Note

. Bankruptcy

August

2014,

the Company entered into the Restructuring Support Agreement with the Consenting Lenders, which contemplated a plan of reorganization through a balance sheet restructuring of the Company’s obligations upon the terms specified therein. On the same day, the Company filed the Prepackaged Case under chapter

of title

of the Bankruptcy Code in the Court. The Prepackaged Case was filed only in respect of the Company, but not any of its subsidiaries. Through the Prepackaged Case, the Company sought to implement a balance sheet restructuring pursuant to the terms of the Plan. The Company continued to operate its business as a “debtor in possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.

September

22,

2014,

the Court entered (the “Confirmation Order”) confirming the Plan. On

October

15,2014

(the “Effective Date”), the Company completed its balance sheet restructuring and emerged from Chapter

through a series of transactions contemplated by the Plan, and the Plan became effective pursuant to its terms.

Key components of the Plan included:

Entry into a new senior secured credit facility (the “Exit Financing Facility”) as of

October

2014,

in the amount of

$275

million (inclusive of a

$50

million revolving credit facility).

●

The cancellation of all outstanding equity interests in the Company as of the Effective Date, with the then current holders of such equity interests (other than the Consenting Lenders on account of certain warrants held by them or shares of common stock received upon conversion of such warrants ) receiving (i) shares of New Eagle Common Stock equal to

0.5%

of the total number of shares of New Eagle Common Stock issued and outstanding on the Effective Date (subject to dilution by the New Eagle Equity Warrants and the

2014

Plan), and (ii) an aggregate of

152,266

New Eagle Equity Warrants. Each New Eagle Equity Warrant has a

-year term (commencing on the Effective Date) and is exercisable for

one

share of New Eagle Common Stock (subject to adjustment as set forth in the New Eagle Equity Warrant Agreement and dilution by the

2014

Plan).

●

The extinguishment of all loans and other obligations under the Exit Financing Facility as of the Effective Date, with the current holders thereof receiving (i) shares of New Eagle Common Stock equal to

99.5%

of the total number of shares of New Eagle Common Stock issued and outstanding on the Effective Date, subject to dilution by the New Eagle Equity Warrants and the

2014

Plan, and (ii) a cash distribution as contemplated by the Plan .On the Effective Date, the Exit Financing Facility was terminated, and the liens and mortgages thereunder were released.

●	All claims of unsecured creditors of Eagle Bulk Shipping Inc. were unaffected and paid in full.

●

The establishment of a

2014

Plan that provided senior management and certain other employees of the reorganized Company with

of the New Eagle Common Stock (on a fully diluted basis) on the Effective Date, and

two

tiers of options to acquire

5.5%

of the New Eagle Common Stock (on a fully diluted basis) with different strike prices based on the equity value for the reorganized Company and a premium to the equity value, each of the foregoing to vest generally over a

four

year schedule through

25%

annual installments commencing on the

first

anniversary of the Effective Date. The

2014

Plan also provided for the reservation of certain additional shares for future issuance thereunder, as further described in the Plan.

The Plan also provided for certain releases of various parties by certain holders of claims against and equity interests in the Company.

Exit Financing Facility

October

2014,

Eagle Bulk Shipping Inc., as borrower, and certain of its subsidiaries, as guarantors, entered into the Exit Financing Facility with the Exit Lenders. The Exit Financing Facility is in the amount of

$275

million, including a

$50

million revolving credit facility, and matures on

October

15,

2019.

Amounts drawn under the Exit Financing Facility bear interest at a rate of LIBOR plus the Margin. The revolving credit facility is subject to an annual commitment fee of

40%

of the margin.

Registration Rights Agreement

On the Effective Date, and in accordance with the Plan, the Company entered into the Registration Rights Agreement (“the Registration Rights Agreement”) with certain parties that received shares of New Eagle Common Stock under the Plan. The Registration Rights Agreement provided such parties with demand and piggyback registration rights. On

May

13,

2016,

the Company entered into an Amended and Restated Registration Rights Agreement.

New Eagle Equity Warrant Agreement

On the Effective Date, and in accordance with the Plan, the

152,266

New Eagle Equity Warrants were issued pursuant to the terms of the New Eagle Equity Warrant Agreement. Each New Eagle Equity Warrant has a

-year term (commencing on the Effective Date) and are exercisable for

one

share of New Eagle Common Stock (subject to adjustment as set forth in the New Eagle Equity Warrant Agreement and dilution by the

2014

Plan).The New Eagle Equity Warrants are exercisable at an exercise price of

$556.40

per share (subject to adjustment as set forth in the New Eagle Equity Warrant Agreement). The New Eagle Equity Warrant Agreement contains customary anti-dilution adjustments in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction.