP.  No waiver or consent, express or implied, by any

 

17


 

party of or to any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a waiver or consent of or to any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder.  Failure on the part of a party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitations period has run.

 

SECTION 7.6.  Amendment Or Modification.  This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto; provided, however, that the MLP and the OLLC may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the MLP.

 

SECTION 7.7.  Assignment.  No party shall have the right to assign its rights or obligations under this Agreement without the consent of the other parties hereto.

 

SECTION 7.8.  Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.

 

SECTION 7.9.  Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

 

SECTION 7.10.  Gender, Parts, Articles And Sections.  Whenever the context requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural.  All references to Article numbers and Section numbers refer to Articles and Sections of this Agreement.

 

SECTION 7.11.  Further Assurances.  In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

 

SECTION 7.12.  Withholding Or Granting Of Consent.  Each party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.

 

18


 

SECTION 7.13.  Laws And Regulations.  Notwithstanding any provision of this Agreement to the contrary, no party to this Agreement shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such party to be in violation of any applicable law, statute, rule or regulation.

 

SECTION 7.14.  Negotiation Of Rights Of Capital Maritime, Limited Partners, Assignees, And Third Parties.  The provisions of this Agreement are enforceable solely by the parties to this Agreement, and no shareholder of Capital Maritime and no limited partner, member, assignee or other Person of the MLP or the OLLC shall have the right, separate and apart from Capital Maritime, the MLP or the OLLC, to enforce any provision of this Agreement or to compel any party to this Agreement to comply with the terms of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

19


 

IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Closing Date.

 

CAPITAL MARITIME & TRADING CORP.,

 

 

 

 

 

by

 

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notice:

 

 

 

c/o Capital Ship Management Corp.,
3 Iassonos Street
Piraeus, Greece

 

Phone:

+30 210 428 4879

 

Fax:

+30 210 428 4285

 

Attention:

Ioannis E. Lazaridis

 

 

CAPITAL GP L.L.C.,

 

 

 

 

 

by

 

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notice:

 

 

 

c/o Capital Ship Management Corp.,
3 Iassonos Street
Piraeus, Greece

 

Phone:

+30 210 428 4879

 

Fax:

+30 210 428 4285

 

Attention:

Ioannis E. Lazaridis

 

20


 

CAPITAL PRODUCT OPERATING L.L.C.,

 

 

 

by

Capital GP L.L.C., its general partner,

 

 

 

 

 

by

Capital Product Partners L.P., its sole member

 

 

 

 

 

 

by

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Address for Notice:

 

 

 

c/o Capital Ship Management Corp.,
3 Iassonos Street
Piraeus, Greece

 

Phone:

+30 210 428 4879

 

Fax:

+30 210 428 4285

 

Attention:

Ioannis E. Lazaridis

 

 

CAPITAL PRODUCT PARTNERS L.P.,

 

 

 

by

Capital GP L.L.C., its general partner,

 

 

 

 

 

by

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Address for Notice:

 

 

 

c/o Capital Ship Management Corp.,
3 Iassonos Street
Piraeus, Greece

 

Phone:

+30 210 428 4879

 

Fax:

+30 210 428 4285

 

Attention:

Ioannis E. Lazaridis

 

21



Exhibit 10.3

 

FORM OF MANAGEMENT AGREEMENT

 

THIS AGREEMENT made effective the • day of • 2007; by and between CAPITAL PRODUCT PARTNERS L.P., a limited partnership duly organized and existing under the laws of the Marshall Islands with its registered office at 3 Iassonos Street, Piraeus, 18537, Greece, (“CLP”) and CAPITAL SHIP MANAGEMENT CORP., a company duly organized and existing under the laws of Panama with its registered office at Hong Kong Bank building, 6th floor, Samuel Lewis Avenue, Panama, and a representative office established in Greece at 3, Iassonos street, Piraeus Greece (“CSM”).

 

WHEREAS:

 

A.    CLP, a limited partnership whose units will be listed and will trade on the Nasdaq Global Market, owns vessels and requires certain commercial and technical management services for the operation of its fleet; and

 

B.    CLP wishes to engage CSM to provide such commercial and technical management services to CLP on the terms set out herein.

 

NOW THEREFORE, the parties agree that, in consideration of the fees set forth in Schedule “B” to this Agreement (the “Fees”) and, if applicable, the Extraordinary Fees and Costs and subject to the Terms and Conditions attached hereto, CSM shall provide the commercial and technical management services set forth in Schedule “A” to this Agreement (the “Services”).

 

IN WITNESS WHEREOF the Parties have executed this Agreement by their duly authorized signatories with effect on the date first above written.

 

 

CAPITAL PRODUCT PARTNERS L.P. BY ITS
GENERAL PARTNER, CAPITAL GP L.L.C.,

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

CAPITAL SHIP MANAGEMENT CORP.,

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 


 

ARTICLE I

 

TERMS AND CONDITIONS

 

Section 1. Definitions. In this Agreement, the term:

 

“Additional Vessels” means medium-range product tankers not in the ownership of CLP on the date of this agreement and medium-range product tankers not forming part of the newbuildings fleet as set out in Schedule “C” to this Agreement, that CLP may subsequently purchase. Such Additional Vessels, after their acquisition by CLP, for the purposes of this Agreement shall also be referred to herein as Vessels;

 

“Change of Control” means with respect to any entity, an event in which securities of any class entitling the holders thereof to elect a majority of the members of the board of directors or other similar governing body of the entity are acquired, directly or indirectly, by a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), who did not immediately before such acquisition own securities of the entity entitling such person or group to elect such majority (and for the purpose of this definition, any such securities held by another person who is related to such person shall be deemed to be owned by such person);

 

“Extraordinary Fees and Costs” means the fees and costs listed in Schedule D to this Agreement.

 

“Limited Partnership Agreement” means the amended and restated agreement of limited partnership of CLP dated as of • , as from time to time amended;

 

“CGP” means Capital GP L.L.C., a Marshall Islands limited liability company that is the general partner of CLP;

 

“CLP Group” means CLP, CGP and subsidiaries of CLP;

 

“Unitholders” means holders of limited partnership units in CLP; and

 

“Vessels” means all medium-range product tankers that are in the ownership of CLP on the date of this agreement, as well as the seven medium-range product tankers scheduled for delivery and acquisition by CLP in 2007 and 2008 (as set out in Schedule “C” to this Agreement) and the Additional Vessels.

 

Section 2. General. CSM shall provide the Services, in a commercially reasonable manner, as CLP, may from time to time direct, all under the supervision of CLP, as represented by CGP in its capacity as the general partner of CLP. CSM shall perform the Services to be provided hereunder in accordance with customary ship management practice and with the care, diligence and skill that a prudent manager of vessels such as the Vessels would possess and exercise.

 

Section 3. Covenants. During the term of this Agreement CSM shall:

 

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(a) diligently provide or subcontract for the provision of (in accordance with Section 18 hereof) the Services to CLP as an independent contractor, and be responsible to CLP for the due and proper performance of same;

 

(b) retain at all times a qualified staff so as to maintain a level of expertise sufficient to provide the Services; and

 

(c) keep full and proper books, records and accounts showing clearly all transactions relating to its provision of Services in accordance with established general commercial practices and in accordance with United States generally accepted accounting principles.

 

Section 4. Non-exclusivity. CSM and its employees may provide services of a nature similar to the Services to any other person. There is no obligation for CSM to provide the Services to CLP on an exclusive basis.

 

Section 5. Confidential Information. CSM shall be obligated to keep confidential, both during and after the term of this Agreement, all information it has acquired or developed in the course of providing Services under this Agreement. CLP shall be entitled to any equitable remedy available at law or equity, including specific performance, against a breach by CSM of this obligation. CSM shall not resist such application for relief on the basis that CLP has an adequate remedy at law, and CSM shall waive any requirement for the securing or posting of any bond in connection with such remedy.

 

Section 6. Service Fee. In consideration for CSM providing the Services, CLP shall pay CSM the Fees as set out in Schedule “B” to this Agreement and the Extraordinary Fees and Costs.

 

Section 7. General Relationship Between The Parties. The relationship between the parties is that of independent contractor. The parties to this Agreement do not intend, and nothing herein shall be interpreted so as, to create a partnership, joint venture, employee or agency relationship between CSM and any one or more of CLP, CGP in its capacity as general partner on behalf of CLP or any member of the CLP Group.

 

Section 8. Force Majeure and Indemnity.

 

(i)            Neither CLP nor CSM shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever of any nature or kind beyond their reasonable control.

 

(ii)           CSM shall be under no liability whatsoever to CLP for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessels or Additional Vessels) and howsoever arising in the course of performance of the Services UNLESS and to the extent that such

 

3


 

loss, damage, delay or expense is proved to have resulted solely from the fraud, gross negligence or willful misconduct of CSM or their employees in connection with the Vessels, in which case (save where such loss, damage, delay or expense has resulted from CSM’s personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) CSM’s liability for each incident or series of incidents giving rise to a claim or claims shall never exceed a total of US$3,000,000.

 

(iii)          Notwithstanding anything that may appear to the contrary in this Agreement, CSM shall not be responsible for any of the actions of the crew of the Vessels even if such actions are negligent, grossly negligent or willful.

 

(iv)          CLP shall indemnify and hold harmless CSM and its employees and agents against all actions, proceedings, claims, demands or liabilities which may be brought against them arising out of, relating to or based upon this Agreement including, without limitation, all actions, proceedings, claims, demands or liabilities brought under or relating to the environmental laws, regulations or conventions of any jurisdiction (“Environmental Laws”), or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses (including legal costs and expenses on a full indemnity basis) they may suffer or incur due to defending or settling same, provided however that such indemnity shall exclude any or all losses, actions, proceedings, claims, demands, costs, damages, expenses and liabilities whatsoever which may be caused by or due to (A) the fraud, gross negligence or willful misconduct of CSM or its employees or agents, or (B) any breach of this Agreement by CSM.

 

(v)           Without prejudice to the general indemnity set out in this Section, CLP hereby undertakes to indemnify CSM, their employees, agents and sub-contractors against all taxes, imposts and duties levied by any government as a result of the operations of CLP or the Vessels, whether or not such taxes, imposts and duties are levied on CLP or CSM. For the avoidance of doubt, such indemnity shall not apply to taxes imposed on amounts paid to CSM as consideration for the performance of Services for CLP. CLP shall pay all taxes, dues or fines imposed on the Vessels or CSM as a result of the operation of the Vessels.

 

(vi)          It is hereby expressly agreed that no employee or agent of CSM (including any sub-contractor from time to time employed by CSM and the employees of such sub-contractors) shall in any circumstances whatsoever be under any liability whatsoever to

 

4


 

CLP for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Section, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to CSM or to which CSM are entitled hereunder shall also be available and shall extend to protect every such employee or agent of CSM acting as aforesaid.

 

(vii)         CLP acknowledges that it is aware that CSM is unable to confirm that the Vessels, their systems, equipment and machinery are free from defects, and agrees that CSM shall not under any circumstances be liable for any losses, costs, claims, liabilities and expenses which CLP may suffer or incur resulting from pre-existing or latent deficiencies in the Vessels, their systems, equipment and machinery.

 

The provisions of this Section 8 shall remain in force notwithstanding termination of this Agreement.

 

Section 9. Term And Termination. With respect to each of the Vessels, this Agreement shall commence from the date on which each Vessel begins its operations and will continue for approximately five years up to and including the date each Vessel has its first special survey (as more specifically described on Schedule E to this Agreement), unless terminated by either party hereto on not less than one hundred and twenty (120) days notice if:

 

(a) in the case of CLP, there is a Change of Control of CSM and in the case of CSM, if there is a Change of Control of CGP;

 

(b) in the case of CSM and at the election of CSM, there is a Change of Control of CLP;

 

(c) the other party breaches this Agreement;

 

(d) a receiver is appointed for all or substantially all of the property of the other party;

 

(e) an order is made to wind-up the other party;

 

(f) a final judgment, order or decree which materially and adversely affects the ability of the other party to perform this Agreement shall have been obtained or entered against that party and such judgment, order or decree shall not have been vacated, discharged or stayed; or

 

5


 

(g) the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or for liquidation, is adjudged insolvent or bankrupt, commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation under any law or statute or of any jurisdiction applicable thereto or if any such proceeding shall be commenced.

 

The approximate termination date of this Agreement with respect to each of the Vessels is listed in Schedule E to this Agreement (the “Date of Termination”). Upon the purchase of each Additional Vessel, Schedule E to this Agreement shall be amended and restated to include the relevant Date of Termination and Schedule B to this Agreement shall be amended and restated to include the relevant Fees applicable to each Additional Vessel. This Agreement shall be deemed to be terminated with respect to a particular Vessel in the case of the sale of such Vessel or if such Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned. Notwithstanding such deemed termination, any Fees outstanding at the time of the sale or loss shall be paid in accordance with the provisions of this Agreement.

 

For the purpose of this clause:

 

(i)            the date upon which a Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which CLP ceases to be the legal owner of the Vessel;

 

(ii)           a Vessel shall not be deemed to be lost until either she has become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred or the Vessel’s owners issue a notice of abandonment to the underwriters.

 

The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination.

 

Section 10. Fees Upon Termination with respect to a Vessel. Upon termination of this Agreement, the Fee shall be adjusted with respect to a Vessel as at the effective date of termination of this Agreement, based on the Fees set forth in Schedule B. Any overpayment shall forthwith be refunded to CLP and any underpayment shall forthwith be paid to CSM.

 

Section 11. Surrender Of Books And Records. Upon termination of this Agreement, CSM shall forthwith surrender to CLP any and all books, records, documents and other property in the possession or control of CSM relating to this Agreement and to the business, finance, technology, trademarks or affairs of CLP and any member of the CLP Group and, except as required by law, shall not retain any copies of same.

 

6


 

Section 12. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement and (in relation to such subject matter) supersedes and replaces all prior understandings and agreements, written or oral, between the parties.

 

Section 13. Amendments to Agreement. CSM reserves the right to make such changes to this Agreement as it shall consider necessary to take account of regulatory changes which come into force after the date hereof and which affect the operation of the Vessels. Such changes will be intimated in writing to CLP and will come into force on intimation or on the date on which such regulatory or other changes come into effect (whichever shall be the later).

 

Section 14. Severability. If any provision herein is held to be void or unenforceable, the validity and enforceability of the remaining provisions herein shall remain unaffected and enforceable.

 

Section 15. Currency. Unless stated otherwise, all currency references herein are to United States Dollars.

 

Section 16. Law And Arbitration. This Agreement shall be governed by the laws of England. Any dispute under this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment then in force. The arbitration shall be conducted in accordance with the London Maritime Arbitrators’ (LMAA) Terms current at the time when the arbitration is commenced.

 

Save as after mentioned, the reference shall be to three arbitrators, one to be appointed by each party and the third by the two arbitrators so appointed. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment to the other party requiring the other party to appoint its arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 calendar days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 calendar days specified, the party referring the dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be as binding as if he had been appointed by agreement.

 

In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.

 

Section 17. Notice. Notice under this Agreement shall be given (via hand delivery or facsimile) as follows:

 

7


 

If to CLP:

 

3 Iassonos Street

Piraeus, 18537, Greece

Attn: Ioannis E. Lazaridis

Fax: +30 210 428 4285

 

 

If to CSM:

 

3 Iassonos Street

Piraeus, 18537, Greece

Attn: Capital Ship Management

Fax: +30 210 428 4285

 

Section 18. Subcontracting And Assignment. CSM shall not assign this Agreement to any party that is not a subsidiary or affiliate of CSM except upon written consent of CLP. CSM may freely sub-contract and sub-license this Agreement to any party, so long as CSM remains liable for performance of the Services and its other obligations under this Agreement.

 

Section 19. Waiver. The failure of either party to enforce any term of this Agreement shall not act as a waiver. Any waiver must be specifically stated as such in writing.

 

Section 20. Affiliates. This Agreement shall be binding upon and inure to the benefit of the affiliates of CLP and/or CSM.

 

Section 21. Counterparts. This Agreement may be executed in one or more signed counterparts, facsimile or otherwise, which shall together form one instrument.

 

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SCHEDULE A

SERVICES

 

CSM shall provide such of the following commercial and technical management services (the “Services”) to CLP, as CGP may from time to time request and direct CSM to provide pursuant to Section 1.02:

 

(1)           Negotiating on behalf of CLP time charters, bareboat charters and other employment contracts with respect to the Vessels and monitor payments thereunder;
 
(2)           Exercising of due diligence to:
 
(i)           maintain and preserve each Vessel and her equipment in full compliance with applicable rules and regulations, including Environmental Laws, good condition, running order and repair, so that each Vessel shall be, insofar as due diligence can make her in every respect seaworthy and in good operating condition;
 
(ii)          keep each Vessel in such condition as will entitle her to the highest classification and rating from the classification society chosen by her owner or charter for vessels of the class, age and type;
 
(iii)         prepare and obtain all necessary approvals for a shipboard oil pollution emergency plan (SOPEP) in a form approved by the Marine Environment Protection Committee of the International Maritime Organisation pursuant to the requirements of Regulation 26 of Annex I of the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, as amended (MARPOL 73/78), and provide assistance with respect to such other documentation and record-keeping requirements pursuant to applicable Environmental Laws;
 
(iv)        arrange for the preparation, filing and updating of a contingency Vessel Response Plan in accordance with the requirements of the U.S. Oil Pollution Act of 1990 as amended (“OPA”), and instruct the crew in all aspects of the operation of such plan;
 
(v)         inform CLP promptly of any major release or discharge of oil or other hazardous material in compliance with law and identify and ensure the availability by contract or otherwise of a Qualified Individual, a Spill Management Team, an Oil Spill Removal Organisation (as such terms are defined by applicable Environmental Laws), and any other individual or entity required by Environmental Laws, resources having salvage, firefighting, lightering and, if applicable, dispersant capabilities, and public relations/media personnel to assist CLP to deal with the media in the event of discharges of oil;

 

A-1


 

(vi)        arrange and procure for the vetting of the Vessels and CLP or CSM by major charterers and arranging and attending relevant inspections of the Vessels, including pre-vetting inspections, or visits at the premises of CSM up to a maximum number of five inspection visits per Vessel per year to be attended by CSM, with additional visits to be for the account of CLP; and
 
(vii)       provide copies of any vessel inspection reports, valuations, surveys or similar reports upon request.
 

CSM is expressly authorized as agents for CLP to enter into such arrangements by contract or otherwise as are required to ensure the availability of the Services outlined above. CSM is further expressly authorized as agents for CLP to enter into such other arrangements as may from time to time be necessary to satisfy the requirements of OPA or other Federal or State laws.

 

(3)           Storing, victualing and supplying of each Vessel and the arranging for the purchase of certain day to day stores, supplies and parts;
 
(4)           Procuring and arrangement for port entrance and clearance, pilots, vessel agents, consular approvals, and other services necessary or desirable for the management and safe operation of each Vessel;
 
(5)           Preparing, issuing or causing to be issued to shippers the customary freight contract, cargo receipts and/or bills of lading;
 
(6)           Performance of all usual and customary duties concerned with the loading and discharging of cargoes at all ports;
 
(7)           Naming of vessel agents for the transaction of each Vessel’s business;
 
(8)           Arrangement and retention in full force and effect of all customary insurance pertaining to each Vessel as instructed by the owner or charterer and all such policies of insurance, including but not limited to protection and indemnity, hull and machinery, war risk and oil pollution covering each Vessel; if requested by the owner or charterer, making application for certificates of financial responsibility on behalf of the Vessels covered hereunder;
 
(9)           Adjustment and the negotiating of settlements, with or on behalf of claimants or underwriters, of any claim, damages for which are recoverable under policies of insurance;
 
(10)         If requested, provide CLP with technical assistance in connection with any sale of any Vessel. CSM will, if requested in writing by CLP, comment on the terms of any proposed Memorandum of Agreement, but CLP will remain solely responsible for agreeing the terms of any Memorandum of Agreement regulating any sale;

 

A-2


 

(11)         Arrangement or the prompt dispatch of each Vessel from loading and discharging ports and for transit through canals;
 
(12)         Arrangement for employment of counsel, and the investigation, follow-up and negotiating of the settlement of all claims arising in connection with the operation of each Vessel; it being understood that CLP will be responsible for the payment of such counsel’s fees and expenses;
 
(13)         Arrangement for the appointment of an adjuster and assistance in preparing the average account, taking proper security for the cargo’s and freight’s proportion of average, and in all ways reasonably possible protecting the interest of each Vessel and her owner; it being understood that CLP will be responsible for the payment of such adjuster’s fees and expenses;
 
(14)         Arrangement for the appointment of surveyors and technical consultants as necessary; it being understood that CLP will be responsible for the payment of such surveyor’s or technical consultant’s fees and expenses outside the ordinary course of business;
 
(15)         Negotiating of the settlement of insurance claims of Vessel owner’s or charterer’s protection and indemnity insurance and the arranging for the making of disbursements accordingly for owner’s or charterer’s account;  CLP shall arrange for the provision of any necessary guarantee bond or other security;
 
(16)         Attendance to all matters involving each Vessel’s crew, including, but not limited to, the following:
 
(i)           arranging for the procurement and enlistment for each Vessel, as required by applicable law, of competent, reliable and duly licensed personnel (hereinafter referred to as “crew members”) in accordance with the requirements of International Maritime Organisation Convention on Standards of Training Certification and Watchkeeping for Seafarers 1978 and as subsequently amended, and all replacements therefore as from time to time may be required;
 
(ii)          arranging for all transportation, board and lodging for the crew members as and when required at rates and types of accommodations as customary in the industry;
 
(iii)         keeping and maintaining full and complete records of any labour agreements which may be entered into between owner or disponent owner and the crew members and the prompt reporting to owner or disponent owner as soon as notice or knowledge thereof is received of any change or proposed change in labour agreements or other regulations relating to the master and the crew members;

 

A-3


 

(iv)        negotiating the settlement and payment of all wages with the crew members during the course of and upon termination of their employment;
 
(v)         the handling of all details and negotiating the settlement of any and all claims of the crew members including, but not limited to, those arising out of accidents, sickness, or death, loss of personal effects, disputes under articles or contracts of enlistment, policies of insurance and fines;
 
(vi)        keeping and maintaining all administrative and financial records relating to the crew members as required by law, labour agreements, owner or charterer, and rendering to owner or charterer any and all reports when, as and in such form as requested by owner or charterer;
 
(vii)       the performance of any other function in connection with crew members as may be requested by owner or charterer; and
 
(viii)      negotiating with unions, if required.
 
(17)         Payment of all charges incurred in connection with the management of each Vessel, including, but not limited to, the cost of the items listed in (2) to (16) above, canal tolls, repair charges and port charges, and any amounts due to any governmental agency with respect to the Vessel crews;
 
(18)         In such form and on such terms as may be requested by CLP, the prompt reporting to CLP of each Vessel’s movement, position at sea, arrival and departure dates, casualties and damages received or caused by each Vessel;
 
(19)         In case any of the Vessels is employed under a voyage charter, CLP shall pay for all voyage related expenses (including bunkers, canal tolls and port dues)  and CSM shall arrange for the provision of bunker fuel of the quality agreed with CLP as required for any Vessel’s trade. CSM shall be entitled to order bunker fuel through such brokers or suppliers as CLP deem appropriate unless CLP instruct CSM to utilize a particular supplier which CSM will be obliged to do provided that the CLP have made prior credit arrangements with such supplier. CLP shall comply with the terms of any credit arrangements made by CSM on their behalf;
 
(20)         CSM shall not in any circumstances have any liability for any bunkers which do not meet the required specification. CSM will, however, take such action, on behalf of CLP, against the supplier of the bunkers, as is agreed with CLP.
 
(21)         CSM shall make arrangements as instructed by the Classification Society of each Vessel for the intermediate and special survey of each Vessel and all costs in connection with passing such surveys (including dry-docking) and satisfactory compliance with class requirements will be borne by CSM.

 

A-4


 

SCHEDULE B

FEES

 

In consideration for the provision of the Services listed in Schedule A by CSM to CLP, CLP shall pay CSM a fixed daily fee of US$5,500 per time-chartered Vessel, payable on the last day of each month, and will also pay a fixed daily fee of US$250 per bareboat-chartered Vessel, as set forth in the table below. This Schedule will be amended from time to time to reflect the applicable fee for each Additional Vessel.

 

Vessel Name

 

Daily Fee in US$

 

 

 

Atlantas

 

250

 

 

 

Aktoras

 

250

 

 

 

Agisilaos

 

5,500

 

 

 

Assos

 

5,500

 

 

 

Arionas

 

5,500

 

 

 

Axios

 

5,500

 

 

 

Aiolos

 

250

 

 

 

Avax

 

5,500

 

 

 

Atrotos

 

5,500

 

 

 

Akeraios

 

5,500

 

 

 

Anemos I

 

5,500

 

 

 

Apostolos

 

5,500

 

 

 

Alexandros II

 

250

 

 

 

Aristotelis II

 

250

 

 

 

Aris II

 

250

 

A-5


 

SCHEDULE C

 

VESSELS TO BE DELIVERED IN 2007 AND 2008

 

Vessel Name

 

Expected
Delivery Date

 

 

 

Atrotos

 

05/07

 

 

 

Akeraios

 

08/07

 

 

 

Anemos I

 

10/07

 

 

 

Apostolos

 

10/07

 

 

 

Alexandros II

 

03/08

 

 

 

Aristotelis II

 

06/08

 

 

 

Aris II

 

08/08

 

A-6


 

SCHEDULE D

EXTRAORDINARY FEES AND COSTS

 

Notwithstanding anything to the contrary in this Agreement, CSM will not be responsible for paying any costs liabilities and expenses in respect of a Vessel, to the extent that such costs, liabilities and expenses are “extraordinary”, which shall consist of the following:

 

(1)           repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilder or by the insurance covering the Vessels, resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents, collisions, damage or events are due to the fraud, gross negligence or wilfull misconduct of CSM, its employees or its agents, unless and to the extent otherwise covered by insurance).
 
(2)           any improvement, upgrade or modification to, structural changes with respect to the installation of new equipment aboard any Vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicable laws, at the recommendation of the classification society for that Vessel or otherwise.
 
(3)           any increase in crew employment expenses resulting from an introduction of new, or a change in the interpretation of, applicable laws or resulting from the early termination of the charter of any Vessel;
 
(4)           CSM shall be entitled to receive additional remuneration for time spent on the insurance, average and salvage claims (charged at the rate of US$800 per man per day of 8 hours) in respect of the preparation and prosecution of claims, the supervision of repairs and the provision of documentation relating to adjustments).
 
(5)           CSM shall be entitled to receive additional remuneration for time (charged at the rate of US$750 per man per day of 8 hours) for any time of over 10 days per year that the personnel of CSM will spend during vetting inspections and attendance on the Vessels in connection with the pre-vetting and vetting of the Vessels by any charterers. In addition CLP will pay any reasonable travel and accommodation expenses of the CSM personnel incurred in connection with such additional time spent.
 
(6)           CLP shall pay the deductible of any insurance claims relating to the Vessels or for any claims that are within such deductible range.
 
(7)           CLP shall pay any significant increase in insurance premiums which are due to factors such as “acts of God” outside of the control of CSM.
 
(8)           CLP shall pay any tax, dues or fines imposed on the Vessels or CSM due to the operation of the Vessels.
 
(9)           CLP shall pay for any expenses incurred in connection with the sale or acquisition of a Vessel, such as in connection with inspections and technical assistance.

 

A-7


 

(10)         CLP shall pay for any similar costs, liabilities and expenses that were not reasonably contemplated by CLP and CSM as being encompassed by or a component of the Fees at the time the Fees were determined.

 

A-8


 

SCHEDULE E

 

DATE OF TERMINATION

 

Vessel Name

 

Expected
Termination Date

 

 

 

Atlantas

 

January-April 2011

 

 

 

Aktoras

 

April-July 2011

 

 

 

Agisilaos

 

May-August 2011

 

 

 

Assos

 

February-May 2011

 

 

 

Arionas

 

August-November 2011

 

 

 

Axios

 

December 2011-March 2012

 

 

 

Aiolos

 

November 2011- February 2012

 

 

 

Avax

 

June 2010

 

 

 

Atrotos

 

February-May 2012

 

 

 

Akeraios

 

May-August 2012

 

 

 

Anemos I

 

July-October 2012

 

 

 

Apostolos

 

July-October 2012

 

 

 

Alexandros II

 

December 2012-March 2013

 

 

 

Aristotelis II

 

March-June 2013

 

 

 

Aris II

 

May-August 2013

 

A-9



 

Exhibit 10.4

 

FORM OF ADMINISTRATIVE SERVICES AGREEMENT

 

THIS AGREEMENT made effective the • day of • 2007; by and between CAPITAL PRODUCT PARTNERS L.P., a limited partnership duly organized and existing under the laws of the Marshall Islands with its registered office at c/o Capital Ship Management Corp., 3 Iassonos Street, Piraeus, 18537, Greece (“CLP”) and CAPITAL SHIP MANAGEMENT CORP., a company duly organized and existing under the laws of Panama with its registered office at Hong Kong Bank building, 6th floor, Samuel Lewis Avenue, Panama, and a representative office established in Greece at 3, Iassonos street, Piraeus Greece (“CSM”).

 

WHEREAS:

 

A.   CLP, a limited partnership whose units will be listed and will trade on the Nasdaq Global Market, owns vessels and requires certain administrative support services for the operation of its fleet; and

 

B.   CLP wishes to engage CSM to provide such administrative support services to CLP on the terms set out herein.

 

NOW THEREFORE, the parties agree that, in consideration for CSM providing the administrative support services set forth in Schedule “A” to this Agreement (the “Services”), and subject to the Terms and Conditions attached hereto, CLP shall reimburse CSM the costs and expenses incurred by CSM in the manner provided for in Schedule “B” to this Agreement (the “Costs and Expenses”).

 

IN WITNESS WHEREOF the Parties have executed this Agreement by their duly authorized signatories with effect on the date first above written.

 

 

CAPITAL PRODUCT PARTNERS L.P. BY ITS GENERAL PARTNER, CAPITAL GP L.L.C.,

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

CAPITAL SHIP MANAGEMENT CORP.,

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 


 

ARTICLE I

 

TERMS AND CONDITIONS

 

Section 1. Definitions. In this Agreement, the term:

 

“Change of Control” means with respect to any entity, an event in which securities of any class entitling the holders thereof to elect a majority of the members of the board of directors or other similar governing body of the entity are acquired, directly or indirectly, by a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), who did not immediately before such acquisition own securities of the entity entitling such person or group to elect such majority (and for the purpose of this definition, any such securities held by another person who is related to such person shall be deemed to be owned by such person);

 

“Limited Partnership Agreement” means the amended and restated agreement of limited partnership of CLP dated as of • , as from time to time amended;

 

“CGP” means Capital GP L.L.C., a Marshall Islands limited liability company that is the general partner of CLP;

 

“CLP Group” means CLP, CGP and subsidiaries of CLP;

 

“Costs and Expenses” has the meaning set forth in Schedule B to this Agreement; and

 

“Unitholders” means holders of units representing limited partnership interests in CLP.

 

Section 2. General. CSM shall provide all or such portion of the Services, in a commercially reasonable manner, as CLP, may from time to time direct, all under the supervision of CLP, as represented by CGP in its capacity as the general partner of CLP.

 

Section 3. Covenants. During the term of this Agreement CSM shall:

 

(a) diligently provide or sub-contract for the provision of (in accordance with Section 19 hereof) the Services to CLP as an independent contractor, and be responsible to CLP for the due and proper performance of same;

 

(b) retain at all times a qualified staff so as to maintain a level of expertise sufficient to provide the Services; and

 

(c) keep full and proper books, records and accounts showing clearly all transactions relating to its provision of Services in accordance with established general commercial practices and in accordance with United States generally accepted accounting principles, and allow CLP and its representatives to audit and examine such books, records and accounts at any time during customary business hours.

 

2


 

Section 4. Non-exclusivity. CSM and its employees may provide services of a nature similar to the Services to any other person. There is no obligation for CSM to provide the Services to CLP on an exclusive basis.

 

Section 5. Confidential Information. CSM shall be obligated to keep confidential, both during and after the term of this Agreement, all information it has acquired or developed in the course of providing Services under this Agreement. CLP shall be entitled to any equitable remedy available at law or equity, including specific performance, against a breach by CSM of this obligation. CSM shall not resist such application for relief on the basis that CLP has an adequate remedy at law, and CSM shall waive any requirement for the securing or posting of any bond in connection with such remedy.

 

Section 6. Reimbursement of Costs and Expenses. In consideration for CSM providing the Services, CLP shall reimburse CSM the Costs and Expenses in the manner provided in Schedule “B” to this Agreement.

 

Section 7. General Relationship Between The Parties.  The relationship between the parties is that of independent contractor. The parties to this Agreement do not intend, and nothing herein shall be interpreted so as, to create a partnership, joint venture, employee or agency relationship between CSM and any one or more of CLP, CGP in its capacity as general partner on behalf of CLP or any member of the CLP Group.

 

Section 8. Indemnity. CLP shall indemnify and hold harmless CSM and its employees and agents against all actions, proceedings, claims, demands or liabilities which may be brought against them due to this Agreement including, without limitation, all actions, proceedings, claims, demands or liabilities brought under the environmental laws of any jurisdiction, and against and in respect of all costs and expenses (including legal costs and expenses on a full indemnity basis) they may suffer or incur due to defending or settling same, provided however that such indemnity shall exclude any or all losses, actions, proceedings, claims, demands, costs, damages, expenses and liabilities whatsoever which may be caused by or due to the fraud, gross negligence or willful misconduct of CSM or its employees or agents.

 

Section 9. NO CONSEQUENTIAL DAMAGES. NEITHER CSM NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY CLP, OR FOR PUNITIVE DAMAGES, WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION, INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, FRAUD, MISREPRESENTATION AND OTHER TORTS.

 

3


 

Section 10. Term And Termination. This Agreement shall have an initial term of five years unless terminated by either party hereto on not less than one hundred and twenty (120) days notice if:

 

(a)           in the case of CLP, there is a Change of Control of CSM and in the case of CSM, if there is a Change of Control of CGP or CLP;

 

(b)           in the case of CSM and at the election of CSM, there is a Change of Control of CLP;

 

(c)           the other party breaches this Agreement;

 

(d)           a receiver is appointed for all or substantially all of the property of the other party;

 

(e)           an order is made to wind-up the other party;

 

(f)            a final judgment, order or decree which materially and adversely affects the ability of the other party to perform this Agreement shall have been obtained or entered against that party and such judgment, order or decree shall not have been vacated, discharged or stayed; or

 

(g)           the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or for liquidation, is adjudged insolvent or bankrupt, commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation under any law or statute or of any jurisdiction applicable thereto or if any such proceeding shall be commenced.

 

Section 11. Costs and Expenses Upon Termination. Upon termination of this Agreement in accordance with Section 10 hereof, CLP shall be obligated to pay CSM any and all amounts payable pursuant to Section 6 hereof for Services provided prior to the time of termination.

 

Section 12. Surrender Of Books And Records. Upon termination of this Agreement, CSM shall forthwith surrender to CLP any and all books, records, documents and other property in the possession or control of CSM relating to this Agreement and to the business, finance, technology, trademarks or affairs of CLP and any member of the CLP Group and, except as required by law, shall not retain any copies of same.

 

Section 13. Force Majeure. Neither party shall be liable for any failure to perform this Agreement due to any cause beyond its reasonable control.

 

Section 14. Entire Agreement. This Agreement forms the entire agreement between the parties with respect to the subject matter hereof and supersedes and replaces all previous agreements, written or oral, with respect to the subject matter hereof.

 

4


 

Section 15. Severability. If any provision herein is held to be void or unenforceable, the validity and enforceability of the remaining provisions herein shall remain unaffected and enforceable.

 

Section 16. Currency. Unless stated otherwise, all currency references herein are to United States Dollars.

 

Section 17. Law And Arbitration. This Agreement shall be governed by the laws of England. Any dispute under this Agreement shall be put to arbitration in England, a jurisdiction to which the parties hereby irrevocably submit.

 

Section 18. Notice. Notice under this Agreement shall be given (via hand delivery or facsimile) as follows:

 

If to CLP:

 

3 Iassonos Street

Piraeus, 18537 Greece

Attn: Ioannis E. Lazaridis

Fax: +30 210 428 4285

 

If to CSM:

 

3 Iassonos Street

Piraeus, 18537 Greece

Attn: Director

Fax: +30 210 428 4285

 

Section 19. Sub-contracting And Assignment. CSM shall not assign this Agreement to any party that is not a subsidiary or affiliate of CSM except upon written consent of CLP. CSM may freely sub-contract or sub-license this Agreement, so long as CSM remains liable for performance of the Services and its obligations under this Agreement.

 

Section 20. Waiver. The failure of either party to enforce any term of this Agreement shall not act as a waiver. Any waiver must be specifically stated as such in writing.

 

Section 21. Affiliates. This Agreement shall be binding upon and inure to the benefit of the affiliates of CLP and/or CSM.

 

Section 22. Counterparts. This Agreement may be executed in one or more signed counterparts, facsimile or otherwise, which shall together form one instrument.

 

5


 

SCHEDULE A

SERVICES

 

CSM shall provide such of the following administrative support services (the “Services”) to CLP, as CGP may from time to time request and direct CSM to provide pursuant to Section 1.02:

 

(a)                                  Keep and maintain at all times books, records and accounts which shall contain particulars of receipts and disbursements relating to the assets and liabilities of CLP and such books, records and accounts shall be kept pursuant to normal commercial practices that will permit CLP to prepare or cause to be prepared financial statements in accordance with U.S. generally accepted accounting principles and in each case shall also be in accordance with those required to be kept by CLP under applicable federal securities laws and regulations in the United States and as CLP is required to keep and file under applicable foreign taxing regulations and the U.S. Internal Revenue Code of 1986 and the regulations applicable with respect thereto, all as amended from time to time;
 
(b)                                 Prepare all such returns, filings and documents, for review and approval by CLP as may be required under the Limited Partnership Agreement as well as such other returns, filings, documents and instruments as may from time to time be requested or instructed by CLP; and file such documents, as applicable, as directed by CLP with the relevant authority;
 
(c)                                  Provide, or arrange for the provision of, advisory services to CLP with respect to CLP’s obligations under applicable securities laws and regulations in the United States and assist CLP in arranging for compliance with continuous disclosure obligations under applicable securities laws and regulations and the rules and regulations of the Nasdaq Global Market and any other securities exchange upon which CLP’s securities are listed, including the preparation for review, approval and filing by CLP of reports and other documents with all applicable regulatory authorities, providing that nothing herein shall permit or authorize CSM to act for or on behalf of CLP in its relationship with regulatory authorities except to the extent that specific authorization may from time to time be given by CLP;
 
(d)                                 Provide, or arrange for the provision of, advisory, clerical and investor relations services to assist and support CLP in its communications with its Unitholders, including in connection with disclosures that may be required for regulatory compliance to its Unitholders and the wider financial markets, as CLP may from time to time request or direct, provided that nothing herein shall permit or authorize CSM to determine the content of any such communications by CLP to its Unitholders and the wider financial markets;

 

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(e)                                  At the request and under the direction of CLP, handle, or arrange for the handling of, all administrative and clerical matters in respect of (i) the call and arrangement of all meetings of the Unitholders pursuant to the Limited Partnership Agreement, (ii) the preparation of all materials (including notices of meetings and information circulars) in respect thereof and (iii) the submission of all such materials to CLP in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that CLP has full opportunity to review them, approve them, execute them and return them to CSM for filing or mailing or other disposition as CLP may require or direct;
 
(f)                                    Provide, or arrange for the provision of, or secure sufficient and necessary office space, equipment and personnel including all accounting, clerical, secretarial, corporate and administrative services as may be reasonably necessary for the performance of CLP’s business;
 
(g)                                 Arrange for the provision of such audit, accounting, legal, insurance and other professional services as are reasonably required by CLP from time to time in connection with the discharge of its responsibilities under the Limited Partnership Agreement, to the extent such advice and analysis can be reasonably provided or arranged by CSM, provided that nothing herein shall permit CSM to select the auditor of CLP, which shall be selected in accordance with the provisions for the appointment of the auditor pursuant to the Limited Partnership Agreement or as otherwise be required by law governing CLP, or to communicate with the auditor other than in the ordinary course of making such books and records available for review as the auditors may require and to respond to queries from the auditors with respect to the accounts and statements prepared by, or arranged by, CSM, and in particular CSM will not have any of the authorities, rights or responsibilities of the audit committee of CSM, but shall provide, or arrange for the provision of, information to such committee as may from time to time be required or requested; and provided further that nothing herein shall entitle CSM to retain legal counsel for CLP unless such selection is specifically approved by CSM;
 
(h)                                 Provide, or arrange for the provision of, such assistance and support as CLP may from time to time request in connection with any new or existing financing for CLP, such assistance and support to be provided in accordance with the direction, and under the supervision of CLP, as represented by CGP in its capacity as the general partner of CLP;
 
(i)                                     Provide, or arrange for the provision of, such administrative and clerical services as may be required by CLP to support and assist CLP in considering any future acquisitions or divestments of assets of CLP, all under the direction and under the supervision of CLP, as represented by CGP in its capacity as the general partner of CLP;

 

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(j)                                     Provide, or arrange for the provision of, such support and assistance to CLP as CLP may from time to time request in connection with any future offerings of Units that CLP may at any time determine is desirable for CLP, all under the direction and supervision of CLP, as represented by CGP in its capacity as the general partner of CLP;
 
(k)                                  Provide, or arrange for the provision of, at the request and under the direction of CLP, such communications to the transfer agent for CLP as may be necessary or desirable;
 
(l)                                     Prepare and provide, or arrange for the preparation and provision of, regular cash reports and other accounting information for review by CLP, so as to permit and enable CLP to make all determinations of financial matters required to be made pursuant to the Limited Partnership Agreement, including the determination of amounts available for distribution by CLP to its Unitholders, and to assist CLP in making arrangements with the transfer agent for CLP for the payment of distributions to the Unitholders in accordance with the Limited Partnership Agreement;
 
(m)                               Provide, or arrange for the provision of, such assistance to CLP as CLP may request or direct with respect to the performance of the obligations to the Unitholders under the Limited Partnership Agreement and to provide monitoring of various obligations and rights under agreements entered into by CLP and provide advance reports on a timely basis to CLP advising of steps, procedures and compliance issues under such agreements, so as to enable CLP, through its general partner to make all such decisions as would be necessary or desirable thereunder;
 
(n)                                 Provide, or arrange for the provision of, such additional administrative and clerical services pertaining to CLP, the assets and liabilities of CLP and the Unitholders and matters incidental thereto as may be reasonably requested by CLP from time to time;
 
(o)                                 Negotiate and arrange, at the request and under the direction of CLP, for interest rate swap agreements, foreign currency contracts, forward exchange contracts and any other hedging arrangements;
 
(p)                                 Provide, or arrange for the provision of, IT services;
 
(q)                                 Maintain, or arrange for the maintenance of, CLP’s and CLP’s subsidiaries’ existence and good standing in necessary jurisdictions;
 
(r)                                    Negotiate, at the request and under the direction of CLP, loan and credit terms with lenders and monitor and maintain compliance therewith;
 
(s)                                  Provide, or arrange for the provision of, at the request and under the direction of CLP, cash management and services, including assistance

 

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with preparation of budgets, overseeing banking services and bank accounts and arranging for the deposit of funds; and
 
(t)                                    Monitor the performance of investment managers.

 

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SCHEDULE B

COSTS AND EXPENSES

 

Within 30 days after the end of each month, CSM shall submit to CLP for payment an invoice for reimbursement of all costs and expenses reasonably incurred by CSM (the “Costs and Expenses”) in connection with the provision of the Services listed in Schedule A by CSM to CLP for such month. Each statement will contain such supporting detail as may be reasonably required to validate such amounts due.

 

CLP shall make payment within 15 days of the date of each invoice (any such day on which a payment is due, the “Due Date”). All invoices for Services are payable in U.S. dollars. All amounts not paid within 10 days after the Due Date shall bear interest at the rate of 1.00% per annum over US$ LIBOR from such Due Date until the date payment is received in full by CSM.

 

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Exhibit 10.5

 

FORM OF CONTRIBUTION AND CONVEYANCE AGREEMENT

 

This CONTRIBUTION AND CONVEYANCE AGREEMENT, dated as of • , 2007, is entered into by and among Capital Maritime & Trading Corp., a Marshall Islands corporation (“Capital Maritime”); Capital GP L.L.C., a Marshall Islands limited liability company (“GP LLC”); Capital Product Partners L.P., a Marshall Islands limited partnership (the “MLP”); and Capital Product Operating L.L.C., a Marshall Islands limited liability company (the “OLLC”). The foregoing shall be referred to individually as a “Party” and collectively as the “Parties.”  Certain capitalized terms have the meanings assigned to them in Article I hereof.

 

RECITALS

 

A.    Capital Maritime and GP LLC have formed the MLP pursuant to the Marshall Islands Limited Partnership Act (the “Marshall Islands LP Act”) for the purpose of, among other things, acquiring and owning all of the outstanding shares of capital stock of and operating all of the assets of certain subsidiaries of Capital Maritime that own and operate new or almost new medium range product tankers under medium to long-term time charters or bareboat charters. The respective Boards of Directors of Capital Maritime and the MLP have prior to this Agreement authorized the Parties to effect the actions set forth below at the times and in the order set forth below.

 

B.    To accomplish the objectives and purposes in the preceding recital, the following actions have been taken prior to the date hereof:

 

1.     Capital Maritime formed GP LLC under the terms of the Marshall Islands Limited Liability Company Act (the “Marshall Islands LLC Act”) and contributed $1000 in exchange for all of the member interests in GP LLC.
 
2.     GP LLC and Capital Maritime formed the MLP, to which GP LLC contributed $20 and Capital Maritime contributed $980 in exchange for a 2% general partner interest and 98% limited partner interest, respectively.
 
3.     The MLP formed the OLLC pursuant to the Marshall Islands LLC Act and contributed $1000 in exchange for all of the member interests in the OLLC.
 
4.     The MLP made an election to be classified as an association taxable as a corporation for U.S. federal income tax purposes, effective as of formation.
 

C.    At the Effective Time, each of the following matters shall occur:

 

1.     Capital Maritime will sell to the MLP, subsequent to the execution

 


 

of the Purchase Agreement, all of the outstanding shares of capital stock of the subsidiaries named on Schedule A hereto (collectively, the “Vessel Owning Subsidiaries”). As consideration therefor, the MLP will issue to Capital Maritime, and Capital Maritime will receive (a) 11,750,000 Common Units, representing a 56.0% limited partner interest in the MLP, (b) 8,805,521 Subordinated Units, representing a 42.0% limited partner interest in the MLP, (c) the Incentive Distribution Rights, (d) $25 million in cash representing a cash dividend and (e) the right to receive an additional dividend in the amount of $30 million payable in cash or a number of Common Units necessary to satisfy the Underwriters’ over-allotment option or a combination thereof, as described in Section 3.02.
 
2.     Capital Maritime’s original 98% limited partner interest in the MLP will be converted into one Subordinated Unit.
 
3.     GP LLC’s original 2% general partner interest in the MLP will be converted into 419,500 General Partner Units.
 
4.     The MLP will transfer the Interests to the OLLC.
 
5.     Capital Maritime will transfer the Incentive Distribution Rights to GP LLC.
 
6.     Capital Maritime, through the underwriters of the Offering (the “Underwriters”) and pursuant to the Purchase Agreement, will sell the 11,750,000 Common Units to the public in exchange for $[•] million (the “Offering Proceeds”).
 
7.     Capital Maritime will use the Offering Proceeds to (a) pay the underwriting discounts and commissions of $[•] million (which may be withheld by the Underwriters from the Offering Proceeds as payment thereof), (b) pay other transaction expenses incurred by Capital Maritime in connection with the Offering of approximately $[•] million and (c) with respect to the remaining Offering Proceeds, to repay the debt of the Vessel Owning Subsidiaries.
 
8.     The agreements of limited partnership and the limited liability company agreements of the aforementioned entities will be amended and restated to the extent necessary to reflect the applicable matters set forth above and in Article II and Article III of this Agreement.

 

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AGREEMENT

 

NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the Parties undertake and agree as follows:

 

ARTICLE I

 

Definitions; Recordation

 

Section 1.01. Definitions. The following capitalized terms have the meanings given below.

 

“Acts” shall mean collectively the Marshall Islands LP Act and the Marshall Islands LLC Act.

 

“Agreement” means this Contribution and Conveyance Agreement.

 

 “Attorney-In-Fact” has the meaning assigned to such term in Section 5.02.

 

“Bank Credit Facility” means the credit agreement dated • , 2007 by and among the MLP, as the borrower, the banks and financial institutions named therein as lenders, and the other parties thereto.

 

“Beneficial Owner” has the meaning assigned to such term in Section 6.03.

 

“Capital Maritime” has the meaning assigned to such term in the first paragraph of this Agreement.

 

“Common Units” has the meaning assigned to such term in the Partnership Agreement.

 

“Conveyed Interests” has the meaning assigned to such term in Section 5.02.

 

“Conveying Parties” has the meaning assigned to such term in Section 5.02.

 

“Effective Time” means the time when the transactions contemplated by Article II hereof have been consummated.

 

“General Partner Units” has the meaning assigned to such term in the Partnership Agreement.

 

“GP LLC” has the meaning assigned to such term in the first paragraph of this Agreement.

 

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“Hazardous Substances” has the meaning assigned to such term in the Omnibus Agreement.

 

“Incentive Distribution Rights” has the meaning assigned to such term in the Partnership Agreement.

 

“Interests” means the shares of capital stock of the Vessel Owning Subsidiaries and other rights and interests sold and conveyed to the MLP (or intended so to be) pursuant to this Agreement.

 

“Laws” means any and all laws, statutes, ordinances, rules or regulations promulgated by a governmental authority, orders of a governmental authority, judicial decisions, decisions of arbitrators or determinations of any governmental authority or court.

 

“MLP” has the meaning assigned to such term in the first paragraph of this Agreement.

 

“Marshall Islands LLC Act” has the meaning assigned to such term in Recital B.1 of this Agreement.

 

“Marshall Islands LP Act” has the meaning assigned to such term in Recital A of this Agreement.

 

“Net Over-Allotment Proceeds” has the meaning assigned to such term in Section 3.01.

 

“Offering” means the initial public offering and sale of 11,750,000 Common Units by Capital Maritime to the public.

 

“Offering Proceeds” has the meaning assigned to such term in Recital C.2 of this Agreement.

 

“OLLC” has the meaning assigned to such term in the first paragraph of this Agreement.

 

“Omnibus Agreement” means the Omnibus Agreement dated of even date herewith, by and among Capital Maritime, GP LLC, the OLLC and the MLP.

 

“Over-Allotment Proceeds” has the meaning assigned to such term in Section 3.01.

 

“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of the MLP, as it may be amended from time to time.

 

“Partnership Group” has the meaning assigned to such term in the Omnibus Agreement.

 

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“Party and Parties” have the meanings assigned to such terms in the first paragraph of this Agreement.

 

“Purchase Agreement” means the Purchase Agreement by and among Capital Maritime, the GP LLC, the MLP, the OLLC, the Underwriters and the other parties thereto, dated as of • , 2007.

 

“Registration Statement” means the registration statement on Form F-1 (File No. [•]) filed by the MLP relating to the Offering, as it may be amended.

 

 “Specific Conveyances” has the meaning assigned to such term in Section 2.08.

 

“Subordinated Units” has the meaning assigned to such term in the Partnership Agreement.

 

“Underwriters” has the meaning assigned to such term in Recital C.6 of this Agreement.

 

“Vessel Owning Subsidiaries” has the meaning assigned to such term in Recital C.1 of this Agreement.

 

“Vessels” has the meaning assigned to such term in Section 4.01(d).

 

ARTICLE II

 

Contribution and Conveyance

 

Section 2.01. Sale by Capital Maritime of Interest in Vessel Owning Subsidiaries. Capital Maritime hereby sells to the MLP, subsequent to the execution of the Purchase Agreement, all of the outstanding shares of capital stock in the Vessel Owning Subsidiaries as set forth on Schedule A hereto.

 

Section 2.02. Issuance of New Units and Incentive Distribution Rights and Payment of Cash Dividend. The MLP hereby issues to Capital Maritime (a) 11,750,000 Common Units, representing a 56.0% limited partner interest in the MLP, (b) 8,805,521 Subordinated Units, representing a 42.0% limited partner interest in the MLP, (c) the Incentive Distribution Rights, (d) $25 million in cash representing a cash dividend and (e) the right to receive an additional dividend in the amount of $30 million, payable in cash or a number of Common Units necessary to satisfy the Underwriters' over-allotment option or a combination thereof as described in Section 3.02, as consideration for the all of the outstanding shares of capital stock of the Vessel Owning Subsidiaries.

 

Section 2.03. Conversion of Capital Maritime’s Limited Partner Interest. The MLP hereby converts Capital Maritime’s original 98% limited partner interest into one Subordinated Unit.

 

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Section 2.04. Conversion of GP LLC’s General Partner Interest. The MLP hereby converts GP LLC’s original 2% general partner interest into 419,500 General Partner Units.

 

Section 2.05. MLP Receipt of Capital Stock of Vessel Owning Subsidiaries. As consideration for (a) 11,750,000 Common Units, (b)  8,805,521 Subordinated Units, (c) the Incentive Distribution Rights and (d) the $25 cash dividend, the MLP hereby acknowledges receipt of the shares of outstanding capital stock of the Vessel Owning Subsidiaries.

 

Section 2.06. Capital Maritime Receipt of New Units, Incentive Distribution Rights and Cash Dividend. As consideration for the shares of capital stock of the Vessel Owning Subsidiaries, Capital Maritime hereby acknowledges receipt of (a) 11,750,000 Common Units, representing a 56.0% limited partner interest in the MLP, (b) 8,805,521 Subordinated Units, representing a 42.0% limited partner interest in the MLP, (c) the Incentive Distribution Rights, (d) $25 million in cash representing a cash dividend, and (e) the right to receive an additional dividend in the amount of $30 million, payable in cash or a number of Common Units necessary to satisfy the Underwriters' over-allotment option or a combination thereof as described in Section 3.02.

 

Section 2.07. Transfer of Interests to OLLC. The MLP hereby transfers all of the Interests to the OLLC, and the OLLC hereby acknowledges receipt of such Interests.

 

Section 2.08. Transfer of Incentive Distribution Rights to GP LLC. Capital Maritime hereby transfers the Incentive Distribution Rights to GP LLC, and GP LLC hereby acknowledges receipt of such Incentive Distribution Rights.

 

Section 2.09. Specific Conveyances. To further evidence the sale of the Interests reflected in this Agreement, each party making such sale may have executed and delivered to the party receiving such Interest being sold certain conveyance, assignment and bill of sale instruments (the “Specific Conveyances”). The Specific Conveyances shall evidence and perfect such sale made by this Agreement and shall not constitute a second conveyance of any assets or interests therein and shall be subject to the terms of this Agreement.

 

ARTICLE III

 

Additional Transaction

 

Section 3.01. Exercise of the Over-Allotment Option. In the event the Underwriters exercise their over-allotment option, the MLP shall issue to Capital Maritime up to 1,762,500 additional common units which Capital Maritime, through the Underwriters and pursuant to the Underwriting Agreement, will sell to the public in one or more parts during the 30-day period following the date of the pricing of the Offering in exchange for $[•] million (the “Over-Allotment Proceeds”). Capital Maritime will use part of the Over-Allotment Proceeds to (a) pay the underwriting discounts and commissions of $[•] million and (b) pay other transaction expenses incurred by Capital Maritime in connection with the exercise of the over-allotment option (such remainder, in the aggregate,

 

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the “Net Over-Allotment Proceeds”). Capital Maritime will retain the Net Over-Allotment Proceeds, if any, and use such proceeds to repay indebtedness or for general corporate purposes.

 

Section 3.02. Dividend. Upon the earlier of (i) the exercise in full of the Underwriters’ over-allotment option and (ii) 30 days after the date of the Underwriting Agreement, the MLP shall pay to Capital Maritime an additional cash dividend in an amount of either $30 million if the over-allotment option is not exercised or, if the over-allotment option is exercised, a number of Common Units necessary to satisfy the over-allotment option, provided that if the Net Over-Allotment Proceeds are less than $30 million, the MLP shall also pay to Capital Maritime an amount in cash equal to the difference between $30 million and the Net Over-Allotment Proceeds.

 

ARTICLE IV

 

Representations and Warranties of Capital Maritime; Disclaimer

 

Section 4.01 Capital Maritime represents and warrants that:

 

(a)           Each of the Vessel Owning Subsidiaries is a corporation duly incorporated, organized and validly existing in good standing under the laws of The Republic of the Marshall Islands and has all requisite power and authority to operate its assets and conduct its business as described in the Registration Statement;

 

(b)           The execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by it pursuant to this Agreement, and the completion of the transactions contemplated by this Agreement, have been duly authorized by all necessary action on its part, and this Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation of it enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws of general application affecting the enforceability of remedies and rights of creditors and except that equitable remedies such as specific performance and injunction are in the discretion of a court;

 

(c)           The execution, delivery and performance by it of this Agreement will not conflict with or result in any violation of or constitute a breach of any of the terms or provisions of, or result in the acceleration of any obligation under, or constitute a default under any provision of: (i) its or any Vessel Owning Subsidiary’s articles of incorporation or by-laws or other organizational documents; (ii) any lien, encumbrance, security interest, pledge, mortgage, charge, other claim, bond, indenture, agreement, contract, franchise license, permit or other instrument or obligation to which it or any Vessel Owning Subsidiary is a party or is subject or by which any of its or any Vessel Owning Subsidiary’s assets or properties may be bound; (iii) any applicable Law; or (iv) any charter or

 

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shipbuilding contract to which any Vessel Owning Subsidiary is a party or any material provision of any material contract to which it or any Vessel Owning Subsidiary is a party or by which its or any Vessel Owning Subsidiary’s properties are bound;

 

(d)           Except as have already been obtained, no consent, permit, approval or authorization of, notice or declaration to or filing with any governmental authority or any other person, including those related to any environmental laws or regulations, is required in connection with the execution and delivery by it of this Agreement or the consummation by it of the transactions contemplated hereunder, and any consents required for the transfer or assignment of the charters and shipbuilding contracts related to the vessels owned by the Vessel Owning Subsidiaries set forth on Schedule A to this Agreement (collectively, the “Vessels”) have been duly obtained;

 

(e)           All of the issued and outstanding shares of capital stock of each Vessel Owning Subsidiary are duly authorized and validly issued in accordance with the articles of incorporation and by-laws of such Vessel Owning Subsidiary and are fully paid and nonassessable;

 

(f)            Capital Maritime owns all of the outstanding shares of capital stock of each Vessel Owning Subsidiary and has good and marketable title thereto, free and clear of all liens, encumbrances, security interests, pledges, mortgages, charges or other claims; each Vessel Owning Subsidiary owns the Vessel set forth opposite its name on Schedule A hereto with good and marketable title, free and clear of all liens, encumbrances, security interests, pledges, mortgages, charges or other claims, other than those arising under the Bank Credit Facility;

 

(g)           There is no agreement, contract, option, commitment or other right or understanding in favor of, or held by, any person other than the MLP to acquire any Vessel Owning Subsidiary or the assets of any Vessel Owning Subsidiary, including the Vessels, that has not been waived;

 

(h)           Correct and complete copies of the organizational documents of each Vessel Owning Subsidiary (as amended to the date hereof) and each of the charters and shipbuilding contracts to which each Vessel Owning Subsidiary is a party (as amended to the date hereof) have been made available to the MLP;

 

(i)            Each charter and shipbuilding contract is a valid and binding agreement of each contracting Vessel Owning Subsidiary enforceable in accordance with its terms and, to the best knowledge of Capital Maritime, of all other parties thereto enforceable in accordance with its terms;

 

(j)            Each Vessel Owning Subsidiary has fulfilled all material obligations required pursuant to its respective charter and shipbuilding contract to have been performed by it prior to the date hereof and has not waived any

 

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material rights thereunder; and no material default or breach exists in respect thereof on its or any Vessel Owning Subsidiary’s part or, to its knowledge, any of the other parties thereto and, to its knowledge, no event has occurred which, after giving of notice or the lapse of time, or both, would constitute such a material default or breach;

 

(k)           Except for such liabilities, debts obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of vessels of the same type as the Vessels in the ordinary course of business, there are no liabilities, debts or obligations of, encumbrances, defects or restrictions with respect to, or claims against any Vessel Owning Subsidiary or any of the assets owned by any Vessel Owning Subsidiary, including the Vessels, other than those arising under the Bank Credit Facility; and

 

(l)            Each Vessel is (i) adequate and suitable for use by the applicable Vessel Owning Subsidiary in such Vessel Owning Subsidiary’s business as presently conducted by it in all material respects as described in the Registration Statement, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes and is in good running order and repair; (iii) insured against all risks, and in amounts, consistent with common industry practices; (iv) in compliance with maritime laws and regulations; (v) duly registered under the flag set forth opposite such Vessel’s name on Schedule A hereto; and (vi) in compliance in all material respects with the requirements of its present class and classification society; and all class certificates of each Vessel are clean and valid and free of recommendations affecting class.

 

Section 4.02           Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws. (a)  EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE ASSETS OWNED BY THE VESSEL OWNING SUBSDIARIES (INCLUDING THE VESSELS), INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF SUCH ASSETS GENERALLY, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON SUCH ASSETS, (B) THE INCOME TO BE DERIVED FROM SUCH ASSETS, (C) THE SUITABILITY OF SUCH ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON OR THEREWITH, (D) THE COMPLIANCE OF OR BY SUCH ASSETS OR THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION,

 

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POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SUCH ASSETS. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY HAS HAD THE OPPORTUNITY TO INSPECT THE RESPECTIVE ASSETS OF THE VESSEL OWNING SUBSIDIARIES, AND SUCH PARTY IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE RESPECTIVE ASSETS OF THE VESSEL OWNING SUBSIDIARIES AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY ANY OF THE OTHER PARTIES. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE ASSETS OF THE VESSEL OWNING SUBSIDIARIES FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. THIS SECTION SHALL SURVIVE THE SALE AND CONVEYANCE OF THE INTERESTS OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE INTERESTS AND THE ASSETS OF THE VESSEL OWNING SUBSIDIARIES THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT.

 

ARTICLE V

 

Further Assurances

 

Section 5.01. Further Assurances. From time to time after the date hereof, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquaintances and other documents, and will do all such other acts and things, all in accordance with applicable Law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record

 

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title to the interests sold and conveyed by this Agreement or intended so to be and (c) to more fully and effectively carry out the purposes and intent of this Agreement.

 

Section 5.02. Power of Attorney. Each Party that has conveyed any Interests (the “Conveyed Interests”) pursuant to this Agreement (collectively, the “Conveying Parties”) hereby constitutes and appoints GP LLC (the “Attorney-in-Fact”) its true and lawful attorney-in-fact with full power of substitution for it and in its name, place and stead or otherwise on behalf of the applicable Conveying Party and its successors and assigns, and for the benefit of the Attorney-in-Fact to demand and receive from time to time the Conveyed Interests sold and conveyed by this Agreement (or intended so to be) and to execute in the name of the applicable Conveying Party and its successors and assigns instruments of conveyance, instruments of further assurance and to give receipts and releases in respect of the same, and from time to time to institute and prosecute in the name of the applicable Conveying Party for the benefit of the Attorney-in-Fact, any and all proceedings at law, in equity or otherwise which the Attorney-in-Fact may deem proper in order to (a) collect, assert or enforce any claims, rights or titles of any kind in and to the Conveyed Interests, (b) defend and compromise any and all actions, suits or proceedings in respect of any of the Conveyed Interests, and (c) do any and all such acts and things in furtherance of this Agreement as the Attorney-in-Fact shall deem advisable. Each Conveying Party hereby declares that the appointment hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable and perpetual and shall not be terminated by any act of any Conveying Party or its successors or assigns or by operation of law.

 

ARTICLE VI

 

Miscellaneous

 

Section 6.01. Completion of Transactions. The transactions provided for in Articles II and III of this Agreement shall be completed on the dates specified in this Agreement and in the following order:  (i) the transactions provided for in Article II shall be completed concurrently and (ii) the transactions provided for in Article III shall be completed in the order set forth therein.

 

Section 6.02. Survival of Representations and Warranties. The representations and warranties of Capital Maritime in this Agreement and in or under any documents, instruments and agreements delivered pursuant to this Agreement, will survive the completion of the transactions contemplated hereby regardless of any independent investigations that the MLP may make or cause to be made, or knowledge it may have, prior to the Effective Time and will continue in full force and effect for a period of one year from the Effective Time. At the end of such period, such representations and warranties will terminate, and no claim may be brought by the MLP against Capital Maritime thereafter in respect of such representations and warranties, except for claims that have been asserted by the MLP prior to the Effective Time.

 

Section 6.03. Costs. Capital Maritime shall pay any and all sales, use and similar taxes arising out of the sale, conveyances and deliveries to be made hereunder,

 

11


 

and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection therewith.

 

Section 6.04. Headings; References; Interpretation. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All references herein to Articles and Sections shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement, respectively. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to,” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

 

Section 6.05. Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

 

Section 6.06. No Third Party Rights. The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

 

Section 6.07. Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the parties hereto.

 

Section 6.08. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly within such jurisdiction without giving effect to conflict of law principles thereof other than Section 5-1401 of the New York General Obligations Law, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Vessels are located, shall apply.

 

Section 6.09. Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision

 

12


 

added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

 

Section 6.10. Deed; Bill of Sale; Assignment. To the extent required and permitted by applicable Law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the Interests.

 

Section 6.11. Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties hereto.

 

Section 6.12. Integration. This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to its subject matter hereof. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the Parties hereto after the date of this Agreement.

 

13


 

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

 

 

 

CAPITAL MARITIME & TRADING CORP.,

 

 

a Marshall Islands Corporation,

 

 

 

 

 

by

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

CAPITAL GP L.L.C.,

 

 

a Marshall Islands limited liability company

 

 

 

 

 

by

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

CAPITAL PRODUCT PARTNERS L.P.,

 

 

a Marshall Islands limited partnership

 

 

 

 

 

by

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

CAPITAL OPERATING L.L.C.,

 

 

a Marshall Islands limited liability company

 

 

 

 

 

by

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

Title:

 

14


 

SCHEDULE A

 

VESSEL OWNING SUBSIDIARIES, VESSELS AND CHARTERS

 

 

Vessel Owning Subsidiary

 

Vessel

 

Jurisdiction of Registration

 

Number of Shares
being Sold

Shipping Rider Co.

 

Atlantas

 

Marshall Islands and Isle of Man

 

500

Canvey Shipmanagement Co.

 

Assos

 

Liberia

 

500

Centurion Navigation Limited

 

Aktoras

 

Marshall Islands and Isle of Man

 

500

Polarwind Maritime S.A.

 

Agisilaos

 

Marshall Islands

 

500

Carnation Shipping Company

 

Arionas

 

Marshall Islands

 

500

Iraklitos Shipping Company

 

Axios

 

Liberia

 

100

Tempest Maritime Inc.

 

Aiolos

 

Marshall Islands and Isle of Man

 

500

Apollonas Shipping Company

 

Avax

 

Liberia

 

500

 

15



 

Exhibit 10.6

 

 

 

 

FORM OF SHARE PURCHASE AGREEMENT

 

 

Dated • March, 2007

 

 

between

 

 

CAPITAL MARITIME & TRADING CORP.

 

 

and

 

 

CAPITAL PRODUCT PARTNERS L.P.

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE I

 

 

 

 

 

Interpretation

 

 

 

 

 

SECTION 1.01 Definitions

 

1

 

 

 

ARTICLE II

 

 

 

 

 

Purchase and Sale of Shares; Closing

 

 

 

 

 

SECTION 2.01 Purchase and Sale of Shares

 

4

SECTION 2.02 Closing

 

5

SECTION 2.03 Place of Closing

 

5

SECTION 2.04 Purchase Price for Shares

 

5

SECTION 2.05 Payment of the Purchase Price

 

5

SECTION 2.06 Deficient Vessel

 

5

SECTION 2.07 Delay in Delivery

 

6

 

 

 

ARTICLE III

 

 

 

 

 

Representations and Warranties of the Buyer

 

 

 

 

 

SECTION 3.01 Organization and Limited Partnership Authority

 

6

SECTION 3.02 Agreement Not in Breach of Other Instruments

 

6

SECTION 3.03 No Legal Bar

 

7

SECTION 3.04 Availability of Funds

 

7

 

 

 

ARTICLE IV

 

 

 

 

 

Representations and Warranties of the Seller

 

 

 

 

 

SECTION 4.01 Organization and Corporate Authority

 

7

SECTION 4.02 Agreement Not in Breach of Other Instruments

 

7

SECTION 4.03 No Legal Bar

 

8

SECTION 4.04 Good and Marketable Title to Shares

 

8

SECTION 4.05 Right to Enter Agreement

 

8

 

 

 

ARTICLE V

 

 

 

 

 

Representations and Warranties of the Seller Regarding the Vessel Owning Subsidiaries

 

 

 

 

 

SECTION 5.01 Organization Good Standing and Authority

 

8

SECTION 5.02 Capitalization

 

8

SECTION 5.03 Organizational Documents

 

9

SECTION 5.04 Agreement Not in Breach of Other Instruments

 

9

SECTION 5.05 Litigation

 

9

SECTION 5.06 Indebtedness to and from Officers, etc.

 

9

SECTION 5.07 Personnel

 

10

 

i


 

SECTION 5.08 Contracts and Agreements

 

10

SECTION 5.09 Compliance with Law

 

10

SECTION 5.10 No Undisclosed Liabilities

 

10

SECTION 5.11 Disclosure of Information

 

11

 

 

 

ARTICLE VI

 

 

 

 

 

Representations and Warranties of the Seller regarding the Vessels

 

 

 

 

 

SECTION 6.01 Title to Vessels

 

11

SECTION 6.02 No Encumbrances

 

11

SECTION 6.03 Condition

 

11

 

 

 

ARTICLE VII

 

 

 

 

 

Pre-Closing Matters

 

 

 

 

 

SECTION 7.01 Covenants of the Seller Prior to each Closing

 

11

SECTION 7.02 Covenant of the Buyer Prior to each Closing

 

13

 

 

 

ARTICLE VIII

 

 

 

 

 

Conditions Of Closing

 

 

 

 

 

SECTION 8.01 Conditions of the Seller

 

13

SECTION 8.02 Conditions of the Buyer

 

13

 

 

 

ARTICLE IX

 

 

 

 

 

Termination, Amendment and Waiver

 

 

 

 

 

SECTION 9.01 Termination of Agreement

 

14

SECTION 9.02 Termination in Respect of a Vessel Owning Subsidiary

 

15

SECTION 9.03 Amendments and Waivers

 

15

 

 

 

ARTICLE X

 

 

 

 

 

Indemnification

 

 

 

 

 

SECTION 10.01 Indemnity by the Seller

 

15

SECTION 10.02 Indemnity by the Buyer

 

16

 

 

 

ARTICLE XI

 

 

 

 

 

Miscellaneous

 

 

 

 

 

SECTION 11.01 Governing Law

 

16

SECTION 11.02 Counterparts

 

16

SECTION 11.03 Complete Agreement

 

16

SECTION 11.04 Interpretation

 

16

SECTION 11.05 Severability

 

16

SECTION 11.06 Third Party Rights

 

16

SECTION 11.07 Notices

 

16

 

ii


 

SHARE PURCHASE AGREEMENT (the “Agreement”), dated as of March • , 2007, by and between CAPITAL MARITIME & TRADING CORP. (the “Seller”), a corporation organized under the laws of the Republic of the Marshall Islands, and CAPITAL PRODUCT PARTNERS L.P. (the “Buyer”), a limited partnership organized under the laws of the Republic of the Marshall Islands and recently formed by the Seller.

 

RECITAL

 

WHEREAS, the Buyer wishes to purchase from the Seller, and the Seller wishes to sell to the Buyer, the shares of common stock as set forth on Schedule C to this Agreement (the “Shares”) representing all of the issued and outstanding shares of common stock of each of the vessel owning subsidiaries that will take delivery of a Vessel in 2007 as set forth in Schedule A.I hereto (each, a “2007 Vessel Owning Subsidiary,” and collectively the “2007 Vessel Owning Subsidiaries”) and of each of the vessel owning subsidiaries that will take delivery of a Vessel in 2008 as set forth in Schedule A.II hereto (each, a “2008 Vessel Owning Subsidiary,” and collectively the “2008 Vessel Owning Subsidiaries” and, together with the 2007 Vessel Owning Subsidiaries, the “Vessel Owning Subsidiaries”).

 

WHEREAS, each of the Vessel Owning Subsidiaries is party to a shipbuilding contract for the construction and delivery of a vessel (each, a “Ship Building Contract”) the name of which is set forth opposite that Vessel Owning Subsidiary’s name on Schedule A.I or on Schedule A.II hereto (each, a “Vessel” and collectively, the “Vessels”).

 

WHEREAS, each of the Vessels is subject to a medium to long-term charter set forth opposite that Vessels name on Schedule A.I or on Schedule A.II hereto (collectively, the “Charters”), and each such Charter will commence upon delivery of the applicable Vessel.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

 

Interpretation

 

SECTION 1.01  Definitions. In this Agreement, unless the context requires otherwise or unless otherwise specifically provided herein, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

 

“Agreement” means this Agreement, including its recitals and schedules, as amended and supplemented;

 


 

“Applicable Law” in respect of any Person, property, transaction or event, means all laws, statutes, ordinances, regulations, municipal by-laws, treaties, judgments and decrees applicable to that Person, property, transaction or event and, whether or not having the force of law, all applicable official directives, rules, consents, approvals, authorizations, guidelines, orders, codes of practice and policies of any Governmental Authority having or purporting to have authority over that Person, property, transaction or event and all general principles of common law and equity;

 

“Builder” means, in respect of the Vessels to be delivered to the 2007 Vessel Owning Subsidiaries, Hyundai MIPO Dockyard Co., Ltd., South Korea and in respect of the Vessels to be delivered to the 2008 Vessel Owning Subsidiaries, STX Shipbuilding Co., Ltd., South Korea, and any successor or permitted assign thereof;

 

“Business Day” means any day other than a Saturday, Sunday or any statutory holiday on which banks in London, Greece and New York are required to close;

 

“Buyer Indemnitees” has the meaning given to it in Section 10.01;

 

“Change of Control” has, with respect to the Buyer, the meaning ascribed to such term in the Omnibus Agreement;

 

“Charters” has the meaning given to it in the recitals;

 

“Closing” has the meaning given to it in Section 2.01;

 

“Closing Date” means the day on which a Closing takes place;

 

“Common Units” means the common units constituting the capital of the Buyer;

 

“Contracts” has the meaning given to it in Section 5.08;

 

“Credit Facility” means the US$370 million credit facility agreement dated • , 2007 between the Buyer and HSH Nordbank AG;

 

“Daily Charter Rate” means, with respect to any Vessel, the daily charter rate set forth opposite that Vessel’s name on Schedule A.I or on Schedule A.II hereto;

 

“Default” means a material Event of Default under and as defined in the Credit Facility that is not capable of remedy or, if capable of remedy has not been cured by the Buyer within the applicable cure period; for the purposes of this definition, a “material Event of Default” means any Event of Default the effect of which is to prohibit or prevent the Buyer from (i) paying distributions or (ii) borrowing, pursuant to the Credit Facility, those funds required to complete its obligations under this Agreement;

 

“Delivered” means, in respect of any Vessel, the concurrent delivery by the respective Vessel Owning Subsidiary and the Builder of that Vessel, to each other, of

 

2


 

a protocol of acceptance and delivery acknowledging, the delivery of that Vessel by the Builder, and the acceptance thereof by that Vessel Owning Subsidiary;

 

“Delivery Date” means, with respect to any Vessel, the date that Vessel is Delivered to the Vessel Owning Subsidiary set out across from that Vessel on Schedule A.I or on Schedule A.II hereto;

 

“Encumbrance” means any mortgage, lien, charge, assignment, adverse claim, hypothecation, restriction, option, covenant, condition or encumbrance, whether fixed or floating, on, or any security interest in, any property whether real, personal or mixed, tangible or intangible, any pledge or hypothecation of any property, any deposit arrangement, priority, conditional sale agreement, other title retention agreement or equipment trust, capital lease or other security arrangements of any kind;

 

“Financing” has the meaning given to it in Section 3.04;

 

“Governmental Authority” means any domestic or foreign government, including federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing and any multinational or supranational organization;

 

“Initial Public Offering” means the initial public offering by the Seller of the Buyer’s common units pursuant to the Registration Statement;

 

“Losses” means, with respect to any matter, all losses, claims, damages, liabilities, deficiencies, costs, expenses (including all costs of investigation, legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) or diminution of value, whether or not involving a claim from a third party, however specifically excluding consequential, special and indirect losses, loss of profit and loss of opportunity;

 

“Manager” means Capital Ship Management Corp.;

 

“Notice” means any notice, citation, directive, order, claim, litigation, investigation, proceeding, judgment, letter or other communication, written or oral, actual or threatened, from any Person;

 

“Omnibus Agreement” means the Omnibus Agreement, dated as of the date hereof, between, among others, the Buyer and the Seller;

 

“Parties” means all parties to this Agreement and “Party” means any one of them;

 

“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of the Buyer dated as of the date hereof;

 

3


 

“Person” means an individual, legal personal representative, corporation, body corporate, firm, partnership, trust, trustee, syndicate, joint venture, unincorporated organization or Governmental Authority;

 

“Purchase Price” has the meaning given to it in Section 2.04;

 

“Registration Statement” means the registration statement on Form F-1 (File No. [•]) filed by the Buyer in connection with the Initial Public Offering, as it may be amended.

 

“Seller Indemnities” has the meaning given to it in Section 10.02;

 

“Shares” has the meaning given to it in the recitals;

 

“Ship Building Contract” has the meaning given to it in the recitals;

 

“Taxes” means all income, franchise, business, property, sales, use, goods and services or value added, withholding, excise, alternate minimum capital, transfer, excise, customs, anti-dumping, stumpage, countervail, net worth, stamp, registration, franchise, payroll, employment, health, education, business, school, property, local improvement, development, education development and occupation taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, dues and charges and other taxes required to be reported upon or paid to any domestic or foreign jurisdiction and all interest and penalties thereon;

 

“Time of Closing” has the meaning given to it in Section 2.01;

 

“Vessel Owning Subsidiaries” has the meaning given to it in the recitals;

 

“Vessels” has the meaning given to it in the recitals;

 

“2007 Vessel Owning Subsidiaries” has the meaning given to it in the recitals;

 

“2008 Vessel Owning Subsidiaries” has the meaning given to it in the recitals.

 

ARTICLE II

 

Purchase and Sale of Shares; Closing

 

SECTION 2.01  Purchase and Sale of Shares. The Seller agrees to sell and transfer to the Buyer, and the Buyer agrees to purchase from the Seller for the Purchase Price and in accordance with and subject to the terms and conditions set forth in this Agreement, the Shares.

 

4


 

SECTION 2.02  Closing. On the terms and subject to the conditions of this Agreement, the sale and transfer of the Shares of each of the Vessel Owning Subsidiaries and payment of the Purchase Price shall take place on a date that is within five (5) Business Days of the Delivery Date for that Vessel Owning Subsidiary’s Vessel or on such other date as may be agreed upon in writing by the Seller and the Buyer (the “Time of Closing”); provided that if any such sale and transfer of a Vessel Owning Subsidiary’s Shares is scheduled to occur on the Delivery Date, the Time of Closing must be after the registration of the Vessel in the name of the relevant Vessel Owning Subsidiary. Each sale and transfer of Shares of a Vessel Owning Subsidiary is hereinafter referred to as a “Closing.”

 

SECTION 2.03  Place of Closing. Each Closing shall take place at a place agreed upon in writing by the Seller and the Buyer.

 

SECTION 2.04  Purchase Price for Shares. At the applicable Time of Closing, the Buyer shall pay to the Seller (to such account as the Seller shall nominate) the amount set out on Schedule B across from the applicable Vessel Owning Subsidiary’s name, for that Vessel Owning Subsidiary’s Shares (each such amount, a “Purchase Price”).

 

SECTION 2.05  Payment of the Purchase Price. Each Purchase Price will be paid by the Buyer to the Seller of the Shares of the applicable Vessel Owning Subsidiary in respect of which that Purchase Price is payable by wire transfer of immediately available funds to an account designated in writing by the Seller. The Seller shall give the Buyer written notice ten (10) days prior to the expected Time of Closing

 

SECTION 2.06  Deficient Vessel. In the event that there is a deficiency in a Vessel such that the Vessel does not meet the specifications set forth in the relevant Ship Building Contract then:

 

(a)  if the relevant Vessel Owning Subsidiary is not obligated under the Ship Building Contract to purchase the Vessel or if the relevant Vessel Owning Subsidiary is obligated under the Ship Building Contract to purchase the Vessel but the charterer under the relevant Charter refuses to accept the Vessel or refuses to accept the Vessel without any amendments to the relevant Charter, and the Seller does not secure prior to the Time of Closing in respect of such Vessel Owning Subsidiary a replacement charter similar in all material respects to the relevant Charter, in the opinion of the Board of Directors of the Buyer, acting reasonably:

 

(i)  the Buyer may elect to purchase the Vessel Owning Subsidiary (in which case the Seller and applicable Vessel Owning Subsidiary will complete the purchase of such Vessel in accordance with the Ship Building Contract, and the Buyer will complete the purchase of the Vessel Owning Subsidiary hereunder); or

 

(ii)  the Buyer may elect not to purchase the Vessel Owning Subsidiary from the Seller, and the Seller and applicable Vessel Owning Subsidiary may complete the purchase of such Vessel in accordance with

 

5


 

the Ship Building Contract, provided that any such purchase, ownership and operation of the Vessel by the Seller, the Vessel Owning Subsidiary or any of their affiliates shall be subject to the terms of the Omnibus Agreement; and

 

(b)  if the relevant Vessel Owning Subsidiary is obligated under the Ship Building Contract to purchase the Vessel and the charterer under the relevant Charter accepts the Vessel with no amendments to the Charter as a result of such deficiencies, the Buyer will complete the purchase of the Vessel Owning Subsidiary hereunder;

 

(c)  if the Buyer completes the purchase of the relevant Vessel Owning Subsidiary pursuant to subsection (a)(i) or (b) above and the Daily Charter Rate under the relevant Charter has not decreased as a result of such deficiencies, the Seller shall have the right to receive and retain any adjustments, rebates, discounts or other reductions related to such deficiency received by the relevant Vessel Owning Subsidiary pursuant to the relevant Ship Building Contract.

 

SECTION 2.07  Delay in Delivery. In the event that there has been a delay in excess of three hundred (300) days in the Delivery of any Vessel to a Vessel Owning Subsidiary from the delivery date provided for in the relevant Ship Building Contract, the Buyer may elect not to purchase such Vessel Owning Subsidiary from the Seller, and the Seller and applicable Vessel Owning Subsidiary may complete the purchase of such Vessel in accordance with the Ship Building Contract, provided that any such purchase, ownership and operation of the Vessel by the Seller, the Vessel Owning Subsidiary or any of their affiliates shall be subject to the terms of the Omnibus Agreement.

 

ARTICLE III

 

Representations and Warranties of the Buyer

 

The Buyer represents and warrants to the Seller that as of the date hereof and on each respective Closing Date:

 

SECTION 3.01  Organization and Limited Partnership Authority. The Buyer is duly formed, validly existing and in good standing under the laws of the Republic of The Marshall Islands, and has all requisite limited partnership power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer, has been effectively authorized by all necessary action, limited partnership or otherwise, and constitutes legal, valid and binding obligations of the Buyer. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the Buyer.

 

SECTION 3.02  Agreement Not in Breach of Other Instruments. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any agreement or other instrument to which the Buyer is a party or by which it is bound, the Certificate of

 

6


 

Formation and the Partnership Agreement, any judgment, decree, order or award of any court, governmental body or arbitrator by which the Buyer is bound, or any law, rule or regulation applicable to the Buyer which would have a material effect on the transactions contemplated hereby.

 

SECTION 3.03  No Legal Bar. The Buyer is not prohibited by any order, writ, injunction or decree of any body of competent jurisdiction from consummating the transactions contemplated by this Agreement and no such action or proceeding is pending or, to the best of its knowledge and belief, threatened against the Buyer which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby.

 

SECTION 3.04  Availability of Funds.  The Buyer has firm financing commitments that are sufficient to enable it to pay the Purchase Price of the Shares of the 2007 Vessel Owning Subsidiaries and 50% of the Purchase Price of the Shares of the 2008 Vessel Owning Subsidiaries. The financing required to pay the Purchase Price is referred to in this Agreement as the “Financing.”  The Buyer does not have any reason to believe that any of the conditions of the Financing will not be satisfied or that the Financing will not be available to the Buyer on a timely basis to pay the Purchase Price of the Shares of the 2007 Vessel Owning Subsidiaries and 50% of the Purchase Price of the Shares of the 2008 Vessel Owning Subsidiaries.

 

ARTICLE IV

 

Representations and Warranties of the Seller

 

The Seller represents and warrants to the Buyer that as of the date hereof and on each respective Closing Date:

 

SECTION 4.01  Organization and Corporate Authority. The Seller is duly incorporated, validly existing and in good standing under the laws of the Republic of The Marshall Islands, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller, has been effectively authorized by all necessary action, corporate or otherwise, and constitutes legal, valid and binding obligations of the Seller. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the Seller.

 

SECTION 4.02  Agreement Not in Breach of Other Instruments. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any agreement or other instrument to which the Seller is a party or by which it is bound, the Articles of Incorporation and Bylaws of the Seller, any judgment, decree, order or award of any court, governmental body or arbitrator by which the Seller is bound, or any law, rule or regulation applicable to the Seller.

 

7


 

SECTION 4.03  No Legal Bar. The Seller is not prohibited by any order, writ, injunction or decree of any body of competent jurisdiction from consummating the transactions contemplated by this Agreement and no such action or proceeding is pending or, to the best of its knowledge and belief, threatened against the Seller which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby.

 

SECTION 4.04  Good and Marketable Title to Shares. The Seller is the registered owner of all of the Shares and now has, and at each Closing will have and convey to the Buyer, good and marketable title to the Shares, free and clear of any and all Encumbrances.

 

SECTION 4.05  Right to Enter Agreement. The Seller has the full right, power and authority to enter into this Agreement and to transfer, convey and sell to the Buyer at the Time of Closing the Shares and upon consummation of the purchase contemplated hereby, the Buyer will acquire from the Seller good and marketable title to the Shares, free and clear of all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever.

 

ARTICLE V

 

Representations and Warranties of
the Seller Regarding the Vessel Owning Subsidiaries

 

The Seller represents and warrants to the Buyer that as of the date hereof and on each respective Closing Date:

 

SECTION 5.01  Organization Good Standing and Authority. Each of the Vessel Owning Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the Republic of The Marshall Islands. Each of the Vessel Owning Subsidiaries has full corporate power and authority to carry on its business as it is now, and has since its incorporation been, conducted, and is entitled to own, lease or operate the properties and assets it now owns, leases or operates and to enter into legal and binding contracts. Each of the Vessel Owning Subsidiaries is qualified to do business, is in good standing and has all required and appropriate licenses and authorizations in each jurisdiction in which its failure to obtain or maintain such qualification, good standing, licensing or authorization would have a material adverse effect on the condition (financial or otherwise), assets, properties, business or prospects of such Vessel Owning Subsidiary taken as a whole. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up any Vessel Owning Subsidiary.

 

SECTION 5.02  Capitalization. The Shares consist of the shares listed next to each of the Vessel Owning Subsidiaries listed in Schedule C. The Shares have been duly authorized and validly issued and are fully paid and non-assessable, and constitute the total authorized, issued and outstanding capital stock of each of the Vessel Owning Subsidiaries.

 

8


 

There are not, and on each respective Closing Date there will not be, outstanding (i) any options, warrants or other rights to purchase from any Vessel Owning Subsidiary any capital stock of such Vessel Owning Subsidiary, (ii) any securities convertible into or exchangeable for shares of such capital stock or (iii) any other commitments of any kind for the issuance of additional shares of capital stock or options, warrants or other securities of the Vessel Owning Subsidiaries.

 

SECTION 5.03  Organizational Documents. The Seller has supplied to the Buyer true and correct copies of the organizational documents of each of the Vessel Owning Subsidiaries, in each case as in effect on each respective Closing Date (the “Organizational Documents”) and no amendments will be made to the Organizational Documents prior to any Closing Date without the prior written consent of the Buyer (such consent not to be unreasonably withheld).

 

SECTION 5.04  Agreement Not in Breach of Other Instruments. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, or result in a breach of, any of the terms and provisions of, or constitute a default under, or conflict with, or give any other party thereto a right to terminate any agreement or other instrument to which any of the Vessel Owning Subsidiaries is a party or by which any of them is bound including, without limitation, any of the Charter Documents or any judgment, decree, order or award of any court, governmental body or arbitrator applicable to any of the Vessel Owning Subsidiaries.

 

SECTION 5.05  Litigation.

 

(a).          There is no action, suit or proceeding to which any of the Vessel Owning Subsidiaries is a party (either as a plaintiff or defendant) pending before any court or governmental agency, authority or body or arbitrator; there is no action, suit or proceeding threatened against any of the Vessel Owning Subsidiaries; and, to the best knowledge of the Seller, there is no basis for any such action, suit or proceeding;

 

(b).          None of the Vessel Owning Subsidiaries has been permanently or temporarily enjoined by any order, judgement or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the business, assets, or properties of any of the Vessel Owning Subsidiaries; and

 

(c).          There is not in existence any order, judgment or decree of any court or other tribunal or other agency enjoining or requiring any of the Vessel Owning Subsidiaries to take any action of any kind with respect to its business, assets or properties.

 

SECTION 5.06  Indebtedness to and from Officers, etc. None of the Vessel Owning Subsidiaries will be indebted, directly or indirectly, to any person who is an officer, director, stockholder or employee of any of the Seller or any spouse, child, or other relative or any affiliate of any such person, nor shall any such officer, director,

 

9


 

stockholder, employee, relative or affiliate be indebted to any of the Vessel Owning Subsidiaries.

 

SECTION 5.07  Personnel. The Vessel Owning Subsidiaries have no employees other than the crew serving on board their respective Vessels, to the extent such crew members are not directly employed by the Manager.

 

SECTION 5.08  Contracts and Agreements. All material contracts and agreements, written or oral, to which a Vessel Owning Subsidiary is a party or by which any of its assets are bound, including the Shipbuilding Contracts and the Charters (the “Contracts”), have been disclosed to the Buyer. No other contracts will be entered into by any of the Vessel Owning Subsidiaries prior to each respective Closing Date without the prior consent of the Buyer (such consent not to be unreasonably withheld).

 

(a).          Each of the Contracts is a valid and binding agreement of each respective contracting Vessel Owning Subsidiary, and to the best knowledge of the Seller, of all other parties thereto;

 

(b).          Each of the Vessel Owning Subsidiaries has fulfilled all material obligations required pursuant to its respective Contracts to have been performed by it prior to the date hereof and has not waived any material rights thereunder; and

 

(c).          There has not occurred any material default under any of the Contracts, or to the best knowledge of the Seller, on the part of any other party thereto nor has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any of the Vessel Owning Subsidiaries under any of the Contracts nor, to the best knowledge of the Seller, has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the Contracts.

 

SECTION 5.09  Compliance with Law. The conduct of business by each of the Vessel Owning Subsidiaries on the date hereof does not violate any laws, statutes, ordinances, rules, regulations, decrees, orders, permits or other similar items in force on the date hereof (including, but not limited to, any of the foregoing relating to employment discrimination, environmental protection or conservation) of any country, province, state or other governing body, the enforcement of which would materially and adversely affect the business, assets, condition (financial or otherwise) or prospects of each Vessel Owning Subsidiary taken as a whole, nor has any of the Vessel Owning Subsidiaries received any notice of any such violation.

 

SECTION 5.10  No Undisclosed Liabilities. Other than the legal fees relating to the Delivery of the Vessel and the registration of the Vessel with the relevant flag state, no Vessel Owning Subsidiary (or Vessel owned by it) has any other liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for taxes and

 

10


 

interest, penalties and other charges payable with respect to any such liability or obligation).

 

SECTION 5.11   Disclosure of Information. The Seller has disclosed to the Buyer all material information on, and about, the Vessel Owning Subsidiaries and each of the Vessels and all such information is true, accurate and not misleading in any material respect. Nothing has been withheld from the material provided to the Buyer which would render such information untrue or misleading.

 

ARTICLE VI

 

Representations and Warranties of
the Seller regarding the Vessels

 

The Seller represents and warrants to the Buyer that at each respective Closing Date:

 

SECTION 6.01  Title to Vessels. Each of the Vessel Owning Subsidiaries upon Delivery will be the registered owner of the Vessel listed next to its name in Schedule A.I or in Schedule A.II.

 

SECTION 6.02  No Encumbrances. Each of the Vessel Owning Subsidiaries and Vessels will be free of all Encumbrances other than the Encumbrances appearing in the ship registry of each Vessel and those arising under the Credit Facility.

 

SECTION 6.03  Condition. Each Vessel will be (i) adequate and suitable for use by the Vessel Owning Subsidiary in its business as described in the Registration Statement, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes and in good running order and repair; (iii) insured against all risks, and in amounts, consistent with common industry practices; (iv) in compliance with maritime laws and regulations; (v) in compliance in all material respects with the requirements of its class and classification society; and (vi) all class certificates of the Vessel will be clean and valid and free of recommendations affecting class; and the Buyer acknowledges and agrees that, subject only to the representations and warranties in this Article VI, it is acquiring the Vessel on an “as is, where is” basis.

 

ARTICLE VII

 

Pre-Closing Matters

 

SECTION 7.01  Covenants of the Seller Prior to each Closing. From the date of this Agreement to each respective Closing Date, Seller shall cause the Vessel Owning Subsidiaries to conduct their respective businesses in the usual, regular and ordinary course in substantially the same manner as previously conducted. The Seller shall not, and shall not permit the Vessel Owning Subsidiaries to, take any action that would result

 

11


 

in any of the conditions to the purchase and sale of Shares set forth in Article VIII not being satisfied. In addition the Seller hereby agrees and covenants that it:

 

(a).          shall cooperate with the Buyer and use its reasonable best efforts to obtain, at or prior to each respective Closing Date, any consents required in respect of the transfer of the rights and benefits under the Contracts;

 

(b).          shall use its reasonable best efforts to take or cause to be taken promptly all actions and to do or cause to be done all things necessary, proper and advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and to cooperate with the Buyer in connection with the foregoing, including using all reasonable best efforts to obtain all necessary consents, approvals and authorizations from each Governmental Authority and each other Person that are required to consummate the transactions contemplated under this Agreement;

 

(c).          shall take or cause to be taken all necessary corporate action, steps and proceedings to approve or authorize validly and effectively the purchase and sale of the Vessel Owning Subsidiaries and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby;

 

(d).          shall not amend, alter or otherwise modify or permit any amendment, alteration or modification of any material provision of or terminate the Charters or Ship Building Contracts of any of the Vessel Owning Subsidiaries without the prior written consent of the Buyer, not to be unreasonably withheld or delayed;

 

(e).          shall not exercise or permit any exercise of any rights or options contained in the Charters or Ship Building Contracts, without the prior written consent of the Buyer, not to be unreasonably withheld or delayed;

 

(f).           shall consult with the Buyer regarding all material decisions to be made pursuant to the Ship Building Contracts, and shall make such decisions only with the prior approval of the Buyer, not to be unreasonably withheld or delayed;

 

(g).          shall observe and perform in a timely manner, all of its covenants and obligations under its Charters and Ship Building Contracts, if any, and (i) in the case of a default by another party thereto, it shall forthwith advise the Buyer of such default and shall, if requested by the Buyer, enforce all of its rights under such Charter or Ship Building Contract in respect of such default; and (ii) subject to the rights of the lenders under the Credit Facility, in the case of a breach or anticipated breach of any Charter or Ship Building Contract by the Seller or Vessel Owning Subsidiary, it shall permit the Buyer to cure on its behalf such breach or anticipated breach and shall promptly reimburse the Buyer for any and all costs that the Buyer may expend in order to effect such cure; and

 

12


 

(h).          shall not cause or, to the extent reasonably within its control, permit any Encumbrances to attach to any Vessel other than in connection with the Credit Facility.

 

SECTION 7.02  Covenant of the Buyer Prior to each Closing. The Buyer hereby agrees and covenants that during the period of time after the date of the Agreement and prior to each respective Closing Date, the Buyer shall, in respect of the Vessel Owning Subsidiaries to be transferred on each respective Closing Date, take, or cause to be taken, all necessary corporate action, steps and proceedings to approve or authorize validly and effectively the purchase and sale of those Vessel Owning Subsidiaries and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby.

 

ARTICLE VIII

 

Conditions Of Closing

 

SECTION 8.01  Conditions of the Seller. The obligation of the Seller to sell is subject to the satisfaction (or waiver by the Seller) on or prior to each respective Closing Date of the following conditions:

 

(a).          the representations and warranties of the Buyer made in this Agreement shall be true and correct in all material respects as of each respective Closing Date as though made on each respective Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects, on and as of such earlier date);

 

(b).          the Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by the Buyer by each respective Closing Date;

 

(c).          no legal or regulatory action or proceeding shall be pending or threatened by any Governmental Authority to enjoin, restrict or prohibit the purchase and sale of the Vessel Owning Subsidiaries;

 

(d).          all proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incidental thereto shall be reasonably satisfactory in form and substance to the Seller, and the Seller shall have received copies of all such documents and other evidence as it may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith.

 

SECTION 8.02  Conditions of the Buyer. The obligation of the Buyer to purchase and pay for the Shares is subject to the satisfaction (or waiver by the Buyer) on or prior to each respective Closing Date of the following conditions:

 

13


 

(a).          the representations and warranties of the Seller in this Agreement shall be true and correct in all material respects as of each respective Closing Date as though made on each respective Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects, on and as of such earlier date);

 

(b).          the Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by the Seller by each respective Closing Date;

 

(c).          no legal or regulatory action or proceeding shall be pending or threatened by any Governmental Authority to enjoin, restrict or prohibit the purchase and sale of the Vessel Owning Subsidiaries;

 

(d).          the Buyer shall have obtained the funds necessary to consummate the purchase and sale of the Shares of the Vessel Owning Subsidiaries, to refinance all indebtedness the Buyer is required to refinance as a result of the purchase and sale of the Vessel Owning Subsidiaries and to pay all related fees and expenses;

 

(e).          the Buyer shall have received written consents from all third parties necessary or appropriate to effect the purchase and sale of the Shares of the Vessel Owning Subsidiaries, other than such consents the absence of which, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), assets, properties, business or prospects of such Vessel Owning Subsidiaries taken as a whole;

 

(f).           all proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incidental thereto shall be reasonably satisfactory in form and substance to the Buyer and its counsel, and the Buyer shall have received copies of all such documents and other evidence as it or its counsel may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith; and

 

(g).          the Buyer is satisfied that the relevant Vessel Owning Subsidiary has inspected the Vessel prior to the Delivery Date in accordance with the relevant Ship Building Contract.

 

ARTICLE IX

 

Termination, Amendment and Waiver

 

SECTION 9.01  Termination of Agreement. Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the purchase and sale of the Vessel Owning Subsidiaries and the other transactions contemplated by this Agreement abandoned at any time prior to each respective Closing:

 

14


 

(a).          by mutual written consent of the Seller and the Buyer;

 

(b).          by the Seller if any of the conditions set forth in Section 8.01 shall have become incapable of fulfillment, and shall not have been waived by the Seller; or

 

(c).          by the Buyer if any of the conditions set forth in Section 8.02 shall have become incapable of fulfillment, and shall not have been waived by the Buyer.

 

provided, however, that the party seeking termination pursuant to clause (b) or (c) is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement.

 

SECTION 9.02  Termination in Respect of a Vessel Owning Subsidiary. Notwithstanding anything to the contrary, this Agreement shall be deemed to be terminated in respect of and only in respect of a particular Vessel Owning Subsidiary, without any further action by either the Buyer or the Seller, if:

 

(a) the Ship Building Contract with respect to such Vessel Owning Subsidiary is terminated or cancelled for any reason whatsoever; or

 

(b) the Buyer elects not to purchase such Vessel Owning Subsidiary pursuant to Section 2.06(a) or Section 2.07 hereof.

 

SECTION 9.03  Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each parties hereto. By an instrument in writing the Buyer, on the one hand, or the Seller, on the other hand, may waive compliance by the other with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.

 

ARTICLE X

 

Indemnification

 

SECTION 10.01  Indemnity by the Seller. The Seller shall be liable for, and shall indemnify the Buyer and each of its directors, employees, agents and representatives (the “Buyer Indemnitees”) against and hold them harmless from, any Losses, suffered or incurred by such Buyer Indemnitee:

 

(a).          by reason of, arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Seller in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Seller; or

 

(b).          any fees, expenses or other payments incurred or owed by the Seller to any brokers, financial advisors or comparable other persons retained or

 

15


 

employed by it in connection with the transactions contemplated by this Agreement.

 

SECTION 10.02  Indemnity by the Buyer. The Buyer shall indemnify the Seller and its affiliates and each of their respective officers, directors, employees, agents and representatives (the “Seller Indemnitees”) against and hold them harmless from, any Losses, suffered or incurred by such Seller Indemnitee by reason of, arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Buyer in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Buyer.

 

ARTICLE XI

 

Miscellaneous

 

SECTION 11.01  Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly within such jurisdiction without giving effect to conflict of law principles thereof other than Section 5-1401 of the New York General Obligations Law, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Vessels are located, shall apply.

 

SECTION 11.02  Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument.

 

SECTION 11.03  Complete Agreement. This Agreement and Schedules hereto contain the entire agreement between the parties hereto with respect to the transactions contemplated herein and, except as provided herein, supersede all previous oral and written and all contemporaneous oral negotiations, commitments, writings and understandings.

 

SECTION 11.04  Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

SECTION 11.05  Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

 

SECTION 11.06  Third Party Rights. A person who is not a party to this Agreement has no right to enforce or to enjoy the benefit of any term of this Agreement.

 

16


 

SECTION 11.07  Notices. Any notice, claim or demand in connection with this Agreement shall be delivered to the parties at the following addresses (or at such other address or facsimile number for a party as may be designated by notice by such party to the other party):

 

(a).          if to Capital Maritime & Trading Corp., as follows:

 

c/o Capital Ship Management Corp., 3 Iassonos Street, Piraeus, Greece

Attention:     Ioannis E. Lazaridis

Facsimile:     +30 210 428 4285

 

(b).          if to Capital Product Partners L.P., as follows:

 

c/o Capital Ship Management Corp., 3 Iassonos Street, Piraeus, Greece

Attention:     Ioannis E. Lazaridis

Facsimile:     +30 210 428 4285

 

and any such notice shall be deemed to have been received (i) on the next working day in the place to which it is sent, if sent by facsimile or (ii) forty eight (48) hours from the time of dispatch, if sent by courier.

 

17


 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the date first above written.

 

 

 

 

CAPITAL MARITIME & TRADING CORP.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

CAPITAL PRODUCT PARTNERS L.P.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

18


 

SCHEDULE A.I

 

2007 VESSEL OWNING SUBSIDIARIES, VESSELS AND CHARTERS

 

 

Vessel Owning Subsidiary

 

Vessel

 

Delivery Date

 

Charter Type

 

Daily
Charter Rate

 

Charterer

Epicurus Shipping Company

 

Atrotos

 

05/07

 

3-year Time Charter

 

$

20,000

 

Morgan Stanley Capital Group Inc.

Laredo Maritime Inc.

 

Akeraios

 

08/07

 

3-year Time Charter

 

$

20,000

 

Morgan Stanley Capital Group Inc.

Splendor Shipholding S.A.,

 

Anemos I

 

10/07

 

3-year Time Charter

 

$

20,000

 

Morgan Stanley Capital Group Inc.

Lorenzo Shipmanagement Inc.

 

Apostolos

 

10/07

 

3-year Time Charter

 

$

20,000

 

Morgan Stanley Capital Group Inc.

 


 

SCHEDULE A.II

 

2008 VESSEL OWNING SUBSIDIARIES, VESSELS AND CHARTERS

 

Vessel Owning Subsidiary

 

Vessel

 

Delivery Date

 

Charter Type

 

Daily
Charter Rate

 

Charterer

Sorrel Shipmanagement Inc.

 

Alexandros II

 

01/08

 

10-year Bareboat Charter

 

$

13,000

 

Overseas Shipholding Group Inc.

Wind Dancer Shipping Inc.

 

Aristotelis II

 

06/08

 

10-year Bareboat Charter

 

$

13,000

 

Overseas Shipholding Group Inc.

Belerion Maritime Co.

 

Aris II

 

08/08

 

10-year Bareboat Charter

 

$

13,000

 

Overseas Shipholding Group Inc.

 


 

SCHEDULE B

 

PURCHASE PRICE

 

Vessel Owning Subsidiary

 

Purchase Price
(US Dollars)

 

Epicurus Shipping Company

 

$

56,000,000

 

Laredo Maritime Inc.

 

$

56,000,000

 

Splendor Shipholding S.A.,

 

$

56,000,000

 

Lorenzo Shipmanagement Inc.

 

$

56,000,000

 

Sorrel Shipmanagement Inc.

 

$

48,000,000

 

Wind Dancer Shipping Inc.

 

$

48,000,000

 

Belerion Maritime Co.

 

$

48,000,000

 

 


 

SCHEDULE C

 

CAPITALIZATION

 

Vessel Owning Subsidiary

 

Number of Shares

 

Epicurus Shipping Company

 

100

 

Laredo Maritime Inc.

 

500

 

Splendor Shipholding S.A.,

 

500

 

Lorenzo Shipmanagement Inc.

 

500

 

Sorrel Shipmanagement Inc.

 

500

 

Wind Dancer Shipping Inc.

 

500

 

Belerion Maritime Co.

 

500

 

 



EXHIBIT 21.1

 

SUBSIDIARIES OF CAPITAL PRODUCT PARTNERS L.P.

 

Capital Product Operating L.L.C. (Marshall Islands)

 



 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the use in this Registration Statement of Capital Product Partners L.P. on Form F-1 of our report dated March 5, 2007 relating to the combined financial statements of Capital Product Partners, defined as including the following subsidiaries of Capital Maritime & Trading Corp.:

 

Shipping Rider Co.

Canvey Shipmanagement Ltd.

Centurion Navigation Limited

Polarwind Maritime S.A.

Carnation Shipping Company

Iraklitos Shipping Company

Apollonas Shipping Company

Tempest Maritime Inc.

 

appearing in the Prospectus, which is part of such Registration Statement.

 

We also consent to the reference to us under the heading “Experts” in such Prospectus.

 

 

 

/s/ Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 19, 2007

 


 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the use in this Registration Statement of Capital Product Partners L.P. on Form F-1 of our report dated February 9, 2007 relating to the balance sheet of Capital GP L.L.C. appearing in the Prospectus, which is part of such Registration Statement.

 

We also consent to the reference to us under the heading “Experts” in such Prospectus.

 

 

 

/s/ Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 19, 2007

 


 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the use in this Registration Statement on Form F-1 of our report dated February 9, 2007 except for Note 2 as to which the date is February 21, 2007 relating to the balance sheet of Capital Product Partners L.P. appearing in the Prospectus, which is part of such Registration Statement.

 

We also consent to the reference to us under the heading “Experts” in such Prospectus.

 

 

 

/s/ Deloitte.

Hadjipavlou, Sofianos & Cambanis S.A.

Athens, Greece

March 19, 2007

 



Exhibit 23.4

 

[CLARKSONS LETTERHEAD]

 

Capital Product Partners L.P.
Athens

Greece

 

19 March, 2007

 

Ladies and Gentlemen:

 

Reference is made to the Form F-1 registration statement (the “Registration Statement”) relating to the initial public offering of common units of Capital Product Partners L.P. (the “Company”).

 

We have reviewed the section in the Prospectus entitled “The International Shipping Industry” and confirm that it accurately describes the international containership and drybulk shipping markets. We further advise the Company that our role has been limited to the provision of the statistical data, graphs, and tables supplied by us. With respect to such statistical data, graphs and tables supplied by us, we advise you that:

 

•   some industry data included in this discussion is derived from estimates or subjective judgments;

 

•   the published information of other maritime data collection agencies may differ from this data; and

 

•   while we have taken reasonable care in the compilation of the industry statistical data, graphs and tables and believe them to be accurate and correct, data compilation is subject to limited audit and validation procedures and may accordingly contain errors.

 

We hereby consent to all references to our name in the Registration Statement and to the use of the graphical and statistical information supplied by us set forth in the sections of the Registration Statement entitled “Summary”, “Business” and “The Products Tanker Industry.”

 

We hereby consent to the filing of this letter as an exhibit to the Registration Statement of the Company on Form F-1 to be filed with the U.S. Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, and to the reference to our firm in the section of the Registration Statement entitled “The Products Tanker Industry” and “Experts.”

 

CLARKSON RESEARCH SERVICES LIMITED

 

Name:

/s/ S. Gordon

 

 

Title:

Director

 

 

 

Clarkson Research Services Limited England No. 1944749: Registered Office as above



EXHIBIT 99.1

 

CONSENT OF DIRECTOR NOMINEE

 

I hereby consent to being named as a director nominee of Capital Product Partners L.P., a Marshall Island’s limited liability partnership in the Registration Statement on Form F-1 of Capital Product Partners L.P. (including the prospectus contained therein), and in all subsequent amendments and post-effective amendments or supplements thereto, filed with the U.S. Securities and Exchange Commission.

 

 

Dated: March 7, 2007

 

 

 

 

 

Signature:

/s/ Nikolaos Syntychakis

 

 

 

Nikolaos Syntychakis

 



EXHIBIT 99.2

 

CONSENT OF DIRECTOR NOMINEE

 

I hereby consent to being named as a director nominee of Capital Product Partners L.P., a Marshall Island’s limited liability partnership in the Registration Statement on Form F-1 of Capital Product Partners L.P. (including the prospectus contained therein), and in all subsequent amendments and post-effective amendments or supplements thereto, filed with the U.S. Securities and Exchange Commission.

 

 

Dated: March 7, 2007

 

 

 

 

 

Signature:

/s/ Abel Rasterhoff

 

 

 

Abel Rasterhoff

 



EXHIBIT 99.3

 

CONSENT OF DIRECTOR NOMINEE

 

I hereby consent to being named as a director nominee of Capital Product Partners L.P., a Marshall Island’s limited liability partnership in the Registration Statement on Form F-1 of Capital Product Partners L.P. (including the prospectus contained therein), and in all subsequent amendments and post-effective amendments or supplements thereto, filed with the U.S. Securities and Exchange Commission.

 

 

Dated: March 7, 2007

 

 

 

 

 

Signature:

/s/ Keith Forman

 

 

 

Keith Forman