As filed with the Securities and Exchange Commission on August 29, 2005.
Registration Statement No. 333-        

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

StealthGas Inc.

(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.)

StealthGas Inc.
331 Kifissias Avenue
Erithrea 14561
Athens, Greece
(011)(30)(210) 625 2849

(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

CT Corporation
111 Eighth Avenue
New York, New York 10011
(800) 624-0909

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:


Stephen P. Farrell, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
(212) 309-6000
(telephone number)
(212) 309-6001
(facsimile number) 		Richard Sharp, Esq.
James H. Ball, Jr., Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
(212) 530-5000
(telephone number)
(212) 822-5209
(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, check the following box.     [ ]

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.     [ ]

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.     [ ]

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.     [ ]

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

CALCULATION OF REGISTRATION FEE


Title of Each Class of
Securities to be Registered 		Amount to
be Registered(1) 		Proposed Maximum
Offering Price
Per Security(2) 		Proposed Maximum
Aggregate
Offering Price(1)(2) 		Amount of
Registration Fee
Common Stock, par value $.01 8,855,000 $16.00 $141,680,000 $16,676
(1)  Includes shares to be sold upon exercise of the underwriters' over-allotment option. See "Underwriting."
(2)   Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act.

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 Commission, acting pursuant to said Section 8(a), may determine.



The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion dated August 29, 2005

StealthGas Inc.

7,700,000 Shares

Common Stock

We are offering 7,700,000 shares of our common stock. The underwriters have an option to purchase up to an additional 1,155,000 shares of common stock from us to cover over-allotments.

This is our initial public offering. Our common stock has been approved for listing on the Nasdaq National Market, subject to official notice of issuance, under the symbol "GASS." We currently anticipate the initial public offering price to be between $14.00 and $16.00 per share.

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 14.

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.


  Per Share Total
Public Offering Price            
Underwriting Discount            
Proceeds to us (before expenses)            

The underwriters expect to deliver the shares to purchasers on or about                         , 2005.

Cantor Fitzgerald & Co.

Morgan Keegan & Company, Inc.
Johnson Rice & Company
Hibernia Southcoast Capital

HARRIS direct

The date of this prospectus is                  , 2005



    



TABLE OF CONTENTS


  PAGE
ENFORCEABILITY OF CIVIL LIABILITIES   ii  
THE INTERNATIONAL GAS CARRIER MARKET   ii  
PROSPECTUS SUMMARY   1  
RISK FACTORS   14  
FORWARD LOOKING STATEMENTS   31  
USE OF PROCEEDS   32  
DIVIDEND POLICY   33  
CAPITALIZATION   34  
DILUTION   35  
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA   36  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   40  
THE INTERNATIONAL GAS CARRIER MARKET   55  
BUSINESS   66  
ENVIRONMENTAL AND OTHER REGULATIONS   74  
MANAGEMENT   78  
PRINCIPAL STOCKHOLDERS   81  
DESCRIPTION OF INDEBTEDNESS   82  
RELATED PARTY TRANSACTIONS   84  
REGISTRAR AND TRANSFER AGENT   87  
SHARES ELIGIBLE FOR FUTURE SALE   87  
DESCRIPTION OF CAPITAL STOCK   88  
MARSHALL ISLANDS COMPANY CONSIDERATIONS   92  
TAX CONSIDERATIONS   96  
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION   105  
UNDERWRITING   106  
LEGAL MATTERS   108  
EXPERTS   109  
WHERE YOU CAN FIND ADDITIONAL INFORMATION   109  
INDEX TO FINANCIAL STATEMENTS   F-1  

We have not authorized anyone to give any information or to make any representations other than those contained in this prospectus. Do not rely upon any information or representations made outside of this prospectus. This prospectus is not an offer to sell, and it is not soliciting an offer to buy (1) any securities other than shares of our common stock or (2) shares of our common stock in any circumstances in which our offer or solicitation is unlawful. The information contained in this prospectus may change after the date of this prospectus. Do not assume after the date of this prospectus that the information contained in this prospectus is still correct.

Unless otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise their option to purchase up to 1,155,000 shares of our common stock to cover over-allotments, if any.

i



ENFORCEABILITY OF CIVIL LIABILITIES

StealthGas Inc. is a Marshall Islands company, and our executive offices are located outside of the United States in Athens, Greece. All but one of our directors and officers reside outside of the United States, and most of our assets and their assets are located outside the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in the United States courts against us or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws.

Furthermore, there is substantial doubt that the courts of the Marshall Islands or Greece would enter judgments in original actions brought in those courts predicated on United States federal or state securities laws.

THE INTERNATIONAL GAS CARRIER MARKET

The discussions contained under the heading "The International Gas Carrier Market" have been reviewed by Fearnley Consultants A/S, or Fearnleys, which has confirmed to us that they accurately describe the international gas carrier market, subject to the reliability of the data supporting the statistical and graphical information presented in this prospectus.

The statistical and graphical information we use in this prospectus has been compiled by Fearnleys from its database. Fearnleys compiles and publishes data for the benefit of its clients. Its methodologies for collecting data, and therefore the data Fearnleys collected, may differ from those of other sources, and its data does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the market.

ii



PROSPECTUS SUMMARY

This section summarizes some of the key information and financial statements that appear later in this prospectus. As an investor or prospective investor, you should review carefully the risk factors and the more detailed information and financial statements and notes thereto that appear later. We use the term LPG generally to refer to liquefied petroleum gas products such as butane and propane, as well as petrochemical gases and ammonia. We also use the term cubic meters, or cbm, in describing the size of our LPG carriers, or LPGs. Capacity figures specified in cbm refer to the maximum volume of cargo that LPG carriers can carry. Unless otherwise indicated, all references to currency amounts in this prospectus are in United States dollars and all share numbers give effect to a 60,000-for-1 stock split effected August 26 , 2005.

Unless the context otherwise requires, when used in this prospectus, the terms "StealthGas," the "Company," "we," "our" and "us" refer to StealthGas Inc.

Our Company

We are a newly-formed Marshall Islands company, incorporated in December 2004. As a provider of international seaborne transportation services to LPG producers and users, we carry various petroleum and petrochemical gas products in liquefied form, including propane, butane, butadiene, isopropane, propylene and vinyl chloride monomer, which are all byproducts of the production of crude oil and natural gas. These products are transported in liquefied form in order to reduce their volume and to facilitate their handling. Transportation by sea represents a major element of gas transportation logistics. LPG products have a variety of both industrial and other uses, including transportation, fertilizer production, the manufacture of plastics, space heating, cooking, water heating and process heating. We serve industrial companies, as well as national and independent energy companies and energy traders such as Dow Chemical Company, Statoil ASA, Finaval SpA and Petredec Ltd.

LPG Products and Carriers

Liquid petroleum gases are produced as a byproduct of crude oil refining and natural gas production, and are primarily used as fuel for transportation, residential and commercial heating/cooking, and as a feedstock for the production of petrochemicals. Petrochemical gases are used in the production of a vast array of chemicals and new production technologies that allow plastic to displace metal, cotton, wood and other materials in an increasing number of end-user products. We believe transportation of petrochemical gases is a fast growing market, driven primarily by industrial and consumer demand for products derived from petrochemical gases such as plastics/polymers, synthetic-based products, textiles, chemicals and rubber. We believe that with expected increases in crude oil and natural gas production as well as the expanding use of liquid petroleum gases worldwide, seaborne trade volumes will increase significantly.

LPG products are divided into three categories:

•  Liquid petroleum gases consisting mainly of butane and propane, which accounted for 70% of the total volume of petroleum gas products transported by sea in 2004, are carried in fully-pressurized ships. These gases are used for cooking, as fuel for cars, as fuel in refineries, as chemical feedstock for industrial and power plant fuels and at gas utilities.
•  Petrochemical gases that are traded as butadiene, propylene and vinyl chloride monomer, or VCM, and ethylene, which are carried in semi-refrigerated ships, since they require refrigeration to minus 104° Celsius to be transported in liquefied form. These petrochemical gases are primarily used in the plastics manufacturing industry and represented approximately 12% of the volume of petroleum gas products transported by sea in 2004.
•  Ammonia, which is carried in fully-refrigerated ships, is mainly used in the fertilizer industry and as a feedstock in the petrochemical industry. Ammonia represented approximately 18% of the volume of petroleum gas products transported by sea in 2004.

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LPG carriers are commonly referred to as ships which can transport liquid petroleum and petrochemical gases as well as ammonia. However, only a limited number of LPG carriers can transport ammonia and certain petrochemical gases such as ethylene and VCM, which have characteristics that require additional design features and/or equipment on the vessels.

There are three main types of LPG carriers classified based on method of liquefaction:

•  Fully-pressurized carriers, which liquefy their cargoes at ambient temperatures under high pressure of up to 17 bar (kg/cm 2 ), are generally small vessels of under 8,000 cbm. The majority of these ships are less than 5,000 cbm.
•  Semi-refrigerated carriers, which liquefy their cargoes under a combination of pressure and refrigeration to temperatures down to minus 48° Celsius and pressure up to 9 bar (kg/cm 2 ). Certain semi-refrigerated carriers with gas plants are able to cool cargoes further to minus 104° Celsius and are referred to as ethylene carriers. The majority of these ships are less than 20,000 cbm.
•  Fully-refrigerated carriers can liquefy their cargoes at or under their boiling temperatures down to approximately minus 48° Celsius at atmospheric pressure with onboard compressors. These ships are typically 22,000 cbm and larger and also carry clean petroleum products such as naphtha.

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Our Fleet

Our fleet currently consists of nine LPG carriers. We intend to acquire nine additional LPG carriers for a total price of $109.9 million with a portion of the proceeds of this offering, together with additional indebtedness of $9.75 million under a new credit facility we intend to obtain. We refer to these nine LPG carriers as our Identified Vessels. Following our acquisition of the Identified Vessels, our fleet of 18 vessels will have an average age of approximately 10.8 years, compared to an average age of 14.8 years for the global LPG carrier industry as of June 2005. The balance of the proceeds of this offering will be used for the acquisition of additional vessels, working capital and other general corporate purposes.

Assuming an initial public offering price of $15.00 per share and excluding the additional indebtedness of $9.75 million we intend to incur to fund a portion of the purchase price for the Marathon , following this offering and the acquisition of the Identified Vessels, debt will constitute 26.5% of our capitalization. We currently intend to acquire up to 10 vessels in addition to the Identified Vessels by the middle of 2006 with additional indebtedness, cash from our operations and a portion of the balance of the proceeds of this offering. For a description of our existing credit facility and our plans with respect to the new credit facility we intend to obtain, see "Description of Indebtedness."

The following table summarizes certain information about the vessels in our combined fleet:


  Vessel Size
(cbm) 		Type of
LPG Carrier 		Delivery
Date 		Employment
Status 		Expiration of
Charter
Initial Fleet                  
Gas Amazon   6,526   fully-pressurized May 2005 time charter   May 2006  
Gas Emperor   5,013   fully-pressurized February 2005 time charter   February 2006  
Birgit Kosan   5,012   fully-pressurized April 2005 bareboat   April 2007  
Gas Courchevel   4,109   semi-refrigerated November 2004 time charter   September 2005  
Gas Shanghai   3,526   fully-pressurized December 2004 time charter   February 2006  
Gas Prophet   3,556   fully-pressurized October 2004 time charter   January 2006  
Gas Arctic*   3,434   semi-refrigerated April 2005 bareboat   April 2009  
Gas Ice*   3,434   semi-refrigerated April 2005 bareboat   April 2008  
Gas Tiny   1,320   semi-refrigerated October 2004 time charter   November 2006  
Subtotal   35,930 cbm             
Identified Vessels                  
Gas Cathar   7,517   fully-pressurized ** spot   —  
Gas Chios   6,562   fully-pressurized ** time charter   February 2006  
Marathon   6,550   fully-pressurized ** bareboat   October 2007  
Sweet Dream   5,018   fully-pressurized ** bareboat   December 2005  
Gas Eternity   3,500   fully-pressurized *** spot   —  
Gas Legacy   3,500   fully-pressurized ** spot   —  
Gas Crystal   3,211   semi-refrigerated ** spot   —  
Gas Prodigy   3,014   fully-pressurized ** time charter   March 2006  
Gas Oracle   3,014   fully-pressurized ** time charter   May 2006  
Subtotal   41,886 cbm             
TOTAL   77,816 cbm             
* These vessels are iceclass ships. Iceclass ships are capable of stable operations in extreme conditions and have ice-pushing capabilities.
** We currently anticipate taking delivery of these vessels by the end of November 2005.
*** We currently anticipate taking delivery of this vessel by February 2006.

3



We have entered into agreements with the Vafias Group pursuant to which we will pay $109.9 million to acquire the Identified Vessels from the Vafias Group. The aggregate purchase price of $109.9 million represents the fair market value of the Identified Vessels at the time we agreed to acquire them. We will acquire the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios through the acquisition of the capital stock of their owners, which are Vafias Group affiliates. The owners' current bank debt will be repaid. We expect the deliveries of the Identified Vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity, which we expect will be delivered by February 2006. The delivery of each of the Identified Vessels is subject to customary conditions.

All of the vessels in our initial fleet will be on period charters during the remainder of 2005, other than the Gas Courchevel, the charter for which expires in September 2005. In the future, we intend to deploy our vessels under period charters, including time and bareboat charters, which can last up to several years, and spot market charters (mainly through voyage charters and short term time charters), which generally last from one to six months, as market conditions warrant. As a result, during the time our LPG carriers are committed on period charters we will be unable, during periods of improving charter markets, to take advantage of improved charter rates as we could if our LPG carriers were employed only on spot charters. Period charters provide predictable and stable cash flows while spot charters may generate increased profit margins during periods of improvement in LPG charter rates.

Our Fleet Manager

All of our vessels will be managed by Stealth Maritime S.A., or Stealth Maritime, a company controlled by the Vafias Group, which in turn is controlled by the Vafias family. Stealth Maritime will be responsible for all aspects of our administration as well as the chartering and operation of our fleet. Stealth Maritime currently subcontracts the technical management of our vessels to either V.Ships (Cyprus) or Tesma (Singapore). Following this offering, Stealth Maritime will also subcontract the technical management of certain of the Identified Vessels to Hanseatic Shipping Co., Ltd. None of these ship management companies are affiliated with us or with Stealth Maritime. These technical managers, which Stealth Maritime supervises, are responsible for the day-to-day activities of our fleet including the operation, crewing, maintenance and repair of our ships; they also must ensure that our fleet's operations comply with environmental and other regulatory requirements. Stealth Maritime will compensate these technical managers from the management fees we pay it.

We have a management agreement with Stealth Maritime with an initial term of five years, under which Stealth Maritime will be responsible for our internal administration and the commercial and technical management of our fleet. Under the agreement, we will pay Stealth Maritime a management fee of $390 per day (based on an exchange rate of 1.00:US$1.25) per vessel operating under a voyage or time charter (and $125 per vessel per day for any vessel on bareboat charter) in advance on a monthly basis, pro rated for the calendar days we own the vessels. We pay a fee of $125 (based on an exchange rate of 1.00:US$1.25) per vessel per day for each of our vessels operating on bareboat charter. The management fee will be adjusted quarterly based on the United States Dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We will also be obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime will also earn a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold by them on our behalf. In addition, as long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier which Stealth Maritime may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. This right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. We will reimburse Stealth Maritime for its payment of the compensation to our Chief Executive Officer and Chief Financial Officer. In 2005, such compensation is expected to be in an aggregate amount of €520,000 (US$629,096, based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005) on an annualized basis.

4



Our Corporate History

The Gas Prophet , Gas Tiny , Gas Courchevel and Gas Shanghai were acquired by the Vafias Group. In addition, the Vafias Group entered into memoranda of agreement to acquire the Gas Arctic , the Gas Ice , the Birgit Kosan, the Gas Emperor and the Gas Amazon , and paid the sellers of the Gas Artic and the Gas Ice a total of $1.9 million in deposits. We financed the $50.4 million balance of the purchase prices of the Gas Arctic and the Gas Ice and of the Birgit Kosan , Gas Emperor and Gas Amazon with borrowings under the loan agreement with Fortis Bank (Nederland) N.V, or Fortis Bank, and additional capital from our sole stockholder. The Vafias Group contributed to us, in exchange for nominal consideration, the capital stock of the companies whose subsidiaries own these nine vessels, although, as described above, we financed an aggregate of $50.4 million of the purchase price of certain of those vessels.

Since our initial fleet has been fully leveraged, we determined to return $10.0 million of the original capital contributions we received. Accordingly, on July 4, 2005, we declared a dividend to our existing stockholder of $10.0 million which was paid on July 13, 2005 from cash on hand.

Our sole stockholder, Flawless Management Inc., is a company entirely owned by our chief executive officer, or CEO, Harry Vafias, who is a member of the Vafias family. After this offering, Flawless Management Inc. will own approximately 43.8% of our outstanding common stock. The Vafias Group has been active in shipping for over 30 years. During 2004, the Vafias Group operated a fleet of 30 vessels, making it one of the ten largest ship management companies in Greece. The Vafias Group formed Stealth Maritime in 1999 which, as our fleet manager, will be responsible for all aspects of our administration and operations.

We maintain our principal executive offices at 331 Kifissias Avenue, Erithrea 14561, Athens, Greece. Our telephone number at that address is (011) (30) (210) 625 2849.

5



Our Distinguishing Factors

We believe that we possess a number of distinguishing factors that position us well in the LPG carrier market:

•  Increased Market Share Through Acquisition of Identified Vessels.     We believe our fleet of nine LPG carriers, together with the nine Identified Vessels, will give us one of the industry's larger fleets of 3,000-7,999 cbm LPG carriers. We believe that our combined fleet will represent approximately 5.7% of the industry's 3,000-7,999 cbm LPG carriers, which generally operate under shorter trade routes than larger LPG carriers, as of June 2005.
•  Leveraging Relationship with Vafias Group .    We are affiliated with the Vafias Group, which in turn is controlled by the Vafias family of which Harry Vafias, our CEO, age 27, is a member. The Vafias Group has been active in shipping since 1974. It has more than 30 years of experience in the operation of dry cargo vessels, bulk carriers and oil tankers. During 2004, the Vafias Group operated a fleet of 30 vessels, making it one of the ten largest ship management companies in Greece.
•  Experienced Management Team and Operational Expertise.     Through its relationship with the Vafias Group, our fleet manager, Stealth Maritime, has assembled a management team of executives and key employees with decades of experience in all aspects of vessel chartering, administration and operations. We believe that the shipping experience of these managers will position us to become a leading market player.
•  Efficient and Dependable Vessel Operations .    We believe that the Vafias Group is an efficient and dependable vessel manager that maintains high standards of operation, vessel technical condition, safety and environmental protection. We believe that by relying on the experience of the Vafias Group, our fleet manager, Stealth Maritime, will be able to contain our operating costs both by making available to us the operating efficiencies and economies of scale enjoyed by the Vafias Group and by using the Vafias Group's shipping experience in supervising the operations of the technical managers it employs for our fleet.
•  Strong Customer Relationships .    The Vafias Group, with its lengthy experience in shipping, has developed strong relationships with national, major and independent oil companies, energy traders and industrial companies such as Royal Dutch/Shell Group, British Petroleum, Dow Chemical Company, Statoil ASA, Vitol S.A., Glencore International AG, Finaval SpA and Petredec Ltd., as well as other companies which are among the principal charterers of LPG carriers. We believe our relationship with the Vafias Group will afford us access to these charterers for our vessels.

6



Our Business Strategy

We will seek to expand our fleet and provide reliable seaborne transportation at a competitive cost, in order to achieve our business objectives and to increase stockholder value by:

•  Becoming an Industry Leader.     The LPG sector is smaller than other shipping sectors. As of June 2005, the worldwide fleet of LPG carriers had only 934 ships with the larger fleets in the sector having approximately 20 to 25 vessels, and the largest fleet consisting of 47 vessels. We believe the relatively small number of LPG carriers in the world fleet coupled with the increasing demand for LPG products will support the growth of our fleet through acquisitions of second hand vessels and newbuildings. After acquisition of the Identified Vessels, our fleet will consist of 18 LPG carriers. We intend to continue to grow our fleet. Specifically, we currently intend to acquire up to 10 vessels in addition to the Identified Vessels by the middle of 2006 with additional indebtedness, cash from our operations and a portion of the balance of the proceeds of this offering. As a result, we believe we will own among the larger LPG carrier fleets by number of ships and will have a significant presence in the LPG charter market as currently composed.
•  Strategically Expanding the Size and Profile of our Fleet.     We intend to grow and diversify our LPG fleet into all sizes of LPG carriers, including small LPG carriers (up to 8,000 cbm), midsize LPG carriers (up to 50,000 cbm), large LPG carriers (up to 70,000 cbm) and very large LPG carriers (70,000 cbm and over). We anticipate that our fleet will consist of fully-pressurized, semi-refrigerated and fully-refrigerated LPG carriers, which will give us the capability and flexibility of carrying all LPG products. Our vessels will be able to trade in a multitude of trade routes, including the Far East, the Mediterranean, Northern Europe and South America, as well as in other regions which are evidencing an increasing demand for LPG products. We intend to continue to monitor developments in demand and to assess when additional vessel acquisitions would, in our view, be warranted.
•  Focusing on LPG Carriers .    We intend to focus on LPG carriers since we believe that this sector of shipping offers us achievable opportunities for growth. With the growth in world energy requirements, there has been an increasing demand for LPG products for industrial and other uses. Unlike liquefied natural gas, or LNG, LPG products are easily deliverable, and their distribution does not depend upon a developed infrastructure for delivery. This facilitates use of LPG products in both industrialized and developing regions, which we believe should lead to increased demand for these products, thereby providing additional opportunities for growth of our business.
•  Capitalizing on Increasing Seaborne LPG Trade .    By expanding and diversifying our fleet of LPG carriers, we intend to position ourselves to capitalize on the increased demand for LPG products in developing regions, such as in China, Southeast Asia, and South America, as well as in developed areas such as Japan, North America, Northern Europe and the Mediterranean. In addition, we believe the growth of the chemical industries in China and India are leading to increased demand for LPG products. As a byproduct of LNG, the supply of LPG has increased with the continuing growth in demand for LNG as a clean and efficient energy source. The growing production of LNG will drive an increasing supply of LPG. We believe the availability of LPG will increase demand for LPG shipping and transportation and should continue to provide us with opportunities for the future growth of our business. We intend to capitalize on both the increased demand and supply of LPG.
•  Operating a Modern, High Quality Fleet.     We intend to maintain a relatively young fleet with an average fleet age of between 10 to 15 years. We believe that owning a modern, high quality fleet reduces operating costs, improves safety and provides us with a competitive advantage in

7



  securing favorable charters. We intend to limit our acquisition of vessels to those that meet rigorous industry standards and that are capable of meeting the stringent certification requirements of major oil companies. We maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel.
•  Executing our Chartering Strategy.     In the current favorable charter market, we are mainly focusing on short to medium term period charters, including time and bareboat charters, which can last up to several years. As the charter market changes, we may adapt our chartering strategy to include spot market charters and contracts of affreightment.
•  Maintaining Scalable Infrastructure.     We believe that we and Stealth Maritime, our fleet manager, have assembled an experienced management team capable of administering a fleet of up to 20 vessels with relatively limited need for increased personnel. As our fleet grows, we will assess what additional resources, if any, may be required while still focusing on containing overhead and administrative costs. In the current LPG carrier market we believe that Stealth Maritime's subcontracting the technical management of our vessels is more efficient and cost effective than an attempt by Stealth Maritime to develop its own technical management staff, which would result in increased management fees for us.

8



Our Dividend Policy

Our policy is to declare and pay quarterly dividends to stockholders from our net profits each January, April, July and October, beginning January 2006, in amounts the Board of Directors determines are appropriate. However, we may have to make provisions for vessel acquisitions and other obligations that would reduce or eliminate the cash available for distribution as dividends. While we cannot assure you that we will do so, and subject to the limitations set forth below, we expect to declare and pay a dividend of $0.1875 per share in January 2006. Also, from time to time, the Board of Directors may determine to declare and pay quarterly dividends in an amount up to 50% of our net quarterly income, as the Board of Directors deems appropriate.

The declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet expansion, restrictions in our loan agreements, including the loan agreement with Fortis Bank, or other financing arrangements, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. The payment of dividends is not guaranteed or assured, and may be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flows of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the LPG carrier charter market, our earnings would be adversely affected, thus also limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of the dividend. There can be no assurance that dividends will be paid in the anticipated amounts and frequency set forth in this prospectus.

9



The Offering

Common stock offered by us 7,700,000 shares
Underwriters' over-allotment option 1,155,000 shares
Common stock to be outstanding     immediately after this offering (1) 13,700,000 shares
Use of proceeds We estimate that the net proceeds of this offering will be $106.82 million based on an assumed initial public offering price of $15.00 per share and after deducting the underwriting discount and the estimated expenses related to this offering. We intend to use $100.15 million of the net proceeds of this offering, together with additional indebtedness of $9.75 million under a new credit facility we intend to obtain, to acquire the Identified Vessels. The balance of the net proceeds of this offering will be used for working capital and other corporate purposes, including acquisitions of other vessels that we have not yet identified. See "Use of Proceeds."
Nasdaq National Market listing Our common stock has been approved for listing on the Nasdaq National Market, subject to official notice of issuance, under the symbol "GASS."
(1) Assumes that our underwriters do not exercise their over-allotment option and does not include 715,000 shares of common stock reserved for issuance under our equity compensation plan.

Risk Factors

Investing in our common stock involves substantial risk. You should carefully consider all the information in this prospectus prior to investing in our common stock. In particular, we urge you to consider carefully the factors set forth in the section of this prospectus entitled "Risk Factors" beginning on page 14.

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Summary Consolidated Financial and Other Data

The following table sets forth our summary consolidated financial data and other operating data. Our fleet consisted of four LPG carriers at December 31, 2004, five LPG carriers at March 31, 2005 and nine LPG carriers at June 30, 2005. We will be reporting on a calendar year basis. The summary consolidated income statement data, the summary consolidated balance sheet data and the other financial data are derived from our audited consolidated financial statements for the period from October 12, 2004 through December 31, 2004, from our financial records for three-month period ended March 31, 2005 and from our unaudited consolidated financial statements for the six-month period ended June 30, 2005. The fleet data and average daily results for the periods indicated are derived from our records. Our unaudited consolidated financial statements include all adjustments, which include only normal and recurring adjustments, which in the opinion of our management are necessary to present fairly the data included therein. The results of operations for the three-month period ended March 31, 2005 and the six-month period ended June 30, 2005 are not necessarily indicative of the results to be expected for the full year. Share data give effect to a 60,000-for-1 stock split effected August 26, 2005. We refer you to the footnotes to our consolidated financial statements for a discussion of the basis upon which our consolidated financial statements are presented. The data below should be read in conjunction with our consolidated financial statements, related notes and other financial information included herein. In accordance with the standard shipping industry practice, the Vafias Group did not obtain from the sellers historical financial or operating data for the vessels that it acquired and subsequently contributed or sold to us, as that data was not material to the decision to purchase the vessels. Accordingly, we have not included any historical financial or operating data relating to the results of operations of our vessels for any period before we acquired them. Please see the discussion in "Management's Discussion of Financial Condition and Results of Operations—Lack of Historical Operating Data for Vessels Before their Acquisition".


  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
INCOME STATEMENT DATA                  
Revenues:                  
Voyage revenues $ 1,455,551   $ 3,531,313   $ 9,592,605  
Operating expenses:                  
Voyage expenses   337,180     171,182     383,450  
Vessel operating expenses   564,184     1,106,559     2,435,771  
Management fees   81,120     163,020     388,615  
General and administrative expenses   35,100     105,300     234,280  
Depreciation   174,086     419,021     1,334,219  
Total expenses   1,191,670     1,965,082     4,776,335  
Income from operations   263,881     1,566,231     4,816,270  
Interest and finance costs, net   —     (34,095 )    (562,157 ) 
Loss on derivative   —     —     (389,300 ) 
Interest income   46     23,058     189,233  
Foreign exchange loss   (4,252 )    (5,587 )    (4,547 ) 
Other expenses, net   (4,206 )    (16,624 )    (766,771 ) 
Net income $ 259,675   $ 1,549,607   $ 4,049,499  
Earnings per share, basic and diluted   0.04     0.26     0.67  
Weighted average numbers of shares outstanding   6,000,000     6,000,000     6,000,000  

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  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
                   
BALANCE SHEET DATA (at period end)                  
Current assets, including cash $ 1,220,603   $ 31,846,753   $ 21,630,301  
Total assets   32,511,067     76,596,111     102,621,779  
Current liabilities   1,172,936     6,859,003     8,029,277  
Loss on derivative   —     —     389,300  
Total long-term debt, including current portion   —     23,123,798     44,992,500  
Total stockholders' equity   31,338,131     46,613,310     49,210,702  
OTHER FINANCIAL DATA                  
Net cash provided by (used in) operating activities $ 421,194   $ 1,200,880   $ 8,215,480  
Net cash provided by (used in) investing activities   (31,464,550 )    (13,715,915 )    (50,883,975 ) 
Net cash provided by (used in) financing activities   31,043,356     42,201,072     63,885,572  
EBITDA (1)   433,715     1,979,665     5,756,642  
FLEET DATA                  
Average number of vessels (2)   2.3     4.6     6.4  
Total voyage days for fleet (3)   208     418     1,167  
Total time charter days for fleet (4)   96     412     1,158  
Total spot market days for fleet (5)   112     6     9  
Total calendar days for fleet (6)   208     418     1,167  
Fleet utilization (7)   100 %    100 %    100 % 
AVERAGE DAILY RESULTS                  
Time charter equivalent (8) $ 5,377   $ 8,039   $ 7,891  
Vessel operating expenses (9)   2,712     2,647     2,087  
General and administrative expenses   169     252     201  
Management fees   390     390     333  
Total vessel operating expenses (10)   3,271     3,289     2,621  
(1) EBITDA represents net earnings before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included in this prospectus because it is a basis upon which we assess our liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.

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The following table reconciles net cash provided by (used in) operating activities, as reflected in the consolidated statements of cash flows, to EBITDA:


  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
                   
Net Cash Provided By (Used in) Operating Activities $ 421,194   $ 1,200,880   $ 8,215,480  
Net increase in current assets, excluding cash   1,220,603     940,113     (807,379 ) 
Net (increase) in current liabilities, excluding current portion of long-term debt   (1,172,936 )    (74,865 )    (1,429,341 ) 
Non-cash general and administrative expenses   (35,100 )    (97,500 )    (195,000 ) 
Interest income   (46 )    (23,058 )    (189,233 ) 
Interest and finance costs, net   —     34,095     562,157  
Amortization of financing fees   —     —     (10,742 ) 
Loss on derivative   —     —     (389,300 ) 
EBITDA $ 433,715   $ 1,979,665   $ 5,756,642  
(2) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(3) In the future, our total voyage days for fleet will reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydocks or special or intermediate surveys.
(4) Total time charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.
(5) Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.
(6) Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.
(7) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.
(8) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
(9) Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
(10) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

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RISK FACTORS

You should consider carefully the following factors, as well as the other information set forth in this prospectus, before making an investment in our common stock. Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common stock. Any of the contingencies described in the prospectus could significantly and adversely affect our business, financial condition or operating results and the trading price of our stock. You could lose all or part of your investment.

Industry Specific Risks

The cyclical nature of the demand for LPG product transportation may lead to significant changes in our chartering and vessel utilization, which may adversely affect our revenues, profitability and financial position

The international LPG carrier market is cyclical with attendant volatility in profitability, charter rates and vessel values. Recent fluctuations attest to the volatility in the gas carrier market. Because many factors influencing the supply of, and demand for, vessel capacity are unpredictable, the timing, direction and degree of changes in the international gas carrier market are also not predictable.

The degree of charter rate volatility among different types of gas carriers has varied widely. To the extent we have vessels in the spot market, we are exposed to changes in spot rates for gas carriers and such changes can affect our earnings and the value of our gas carriers at any given time. There is no assurance that as our period charters expire that they will be extended or renewed on favorable terms.

In addition, when LPG vessel prices are considered to be low, companies not usually involved in shipping may make speculative vessel orders, thereby increasing the LPG shipping supply, satisfying demand sooner and potentially suppressing charter rates. Any of the foregoing factors could have an adverse effect on our revenues, profitability and financial position.

Charter rates for LPG carriers over the preceding twelve months have reached high levels and future demand for LPG carriers and charter rates will depend on continued economic growth in the world economy and demand for LPG product transportation that exceeds the capacity of the growing worldwide LPG carrier fleet's ability to match it

We believe that the future demand for LPG carriers and the charter rate levels for LPG carriers will depend upon continued economic growth in the world's economy, particularly in the economies of China, India and Southeast Asia, and upon seasonal and regional changes in demand and changes to the capacity of the world fleet. The capacity of the world fleet seems likely to increase and there can be no assurance that economic growth will continue. Adverse economic, political, social or other developments could have a material adverse effect on world economic growth and thus on our business and results of operations.

The factors affecting the supply and demand for LPG carriers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.

The factors that influence demand for our vessels include:

•  supply and demand for LPG products;
•  global and regional economic conditions;
•  the distance LPG products are to be moved by sea;
•  availability of alternative transportation means; and
•  changes in seaborne and other transportation patterns.

The factors that influence the supply of vessel capacity include:

•  the number of newbuilding deliveries;
•  the scrapping rate of older vessels;

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•  LPG carrier prices;
•  changes in environmental and other regulations that may limit the useful lives of vessels; and
•  the number of vessels that are out of service.

Any material increase in the supply of LPG carrier capacity without a corresponding growth in LPG carrier demand could have a material adverse effect on the employment of our LPG fleet and on prevailing charter rates and could accordingly adversely affect our business, financial condition and operating results.

Various economic factors could materially adversely affect our business, financial position and results of operations, as well as our future prospects

Some LPG products we carry are used in cyclical businesses such as the manufacturing of plastics and in the chemical industry and, accordingly, a slackening of demand in those industries could adversely affect the LPG carrier industry. Moreover, an adverse change in economic conditions affecting China, Japan, India or Southeast Asia could have a negative effect on the demand for LPG products, thereby adversely affecting our business, financial position and results of operations, as well as our future prospects. In particular, in recent years China and India have been among the world's fastest growing economies in terms of gross domestic product. We cannot assure you that such growth will be sustained or that these countries' economies will not experience a slowdown or recession in the future. Moreover, any slowdown in the economies of the United States or the European Union may adversely affect economic growth in Asia. Our business, financial position and results of operations, as well as our future prospects, could likely be materially and adversely affected by an economic downturn in any of these countries or regions.

If the demand for LPG products and LPG shipping does not continue to grow, our business, results of operations and financial condition could be adversely affected

Our growth depends on continued growth in world and regional demand for LPG products and LPG shipping, all of which could be adversely affected by a number of factors, such as:

•  increases in the cost of petroleum and LNG from which LPG is derived;
•  increases in the production and demand for industrial and residential area petroleum gas in areas linked by pipelines to consuming areas, or the conversion of existing non-petroleum gas pipelines to petroleum gas pipelines in those markets;
•  decreases in the consumption of LPG or LNG due to increases in its price relative to other energy sources or other factors making consumption of LPG or LNG less attractive;
•  availability of new, alternative energy sources;
•  a reduction in global or general industrial activity specifically in the plastics and chemical industry; and
•  adverse global or regional economic or political conditions, particularly in LPG consuming regions, which could reduce energy consumption.

Reduced demand for LPG products and LPG shipping would have a material adverse effect on our future growth and would harm our business, results of operations and financial condition.

Our operating results are subject to seasonal fluctuations, which could affect our operating results and the amount of available cash with which we can pay dividends

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results, which could affect the amount of dividends that we pay to our stockholders from quarter-to-quarter. The LPG carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues may be stronger in fiscal quarters ended

15



December 31 and March 31, and conversely, our revenues may be weaker during the fiscal quarters ended June 30 and September 30. This seasonality could materially affect our operating results and cash available for distribution to our stockholders as dividends in the future.

Our revenues, operations and future growth could be adversely affected by a decrease in supply of liquefied natural gas, or LNG

As of the current period, there has been a strong supply for and an increase in the construction of plants and projects involving LNG, of which LPG is a byproduct. If the supply of LNG decreases, we may see a concurrent reduction in the production of LPG and resulting lesser demand and lower charter rates for our vessels. A significant reduction in the supply of LPG would ultimately have a material adverse impact on our revenues, operations and future growth.

Because the market value of our vessels are currently at high levels and may fluctuate significantly, we may incur losses when we sell our vessels, which may adversely affect our earnings and possibly lead to defaults under our loan agreements

The market value of our vessels, which are currently at high levels, may fluctuate depending on a number of factors including:

•  general economic and market conditions affecting the shipping industry;
•  age, sophistication and condition of our vessels;
•  types and sizes of vessels;
•  availability of other modes of transportation;
•  cost and delivery of schedules for newbuildings;
•  governmental and other regulations;
•  demand for LPG products;
•  prevailing level of LPG charter rates; and
•  technological advances.

If we sell vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be less than the vessel's carrying value on our financial statements, resulting in a loss and reduction in earnings. If the market value of our fleet declines, we may not be in compliance with certain provisions of our existing loan agreements and we may not be able to refinance our debt or obtain additional financing. If we are unable to pledge additional collateral, our lenders could accelerate our debt and foreclose on our fleet. The loss of our vessels would mean we could not run our business.

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our financial conditions and results of operations

Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because those laws and regulations are often revised, we cannot predict the ultimate cost of complying with them or the impact they may have on the resale prices or useful lives of our vessels. Additional rules and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which could materially adversely affect our operations. We are also required by various governmental and quasi-governmental agencies to obtain permits, licenses and certificates with respect to our operations. These permits, licenses and certificates may be issued or renewed with terms that could materially and adversely affect our operations.

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA 90 applies to discharges of any oil from a vessel, including discharges of fuel and lubricants from an LPG carrier.

16



OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its 200 nautical mile exclusive economic zone. Our gas carriers will not be carrying oil in bulk as cargo, and will therefore not be subject to oil spill liability under the provisions of OPA 90 (except in the case of a discharge of fuel oil or bunkers). Gas carriers, however, are considered "vessels" for purposes of OPA financial responsibility requirements. Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" and are jointly, severally and strictly liable (unless the discharge of pollutants results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of pollutants from their vessels. See "Environmental and Other Regulation."

The International Maritime Organization (the "IMO"), which is an agency of the United Nations, has adopted final regulations that are designed to reduce pollution in international waters, both from accidents and from routine operations. These regulations address oil discharges, ballasting and unloading operations, sewage, garbage, and air emissions. In complying with OPA 90 and the IMO regulations and other regulations that may be adopted, including regulations governing the safety, construction, equipment, operation and liability of gas carriers, shipowners and operators may be required to incur additional costs in meeting new maintenance and inspection requirements, in developing contingency plans for potential spills, and in obtaining insurance coverage.

The operation of our vessels is affected by the requirements set forth in the International Management Code for the Safe Operation of Ships and Pollution Prevention ("ISM Code"). The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject the owner or charterer to increased liability, may decrease available insurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports. Currently, each of the vessels in our fleet is ISM Code-certified. Because these certifications are critical to our business, we place a high priority on maintaining them. For this reason, we believe it is highly unlikely that such certifications could be discontinued. However, there can be no assurance that such certifications will be maintained indefinitely.

We currently maintain, for each of our vessels, pollution liability coverage insurance in the amount of $1.0 billion per incident. In addition, we carry hull and machinery and protection and indemnity insurance to cover the risks of fire and explosion. Given the relatively small amount of bunkers our vessels carry, we believe that a spill of oil from the vessels should not be catastrophic. However, under certain circumstances, fire and explosion could result in a catastrophic loss. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. If the damages from a catastrophic spill exceeded our insurance coverage, it would have a severe effect on us and could possibly result in our insolvency.

We believe that regulation of the shipping industry will continue to become more stringent and more expensive for us and our competitors. Substantial violations of applicable requirements or a catastrophic release from one of our vessels could have a material adverse impact on our financial condition and results of operations.

Our vessels are subject to periodic inspections by a classification society

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. Our fleet is currently classed with Bureau Veritas, Nippon Kaiji Kyokai, or NKK, the American Bureau of Shipping, Det Norske Veritas and RINA SpA.

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A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspection of the underwater parts of such vessel.

If a vessel does not maintain its class and/or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable and we could be in violation of covenants in our loan agreements and insurance contracts or other financing arrangements. This would adversely impact our operations and revenues.

Maritime claimants could arrest our vessels, which could interrupt our cash flow

Crew members, suppliers of goods and services to a vessel, shippers of cargo and others may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of funds to have the arrest lifted.

In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our ships or, possibly, another vessel managed by the Vafias Group.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of revenues

A government could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels would adversely impact our operations and revenues, thereby resulting in loss of revenues.

Risks involved with operating ocean-going vessels could affect our business and reputation, which would adversely affect our revenues and stock price

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:

•  marine accident or disaster;
•  piracy;
•  explosions;
•  environmental accidents;
•  pollution;
•  loss of life;
•  cargo and property losses or damage; and
•  business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in a serious accident could harm our reputation as a safe and reliable vessel operator and lead to a loss of business.

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Our vessels may suffer damage and we may face unexpected drydocking and repair costs, which could affect our cash flow and financial condition

If our vessels suffer damage, they may need to be repaired at a shipyard facility. The costs of drydocking and repairs are unpredictable and can be substantial. We may have to pay drydocking and repair costs that our insurance does not cover. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would have an adverse effect on our cash flow and financial condition. We do not intend to carry business interruption insurance.

Our operations outside the United States expose us to global risks, such as terrorism, that may interfere with the operation of our vessels

We are an international company and primarily conduct our operations outside the United States. Changing economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered affect us. In the past, political conflicts, particularly in the Arabian Gulf, resulted in attacks on vessels, mining of waterways and other efforts to disrupt shipping in the area. For example, in October 2002, the vessel Limburg was attacked by terrorists in Yemen. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Following the terrorist attack in New York City on September 11, 2001, and the military response of the United States, including the recent conflict in Iraq, the likelihood of future acts of terrorism may increase, and our vessels may face higher risks of being attacked. In addition, future hostilities or other political instability in regions where our vessels trade could affect our trade patterns and adversely affect our operations and performance. Furthermore, future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an economic recession in the United States or the world. Any of these occurrences could have a material adverse impact on our operating results, revenue and costs.

Terrorist attacks, or the perception that LPG or LNG facilities and LPG or LNG carriers are potential terrorist targets, could materially and adversely affect the continued supply of LPG and LNG to the United States and to other countries. Concern that LPG and LNG facilities may be targeted for attack by terrorists has contributed to a significant community and environmental resistance to the construction of a number of LNG facilities, primarily in North America. If a terrorist incident involving a gas facility or gas carrier did occur, the incident may adversely affect necessary LPG facilities or LNG facilities currently in operation.

Company-Specific Risks

Because we are a start-up company with a limited operating history, our limited historical financial and operating data may not be a reliable indicator of our prospects and future performance and may not be sufficient to evaluate our business plan

We are a start-up company incorporated in December 2004 with a limited operating history. The consolidated financial statements included in this prospectus reflect the historical business activities of our vessel-owning companies both before and after their acquisition by us. Our consolidated financial statements have been presented as if the vessel-owning companies were our consolidated subsidiaries as of the dates indicated in our consolidated financial statements and using the combined historical carrying costs of the assets and the liabilities of such vessel-owning companies. Our consolidated financial statements cover only the period from October 12, 2004 to December 31, 2004 and the six-month period ended June 30, 2005. Accordingly, we have only a limited operating history upon which you can evaluate our prospects and future performance. These periods covered by our consolidated financial statements may be too short to determine whether our business will succeed. Our prospects may be adversely affected by the risks, expenses and difficulties frequently encountered in the operation of a new business in an evolving and competitive industry.

Dependence on our relationship with the Vafias Group and Stealth Maritime

We are a newly formed company and currently plan not to have any salaried employees, although we intend to reimburse our fleet manager, Stealth Maritime, for the salaries of our CEO and CFO. We are accordingly dependent upon our fleet manager, Stealth Maritime, for the administration,

19



chartering and operations supervision of our fleet. Stealth Maritime is a privately-owned company controlled by the Vafias Group and about which there is little public information. We will depend on our relationship with the Vafias Group for:

•  our recognition and acceptance in the LPG carrier sector, including our ability to attract charterers;
•  relations with charterers and charter brokers;
•  operational expertise; and
•  management experience.

The loss of Stealth Maritime's services or its failure to perform its obligations to us properly for financial or other reasons could materially and adversely affect our business and the results of our operations. Although we may have rights against Stealth Maritime if it defaults on its obligations to us, you will have no recourse against Stealth Maritime. In addition, we cannot assure you that we will be able to find a replacement manager on terms as favorable as those currently in place with Stealth Maritime. Further, we expect that we will need to seek approval from our lenders to change our manager.

We depend on third party managers to manage our fleet

Stealth Maritime will subcontract the technical management of our fleet, including crewing, operation, maintenance and repair, to third party managers. The loss of their services or their failure to perform their obligations could materially and adversely affect the results of our operations. Although we may have rights against these managers if they default on their obligations, you will have no recourse against these parties. In addition, we cannot assure you that we will be able to find replacement technical managers on terms as favorable as those currently in place. Further, we expect that we will need to seek approval from our lenders to change these third party managers.

We may enter into certain significant transactions with companies affiliated with the Vafias Group which may result in conflicts of interests

In addition to our management contract with Stealth Maritime, a company controlled by the Vafias Group and the Vafias family, of which our CEO is a member, we may enter into other transactions with companies affiliated with the Vafias Group. Such transactions could create conflicts of interest that could adversely affect our business or your interests as stockholders of our common stock, as well as our financial position and results of operations, as well as our future prospects.

Our directors and officers may in the future hold direct or indirect interests in companies that compete with us

Our directors and officers each have a history of involvement in the shipping industry and may in the future, directly or indirectly, hold investments in companies that compete with us. In that case, they may face conflicts between their own interests and their obligations to us.

Stealth Maritime and companies affiliated with Stealth Maritime may acquire vessels that compete with our fleet

It is possible that Stealth Maritime or companies affiliated with Stealth Maritime could, in the future, agree to manage vessels that compete directly with ours. As long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier, which Stealth Maritime, its principals or any of their controlled affiliates may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. Were we, however, to decline any such opportunity offered to us or if we do not have the resources or desire to accept any such opportunity, Stealth Maritime could retain and manage the vessel. Furthermore, this right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. In such cases, they could compete with our fleet and may face conflicts between their own interests and their obligations to us. In addition, in the future, we may also consider diversifying into wet, dry or

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other gas shipping sectors. Any such vessels would be in competition with Stealth Maritime and companies affiliated with Stealth Maritime. Stealth Maritime might be faced with conflicts of interest with respect to their own interests and their obligations to us that could adversely affect our business and your interests as stockholders.

As our current charters expire, new charters at attractive rates may not be available which would have an adverse impact on our revenues and financial condition

Charter rates for LPG carriers are currently at their highest levels in recent years. In 2005 and into 2006, we expect to derive the greater part of our revenues from period charters, including time and bareboat charters. When these current charters expire, it may not be possible to re-charter these vessels at similar rates and as a result, we may have to accept lesser rates or experience off-hire time for our vessels, which may adversely impact our revenues and financial condition.

We are dependent on the ability of our charterers to honor their commitments to us for all our revenues

We derive all our revenues from the payment of hire by charterers. If our charterers encounter financial difficulties and cannot pay us, or otherwise refuse to pay us, our recourse against them may be limited or may not be able to be undertaken in a timely fashion. Non-payment by charterers would have a material adverse effect on our revenues.

As our fleet grows in size, we will need to improve our operations and financial systems, staff and crew; if we cannot improve these systems or recruit suitable employees, our business and results of operations may be adversely affected

Our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our technical managers to recruit suitable additional seafarers and shoreside administrative and management personnel. We cannot assure you that Stealth Maritime and those technical managers will be able to continue to hire suitable employees as we expand our fleet. Our LPG carriers require a technically skilled staff with specialized training. If the technical managers' crewing agents are unable to employ such technically skilled staff, they may not be able to adequately staff our vessels. If Stealth Maritime is unable to operate our financial and operations systems effectively or our technical managers are unable to recruit suitable employees as we expand our fleet, our results of operation may be adversely affected.

We depend upon a few significant customers for a large part of our revenues. The loss of one or more of these customers could adversely affect our financial performance

In our limited operating history we have derived a significant part of our revenue from a small number of charterers. For the six-month period ended June 30, 2005, approximately 80% of our revenue was derived from three charterers. We anticipate continuing to service these customers as well as additional customers which will represent significant amounts of our revenue after our acquisition of the Identified Vessels. If we encounter any difficulties in our relationships with these charterers, our results of operations, cash flows and financial condition could be adversely affected.

If we fail to manage our planned growth properly, we may not be able to successfully expand our market share

The acquisition of additional vessels may impose significant additional responsibilities on our management and staff, and may necessitate that we, and they, increase the number of personnel.

We intend to continue to grow our fleet. Our business strategy to become an industry leader is based on eventually acquiring a larger fleet. Specifically, we currently intend to acquire up to 10 vessels in addition to the Identified Vessels by the middle of 2006 with additional indebtedness, cash from our operations and a portion of the balance of the proceeds of this offering. We may not be able to identify suitable vessels, acquire vessels on advantageous terms or obtain financing for such acquisitions. Our growth will depend on:

•  locating and acquiring suitable vessels;
•  identifying and completing acquisitions or joint ventures;

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•  integrating any acquired business successfully with our existing operations;
•  expanding our customer base;
•  managing our expansion; and
•  obtaining required financing.

Growing our business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtaining additional qualified personnel and managing relationships with customers and our commercial and technical managers and integrating newly acquired vessels into existing infrastructures. We cannot give any assurance that we will be successful in executing our growth plans and business strategy to become an industry leader or that we will not incur significant expenses and losses in connection therewith.

We may be unable to attract and retain key management personnel and other employees in the LPG carrier industry, which may negatively affect the effectiveness of our management and our results of operation

Our success depends to a significant extent upon the abilities and efforts of our management team, including our CEO, Harry Vafias, and our Chief Financial Officer, Andrew Simmons. In addition, Harry Vafias is a member of the Vafias family, which controls the Vafias Group, which in turn controls Stealth Maritime, our fleet manager. Our success will depend upon our and Stealth Maritime's ability to hire and retain qualified managers to oversee our operations. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not have employment agreements directly with our CEO or Chief Financial Officer, who are technically employees of Stealth Maritime, our fleet manager, although under our management agreement with Stealth Maritime, our relationship with each of our CEO and Chief Financial Officer is governed by terms substantially similar to those typically included in employment agreements. We do not intend to maintain "key man" life insurance on any of our officers.

Our CEO has limited experience running a public company

While our CEO, Harry Vafias, age 27, has been actively involved in the management and operation of vessels for several years as an employee of the Vafias Group, he has not had prior experience as a CEO of a public company. Mr. Vafias will have to rely on the experience of the Vafias Group for the management of our vessels, as well as the advice and oversight of the Board of Directors, in his role as our CEO.

No assurance of dividends

We intend to declare and pay dividends to stockholders quarterly in amounts our Board of Directors determines are appropriate, commencing with a dividend of $0.1875 per share in January 2006. However, we could incur expenses, obligations or liabilities that would reduce or eliminate the cash we have available for distribution as dividends. Our loan agreements, including the loan agreement with Fortis Bank, or other financing arrangements, as well as Marshall Islands law, may also restrict or prohibit our declaration and payment of dividends under some circumstances.

If we are not successful in acquiring the Identified Vessels, any unused net proceeds from this offering may be used for other corporate purposes or held pending investment in other vessels. Identifying and acquiring other vessels may take a significant amount of time. The result may be that proceeds of this offering are not invested in new vessels, or are so invested but only after some delay. In either case, we will not be able to earn charterhire consistent with our current anticipations, and our profitability and our ability to pay dividends will be affected.

In addition, the declaration and payment of dividends will be subject at all times to the discretion of our Board of Directors. The timing and amount of dividends will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements or other financing arrangements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of

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dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends. There can be no assurance that dividends will be paid in the anticipated amounts and frequency set forth in this prospectus.

A significant increase in our debt levels may adversely affect us and our cash flows

We only recently began to incur debt and as we incur additional debt to acquire more vessels, including the new credit facility we intend to obtain to help finance our acquisition of the Marathon , and additional indebtedness we anticipate incurring in connection with our intended acquisition by the middle of 2006 of up to 10 vessels which we have yet to identify, the need to service the indebtedness will impact our profitability and cash available for growth of our fleet, working capital and dividends. Additionally, an increase in the present interest rate levels may increase the cost of servicing our indebtedness with similar results.

To finance our future fleet expansion program beyond the Identified Vessels, including our intended acquisition of up to 10 vessels by the middle of 2006 which we have yet to identify, we expect to incur additional secured debt. We will have to dedicate a portion of our cash flow from operations to pay the principal and interest on our debt. These payments will limit funds otherwise available for working capital, capital expenditures, dividends and other purposes. The need to service our debt may limit our funds available for other purposes, including distributing cash to our stockholders, and our inability to service our debt could lead to acceleration of our debt and foreclosure on our fleet.

Moreover, carrying secured indebtedness exposes us to increased risks if the demand for LPG product transportation drops significantly and charter rates and vessel values are adversely affected.

Our loan agreements or other financing arrangements contain restrictive covenants that may limit our liquidity and corporate activities

Our loan agreement imposes, and our future financing arrangements may impose, operating and financial restrictions on us. These restrictions may limit our ability to:

•  incur additional indebtedness;
•  create liens on our assets;
•  sell capital stock of our subsidiaries;
•  make investments;
•  engage in mergers or acquisitions;
•  pay dividends; and
•  make capital expenditures.

The Fortis Bank loan agreement requires us to maintain specified financial ratios and satisfy financial covenants. These financial ratios and covenants include requirements that we:

•  maintain an aggregate minimum cash balance with Fortis Bank of at least $3.0 million;
•  ensure that our ratio of our total liabilities less total stockholders' equity to total assets does not exceed 0.80 to 1.0 at any time; and
•  maintain a ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan of at least 1.25 to 1.

As of June 30, 2005, our cash balance with Fortis Bank was $7.35 million; our ratio of our total liabilities less total stockholders' equity to total assets was 0.041 and our ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan was 2.26.

As a result of the restrictions in our loan agreement, or similar restrictions in our future financing arangements with respect to the Marathon and our intended acquisition of up to 10 vessels by the middle of 2006 which we have yet to identify, we may need to seek permission from our lenders in

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order to engage in some corporate actions. Our lenders' interests may be different from ours, and we cannot guarantee that we will be able to obtain their permission when needed. This may prevent us from taking actions that we believe are in our best interest.

A failure by us to meet our payment and other obligations could lead to defaults under our secured loan agreements. Our lenders could then accelerate our indebtedness and foreclose on our fleet. The loss of our vessels would mean we could not run our business.

Our ability to obtain additional debt financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operation and our ability to implement our business strategy, including our intended acquisition of up to 10 vessels by the middle of 2006 which we have yet to identify.

Because we generate all of our revenues in United States dollars but incur a significant portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations

We generate all of our revenues in United States dollars and a portion, depending on the trade routes, of our vessels' expenses in currencies other than United States dollars. This difference could lead to fluctuations in net income due to changes in the value of the United States dollar relative to the other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the United States dollar falls in value can increase, decreasing our net income. For example, in the year ended December 31, 2004, the value of the United States dollar declined by 7.5% as compared to the Euro. We have not hedged these risks. Our operating results could suffer as a result.

In the highly competitive international LPG carrier market, we may not be able to compete for charters with new entrants or established companies with greater resources

We deploy our vessels in a highly competitive market that is capital intensive. Competition arises primarily from other vessel owners, some of which have substantially greater resources than we do. Competition for the transportation of LPG can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its managers to the charterers. Competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer more competitive prices and fleets.

We principally operate in one segment of the shipping industry, the seaborne transport of LPG, and our lack of a diversified business could adversely affect us

Unlike many other shipping companies, which may carry drybulk, crude oil and oil products, we currently depend primarily on the transport of LPG. Substantially all of our revenue is derived from a single source—the seaborne transport of LPG—and our lack of a diversified business model could adversely affect us if the LPG seaborne transport business fails to perform to our expectations.

If we expand into dry, wet or other gas shipping sectors, we may not be able to successfully execute such expansion plans, which could have an adverse effect on our business, results of operation and financial condition

In the future, we may expand into dry, wet or other gas shipping sectors if opportunities arise. We have limited experience in these sectors and an inability to successfully execute such expansion plans could:

•  be costly;
•  distract us from our LPG carrier business; and
•  divert management resources,

each of which could have an adverse effect on our business, results of operation and financial condition.

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Purchasing and operating previously owned, or secondhand, vessels may result in increased operating costs and vessels off-hire, which could adversely affect our revenues

Our examination of secondhand vessels, which may not include physical inspection prior to purchase, does not provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties on secondhand vessels.

In general, the costs of maintaining a vessel in good operating condition increase with its age. The average age of the nine LPG carriers in our fleet is approximately 11.6 years. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we cannot be certain that the sales prices will equal at least their carrying values at that time.

The shipping industry has inherent operational risks that may not be adequately covered by our insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance coverage, insurance and war risk insurance for our fleet. We can give no assurance that we are adequately insured against all risks. We may not be able to obtain adequate insurance coverage for our fleet in the future. The insurers may not pay particular claims. Even if our insurance coverage is adequate, we may not be able to timely obtain a replacement vessel in the event of a loss. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs or lower our revenue.

Our existing stockholder will effectively control the outcome of matters on which our stockholders are entitled to vote following this offering and his interests may be different from yours

Our current stockholder, a company controlled by our CEO, will own, directly or indirectly, approximately 43.8% of our outstanding common stock after this offering, assuming the underwriters do not exercise their over-allotment option. The existing stockholder will effectively control the outcome of matters on which our stockholders are entitled to vote, including the election of our entire Board of Directors and other significant corporate actions. The interests of this stockholder may be different from your interests.

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

Under the United States Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of vessel owning or chartering corporations, such as our subsidiaries, that is attributable to transportation that begins or ends, but does not both begin and end, in the United States is characterized as United States shipping income. United States shipping income is subject to either a (i) 4% United States federal income tax without allowance for deductions or (ii) taxation at the standard United States federal income tax rates (and potentially to a 30% branch profits tax), unless derived by a corporation that qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder.

Generally, our subsidiaries will qualify for this exemption for a taxable year if our shares are treated as "primarily and regularly traded" on an established securities market in the United States. Our shares of common stock will be so treated if (i) the aggregate number of our shares of common stock traded during such year on an established securities market in the United States exceeds the aggregate number of our shares of common stock traded during that year on established securities markets in any other single country, (ii) either (x) our shares of common stock are regularly quoted during such year by dealers making a market in our shares or (y) trades in our shares of common stock are effected, other than in de minimis quantities, on an established securities market in the

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United States on at least 60 days during such taxable year and the aggregate number of our shares of common stock traded on an established securities market in the United States during such year equals at least 10% of the average number of our shares of common stock outstanding during such taxable year and (iii) our shares of common stock are not "closely held" during such taxable year. For these purposes, our shares of common stock will be treated as closely held during a taxable year if, for more than one-half the number of days in such taxable year, one or more persons each of whom owns either directly or under applicable attribution rules, at least 5% of our shares of common stock, own, in the aggregate, 50% or more of our shares of common stock, unless we can establish, in accordance with applicable documentation requirements, that a sufficient number of the shares of common stock in the closely-held block are owned, directly or indirectly, by persons that are residents of foreign jurisdictions that provide United States shipping companies with an exemption from tax that is equivalent to that provided by Section 883 to preclude other stockholders in the closely-held block from owning 50% or more of the closely-held block of shares of common stock.

We anticipate that approximately 43.8% of our shares of common stock will be owned by our existing stockholder immediately following the offering. It is possible that, either immediately following the offering or at a later time, one or more persons each of whom owns, either directly or under applicable attribution rules, at least 5% of our shares of common stock will own, in the aggregate, 50% or more of our shares of common stock. In such circumstances, we and our subsidiaries may qualify for the exemption provided in Section 883 of the Code only if enough of the closely-held block of our common shares was owned or treated as owned by "qualified stockholders" so it could not be the case that, for more than half of the days in our taxable year, the shares of common stock in the closely-held block not owned or treated as owned by qualified stockholders represented 50% or more of our shares of common stock. For these purposes, a "qualified stockholder" includes an individual that owns or is treated as owning shares of our common stock and is a resident of a jurisdiction that provides an exemption that is equivalent to that provided by Section 883 of the Code and certain other persons; provided in each case that such individual or other person complies with certain documentation and certification requirements set forth in the Section 883 regulations and designed to establish status as a qualified stockholder.

Our CEO, the sole stockholder of our existing stockholder, has entered into an agreement with us regarding his compliance, and the compliance by certain entities that he controls and through which he owns our shares, with the certification procedures designed to establish status as a qualified stockholder. In certain circumstances, his compliance and the compliance of such entities he controls with the terms of that agreement may enable us and our subsidiaries to qualify for the benefits of Section 883 even where persons each of whom owns, either directly or under applicable attribution rules, 5% or more of our shares own, in the aggregate, more than 50% of our outstanding shares. There can be no assurance, however, that his compliance and the compliance of such entities he controls with the terms of that agreement will enable us or our subsidiaries to qualify for the benefits of Section 883.

The entities that own the Identified Vessels that we are acquiring through stock acquisitions may not qualify for the benefits of Section 883 for 2005, with the result that United States federal tax, as described below, may apply if such vessels have made or make voyages in 2005 that begin or end in the United States. We do not believe that such vessels have made such a voyage, but do not in all circumstances control whether such a voyage will be made.

If our subsidiaries do not qualify for the exemption under Section 883 of the Code for any taxable year, they would be subject for those years to the 4% United States federal income tax on their gross United States shipping income or, in certain circumstances to net income taxation at the standard United States federal income tax rates (and potentially also to a 30% branch profits tax). The imposition of such tax could have a negative effect on our business and would result in decreased earnings available for distribution to our stockholders.

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

A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation'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, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which 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" and cash proceeds from the offering will be treated as an asset which produces passive income. United States stockholders of a PFIC are subject to a disadvantageous United States 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 proposed method of operation and the manner in which we expect to use the proceeds of this offering, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. We believe that our income from our time chartering activities does not constitute "passive income," and the assets that we own and operate in connection with the production of that income do not constitute passive assets. We intend to treat the income that we derive from bareboat charters as "passive income," and the assets giving rise to such income as "passive assets" for the purposes of the PFIC rules.

There is, however, no direct legal authority under the PFIC rules addressing our proposed method of operation. Accordingly, no assurance can be given that the United States Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

If we were unable to purchase assets which produce non-passive income with the proceeds of the offering in a timely fashion, then it is possible that we could be treated as a PFIC. However, we believe that we will be able to purchase sufficient assets which produce non-passive income with the proceeds of the offering in a fashion that will permit us to avoid being treated as a PFIC with respect to any taxable year.

Our expectation that we will not be treated as a PFIC is based in part upon our beliefs and expectations regarding the value of the vessels that we will lease on a bareboat basis relative to the value of our other assets. Should our beliefs or expectations turn out to be incorrect, then we could, in certain circumstances, be treated as a PFIC.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States stockholders would face adverse United States tax consequences. Under the PFIC rules, unless those stockholders make an election available under the Code (which election could itself have adverse consequences for such stockholders, as discussed below under "Tax Considerations—United States Federal Income Taxation of United States Holders"), such stockholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the stockholder's holding period of our common shares. See "Tax Considerations—United States Federal Income Tax Considerations—United States Federal Income Taxation of United States Holders" for a more comprehensive discussion of the United States federal income tax consequences to United States stockholders if we are treated as a PFIC.

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We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Stockholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public stockholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction. For more information with respect to how stockholder rights under Marshall Islands law compares with stockholder rights under Delaware law, we refer you to our discussion under the heading "Marshall Islands Company Considerations" beginning on page 92.

Obligations associated with being a public company will require significant company resources and management attention

Upon completion of this offering, we will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the other rules and regulations of the Securities and Exchange Commission, or the Commission, including the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will have to dedicate a significant amount of time and resources to ensuring compliance. We have not yet begun this process and it is possible that material weaknesses exist. In addition, upon completion of this offering, we will become subject to the listing requirements of the Nasdaq National Market.

We will work with our independent legal, accounting and financial advisors to identify any areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. We will evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take will take considerable time and may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

In addition, compliance with reporting and other requirements applicable to public companies will create additional costs for us and will require the time and attention of management. Our limited management resources may exacerbate the difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management's attention to these matters will have on our business.

In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors' and officers' liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

It may be difficult to enforce service of process and enforcement of judgments against us and our officers and directors

We are a Marshall Islands company, and our executive offices are located outside of the United States in Athens, Greece. All but one of our directors and officers reside outside of the United States,

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and most of our assets and their assets are located outside the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in the United States courts against us or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws.

There is also substantial doubt that the courts of the Marshall Islands or Greece would enter judgments in original actions brought in those courts predicated on United States, federal or state securities laws.

Offering Specific Risks

There is no guarantee that an active and liquid public market for you to resell shares of our common stock will develop

The price of our common stock after this offering may be volatile, and may fluctuate due to factors such as:

•  actual or anticipated fluctuations in quarterly and annual results;
•  mergers and strategic alliances in the shipping industry;
•  market conditions in the industry;
•  supply and demand for LPG products and LPG shipping;
•  supply and demand for LNG, of which LPG is a byproduct;
•  changes in government regulation;
•  fluctuations in our quarterly revenues and earnings and those of our publicly held competitors;
•  shortfalls in our operating results from levels forecast by securities analysts;
•  announcements concerning us or our competitors; and
•  the general state of the securities markets.

The international gas carrier market, including the transport of LPG products, is unpredictable and volatile. The market for our common stock, as well as the securities of other companies in this industry may be volatile.

You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future

If you purchase common stock in this offering, you will pay more for your shares of common stock than the amounts paid by our existing stockholder for its shares. As a result, you will incur immediate and substantial dilution of $4.77 per share, representing the difference between the initial public offering price and our pro forma as adjusted net tangible book value per share at June 30, 2005, after giving effect to this offering and assuming that the underwriters exercise their over-allotment option in full. In addition, purchasers of our common stock in this offering will have contributed approximately 22.4% of the aggregate price paid by all purchasers of our common stock, but will own only approximately 77.6% of the shares outstanding after this offering assuming the underwriters do not exercise their over-allotment option. We refer you to the discussion under the heading "Dilution."

Because our common stock has never been publicly traded, a liquid trading market may not develop for our common stock and you may not be able to sell your stock

Prior to this offering, there has not been a public market for our common stock. A liquid trading market for our common stock may not develop. The initial public offering price was determined in negotiations between the representative of the underwriters and us and may not be indicative of prices that will prevail in the trading market.

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Future sales of our common stock could cause the market price of our common stock to decline

Sales of a substantial number of shares of our common stock in the public market following this offering, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

We intend to issue additional shares of our common stock in the future and our stockholders may elect to sell large numbers of shares held by them from time to time. Our amended and restated articles of incorporation authorize us to issue 100,000,000 shares of common stock, of which 13,700,000 shares will be outstanding immediately after this offering. The number of shares of common stock available for sale in the public market will be limited by restrictions applicable under securities laws and agreements that we and our executive officers, directors and existing stockholder have entered into with the underwriters of this offering. Subject to certain exceptions, these agreements generally restrict us and our executive officers, directors and our existing stockholder from directly or indirectly offering, selling, pledging, hedging or otherwise disposing of our equity securities or any security that is convertible into or exercisable or exchangeable for our equity securities and from engaging in certain other transactions relating to such securities for a period of 180 days after the date of this prospectus without the prior written consent of Cantor Fitzgerald & Co. However, Cantor Fitzgerald & Co. may, in its sole discretion and at any time or from time to time before the expiration of the 180-day lock-up period, without notice, release all or any portion of the securities subject to these agreements.

Anti-takeover provisions in our organizational documents could make it difficult for our stockholders to replace or remove our current Board of Directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock

Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our stockholders to change the composition of our Board of Directors in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable.

These provisions include:

•  authorizing our Board of Directors to issue "blank check" preferred stock without stockholder approval;
•  providing for a classified Board of Directors with staggered three year terms;
•  prohibiting cumulative voting in the election of directors;
•  authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of 80% of the outstanding shares of our common stock entitled to vote for the directors;
•  limiting the persons who may call special meetings of stockholders;
•  establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and
•  prohibiting certain transactions with interested stockholders.

These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

Shares eligible for future sale

Upon consummation of our offering, our existing stockholder will own 6,000,000 shares, or approximately 43.8%, of our outstanding common stock, which shares may be resold subject to the requirements of Rule 144 under the Securities Act of 1933, as amended, as a result of its status as our

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"affiliate." Furthermore, shares held by our existing stockholder, as well as any shares held by our officers and directors, will be subject to the underwriters' 180 day lock-up agreement. We refer you to the discussion under the heading "Shares Eligible for Future Sale" in this prospectus. Sales or the possibility of sales of substantial amounts of shares of our common stock by our existing stockholder in the public markets could adversely affect the market price of our common stock.

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FORWARD LOOKING STATEMENTS

This prospectus includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements." We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material.

All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as:

•  future operating or financial results;
•  global and regional political conditions;
•  statements about pending or recent acquisitions, business strategy and expected capital spending or operating expenses;
•  competition in the marine transportation industry;
•  statements about shipping market trends, including charter rates, factors affecting supply and demand and world fleet composition;
•  future LPG prices and production;
•  future supply and demand for LNG gas of which LPG is a byproduct;
•  our ability to obtain additional financing; and
•  expectations regarding the availability of vessel acquisitions.

When used in this document, the words "anticipate," "believe," "intend," "estimate," "project," "forecast," "plan," "potential," "will," "may," "should" and "expect" reflect forward-looking statements.

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USE OF PROCEEDS

We estimate that the net proceeds of this offering will be $106.82 million based on an assumed initial public offering price of $15.00 per share and after deducting the underwriting discount and the estimated expenses related to this offering. We intend to use $100.15 million of the net proceeds of this offering, together with indebtedness of $9.75 million under a new credit facility that we intend to obtain, to acquire the Identified Vessels. The balance of the net proceeds of this offering, in the amount of $6.67 million, will be used for working capital and other corporate purposes, including acquisitions of other vessels that we have not yet identified.

We have entered into agreements with the Vafias Group pursuant to which we will pay $109.9 million to acquire the Identified Vessels from the Vafias Group. The aggregate purchase price of $109.9 million represents the fair market value of the Identified Vessels at the time we agreed to acquire them. We will acquire the Gas Prodigy, the Gas Oracle, the Sweet Dream and the Gas Chios through the acquisition of the capital stock of their owners, which are Vafias Group affiliates. The owners' current bank debt will be repaid. We expect the deliveries of the Identified Vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity, which we expect will be delivered by February 2006. The delivery of each of the Identified Vessels is subject to customary conditions.

We intend to incur the indebtedness of $9.75 million to finance a portion of the purchase price for the Marathon under a new credit facility, which would be secured by a security interest in the Marathon . We have had preliminary discussions with potential lenders, although we cannot assure you that we will obtain such financing. If we are unable to obtain a new credit facility to fund the $9.75 million portion of the purchase price for the Marathon , we intend to fund that portion of the acquisition from other sources, which may include a capital contribution from our current sole stockholder or cash on hand.

If we do not purchase the Identified Vessels, we may use the proceeds of this offering to purchase other vessels or for general corporate purposes. In particular, certain events may arise which could result in us not taking delivery of an Identified Vessel, such as a total loss of a vessel, a constructive total loss of a vessel, or substantial damage to a vessel prior to its delivery.

The above should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operation" beginning on page 40 and "Related Party Transactions" beginning on page 82.

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DIVIDEND POLICY

We intend to declare and pay quarterly dividends from our net profits to stockholders each January, April, July and October, beginning January 2006, in amounts the Board of Directors determines are appropriate. However, we may have to make provisions for vessel acquisitions and other obligations that would reduce or eliminate the cash available for distribution as dividends. While we cannot assure you that we will do so, and subject to the limitations set forth below, we expect to declare and pay an initial dividend of $0.1875 per share in January 2006. However, we may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Also, from time to time, the Board of Directors may determine to declare and pay quarterly dividends in an amount up to 50% of our net quarterly income as the Board of Directors deems appropriate. The amount of any dividends we pay may vary from period to period.

Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, including the loan agreement with Fortis Bank, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. The payment of dividends is not guaranteed or assured, and may be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the LPG carrier market, our earnings would be adversely affected thus limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend. There can be no assurance that dividends will be paid in the anticipated amounts and frequency set forth in this prospectus.

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CAPITALIZATION

The following table sets forth our consolidated capitalization at June 30, 2005, on:

•  an actual basis, giving effect to the 60,000-for-1 stock split effected August 26, 2005;
•  an adjusted basis, giving effect to the payment to our sole stockholder of a dividend of $10.0 million on July 13, 2005; and
•  on a further adjusted basis, giving effect to the issuance and sale of the 7,700,000 shares of our common stock offered hereby at an assumed initial public offering price of $15.00 per share and the application of the net proceeds of the offering as described in "Use of Proceeds," and excluding the $9.75 million of additional indebtedness which we intend to incur to finance a portion of the purchase price for the Marathon .

This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.


  At June 30, 2005
  Actual As Adjusted As Further
Adjusted(3)(4)
  (in thousands)
Debt:                  
Current portion of secured long term debt $ 5,427   $ 5,427   $ 5,427  
Total long term secured debt, net of current portion   44,993     44,993     44,993  
Total debt(1) $ 50,420   $ 50,420   $ 50,420  
                   
Stockholders' equity:                  
Common stock, $.01 par value per share; 100,000,000 shares authorized on an actual, as adjusted basis and as further adjusted basis; 6,000,000 shares issued and outstanding, on an actual and as adjusted basis and 13,700,000 shares issued and outstanding on an as further adjusted basis(2)   60     60     137  
Additional paid-in capital   44,842     44,842     144,985  
Retained earnings/(accumulated deficit)   4,309     (5,691 )    (5,010 ) 
Total stockholders' equity   49,211     39,211     140,112  
Total capitalization $ 99,631   $ 89,631   $ 190,532  
(1) All of our indebtedness is guaranteed by our subsidiaries and secured by liens on the vessels owned by our subsidiaries.
(2) As of June 30, 2005, there were 50,000,000 shares of our common stock, no par value per share, authorized and 100 shares issued and outstanding. Immediately prior to effecting the 60,000-for-1 stock split on August 26, 2005, we increased the number of authorized shares of our common stock from 50,000,000 to 100,000,000.
(3) Additional paid-in capital includes the $6,600,000 difference between the acquisition costs of the Identified Vessels to the Vafias Group and their fair market value at the time we agreed to acquire them, which is equal to the aggregate purchase price to be paid by us to the Vafias Group for the Identified Vessels. For accounting purposes, this difference is treated as a deemed distribution to the Vafias Group which will occur in the fourth quarter of 2005 and the first quarter of 2006.
(4) Includes $681,170 in retained earnings attributable to Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Ltd. and Continent Gas Inc., the Vafias Group entities which own the Gas Prodigy, the Gas Oracle , the Sweet Dream and the Gas Chios, and which is reflected in the financial statements of these entities included elsewhere herein. We will acquire the capital stock of these entities with a portion of the proceeds of this offering as described in the "Use of Proceeds." Does not include bank debt of $14,000,000 reflected in the financial statements of these entities included elsewhere herein as such debt will be repaid simultaneously with our stock acquisition of the owners of the Gas Prodigy, the Gas Oracle, the Sweet Dream and the Gas Chios.

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DILUTION

At June 30, 2005, we had adjusted net tangible book value of $33,292,000, or $5.55 per share, after giving effect to (1) the 60,000-for-1 stock split effected on August 26, 2005, (2) the payment to our sole stockholder, Flawless Management Inc., of a dividend of $10,000,000 on July 13, 2005, (3) a deemed distribution of $6,600,000 to the Vafias Group (representing the difference between the acquisition costs of the Identified Vessels to the Vafias Group and the fair market value of the Identified Vessels at the time we agreed to acquire them, which is equal to the aggregate purchase price to be paid by us to the Vafias Group) and (4) $681,170 in combined retained earnings, as of June 30, 2005, of Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Ltd. and Continent Gas Inc., the Vafias Group entities which own the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios , as reflected in the financial statements of these entities included elsewhere herein. After giving effect to the sale of 7,700,000 shares of common stock at an assumed initial public offering price of $15.00 per share (the mid-point of the initial public offering price range of $14.00 to $16.00 per share), and assuming that the underwriters' over-allotment option is not exercised, the pro forma adjusted net tangible book value at June 30, 2005, would have been $140,112,000, or $10.23 per share. This represents an immediate appreciation in net tangible book value of $4.68 per share to our existing stockholder and an immediate dilution of net tangible book value of $4.77 per share to new investors. The following table illustrates the pro forma per share dilution and appreciation at June 30, 2005:


Assumed initial public offering price per share       $ 15.00  
Adjusted net tangible book value per share as of June 30, 2005   5.55  
Increase in net tangible book value per share attributable to new investors in this offering   4.68  
Pro forma adjusted net tangible book value per share after giving effect to this offering         10.23  
Dilution per share to new investors       $ 4.77  

Net tangible book value per share of our common stock is determined by dividing our tangible net worth, which consists of tangible assets less liabilities, by the number of shares of our common stock outstanding. Dilution is determined by subtracting the net tangible book value per share of common stock after this offering from the public offering price per share. Dilution per share to new investors would be $4.47 if the underwriters exercised in full their over-allotment option.

The following table summarizes, on a pro forma basis as at June 30, 2005, the differences between the number of shares of common stock acquired from us, the total amount paid and the average price per share paid by the existing holders of shares of common stock and by you in this offering, based upon the mid-point of the assumed initial public offering price of $15.00 per share (the mid-point of the initial public offering price range of $14.00 to $16.00 per share).


  Pro Forma Shares
Outstanding 		Total Consideration Average Price
Per Share
  Number Percent Amount Percent
Existing stockholder   6,000,000     43.8 %  $ 33,292,000     22.4 %  $ 5.55  
New investors   7,700,000     56.2 %  $ 115,500,000     77.6 %  $ 15.00  
Total   13,700,000     100 %  $ 148,792,000     100 %  $ 10.86  

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table sets forth our selected consolidated financial data and other operating data. Our fleet consisted of four LPG carriers at December 31, 2004, five LPG carriers at March 31, 2005 and nine LPG carriers at June 30, 2005. We will be reporting on a calendar year basis. The summary consolidated income statement data, the summary consolidated balance sheet data and the other financial data are derived from our audited consolidated financial statements for the period from October 12, 2004 through December 31, 2004, from our financial records for the three-month period ended March 31, 2005 and from our unaudited consolidated financial statements for the six-month period ended June 30, 2005. The fleet data and average daily results for the periods indicated are derived from our records. Our unaudited consolidated financial statements include all adjustments, which include only normal and recurring adjustments, which in the opinion of our management are necessary to present fairly the data included therein. The results of operations for the three-month period ended March 31, 2005 and the six-month period ended June 30, 2005 are not necessarily indicative of the results to be expected for the full year. Share data give effect to a 60,000-for-1 stock split effected August 26, 2005. We refer you to the footnotes to our consolidated financial statements for a discussion of the basis upon which our consolidated financial statements are presented. The data below should be read in conjunction with our consolidated financial statements, related notes and other financial information included herein. In accordance with the standard shipping industry practice, the Vafias Group did not obtain from the sellers historical financial or operating data for the vessels that it acquired and subsequently contributed or sold to us, as that data was not material to the decision to purchase the vessels. Accordingly, we have not included any historical financial or operating data relating to the results of operations of our vessels for any period before we acquired them. Please see the discussion in "Management's Discussion of Financial Condition and Results of Operations—Lack of Historical Operating Data for Vessels Before their Acquisition".


  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
INCOME STATEMENT DATA                  
Revenues:                  
Voyage revenues $ 1,455,551   $ 3,531,313   $ 9,592,605  
Operating expenses:                  
Voyage expenses   337,180     171,182     383,450  
Vessel operating expenses   564,184     1,106,559     2,435,771  
Management fees   81,120     163,020     388,615  
General and administrative expenses   35,100     105,300     234,280  
Depreciation   174,086     419,021     1,334,219  
Total expenses   1,191,670     1,965,082     4,776,335  
Income from operations   263,881     1,566,231     4,816,270  
Interest and finance costs, net   —     (34,095 )    (562,157 ) 
Loss on derivative   —     —     (389,300 ) 
Interest income   46     23,058     189,233  
Foreign exchange loss   (4,252 )    (5,587 )    (4,547 ) 
Other expenses, net   (4,206 )    (16,624 )    (766,771 ) 
Net income $ 259,675   $ 1,549,607   $ 4,049,499  
Earnings per share, basic and diluted   0.04     0.26     0.67  
Weighted average numbers of shares outstanding   6,000,000     6,000,000     6,000,000  
                   

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  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
BALANCE SHEET DATA
(at period end) 		                 
Current assets, including cash $ 1,220,603   $ 31,846,753   $ 21,630,301  
Total assets   32,511,067     76,596,111     102,621,779  
Current liabilities   1,172,936     6,859,003     8,029,277  
Loss on derivative   —     —     389,300  
Total long-term debt, including current portion   —     23,123,798     44,992,500  
Total stockholders' equity   31,338,131     46,613,310     49,210,702  
OTHER FINANCIAL DATA                  
Net cash provided by (used in) operating activities $ 421,194   $ 1,200,880   $ 8,215,480  
Net cash provided by (used in) investing activities   (31,464,550 )    (13,715,915 )    (50,883,975 ) 
Net cash provided by (used in) financing activities   31,043,356     42,201,072     63,885,572  
EBITDA (1)   433,715     1,979,665     5,756,642  
FLEET DATA                  
Average number of vessels (2)   2.3     4.6     6.4  
Total voyage days for fleet (3)   208     418     1,167  
Total time charter days for fleet (4)   96     412     1,158  
Total spot market days for fleet (5)   112     6     9  
Total calendar days for fleet (6)   208     418     1,167  
Fleet utilization (7)   100 %    100 %    100 % 
AVERAGE DAILY RESULTS                  
Time charter equivalent (8) $ 5,377   $ 8,039   $ 7,891  
Vessel operating expenses (9)   2,712     2,647     2,087  
General and administrative expenses   169     252     201  
Management fees   390     390     333  
Total vessel operating expenses (10)   3,271     3,289     2,621  
(1) EBITDA represents net earnings before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included in this prospectus because it is a basis upon which we assess our liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.

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The following table reconciles net cash provided by (used in) operating activities, as reflected in the consolidated statements of cash flows, to EBITDA:

  Period from
October 12, 2004
through
December 31, 2004 		Three-month period
ended
March 31, 2005 		Six-month period
ended
June 30, 2005
                   
Net Cash Provided By (Used in) Operating Activities $ 421,194   $ 1,200,880   $ 8,215,480  
Net increase in current assets, excluding cash   1,220,603     940,113     (807,379 ) 
Net (increase) in current liabilities, excluding current portion of long term debt   (1,172,936 )    (74,865 )    (1,429,341 ) 
Non-cash general and administrative expenses   (35,100 )    (97,500 )    (195,000 ) 
Interest income   (46 )    (23,058 )    (189,233 ) 
Interest and finance costs, net   —     34,095     562,157  
Amortization of financing fees   —     —     (10,742 ) 
Loss on derivative   —     —     (389,300 ) 
EBITDA $ 433,715   $ 1,979,665   $ 5,756,642  
                   
(2) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
(3) In the future, our total voyage days for fleet will reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydocks or special or intermediate surveys.
(4) Total time charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.
(5) Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.
(6) Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.
(7) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.
(8) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

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(9) Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
(10) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

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

The following management's discussion and analysis should be read in conjunction with our historical consolidated financial statements and their notes included elsewhere in this prospectus. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, such as those set forth in the section entitled "Risk Factors" and elsewhere in this prospectus.

General

As a provider of international seaborne transportation services to LPG producers and users, we carry various petroleum gas products in liquefied form, including propane, butane, butadiene, isopropane, propylene and vinyl chloride monomer, which are all byproducts of the production of crude oil and natural gas. As of December 31, 2004, our fleet consisted of four LPG carriers, the first of which was delivered in October 2004. We took delivery of a fifth LPG carrier in February 2005, an additional three LPG carriers in April 2005 and one LPG carrier in May 2005.

We, through Stealth Maritime, manage the employment of our fleet. We intend to deploy our fleet under period charters including time and bareboat charters, which can last up to several years, and spot market or voyage charters, which generally last from one to six months, as market conditions warrant. Period charters and short term time charters are for a fixed period of time.

•  Charters and revenues .    Under a time charter, the charterer pays a fixed rate per day over the term of the charter; a time charter, including a short term time charter, may provide for rate adjustments and profit sharing. Under a bareboat charter, the charterer pays us a fixed rate for its use of our ship for the term of the charter. Under a voyage charter, we agree to transport a specified cargo from a loading port to a discharging port for a fixed amount.
•  Charters and expenses .    Under a time charter, we are responsible for the vessel's operating costs (crew, provisions, stores, lubricants, insurance, maintenance and repairs) incurred during the term of the charter, while the charterer pays voyage expenses (port, canal and fuel costs) that are unique to each particular voyage. Under a bareboat charter, the charterer is responsible for all vessel operating expenses and voyage expenses incurred during the term of the charter. Under a voyage or spot charter, we are responsible for both the vessel operating expenses and the voyage expenses incurred in performing the charter.

Factors Affecting Our Results of Operations

We believe that the important measures for analyzing trends in the results of our operations consist of the following:

•  Calendar days .    We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenue and the amount of expense that we record during that period.
•  Voyage days .    We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with major repairs, drydockings or special or intermediate surveys. The shipping industry uses voyage days (also referred to as available days) to measure the number of days in a period during which vessels actually generate revenues.
•  Fleet utilization .    We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our calendar days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades or drydockings and other surveys.

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•  Cyclicality .    The international gas carrier market, including the transport of LPG, is cyclical with attendant volatility in profitability, charter rates and vessel values, resulting from changes in the supply of, and demand for, LPG carrier capacity.

To the extent we have vessels in the spot market, we are exposed to changes in spot rates for LPG carriers and such changes affect our earnings and the value of our LPG carriers at any given time. When LPG vessel prices are considered to be low, companies not usually involved in shipping may make speculative vessel orders, thereby increasing the LPG shipping supply, satisfying demand sooner and potentially suppressing charter rates.

•  Seasonality .    The LPG carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues may be stronger in fiscal quarters ended December 31 and March 31 and relatively weaker during the fiscal quarters ended June 30 and September 30.

Due to our limited operating history, our historical consolidated income statement and statement of cash flows each cover only the period from October 12, 2004 through December 31, 2004 and the six-month period ended June 30, 2005.

Voyage Revenues

Our voyage revenues are driven primarily by the number of vessels in our fleet, the number of voyage days during which our vessels generate revenues and the amount of daily charter hire that our vessels earn under charters which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and disposals, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels and the levels of supply and demand in the LPG carrier charter market.

Vessels operating on period charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot charter market during periods characterized by favorable market conditions. As a result, during the time our LPG carriers are committed on period charters we will be unable, during periods of improving charter markets, to take advantage of improving charter rates as we could if our LPG carriers were employed only on spot charters. Vessels operating in the spot charter market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improving charter rates, although we are then exposed to the risk of declining LPG carrier charter rates, which may have a materially adverse impact on our financial performance. If we commit vessels to time charters, future spot market rates may be higher or lower than those rates at which we have time chartered our vessels.

Voyage Expenses

Voyage expenses include port and canal charges, bunker (fuel oil) expenses and commissions. These charges and expenses increase in periods during which vessels are employed on spot market or voyage charters because, under these charters, these expenses are for the account of the vessel owner. Under period charters, these charges and expenses are paid by the charterer. In 2005, port and canal charges and bunker expenses will represent a relatively small portion of our vessels' overall expenses because all but one of our vessels will be employed under period charters, including time and bareboat charters, that require the charterer to bear all of those expenses.

Time Charter Equivalent

A standard maritime industry performance measure used to evaluate performance is the daily time charter equivalent, or daily TCE. Daily TCE revenues are voyage revenues minus voyage expenses divided by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would

41



otherwise be paid by a charterer under a time charter, as well as commissions. We believe that the daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of LPG carriers on time charter or on the spot market and presents a more accurate representation of the revenues generated by our LPG carriers. Our average daily TCE rate was $7,891 for the six-month period ended June 30, 2005. Our average daily TCE rate was $8,039 for the three-month period ended March 31, 2005, which represented an increase of $2,662, or 49.5%, as compared to our average daily TCE rate of $5,377 for the period from October 12, 2004 through December 31, 2004. The reasons for these changes are discussed below under "—Six-month period ended June 30, 2005, three-month period ended March 31, 2005 and fiscal period from October 12, 2004 through December 31, 2004".

Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. These expenses increased during the three-month period ended March 31, 2005, further increased during the six-month period ended June 30, 2005 and will continue to increase during the remainder of 2005 and afterwards as our fleet grows. Factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for insurance, may also cause these expenses to increase.

Management Fees

We pay Stealth Maritime, our fleet manager, a fixed management fee of $390 per day for each vessel in our fleet; however, we pay it a fee of $125 per day (instead of $390) for each of the vessels operating on bareboat charter. Stealth Maritime also receives a brokerage commission of 1.25% on freight, hire and demurrage for each vessel and a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold by them on our behalf. Stealth Maritime pays the technical managers that are responsible for the day-to-day operations of all of our vessels that are not on bareboat charter. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. In 2005, such compensation is expected to be in an aggregate amount of €520,000 (US$629,096, based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005) on an annualized basis.

General and Administrative Expenses

We incur general and administrative expenses which include our onshore vessel related expenses such as legal, accounting and professional expenses and other general vessel expenses. Our general and administrative expenses also include our direct compensation expenses and the value of non-cash executive services provided through, and other expenses arising from, our management agreement with Stealth Maritime, our directors' compensation and the value of the lease expense for the space we rent from Stealth Maritime.

Depreciation

We depreciate our LPG carriers on a straight-line basis over their estimated useful lives determined to be 30 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less the estimated scrap value of the vessels. We intend to expense, as incurred, costs associated with drydockings and special and intermediate surveys.

Interest Expense

We had no outstanding indebtedness in 2004. In March 2005 we entered into a $54.0 million loan agreement with Fortis Bank. We have drawn down the full amount of available credit under this facility in order to finance vessel acquisitions and to provide working capital. As a result, we incurred interest expense of $562,157 for the six-month period ended June 30, 2005. We will incur additional

42



interest expense in 2005 on those outstanding borrowings. In addition, we expect to incur additional interest expense on borrowings under a new credit facility we intend to obtain to finance $9.75 million of the purchase price for the Marathon . See "—Loan Agreement" and "Description of Indebtedness."

Lack of Earlier Historical Operating Data for Vessels

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is no historical financial due diligence process when we acquire vessels. Accordingly, we do not obtain the historical operating data for the vessels from the sellers because that information is not material to our decision to make acquisitions, nor do we believe it would be helpful to potential investors in our common stock in assessing our business or profitability. Most vessels are sold under a standardized agreement, which, among other things, affords the buyer the right to inspect the vessel and the vessel's classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel most records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller's technical manager and the seller is automatically terminated and the vessel's trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, we treat the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business. Although vessels are generally acquired free of charter, two of the Identified Vessels (the Gas Prodigy and the Gas Oracle ), which we intend to acquire with a portion of the proceeds of this offering, were subject to two-year time charters at the time of their acquisition by the Vafias Group. These time charters will continue into 2006. Consistent with industry practice, the Vafias Group did not obtain the financial records of these vessels from their prior owner.

Where a vessel has been under a voyage charter, the vessel is delivered to the buyer free of charter. It is not common in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under a time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer's consent and the buyer's entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter, because it is a separate service agreement between the vessel owner and the charterer. When we purchase a vessel and assume a related time charter, we must take the following steps before the vessel will be ready to commence operations:

•  obtain the charterer's consent to us as the new owner;
•  obtain the charterer's consent to a new technical manager;
•  in some cases, obtain the charterer's consent to a new flag for the vessel;
•  arrange for a new crew for the vessel;
•  replace all hired equipment on board, such as gas cylinders and communication equipment;
•  negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;
•  register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;
•  implement a new planned maintenance program for the vessel; and
•  ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

The following discussion is intended to help you understand how acquisitions of vessels affect our business and results of operations.

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Our business is comprised of the following main elements:

•  employment and operation of our LPG carriers; and
•  management of the financial, general and administrative elements involved in the conduct of our business and ownership of our LPG carriers.

The employment and operation of our LPG carriers require the following main components:

•  vessel maintenance and repair;
•  crew selection and training;
•  vessel spares and stores supply;
•  contingency response planning;
•  onboard safety procedures auditing;
•  accounting;
•  vessel insurance arrangement;
•  vessel chartering;
•  vessel hire management;
•  vessel surveying; and
•  vessel performance monitoring.

The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires the following main components:

•  management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts;
•  management of our accounting system and records and financial reporting;
•  administration of the legal and regulatory requirements affecting our business and assets; and
•  management of the relationships with our service providers and customers.

The principal factors that affect our profitability, cash flows and stockholders' return on investment include:

•  rates and periods of charterhire;
•  levels of vessel operating expenses;
•  depreciation expenses;
•  financing costs; and
•  fluctuations in foreign exchange rates.

Principal Factors that Affect Our Business

The principal factors that affect our financial position, results of operations and cash flows include:

•  charter market rates, which have recently increased to historic highs and periods of charterhire;
•  vessel operating expenses and voyage costs, which are incurred in both U.S. Dollars and other currencies, primarily Euros;
•  depreciation expenses, which are a function of the cost of our vessels, significant vessel improvement costs and our vessels' estimated useful lives;

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•  capital expenditures, such as drydocking and repairs;
•  management fees;
•  interest and other financing costs related to our indebtedness, which is expected to be $49.1 million immediately before the closing of this offering; and
•  fluctuations in foreign exchange rates.

Our strategy is to employ some of our vessels on period charters, including time and bareboat charters, which can last up to several years, in order to generate stable cash flow over a period of time. As a result, however, during the period our LPG carriers are committed on period charters we will be unable, during periods of improving charter markets, to take advantage of improved charter rates as we could if our LPG carriers were employed only on spot charters. Revenues from period charters are generally stable over the duration of the charter, provided there are no unexpected off-hire periods and no performance claims from the charterer or charterer defaults.

Results of the Gas Prodigy, the Gas Oracle, the Sweet Dream and the Gas Chios

The Gas Prodigy , the Gas Oracle and the Sweet Dream were acquired by the Vafias Group on October 15, 2004, April 26, 2005 and May 31, 2005, respectively, each subject to charters with major oil companies with monthly rates of $125,000, $118,000 and $201,500, respectively. The charterers consented to the assignment of the charters in connection with the sales, and these vessels have continued to operate under their respective charters since. The Gas Chios was acquired by the Vafias Group on May 20, 2005 and a major oil company entered into a time charter for the Gas Chios on July 6, 2005 for a monthly rate of $300,000. We will acquire each of these vessels subject to their respective charters which will expire in March 2006, May 2006, December 2005 and February 2006, respectively. The following financial information represents the results of operating the Gas Prodigy under Vafias Group management from the time of its acquisition on October 15, 2004 through June 30, 2005 and of operating the Gas Oracle , the Sweet Dream and the Gas Chios under Vafias Group management from the time of their acquisitions on April 26, 2005, May 31, 2005 and May 20, 2005, respectively, through June 30, 2005, as derived from the historical combined financial statements, included elsewhere in this prospectus, of Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Ltd. and Continent Gas Inc, the Vafias Group entities which have owned, respectively, the Gas Prodigy, the Gas Oracle , the Sweet Dream and the Gas Chios since their acquisitions. Prior to the acquisition of these vessels, each of Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Ltd. and Continent Gas Inc. had remained inactive since their incorporation on, respectively, September 9, 2004, March 23, 2005, March 23, 2005 and April 27, 2005. We expect the financial results to remain substantially similar after we acquire the vessels and until the charters expire.


  Period from
September 9, 2004
through
December 31, 2004 		Six-month period
ended June 30, 2005
Voyage revenues $ 592,455   $ 2,104,374  
Voyage expenses   4,023     101,281  
Vessel operating expenses   194,826     834,709  
Drydocking costs   —     229,491  
Management fees   30,420     116,585  
Depreciation   90,372     336,541  
Foreign exchange (loss)/gain   1,282     (146 ) 

The voyage revenues shown above are augmented by the amortization of the liability associated with the assumption of below market charters when the Gas Prodigy and the Gas Oracle were acquired by the Vafias Group. The revenue recognized from amortizing the below market charter liability was $307,143 for the period from September 9, 2004 through December 31, 2004 and $859,044 for the six-month period ended June 30, 2005. The recognition of revenue from amortization of the liability associated with the below market charter will only continue for the duration of the existing charters on the Gas Prodigy and the Gas Oracle .

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Six-month period ended June 30, 2005, three-month period ended March 31, 2005 and fiscal period from October 12, 2004 through December 31, 2004

The average number of vessels in our fleet was 6.4 during the six-month period ended June 30, 2005. The average number of vessels in our fleet was 4.6 during the three-month period ended March 31, 2005 compared to 2.3 during the fiscal period from October 12, 2004 through December 31, 2004.

VOYAGE REVENUES — Voyage revenues for the six-month period ended June 30, 2005 were $9,592,605. Our average daily TCE rate was $7,891 for the six-month period ended June 30, 2005. During the six-month period ended June 30, 2005, our fleet operated under time charters for a total of 1,158 days and under spot charters for a total of nine days for a total of 1,167 voyage days and a fleet utilization of 100%. During the six-month period ended June 30, 2005, the Gas Arctic, the Gas Ice and the Birgit Kosan were employed on bareboat charters, which generally are for lower monthly amounts but in connection with which we are not responsible for voyage or operating expenses, since our acquisition of those vessels in April 2005.

Voyage revenues for the three-month period ended March 31, 2005 were $3,531,313, an increase of $2,075,762, or 143%, compared to $1,455,551 for the fiscal period from October 12, 2004 through December 31, 2004. Our average daily TCE rate was $8,039 for the three-month period ended March 31, 2005 compared to $5,377 for the fiscal period from October 12, 2004 through December 31, 2004. The growth in revenue and the average daily TCE rate reflects principally the growth in the average number of vessels in our fleet compared to the fiscal period from October 12, 2004 through December 31, 2004. During the three-month period ended March 31, 2005, our fleet operated under time charters for a total of 412 days and under spot charters for a total of six days for a total of 418 voyage days and a fleet utilization of 100%. During the fiscal period from October 12, 2004 through December 31, 2004, our fleet operated under time charters for a total of 96 days and under spot charters for a total of 112 days for a total of 208 voyage days and a fleet utilization of 100%.

VOYAGE EXPENSES — Voyage expenses were $383,450 for the six-month period ended June 30, 2005, consisting principally of commissions charged by related and third parties of $337,454.

Voyage expenses were $171,182 for the three-month period ended March 31, 2005, representing a decrease of $165,998, or 49%, from $337,180 for the fiscal period October 12, 2004 through December 31, 2004, reflecting the fact that our fleet was employed principally on time charters during the three-month period ended March 31, 2005 while our fleet was employed on spot charters for 112 out of 208, or approximately 53.8%, of the voyage days for the period from October 12, 2004 through December 31, 2004 as well as the increase in the average number of vessels in our fleet. Under time charters, these expenses were paid by the charterers. Commissions charged by related and third parties included in the voyage expenses amounted to $127,562, an increase of $59,704, or 88%, compared to $67,858 for the fiscal period from October 12, 2004 through December 31, 2004.

VESSEL OPERATING EXPENSES — Vessel operating expenses were $2,435,771 for the six-month period ended June 30, 2005.

Vessel operating expenses were $1,106,559 for the three-month period ended March 31, 2005, an increase of $542,375, or 96%, compared to $564,184 for the fiscal period from October 12, 2004 through December 31, 2004, reflecting the increase in the average number of vessels compared to the fiscal period from October 12, 2004 through December 31, 2004.

MANAGEMENT FEES — Management fees were $388,615 for the six-month period ended June 30, 2005. During the six-month period ended June 30, 2005, the Gas Arctic, the Gas Ice and the Birgit Kosan were employed on bareboat charters, in connection with which we pay Stealth Maritime, our fleet manager, a fee of $125 per day rather than the fee of $390 per day that we pay to Stealth Maritime for vessels in our fleet which are not on bareboat charters, since our acquisition of those vessels in April 2005.

Management fees were $163,020 for the three-month period ended March 31, 2005, representing an increase of $81,900, or 101%, compared to $81,120 for the fiscal period from October 12, 2004

46



through December 31, 2004. This increase in management fees reflects an increase in the average number of vessels in our fleet during the three-month period ended March 31, 2005 compared to the fiscal period from October 12, 2004 through December 31, 2004.

GENERAL AND ADMINISTRATIVE EXPENSES — General and administrative expenses were $234,280 for the six-month period ended June 30, 2005, consisting of the $195,000 value of non-cash executive services, including the additional executive services provided in the six-month period ended June 30, 2005 in connection with the appointment of our Chief Financial Officer, lease expense of $15,600 and minor miscellaneous administrative expenses of $23,680.

General and administrative expenses were $105,300 for the three-month period ended March 31, 2005 consisting of the $97,500 value of non-cash executive services and lease expense of $7,800, representing an increase of $70,200, or 200%, compared to $35,100, which represents the value of the executive services as well as a charge for the lease expense for the office space that was provided to us without charge by Stealth Maritime, for the fiscal period from October 12, 2004 through December 31, 2004. This increase is due to the fact that there were three months of executive services provided in the three-month period ended March 31, 2005 compared with one month in the fiscal period from October 12, 2004 through December 31, 2004.

DEPRECIATION — Depreciation expenses for the nine vessels in our fleet for the six-month period ended June 30, 2005 were $1,334,219.

Depreciation expenses for the five vessels in our fleet were $419,021 for the three-month period ended March 31, 2005 representing an increase of $244,935, or 140.7%, compared to $174,086 for the period from October 12, 2004 through December 31, 2004, which was due to the increase in the average number of vessels in our fleet compared to the period from October 12, 2004 through December 31, 2004.

INTEREST AND FINANCE COSTS, NET — Net interest and finance costs were $562,157 for the six-month period ended June 30, 2005, resulting primarily from indebtedness incurred to fund vessel acquisitions.

Net interest and finance costs were $34,095 for the three-month period ended March 31, 2005, resulting primarily from indebtedness incurred to fund advances on vessels and to provide working capital. We had no indebtedness outstanding in the fiscal period from October 12, 2004 through December 31, 2004.

LOSS ON DERIVATIVE — For the six-month period ended June 30, 2005, we incurred a non-cash loss on derivative of $389,300 based on the estimated fair value of the interest rate swap, which we agreed to enter into with Fortis Bank on March 31, 2005 in connection with the Fortis Bank loan agreement.

We had no gain or loss on derivatives for the three-month period ended March 31, 2005 or for the fiscal period from October 12, 2004 through December 31, 2004. The aforementioned interest rate swap, which had an estimated fair value of zero as of March 31, 2005, was our only derivative instrument during the three-month period ended March 31, 2005. We had no derivative instruments during the fiscal period from October 12, 2004 through December 31, 2004.

INTEREST INCOME — Net interest income was $189,233 for the six-month period ended June 30, 2005, reflecting cash on hand held in interest bearing accounts.

Net interest income was $23,058 for the three-month period ended March 31, 2005, compared to $46 for the fiscal period from October 12, 2004 through December 31, 2004, reflecting more cash on hand, which was held in interest bearing accounts.

FOREIGN EXCHANGE LOSS — For the six-month period ended June 30, 2005, we incurred a foreign exchange loss of $4,547, resulting from foreign exchange fluctuations on our expenses denominated in currencies other than the U.S. dollar.

For the three-month period ended March 31, 2005, we incurred a foreign exchange loss of $5,587, representing a $1,335, or 31.4%, greater loss than the $4,252 foreign exchange loss we incurred for the

47



fiscal period from October 12, 2004 through December 31, 2004. This increase resulted from our increased expenses denominated in currencies other than the U.S. dollar in the three-month period ended March 31, 2005.

NET INCOME — As a result of the above factors, net income was $4,049,499 for the six-month period ended June 30, 2005 and $1,549,607 for the three-month period ended March 31, 2005. Our net income for the three-month period ended March 31, 2005 represented an increase of $1,289,932, or 496.7%, from net income of $259,675 for the fiscal period from October 12, 2004 through December 31, 2004.

Liquidity and capital resources

Since our inception, our principal source of funds has been equity provided by our affiliates and cash generated by our operations and, more recently, bank borrowings. Our principal use of funds has been to acquire our vessels, to maintain the quality of our LPG carriers, to comply with international standards, laws and regulations and to fund working capital requirements. We will rely upon operating cash flows, bank borrowings, the proceeds of this offering, as well as future equity financings to implement our growth plan.

We anticipate that following the completion of the offering and taking into account generally expected market conditions, internally generated cash flow and borrowings under the Fortis Bank loan agreement discussed below will be sufficient to fund the operations of our fleet, including our working capital requirements. We intend, however, to enter into a new credit facility to finance $9.75 million of the purchase price for the Marathon , as described below. We may increase the size of this potential credit facility if we identify additional vessels we have yet to identify that we would like to acquire with additional indebtedness. Such loans would be secured by a security interest in the Marathon and any such additional vessels.

We entered into a $54.0 million loan agreement dated March 16, 2005 with Fortis Bank (Nederland) N.V. During the six-month period ended June 30, 2005, we acquired the Gas Emperor for $11.5 million, the Gas Arctic and the Gas Ice , each for $9.5 million, the Birgit Kosan for $12.5 million and the Gas Amazon for $9.25 million. Of the total purchase price of $52.25 million, $25.625 million was financed with borrowings under the Fortis Bank loan facility. The balance of the total purchase price was funded with capital contributions from our sole stockholder. With these borrowings, and the prepayment of the $3,580,500 portion of the loan attributable to the Gas Prodigy , the credit facility under the Fortis Bank loan agreement was fully drawn. As of June 30, 2005, $50.4 million principal amount was outstanding under the Fortis Bank loan agreement. See "—Loan Agreement." As of June 30, 2005, we had cash and cash equivalents of $21.2 million.

In addition, in order to finance a portion of the purchase price for the Marathon , we intend to borrow $9.75 million under a new credit facility that we intend to obtain. This potential new credit facility would be secured by a security interest in the Marathon . We have had preliminary discussions with potential lenders, although we cannot assure you that we will obtain such financing. If we are unable to obtain a new credit facility to fund the $9.75 million portion of the purchase price for the Marathon , we intend to fund that portion of the acquisition from other sources, which may include a capital contribution from our current sole stockholder or cash on hand.

Cash Flows

NET CASH PROVIDED BY OPERATING ACTIVITIES — was $8,215,480 for the six-month period ended June 30, 2005 and $421,194 for the fiscal period from October 12, 2004 through December 31, 2004. This represents the net amount of cash, after expenses, generated by chartering our vessels. Stealth Maritime, on our behalf, collects our chartering revenues and pays our expenses.

NET CASH USED IN INVESTING ACTIVITIES — was $50,883,975 for the six-month period ended June 30, 2005, reflecting the acquisition of the Gas Emperor , the Gas Ice, the Gas Arctic , the Birgit Kosan and the Gas Amazon . For the fiscal period from October 12, 2004 through December 31, 2004, net cash used in investing activities was $31,464,550, reflecting the acquisition of four vessels and deposits we placed on the Gas Arctic and the Gas Ice , which were delivered in April 2005.

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NET CASH PROVIDED BY FINANCING ACTIVITIES — was $63,885,572 for the six-month period ended June 30, 2005, reflecting contributions of capital from our sole stockholder to finance the acquisition of the Gas Emperor as well as drawings under the Fortis Bank loan agreement to provide working capital and to fund, together with additional contributions of capital from our sole stockholder, the acquisitions of the Gas Ice, the Gas Artic, the Birgit Kosan and the Gas Amazon . For the fiscal period from October 12, 2004 through December 31, 2004, net cash provided by financing activities was $31,043,356 reflecting the contribution to us of the four vessels which comprised our fleet as of December 31, 2004.

Loan Agreement

We entered into a loan agreement dated March 16, 2005 with Fortis Bank in which it agreed, subject to certain funding conditions, to provide a credit facility of up to $54.0 million principally to partially finance or refinance the acquisition of our vessels. The borrowers under this loan agreement included our subsidiaries as well as Gaz de Brazil Inc., the owner of the Gas Prodig y, which was not a subsidiary of ours, although it will become one of our vessel-owning subsidiaries upon our acquisition of the Gas Prodigy. See an expanded discussion on the loan agreement in "Description of Indebtedness."

The interest rate under the loan agreement is the sum of LIBOR and a margin. The margin varies with the ratio of the outstanding balance of the loan to the aggregate market value of the vessels subject to mortgage in that period. If the ratio is equal to or lower than 60%, the interest rate will be 0.9% over LIBOR. If the ratio is higher than 60% but lower or equal to 70%, the interest rate will be 0.975% over LIBOR. If the ratio is higher than 70%, the interest rate will be 1.05% over LIBOR. We paid a non-refundable fee of $162,000 upon the signing of the loan agreement.

On June 10, 2005, the $3,580,500 portion of the Fortis Bank loan attributable to the Gas Prodigy was prepaid and Fortis Bank's security interest in the Gas Prodigy was released. As of June 30, 2005, $50,419,500, the full amount available for borrowings following the $3,580,500 prepayment, was outstanding under the loan agreement. We are obligated to repay the principal and interest under the credit facility through 2013 in 32 consecutive quarterly installments beginning in August 2005. Our quarterly installments of principal will be in an amount of $1,356,750 with a balloon installment of $7,003,500 due on the earlier of the eighth anniversary of the delivery date of the last ship or on May 30, 2013. In the event that one of the vessels securing the loan is sold or becomes a total loss, we will be obligated to prepay the relevant portion of the credit facility.

New Credit Facility

In order to finance a portion of the purchase price for the Marathon , we intend to borrow $9.75 million under a new credit facility that we intend to obtain. This potential new credit facility would be secured by a security interest in the Marathon . We have had preliminary discussions with potential lenders, although we cannot assure you that we will obtain such financing. If we are unable to obtain a new credit facility to fund the $9.75 million portion of the purchase price for the Marathon , we intend to fund that portion of the acquisition from other sources, which may include a capital contribution from our current sole stockholder or cash on hand.

Capital Expenditures

In 2004, four vessels acquired at a cost of $29.6 million by the Vafias Group were contributed to us by the Vafias Group for nominal consideration, and became part of our fleet. In addition, in 2004, deposits totaling $1.9 million were placed by the Vafias Group on the Gas Arctic and the Gas Ice , which were delivered in April 2005. During the six-month period ended June 30, 2005 we acquired the Gas Emperor for $11.5 million, the Gas Arctic and the Gas Ice , each for $9.5 million, the Birgit Kosan for $12.5 million and the Gas Amazon for $9.25 million. Of the $52.25 million total purchase price for these five vessels, $25.625 million was financed with borrowings under the Fortis Bank loan agreement.

In June 2005, we entered into agreements with the Vafias Group pursuant to which we will pay $39.5 million to acquire the Gas Cathar , the Gas Eternity , the Gas Legacy and the Gas Crystal from

49



the Vafias Group out of the net proceeds of this offering. The purchase price for each of these vessels is payable upon delivery. The aggregate purchase price of $39.5 million represents the fair market value of these vessels at the time we agreed to acquire them. We expect the deliveries of these vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity which we expect will be delivered by February 2006. The delivery of these vessels is subject to customary conditions. See "—Subsequent Events— Gas Prodigy , Gas Oracle , Sweet Dream and Gas Chios ".

Drydocking and Special Survey Costs

None of our vessels was drydocked or underwent special survey in 2004 or during the six-month period ended June 30, 2005. The Gas Ice is scheduled for drydocking in August 2005. In 2006, four of our vessels, including the Gas Ice , are scheduled for drydocking or special surveys, or both. The expenses of drydocking and special survey for Gas Ice will be borne by its bareboat charterer, which is obligated to continue paying us charterhire during the period of the vessel's offhire. We will bear the expenses of drydocking and special surveys for the other three vessels, during which period the vessels will be offhire, thereby affecting our fleet utilization. We expense the cost of drydocking and special surveys as they are incurred. We expect to pay these costs out of our cash from operations.

Quantitative and Qualitative Disclosure of Market Risk

Our policy is to continuously monitor our exposure to business risks, including the impact of changes in interest rates, currency rates, and bunker prices on earnings and cash flows. We intend to assess these risks and, when appropriate, enter into derivative contracts with credit-worthy counter parties to minimize our exposure to the risks.

Interest Rates

We are subject to market risks relating to changes in interest rates, because we have floating rate debt outstanding under the loan with Fortis Bank. We pay interest on this debt based on LIBOR plus a margin. We intend to enter into the interest rate swap to partially hedge our interest rate exposure with respect to the loan with Fortis Bank. Our use of this interest rate swap will involve certain risks, including the risk that losses on the hedged position could exceed the nominal amount invested in the instrument and the risk that the counter party to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which would have an adverse effect on our results. In addition, the swap will not fully hedge our risk if LIBOR equals or exceeds 7.5%. We do not intend to enter into interest rate swaps for speculative purposes.

Interest Rate Swap

On March 31, 2005, we entered into an agreement with Fortis Bank to enter into an interest rate swap in connection with the aforementioned loan agreement. The initial nominal amount of the swap will be $22.5 million amortizing to $4.8 million over its six-year life commencing May 30, 2007. The swap hedges our risk of increases in three month LIBOR over 4.55% and up to 7.5%, but does not hedge our risk if three month LIBOR equals or exceeds 7.5%. As of June 30, 2005, the fair value of the instrument represented a loss of $389,300.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Foreign Exchange Rate Risk

We generate all of our revenues in United States dollars and incur less than 10% of our expenses in currencies other than United States dollars. For accounting purposes, expenses incurred in Euros are converted into United States dollars at the exchange rate prevailing on the date of each transaction. At June 30, 2005, less than 10% of our outstanding accounts payable was denominated in currencies other than the United States dollar (mainly in Euros). We have not hedged currency exchange risks and our operating results could be adversely affected as a result.

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Geographic Markets

We operate our LPG carriers in the following geographic regions: the Far East, the Mediterranean, Northern Europe and South America. Since we operated four vessels in the period from October 12, 2004 to December 31, 2004, principally on spot charters, the distribution of our revenue by trade route is not material for that period. We operated nine vessels in the six-month period ended June 30, 2005, principally on time charters under which our charter customers direct the routes taken by our vessels.

Contractual Obligations

Contractual obligations as of December 31, 2004 were:


  Payments due by period (in thousands)
  Total Less than 1 year 1-3 years 3-5 years More than 5 years
Long-term debt obligation (1)   —     —     —     —     —  
Management fees (2) $ 2,847   $ 569   $ 1,139   $ 1,139     —  
Office lease (3) $ 93   $ 31   $ 62     —     —  
Vessel purchase agreements (4) $ 19,000   $ 19,000     —     —     —  
Total $ 21,940   $ 19,600   $ 1,201   $ 1,139     —  
(1) As of December 31, 2004 we had no outstanding indebtedness. As of June 30, 2005, $50,419,500 principal amount was outstanding under the Fortis Bank loan agreement. We are obligated to repay the principal and interest under the credit facility through 2013 in 32 consecutive quarterly installments beginning in August 2005. Our quarterly installments of principal will be in an amount of $1,356,750 with a balloon installment of $7,003,500 due on the earlier of the eighth anniversary of the delivery date of the last ship or on May 30, 2013. The following principal amounts are payable by us during the periods indicated: $2,713,500 payable within one year of December 31, 2004, $10,854,000 payable between one and three years of December 31, 2004, $10,854,000 payable between three and five years of December 31, 2004, and $25,998,000 payable more than five years after December 31, 2004.
In addition, we expect to be obligated to make the following interest payments during the periods indicated: $1,740,000 payable within one year of December 31, 2004, $4,036,843 payable between one and three years of December 31, 2004, $2,965,955 payable between three and five years of December 31, 2004, and $2,854,722 payable more than five years after December 31, 2004, assuming the amortization of the loan described above and the following interest rates, taking into account our agreement with Fortis Bank to enter into an interest rate swap in connection with the aforementioned loan: 4.35% for 2005, 4.66% for 2006, 4.66% for the first two installment payments in 2007 and 4.55% for the two remaining installments in 2007 and for each subsequent period through the maturity of the loan in 2013. The initial nominal amount of the swap will be $22.5 million amortizing to $4.8 million over its six-year life commencing May 30, 2007. The swap will hedge our risk of increases in three month LIBOR over 4.55% and up to 7.5%, but will not hedge our risk if three month LIBOR equals or exceeds 7.5%.
(2) Under our management agreement with Stealth Maritime, we pay it $125 per vessel per day for vessels on bareboat charter and $390 per vessel per day for vessels not on bareboat charter. The contractual obligations are based on the existing fleet at December 31, 2004 of four vessels, and the payment of a management fee of $390 per vessel per day. Subsequent to December 31, 2004 we acquired the Gas Emperor , the Gas Arctic , the Gas Ice , the Birgit Kosan and the Gas Amazon . Following our acquisition of the nine Identified Vessels, we will have a fleet of 18 vessels, and based on the payment of a management fee of $390 per vessel per day, we expect to pay at least $2,527,200 per year to Stealth Maritime as management fees under the management agreement. We also will pay 1.25% of the gross freight, demurrage and charter hire collected from employment of our ships and 1% of the contract price of any vessels bought or sold on our behalf. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. For the year ending December 31, 2005, such compensation is

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expected to be in an aggregate amount of €520,000 (US $629,096 based on an exchange rate of €1.00:US$1.2098 in effect on June 30, 2005) on an annualized basis.
(3) We lease office space from the Vafias Group. The initial lease term is three years beginning January 3, 2005 with three consecutive options to renew for a one-year term at our option. The total rent per year will be €24,000 (US$29,035, based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005). We believe this is no more than would be incurred on an arm's length basis with an unaffiliated landlord.
(4) The total purchase price for the two LPG carriers, the Gas Artic and the Gas Ice , covered by the vessel purchase agreements is $19.0 million of which 10%, or $1.9 million was paid by the Vafias Group in the form of deposits at December 31, 2004. Subsequent to December 31, 2004, we took delivery of both of these LPG carriers and in connection therewith the $17.1 million balance of the purchase price that was due was paid. Of that amount, $11.8 million was financed with additional indebtedness drawn down under the loan agreement with Fortis Bank and the balance with a capital contribution from our stockholder. In June 2005, we entered into agreements with the Vafias Group pursuant to which we will pay $39.5 million to acquire the Gas Cathar , the Gas Eternity , the Gas Legacy and the Gas Crystal from the Vafias Group out of the net proceeds of this offering. The purchase price for each of these vessels is payable upon delivery. The aggregate purchase price of $39.5 million represents the fair market value of these vessels at the time we agreed to acquire them. We expect the deliveries of these vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity which we expect will be delivered by February 2006. The delivery of each of these vessels is subject to customary conditions. See "—Subsequent Events— Gas Prodigy , Gas Oracle , Sweet Dream and Gas Chios ".

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of those 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 high degree of judgment and the methods of their application. For a description of all of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere herein.

Revenue and Expenses.     Revenue and expenses resulting from each voyage or period time charter are accounted for on an accrual basis. Period charter revenues are recognized over the term of the charter as service is provided. Period charter revenues received in advance are recorded as liabilities until charter service is rendered. Under a voyage charter, the revenues and associated voyage costs are recognized on a pro-rata basis over the duration of the voyage. Voyage expenses comprise commissions, bunkers and port expenses. The impact of our method of recognizing voyage costs on a pro-rata basis is not materially different from a method of recognizing such costs as incurred. We will modify our policy in future periods in the event the difference between the two methods becomes material.

The operating results of voyages in progress at a reporting date are estimated and recognized pro-rata on a per day basis. Probable losses on voyages are provided for in full at the time such losses can be estimated.

Vessel operating expenses comprise all expenses relating to the operation of the vessel, including crewing, repairs and maintenance, insurance, stores, lubricants and miscellaneous expenses. Vessel operating expenses are accounted for on an accrual basis.

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Impairment of long-lived assets.     We evaluate the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, we review certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. We determine undiscounted projected net operating cash flows for each vessel and compare it to the vessel carrying value. In the event that impairment occurred, we would determine the fair value of the related asset and we record a charge to operations calculated by comparing the asset's carrying value to the estimated fair market value. We estimate fair market value primarily through the use of third party valuations performed on an individual vessel basis.

Depreciation.     We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our vessels on a straight-line basis over their estimated useful lives, estimated to be 30 years from date of initial delivery from the shipyard. We believe that a 30-year depreciable life is consistent with that of other gas vessel owners. Depreciation is based on cost less the estimated residual scrap value. An increase in the useful life of the vessel or in the residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of the vessel or in the residual value would have the effect of increasing the annual depreciation charge.

Drydock costs.     Our vessels are required to be drydocked for major repairs and maintenance that cannot be performed while the vessel is operating approximately every 30 to 60 months. Costs expected to be incurred as part of the drydock include actual costs incurred at the drydock yard, cost of fuel consumed between the vessel's last discharge port prior to the drydock and the time the vessel leaves the drydock yard, cost of hiring riding crews to effect repairs on a ship and parts used in making such repairs that are reasonably made in anticipation of reducing the duration or cost of the drydock, cost of travel, lodging and subsistence of our personnel sent to the drydock site to supervise; and the cost of hiring a third party to oversee a drydock.

Allowance for doubtful accounts.     Revenue is based on contracted charter parties and although our business is with customers who we believe to be of the highest standard, there is always the possibility of dispute over terms and payment of freight. In such circumstances, we assess the recoverability of amounts outstanding and we estimate a provision if there is a possibility of non-recoverability. Although we believe our provisions to be based on fair judgment at the time of their creation, it is possible that an amount under dispute is not recovered and the estimated provision for doubtful recoverability is inadequate.

Recent Accounting Pronouncements

On January 17, 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). Such interpretation addresses the consolidation of variable interest entities ("VIEs"), including special purpose entities ("SPEs"), that are not controlled through voting interests or in which the equity investors do not bear the residual economic risks and rewards. The provisions of FIN 46 were effective immediately for transactions entered into by us subsequent to January 31, 2003 and became effective for all other transactions as of July 1, 2003. However, in October 2003, the FASB permitted companies to defer the July 1, 2003 effective date to December 31, 2003, in whole or in part. On December 24, 2003, the FASB issued a complete replacement of FIN 46 ("FIN 46R"), which clarified certain complexities of FIN 46 and generally requires adoption no later than December 31, 2003 for entities that were considered SPEs under previous guidance, and no later than March 31, 2004 for all other entities. The adoption of FIN 46R did not have a material impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123R that will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each

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reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB 25. This Statement will be effective as of the beginning of the first annual reporting period that begins after June 15, 2005.

Entities that used the fair-value-based method for either recognition or disclosure under SFAS No. 123 will apply this revised Statement using a modified version of prospective application. Under this transition method, for the portion of outstanding awards for which the requisite service has not yet been rendered, compensation cost is recognized on or after required effective date based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures. For periods before the required effective date, those entities may elect to apply a modified version of the retrospective application under which financial statements for periods are adjusted on a basis consistent with the pro forma disclosures required for those periods by SFAS No. 123. We are currently evaluating the impact of adopting SFAS No. 123R.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" which replaces Accounting Principles Board Opinion No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements." This statement applies to all voluntary changes in accounting principle and changes resulting from adoption of a new accounting pronouncement that does not specify transition requirements. SFAS 154 requires retrospective application to prior periods' financial statements for changes in accounting principle unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS 154 is effective for the accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 with early implementation permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this statement was issued. SFAS 154 is effective for us as of January 1, 2006 and is not expected to have a material impact on our financial statements.

Subsequent Events

Gas Prodigy, Gas Oracle, Sweet Dream, Gas Chios and Marathon

In August 2005, we entered into agreements with the Vafias Group pursuant to which we will pay $70.4 million to acquire the Gas Prodigy , the Gas Oracle , the Sweet Dream , the Gas Chios and the Maratho n from the Vafias Group. We will acquire the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios through the acquisition of the capital stock of their owners, which are Vafias Group affiliates. The owners' current bank debt will be repaid. We intend to finance the aggregate purchase price for these vessels, other than the Marathon, out of a portion of the net proceeds of this offering and to finance the purchase price for the Marathon with $5.25 million of the net proceeds of this offering, together with $9.75 million of indebtedness under a new credit facility that we intend to obtain. The aggregate purchase price of $70.4 million represents the fair market value of these vessels at the time we agreed to acquire them. We expect the deliveries of these vessels to occur between the closing of this offering and the end of November 2005. The delivery of each of these vessels is subject to customary conditions.

Payment of Dividend

We received the Gas Prophet , the Gas Tiny , the Gas Courchevel and the Gas Shanghai as well as the cash constituting the full purchase price for the Gas Emperor and a significant portion of the purchase prices for the Gas Arctic , the Gas Ice , the Birgit Kosan and the Gas Amazon , which collectively comprise our entire initial fleet, as capital contributions. Since our initial fleet has been fully leveraged, we determined to return $10.0 million of the original capital contributions we received. Accordingly, on July 4, 2005, we declared a dividend to our existing stockholder of $10.0 million which was paid on July 13, 2005 from cash on hand.

    

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THE INTERNATIONAL GAS CARRIER MARKET

The information and data in this section relating to the international LPG carrier market has been provided by Fearnleys and is taken from Fearnleys' databases and other sources available in the public domain. Fearnleys has advised us that it accurately describes the international LPG carrier market, subject to the availability and reliability of the data supporting the statistical and graphical information presented. Fearnleys' methodologies for collecting information and data, and therefore the information discussed in this section, may differ from those of other sources and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the LPG carrier market.

Introduction

Seaborne transportation of LPG involves three principal cargoes (1) liquid petroleum gases, (2) petrochemical gases or petchems, and (3) ammonia. The term LPG generally refers to all of these three principal categories.

The aforementioned types of LPG, which are transported by specialized vessels, can be subdivided into the following gases and petrochemical feedstock:

•  Liquid petroleum gases:
•  Propane;
•  Butane; and
•  Ethane.
•  Petrochemical gases:
•  Ethylene;
•  Propylene;
•  VCM (Vinyl Chloride Monomer); and
•  Butadiene.
•  Ammonia .
•  Anhydrous ammonia.

LPG carriers are commonly referred to as ships which can transport LPG, petrochemical gases and ammonia, however, only a limited number of LPG carriers are fitted to accommodate the transport of ammonia and certain petrochemical gases such as ethylene and VCM, which have characteristics that require additional design features and/or equipment on the vessels.

LPG, petrochemical gases and ammonia can be in a gaseous state under normal ambient temperatures. In order to facilitate handling, all the products are liquefied in order to reduce their volume for seaborne transportation. The method of liquefaction determines the type of gas carrier used to transport the product:

•  fully-pressurized ships carry the cargo only at ambient temperatures in tanks suitable for a maximum pressure of 17 bar (kg/cm 2 );
•  semi-refrigerated ships apply a combination of refrigeration and pressure, accommodating temperatures down to minus 48 o Celsius and pressure of up to 9 bar (kg/cm 2 ). Semi-refrigerated ships with gas plants are able to cool cargoes further down to minus 104 o Celsius and are referred to as ethylene carriers; and
•  fully-refrigerated ships carry their cargo only in refrigerated form at temperatures down to minus 48 o Celsius by cooling the cargo with compressors onboard.

The world fleet of LPG carriers is divided by cargo capacity measured in cubic meters (cbm) into three main segments.

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•  Generally, LPG, petrochemical gases, ammonia and clean petroleum products, or CPP, are transported in fully-refrigerated vessels ranging in size from 22,000 to 85,000 cbm for long-hauls world-wide. This category can be subdivided into Medium Range Gas Carriers (22,000-49,999 cbm), Large Gas Carriers (50,000-69,999 cbm) and Very Large Gas Carriers (70,000 + cbm).
•  LPG and petrochemical gases can also be transported in semi-refrigerated or fully-pressurized vessels ranging between 8,000-21,999 cbm which trade both world-wide and regionally in Europe and in the Far East.
•  Vessels ranging between 3,000-7,999 cbm are semi-refrigerated and fully pressurized, and are primarily used in regional voyages carrying LPG and petrochemical gases in Europe, Southeast Asia, the Far East and the Caribbean.

Ships below 3,000 cbm are employed in coastal distribution and are not in significant competition with deep-sea trades.

Only a limited number of the LPG carriers have the capability of carrying ethylene and ethane, which require cooling temperatures down to –104º Celsius and –82º Celsius respectively.

Supply of Gas Carriers

The existing gas carrier fleet of over 3,000 cbm consists of 595 ships (as of June 2005 ), with a total capacity of 13.8 million cbm. The orderbook represents 31.6% of the total fleet in terms of cbm, and contains a total of 129 vessels.

Table 1 World Existing fleet 3,000+ cbm


Size in cbm Number of
vessels 		% of total
number of ships 		Total cbm % of
Total cbm 		Average age
3,000-7,999   309     51.9 %    1,427,665     10.4 %    14.3  
8,000-21,999   100     16.8 %    1,255,077     9.1 %    15.9  
22,000-49,999   54     9.1 %    1,596,299     11.6 %    14.2  
50,000-69,000   27     4.5 %    1,541,421     11.2 %    15.9  
70,000+   105     17.6 %    8,220,943     60.0 %    15.6  
Total   595     100.0 %    13,782,125     100.0 %    14.8  

The size groups from 22,000 cbm and above contain a large component of old tonnage (i.e. ships over 20 years of age). The total number of ships older than 20 years is as follows: 22,000-49,999 cbm = 17 ships, 50,000-69,999 cbm = 13 ships, 70,000+ cbm = 37 ships.

Scrapping of tonnage has not historically contributed to significant reduction of the fleet because seaborne gas transportation is a relatively new industry and the vessels are designed to last over 30 years with proper maintenance. In addition, technically complex vessels combined with stringent safety and operational requirements have created a high barrier of entry and an excellent safety record. Thus, age alone has not been a disqualifying factor. However, gas carriers have been faced with increased requirements from regulatory bodies, port states and charterers alike. Whereas 30 years used to be a fair economic life of a gas carrier, ships older than 20 years are now more frequently rejected by charterers and port authorities on account of age. Consequently, for the future it is expected that forced scrapping will affect the supply-side more significantly than it has in the past.

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Table 2 Orderbook, 3,000+ cbm


Size in cbm No. of ships % of fleet Total cbm % of Total cbm % ships >20 yrs
3,000-7,999   60     19.4 %    320,020     22.4 %    25.1 % 
8,000-21,999   10     10.0 %    116,300     9.3 %    33.2 % 
22,000-49,000   19     35.2 %    661,000     41.4 %    30.1 % 
50,000-69,999   —     —     —     —     46.7 % 
70,000+   40     38.1 %    3,269,800     39.8 %    34.7 % 
Total   129           4,362,120           35.0 % 

The gas carrier industry is limited by a number of factors constraining growth in supply. The current strong demand for construction of more profitable and less technically-demanding vessels, such as container ships, oil tankers, and the highly valued LNG vessels limits shipyard availability. Another constraint is the limited number of shipyards which have the expertise required to build gas carriers with the necessary sophisticated gas plant systems. Other elements such as operational and technical expertise required to operate gas carriers are also in limited supply.

The orderbook is spread-out with deliveries up to 2008, which also is the earliest delivery slot available in the current overbook shipbuilding market.

Table 3 Orderbook by year of delivery, 3,000+ cbm


Size in cbm 2005 2006 2007 2008 Grand Total
3,000-7,999   2     24     24     10     60  
8,000-21,999   —     3     5     2     10  
22,000-49,999   1     7     10     1     19  
50,000-69,999   —     —     —     —     —  
70,000+   1     7     10     22     40  
Total   4     41     49     35     129  

Since 2002, newbuilding prices have increased as much as 42% for a 3,000 cbm LPG carrier, and up to 64% for a 75,000 cbm LPG carrier. The sharp increase is proportional to size, with newbuilding prices for larger ships increasing the most.

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Newbuilding prices – Monthly Price Development

The hike in newbuilding prices is only partially due to the increase in steel prices. The most significant contribution is the overall demand for ships in all segments.

LPG Vessel Segments and Trading Patterns.

3,000-7,999 cbm .  These are the smallest group of vessels, and are primarily composed of fully-pressurized vessels which carry LPG and petrochemical gases. There are also some semi-refrigerated vessels in the 3,000-5,000 cbm range including several 4,000 cbm ethylene-capable carriers. The trading patterns of these vessels generally consist of short-haul "cross-trading" routes, which include hauls throughout the Far East, the Mediterranean, Northwestern Europe and the Caribbean. The majority of the existing ethylene carriers are in this size segment.
8,000-21,999 cbm .  There are some fully-pressurized vessels in this size segment, however, most of the vessels between 8,000-21,999 cbm are semi- or fully-refrigerated vessels. The majority of vessels under 20,000 cbm are semi-refrigerated while the majority of vessels over 20,000 cbm are fully-refrigerated. The semi-refrigerated vessels carry mainly petrochemical gases and are involved in short cross-trades with some longer hauls, while the fully-refrigerated vessels carry LPG and ammonia, mostly on long-haul routes. These vessels usually trade Transatlantic between the Mediterranean and Northern Europe, and between the Arabian Gulf and Southeast Asia and the Far East.
22,000-49,999 cbm.   The vessels between 22,000 and 49,999 cbm are almost exclusively fully-refrigerated vessels which carry LPG and ammonia on both long-haul and cross-trade routes.
50,000-69,999 cbm .  Vessels in this size group are all fully-refrigerated and transport LPG and ammonia. Typical trading regions normally include both long-haul trades between the Arabian Gulf and the Mediterranean, and cross-trades in the North Sea and Europe. The usual ammonia trades are typically shorter cross-trades.
70,000+ cbm .  All vessels 70,000 cbm and over are fully-refrigerated and carry LPG on long-hauls trades worldwide. However, the Middle East Gulf to Japan or Korea is an important trade route and is often used as a reference when describing this market.

Pressurized Gas Carriers

Some 40% of the products carried on pressurized vessels are petrochemical gases while LPG products account for 60%. Most of the vessels are employed in only one of these markets with only 10-15% of the available fleet switching between the two. Some products, such as ammonia and VCM, require extensive cleaning, whereas other petrochemical gases usually only require purging with nitrogen. Only 10-15 ships can easily change products (grades) from one voyage to the next. Swapping from one product to the other depends on prevailing freight rates and the owners' strategy for future employment. The dominant size of pressurized ships is 3,500 cbm.

Pressurized petrochemical cargoes will typically go from the main sources in the Middle East Gulf to India or Southeast Asia, within Southeast Asia and the Far East, while pressurized LPG products are typically sourced from the Middle East and Southeast Asia to small import terminals spread across the region from East Africa to the Pacific Islands.

The following table highlights the pressurized carriers, which is a sub-set of the world gas carrier fleet:

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Table 5 Pressurized Fleet (included in existing fleet) as of June 2005


Size in cbm Number of
vessels 		% of total
pressurized fleet 		Total
cbm 		Average
Age 		% ships >20 yrs
3,000-7,999   166     91 %    703,623     10     7 % 
8,000-21,999   6     9 %    66,159     8     0 % 
TOTAL   172           769,782              

Trends in LPG, Ammonia and Petrochemical Gas Production and Seaborne Trade

World production of LPG and petrochemical gases as well as seaborne trade have shown a strong and stable growth trend over the past decades. This growth is highly dependent on general global economic growth. The following table illustrates the historical production of LPG, ammonia and the principal petrochemical gases.

Table 6 World Production of LPG, Ammonia and Petrochemical Gases
(in million Tons)


  LPG Ammonia Petchems Total Annual change
1997   180     103     150     432        
1998   183     104     159     446     3.2 % 
1999   190     108     171     469     5.2 % 
2000   199     107     180     486     3.6 % 
2001   203     105     185     493     1.4 % 
2002   208     109     192     509     3.2 % 
2003   209     108     199     516     1.4 % 
2004 Est   211     109     205     525     1.7 % 
Source: CMAI, Drewry

Table 7 Seaborne Trade of LPG, Ammonia and Petrochemical Gases
(in million Tons)


  LPG Ammonia Petchems Total Annual change
1997   46.5     10.9     6.1     63.5        
1998   48.5     11.1     6.1     65.7     3.5 % 
1999   49.6     11.0     6.9     67.5     2.7 % 
2000   49.4     11.1     7.9     68.4     1.3 % 
2001   47.5     11.7     7.8     67.0     –20 % 
2002   48.0     11.6     7.9     67.5     0.7 % 
2003   49.7     12.9     8.1     70.7     4.7 % 
2004 Est   50.6     13.1     8.4     72.1     2.0 % 
Source: Fearnresearch, Drewry

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Figure 8 Seaborne Trade in 2004

The proportional increase between world production and seaborne trade throughout the last eight years is shown in the tables above and demonstrates the correlation between these two parameters. Increased global production will, therefore, most likely increase seaborne trade activity. The strong growth in seaborne petrochemicals, ammonia and LPG trading will create new business opportunities for the overall gas carrier capacity.

Demand for Gas Carriers

Transportation of petrochemical gases is a fast growing market, driven primarily by industrial and consumer demand for products derived from petrochemical gases such as plastics/polymers, synthetic-based products, textiles, chemicals and rubber. LPG, on the other hand, is an associated gas, produced as a byproduct of crude oil and natural gas production, and is primarily used as fuel for transportation, residential and commercial heating/cooking, and as a feedstock for the production of petrochemicals. With expected increases in crude oil and natural gas production, LPG volumes are expected to increase significantly.

Trade statistics show that general economic growth (or the GDP) is one of the best indicators of change in demand for seaborne transportation of gas. However, increased crude oil and natural gas production (with resulting increased LPG volumes) and more trading activity may result in additional demand for seaborne transportation of gas.

Cargoes and Trading Patterns

LPG, ammonia and petrochemical gases all have different characteristics and are traded in specific areas according to the infrastructure and industrial demand of the region. Each of the gas types, its use, trade size and trading pattern is described below:

Liquefied Petroleum Gas (LPG).     LPG is produced as a byproduct either from the production of natural gas or refining of crude oil. LPG cargoes in normal gas carriers are typically ethane, propane and butane (including n-Butane and i-Butane). The primary uses of these LPGs are as fuel for transportation, residential and commercial heating, and as a feedstock for the production of petrochemicals. Large quantities of LPG are produced in the North Sea and North/West Africa as a result of natural gas production and in the Middle East, as a refining byproduct. Japan is the world's single largest importer of LPG. Europe and the United States are also important consumers and are expected to see increased imports of LPG.

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Ammonia.     Ammonia is often a product of natural gas, which is separated by a pressurized cooling process. A large majority of all ammonia, 80% to 90%, is used in fertilizer production. Ammonia accounts for as much as one-fifth of all cargo carried by gas carriers, and is especially an important cargo or trade for the mid sized gas carriers. The ammonia trade begins predominantly from the Black Sea, the Baltic region, the Persian Gulf, Trinidad Tobago and Indonesia, and is usually destined for Europe, the United States, India and the Far East.

Ethane/Ethylene.     Transportation of ethane, a feedstock for petrochemical products, requires vessels capable of cooling and handling the cargo at minus 89º Celsius. Ethylene requires cooling at minus 104º Celsius. Only a few gas carriers are able to handle such cryogenic temperatures . Ethylene is derived from the cracking of petroleum feedstocks. It is used as an important ingredient in the production of a wide range of materials used in industrial and consumer items, including plastics, polyester fibers and resins, large-volume thermoplastic resins, organic chemicals, kitchen equipment, antifreeze and various products used in insulation and packing. Some 70% of global ethylene production is used in the production of various plastics and automobile parts and the balance is used in the production of antifreeze, resins and fibers. Historically, the exporting regions of ethylene have been the Middle East, Europe and Latin America. The growth in imports of ethylene has been driven primarily by economic development. European production rose by over 1 million tonnes over the last two years. India is expected to become a larger producer of ethylene, along with Malaysia, Thailand and Singapore while the Mediterranean region and China are also anticipated to increase their imports.

Petrochemicals

Propylene.     Propylene is produced as a byproduct in the making of ethylene and gasoline and is utilized in the production of consumer goods such as car components, carpets, plastic pipes and household articles for which there is typically a strong demand for in fast growing economies. Polypropylene, a derivative of propylene, accounts for over 50% of propylene usage and is used as a feedstock for plastics. Propylene is also used in the manufacture of acrylic fiber, styrofoam, pharmaceuticals and glue. Typical exporters are countries in the Middle Eastern region. Imports of propylene is dominated by the plastics industry in the Far East.

Vinyl Chloride Monomer (VCM).     VCM is produced by the cracking of ethylene dichloride and requires the input of chloride and ethylene. VCM is primarily used in the manufacturing of polyvinyl chloride, or PVC, products. Major uses include residential construction and irrigation systems. The manufacture of PVC piping accounts for 35% of the VCM produced. The balance of VCM production is used in the manufacture of such items as window frames, wires and cables. The United States is the primary exporter of VCM and Southeast Asia and Latin America are the principal importers.

Butadiene .    Butadiene is produced in the cracking of ethylene. Butadiene is primarily used in the making of plastic products for building construction and rubber for the automobile manufacturing industry. Rubber accounts for 80% of butadiene consumption. South Korea and Europe have traditionally been large exporters of butadiene, while the United Sates and the Far East have traditionally been the largest importers. Exports of butadiene from the Far East are expected to decrease as domestic demand grows. Exports from Europe are expected to be maintained in the future, but are unlikely to increase significantly. Inter-Latin American butadiene trade is expected to increase.

Planned New Construction of Production Facilities.

LPG and petrochemical gases are used in the production of a vast array of chemicals and new production technologies that allow plastic to displace metal, cotton, wood and other materials in an increasing number of end-user products. As a result, the use of LPG and petrochemical gases is expanding worldwide. The following table summarizes the expected new construction and expansion of LPG and petrochemical production facilities over the period from 2005 to 2007.

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Table 9 New LPG Production Capacity


Country Project Capacity in million
tons per year 		Start-up
Angola Sanha   0.9     2005  
Guinea Bioco Island   0.3     2005  
Iran Pars Petrochemical   0.7     2005  
Libya WLGP/AGIP   0.8     2005  
  Total 2005   2.7        
               
Indonesia Belanak   0.5     2006  
Iran AGIP/NIOC   0.7     2006  
Indonesia Jabung   0.5     2006  
Nigeria NLNG Expansion   1     2006  
Norway Snohvit   0.9     2006  
Norway Kaarssto   0.8     2006  
Norway Mongstad   0.1     2006  
  Total 2006   4.5        
               
Indonesia Palembang   0.3     2007  
Iran Statoil   1     2007  
Qatar Dolphin Project   1.5     2007  
Qatar Qatargas II   0.8     2007  
Saudi Arabia Khuff NGL   4.0     2007  
UAE OGD-3   2.5     2007  
  Total 2007   10.1        
  Total 2005-2007   17.3        
Existing Capacity in 2004   211.0        
2005-2007 in % of Existing Capacity   8.0 %       
Source: Fearnresearch, Drewry

Seaborne trade of petrochemical gases, which began in the early 1980s, has experienced a tremendous growth in both ship size and storage facility capability. The shift towards "economy of scale" has provided for more efficient handling of cargo. For example, the first generation of ethylene terminals had a storage capacity of 8,000-15,000 cbm. By the late 1980s, the maximum storage capacity of ethylene terminals had reached 30,000 cbm. New production facilities have storage capabilities of over 60,000 cbm. This trend may give room for a greater demand for the vessels.

The Charter Market

Charter rates are strongly influenced by the balance between supply, i.e. the gas carrier fleet, its cargo carrying capacity and demand for seaborne transportation of gas cargoes. Vessel values are influenced by the cost of newbuildings and the vessels ability to generate profits in the charter market. The value of an old vessel will be influenced more by its prospects to generate profits in the charter market than a new vessel, where values will also be influenced by the cost of building a similar ship and the forward delivery date. In recent months, both freight rates and newbuilding prices have increased.

The demand for gas carrier capacity is primarily determined by industrial and consumer demand for petrochemical gases and derivative products and the need to import such products by sea. Demand is affected by general economic conditions, trends in personal consumption and manufacturing, exports and imports and the capacity of chemical plants, crackers and refineries worldwide. A major contributing factor to demand is the geographical location in terms of loading and discharging ports. Longer voyages require more ship capacity than short voyages.

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The net growth of gas carrier capacity is a function of the size of the existing fleet, the number of newbuildings being delivered and the scrapping of older vessels. Under efficient market conditions, this function becomes self regulating by the market demand, meaning that when freight rates fall due to low demand or due to a high number of newbuilding deliveries, older vessels are scrapped and vice-versa. The chart below indicates spot freight rate developments for the different size segments of gas carriers.

Spot Rates (excluding waiting time), monthly averages

Average spot charter rates have increased substantially over the past three years, as seen in the graph above. Freight rates for the smaller sizes, 3,200 cbm and 6,500 cbm, which are close to perfectly correlated, have gone from an annual average of $156,000 and $220,000 per month in 2002 to $226,000 and $360,000 per month in 2004, which is an increase of 45% and 63% respectively (see table below). Larger size vessels exhibit higher charter rate volatility. For example, during the same period of time, rates for vessels of over 75,000 cbm rose 96% from $465,000 to $912,000 per month.

Table 11 Annual average spot rates (USD/month)


  3,200 Semi-Ref 6,500 Semi-Ref 15,000 Semi-Ref 24,000 Fully-Ref 75,000 Fully-Ref
2000   217,000     279,000     406,000     582,000     1,023,000  
2001   184,000     231,000     444,000     557,000     763,000  
2002   156,000     220,000     439,000     469,000     465,000  
2003   171,000     270,000     468,000     489,000     685,000  
2004   226,000     360,000     570,000     607,000     912,000  
2005*   281,000     471,000     677,000     672,000     959,000  
* The first seven months of 2005

Types of Charters

There are typically three types of transportation contracts:

•  Chartering of a vessel for a specified period of time;
•  Chartering a vessel to carry a specific cargo on a regular basis; and

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•  Chartering a vessel to carry a specific cargo on a one-off basis.

The chartering process commences when a producer (or charterer) of petrochemical gases requests a quote for transporting a cargo or cargoes between two ports. The charterer will in most cases contact a broker which will act as a middle-man and help to identify the available fleet for the specific transport requirement. The charterer may then choose from a selection of available vessels and seek to negotiate the most favorable terms for the transportation requirements. The agreed terms are based on standard industry charterparties prepared to streamline the negotiation and documentation processes.

There are several methods of arranging a charter contract. There are four main categories or alternatives:

•  Spot basis is for the immediate hiring of a vessel and is usually for a single voyage,
•  Time charter basis is when the charterer hires a specific vessel throughout a confined period of time. The vessel owner is responsible for providing the crew and for operating costs, while the charterer is responsible for fuel and other voyage costs.
•  Contracts of affreightment (COA) is an agreement between the vessel owner and charterer to transport a specified cargo on a specified route on a regular basis. COAs function as a long-term series of spot charters, except that the owner is not required to use a specific vessel to transport the cargo, but instead may use any vessel in its fleet. COAs benefit vessel owners by providing a guaranteed level of employment over a standard trading route. An owner with an efficient fleet configuration can schedule its vessels in a triangular trading pattern in order to minimize ballast trips and idle time, thereby achieving high capacity utilization and enhancing revenues.
•  Bareboat charter is a contract to hire a vessel for a period of time with the charterer responsible for operating the vessel and paying all associated operating costs of the vessel during the charter.

A Unique Shipping Segment

Seaborne transportation of petrochemical gases is unlike other shipping segments. Whereas major industrial participants such as oil companies or other crude oil cargo owners in the tanker business are known to have some degree of coverage in terms of either long term contracts or owning ships, the producers, users and traders of petrochemical gases generally do not own or charter on a long-term basis. Gas cargo owners tend to rely on a small group of large vessel operators to provide all freight services. Such market conditions provide cargo owners flexibility in terms of quick and efficient response to changes in trading patterns, while ship owners are given an opportunity to provide transport services that are in limited competition from dedicated vessels.

Shipowners in the Gas Carrier Market

The number of participants involved in the seaborne trade of liquefied petrochemical gases is small and consists of few large and experienced operators. The largest owner, measured in cargo capacity, is Bergesen with 47 gas carriers in total, of which 22 are Very Large Gas Carriers or VLGCs. Since Japan is a major importer of LPG, several Japanese owners are also dominant players in the LPG market.

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Table 12 Top 15 gas carrier owners by cbm.


Owner No. of ships Cbm Av. Ship size
1 Bergesen   47     2,590,096     55,108  
2 Naftomar   27     1,091,729     40,434  
3 NYK   9     663,549     73,728  
4 Yuyo   7     554,376     79,197  
5 Kumiai Senpaku   7     537,935     76,848  
6 Exmar   20     490,743     24,537  
7 Sanko   6     466,427     77,738  
8 KOTC   5     373,250     74,650  
9 Solvang   12     341,968     28,497  
10 Benelux Overseas   8     331,872     41,484  
11 AP Moller   10     318,917     31,892  
12 MOL   9     280,638     31,182  
13 K Line   3     235,350     78,450  
14 Sonatrach   4     232,890     58,223  
15 Iino KK   22     200,937     9,134  
  Total   196     8,710,677        
Source: Drewry

Table 13
Top 5 gas carrier owners, 2-5,000 cbm.


  Owner Cbm
1 Lauritzen   47,956  
2 Hartmann Schiff   36,975  
3 Cispa Gas   36,620  
4 Anthony Veder   25,630  
5 Far East Shipping   24,611  
  Total   171,792  

Table 14
Top 5 gas carrier owners, 5-8,000 cbm.


  Owner Cbm
1 Norwegian Gas Carriers   66,151  
2 Hartmann Schiff   41,667  
3 Komaya Shipping   40,878  
4 Lauritzen   36,518  
5 Sloman Neptun Schiff   36,186  
  Total   221,400  

Many owners have placed their vessels into pools (a cooperative marketing venture among several owners) with other owners to increase flexibility and to optimize vessel utilization and profitability. The current largest pool of owners with vessels between 1,000-10,000 cbm is the GasChem-Gasmare pool, which controls 40 vessels. GasChem-Gasmare is controlled from Hamburg, Germany and Milan, Italy.

The somewhat larger Bergesen VLGC pool controls approximately one-third of the total VLGC fleet, which totals 30 vessels. Although smaller in size, the Bergesen Large Gas Carrier (or LGC) pool is one of the most dominant pools in the shipping industry, controlling 19 out of the 23 ships in this segment (LGC vessels typically range from 50,000-69,999 cbm).

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BUSINESS

As a provider of international seaborne transportation services to LPG producers and users, we carry various petroleum gas products in liquefied form, including propane, butane, butadiene, isopropane, propylene and vinyl chloride monomer, which are all byproducts of the production of crude oil and natural gas. We serve industrial companies and energy traders as well as national and independent energy companies such as Dow Chemical Company, Finaval SpA and Petredec Ltd. As of December 31, 2004, our fleet consisted of four liquefied petroleum gas carriers, or LPG carriers. We took delivery of a fifth LPG carrier in February 2005, an additional three LPG carriers in April 2005 and one additional LPG carrier in May 2005. Each of our vessels is owned through a separate subsidiary organized in the Marshall Islands or Malta. We intend to acquire nine additional LPG carriers, which we refer to as the Identified Vessels, for a total price of $109.9 million with a portion of the proceeds of this offering, together with additional indebtedness of $9.75 million that we intend to obtain. See "Description of Indebtedness". The delivery of each of the Identified Vessels is subject to customary conditions. Following our acquisition of the Identified Vessels, our fleet of 18 vessels will have an average age of approximately 10.8 years, compared to an average age of 14.8 years for the global LPG carrier industry as of June 2005. We currently intend to acquire up to 10 vessels in addition to the Identified Vessels by the middle of 2006 with additional indebtedness, cash from our operations and a portion of the balance of the proceeds of this offering.

The following table summarizes certain information about the vessels in our combined fleet:


  Year
Built 		Vessel Size
(cbm) 		Type of
LPG Carrier 		Delivery
Date 		Employment
Status 		Expiration of
Charter 		Monthly
Charter Rate
Initial Fleet                      
Gas Amazon 1992   6,526   fully-pressurized May 2005 time charter May 2006 $ 420,000  
Gas Emperor 1995   5,013   fully-pressurized February 2005 time charter February 2006   350,000  
Birgit Kosan 1994   5,012   fully-pressurized April 2005 bareboat April 2007   190,000  
Gas Courchevel 1991   4,109   semi-refrigerated November 2004 time charter September 2005   335,000  
Gas Shanghai 1999   3,526   fully-pressurized December 2004 time charter February 2006   275,000  
Gas Prophet 1996   3,556   fully-pressurized October 2004 time charter January 2006   253,750  
Gas Arctic* 1992   3,434   semi-refrigerated April 2005 bareboat April 2009   190,000  
Gas Ice* 1991   3,434   semi-refrigerated April 2005 bareboat April 2008   174,250  
Gas Tiny 1991   1,320   semi-refrigerated October 2004 time charter November 2006   120,000  
Subtotal     35,930 cbm                
Identified Vessels                      
Gas Cathar 2001   7,517   fully-pressurized ** spot —   —  
Gas Chios 1991   6,562   fully-pressurized ** time charter February 2006   300,000  
Marathon 1995   6,550   fully-pressurized ** bareboat October 2007   216,150  
Sweet Dream 1997   5,018   fully-pressurized ** bareboat December 2005   201,500  
Gas Legacy 1998   3,500   fully-pressurized ** spot —   —  
Gas Eternity 1998   3,500   fully-pressurized *** spot —   —  
Gas Crystal 1990   3,211   semi-refrigerated ** spot —   —  
Gas Prodigy 1995   3,014   fully-pressurized ** time charter March 2006   125,000  
Gas Oracle 1990   3,014   fully-pressurized ** time charter May 2006   118,000  
Subtotal     41,886 cbm                
TOTAL     77,816 cbm                
* These vessels are iceclass ships. Iceclass ships are capable of stable operations in extreme conditions and have ice-pushing capabilities.
** We currently anticipate taking delivery of these vessels by the end of November 2005.
*** We currently anticipate taking delivery of this vessel by February 2006.

All of the vessels in our initial fleet will be on period charters during the remainder of 2005, other than the Gas Courchevel, the charter for which expires in September 2005. In the future, we intend to deploy our vessels under period charters, including time and bareboat charters, which can last up to

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several years, and spot market charters (mainly through voyage charters and short term time charters), which generally last from one to six months, as market conditions warrant. As a result, during the time our LPG carriers are committed on period charters, we will be unable, during periods of improving charter markets, to take advantage of improved charter rates as we could if our LPG carriers were employed only on spot charters. Period charters provide predictable and stable cash flows while spot charters may generate increased profit margins during periods of improvement in LPG charter rates.

LPG Transportation

LPG is a non-renewable odorless and colorless gaseous fossil fuel that turns to liquid under moderate pressure or refrigeration. LPG products are transported in liquefied form in order to reduce their volume and facilitate their handling. LPG products are carried in different types of LPG carriers in order to maintain their necessary temperature. Liquid petroleum gas products such as butane and propane, are carried in fully-pressurized ships. Petrochemical gases such as butadiene, propylene and vinyl chloride monomer are carried in semi-refrigerated ships. Ammonia is carried in fully-refrigerated ships. Five of our LPG carriers, the Gas Amazon , Gas Emperor , Birgit Kosan , Gas Shanghai and Gas Prophet are fully-pressurized and four of our LPG carriers, the Gas Courchevel , Gas Arctic , Gas Ice and Gas Tiny are semi-refrigerated. LPG carriers range in size from very large LPG carriers (70,000 cbm and over), large LPG carriers (up to 70,000 cbm), midsize LPG carriers (up to 50,000 cbm) and small LPG carriers (up to 8,000 cbm).

We intend to expand significantly our presence in the LPG shipping industry by acquiring additional LPG carriers (in addition to the Identified Vessels) to grow our fleet and serve our customers' requirements for dependable transportation of LPG products. Specifically, we currently anticipate acquiring up to 10 vessels in addition to the Identified Vessels by the middle of 2006 with additional indebtedness, cash from our operations and a portion of the balance of the proceeds of this offering. As of June 2005, the worldwide fleet of LPG carriers had only 934 vessels with the larger fleets in the sector having approximately 20 to 25 vessels and the largest fleet consisting of 47 vessels. We believe that through acquisition of additional vessels we can become a more significant factor in the industry. All of the vessels in our initial fleet will be on period charters during the remainder of 2005, other than the Gas Courchevel, the charter for which expires in September 2005. In the future, we intend to deploy our vessels under period charters, including time and bareboat charters, and in the spot market as market conditions warrant.

Our Business Strategy

We aim to build and maintain enduring relationships with charterers of LPG carriers and to provide dependable transportation of LPG products at competitive cost. By expanding our fleet, we seek to create stockholder value by acquiring and operating second-hand LPG carriers, and possibly newbuildings of all sizes, employing them in a combination of period charter and spot charter contracts. Our financial strategy is focused on maintaining a reasonable level of leverage as compared to many of our competitors and distributing to our stockholders a portion of our annual net income as dividends.

Acquisition of Nine Identified Vessels

We have entered into agreements with the Vafias Group pursuant to which we will pay $109.9 million to acquire the Identified Vessels from the Vafias Group. The aggregate purchase price of $109.9 million represents the fair market value of the Identified Vessels at the time we agreed to acquire them. The aggregate purchase price to be paid by us represents $6.6 million more than the aggregate price paid by the Vafias Group for the vessels, which reflects the appreciation in the value of the Identified Vessels since the Vafias Group agreed to acquire them. For accounting purposes, this $6.6 million difference is treated as a deemed distribution which will occur in the fourth quarter of 2005 and the first quarter of 2006. We will acquire the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios through the acquisition of the capital stock of their owners, which are Vafias

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Group affiliates. The owners' current bank debt will be repaid. We expect the deliveries of the Identified Vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity which we expect will be delivered by February 2006. The delivery of each of the Identified Vessels is subject to customary conditions.

Competition

The world-wide LPG shipping sector is comparatively smaller than other shipping sectors, consisting of only 934 ships as of June 2005. One-hundred twenty-nine newbuildings are on order and are expected to be delivered between 2005 and 2008. Many vessel owners in the LPG shipping sector have placed their vessels in pools. Pools, which are a cooperative venture among several vessel owners, increase flexibility and optimize vessel utilization and profitability. Some of these pools focus on specific regions or markets, others trade world wide. Pools can be formidable competitors, as they are likely to attract inquiries and to have a significant influence over charterers. The dominance of pools in the LPG shipping sector may require us to consider joining a pool in the future.

Although the LPG shipping sector is characterized by smaller fleets, with the largest fleet consisting of 47 vessels, some of our competitors have larger fleets than us and in some cases, significantly larger assets than we will have. We believe the LPG shipping sector will continue to be highly competitive, driven principally by energy consumption.

Chartering of the Fleet

We, through Stealth Maritime, manage the employment of our fleet. We intend to deploy our fleet between period charters, including time and bareboat charters which can last up to several years, and spot market charters (through voyage charters and short-term time charters), which generally last from one to six months, subject to market conditions. Period charters and short-term time charters are for a fixed period of time. A voyage charter is generally a contract to carry a specific cargo from a loading port to a discharging port for an agreed-upon total charge.

Vessels operating on period charter provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. As a result, during the time our LPG carriers are committed on period charters, we will be unable, during periods of improving charter markets, to take advantage of improved charter rates as we could if our LPG carriers were employed only on spot charters. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in LPG charter rates although we are then exposed to the risk of declining LPG carrier charter rates, which may have a materially adverse impact on our financial performance. If we commit vessels to period charters, future spot market rates may be higher or lower than those rates at which we have period chartered our vessels.

Customers

Our assessment of a charterer's financial condition and reliability is an important factor in negotiating employment for our vessels. Principal charterers include producers of LPG products, such as national, major and other independent energy companies and energy traders, and industrial users of those products. Our principal customer is Petredec Ltd., and our other customers include Dow Chemical Company and Finaval SpA. For the six-month period ended June 30, 2005, approximately 80% of our revenue was derived from three charterers as follows:

•  Petredec — 50%
•  Dow — 20%
•  Finaval — 10%

As a result of the acquisition of the Identified Vessels, we anticipate that in addition to the above charterers, Petrobras will also account for significant percentages of our revenues in the future.

Management of Our Fleet

We have a management agreement with Stealth Maritime with an initial term of five years, under which Stealth Maritime will be responsible for the administration of our affairs and the commercial

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and technical management of our fleet. Under the agreement, we pay Stealth Maritime a management fee of $390 (based on an exchange rate of 1.00:US$1.25) per vessel operating under a voyage or time charter per day on a monthly basis in advance, pro rated for the calendar days we own the vessels. We pay a fee of $125 (based on an exchange rate of 1.00:US$1.25) per vessel per day for each of our vessels operating on bareboat charter. The management fee will be adjusted quarterly based on the United States dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We will also be obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime will also earn a fee equal to 1.0% of the contract price of any vessel bought or sold by them on our behalf. In addition, as long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier, which Stealth Maritime may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. This right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. Additional vessels that we may acquire in the future may be managed by Stealth Maritime, which is an affiliate of the Vafias Group, or by other unaffiliated management companies. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. In 2005, such compensation is expected to be in an aggregate amount of €520,000 (US$629,096, based on the exchange rate of €1.00US:$1.2098 in effect on June 30, 2005) on an annualized basis.

Stealth Maritime currently subcontracts the technical management of our fleet to either V.Ships, a ship management company based in Cyprus or to Tesma, a ship management company based in Singapore. Following this offering, Stealth Maritime will also subcontract the technical management of vessels in our fleet to Hanseatic Shipping Co. Ltd., or Hanseatic Shipping, a privately owned ship management company in Cyprus. These technical managers, which Stealth Maritime will continue to supervise, are responsible for the day-to-day activities of our fleet including the operation, crewing, maintenance and repair of our ships; they also must ensure that our fleet's operations comply with environmental and other regulatory requirements. V.Ships is an international ship management company with offices in 26 countries. It services a fleet of over 600 vessels of all major vessel types. Since 2001, V.Ships has been the largest provider of independent ship management and related marine services to the shipping industry in the world. Tesma (Singapore) is one of the technical competence centers of Tesma Holding, a Danish alliance network of professional ship management companies currently providing full technical service to over 70 vessels and providing crews to over 150 vessels. Hanseatic Shipping has more than 230 ships in management including containerships, bulk carriers, oil tankers, gas carriers, RoRo ships and multi-purpose ships. Hanseatic Shipping was the first off-shore ship management company in Cyprus and was a driving force in establishing Cyprus as a leading ship management center. The technical management agreements with V.Ships (Cyprus), Tesma (Singapore) and Hanseatic Shipping may be terminated at any time upon three months' notice.

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The following chart illustrates the management of our fleet:

Crewing and Employees

As of the completion of this offering, we will have no salaried employees, although we intend to reimburse our fleet manager, Stealth Maritime, for the salaries of our CEO and CFO. Stealth Maritime will ensure that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that our vessels employ experienced and competent personnel.

V.Ships (Cyprus), Tesma (Singapore) and, following this offering, Hanseatic Shipping, are or will be responsible for the crewing of the fleet. These responsibilities include training, compensation, transportation and insurance of the crew.

Inspection by Classification Societies

Every 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.

For maintenance of the class, regular and extraordinary surveys of hull, 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, machinery, including the electrical plant, and on any special equipment classed, at the intervals indicated by the character of classification for the hull. At 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

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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 was 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.

In our experience, for vessels between 3,000 cbm and 7,999 cbm that are less than 20 years old, each instance of drydocking typically lasts between six and 15 days. We will neither incur any loss of revenues nor are we responsible for the costs in relation to special survey or drydocking of any of our vessels while they are on bareboat charter.

The following table lists the next drydockings and special surveys scheduled for our fleet:


Vessel Name Special Survey Drydocking
Initial Fleet    
Gas Amazon Jan. 12, 2007 Jan. 12, 2007
Gas Emperor Nov. 16, 2009 Dec. 13, 2007
Birgit Kosan Nov. 20, 2009 Nov. 20, 2007
Gas Courchevel July 18, 2006 July 18, 2006
Gas Shanghai April 30, 2009 March 22, 2007
Gas Prophet July 30, 2006 July 30, 2006
Gas Arctic July 5, 2007 July 2, 2007
Gas Ice Dec. 1, 2006 Aug. 8, 2005
Gas Tiny Aug. 30, 2006 June 23, 2006
Identified Vessels    
Gas Cathar Nov. 2006 Nov. 2006
Gas Chios April 2006 April 2008
Marathon Sept. 2007 March 2010
Sweet Dream July 2007 July 2007
Gas Eternity Dec. 2008 Jan. 2007
Gas Legacy Dec. 2008 Oct. 2006
Gas Crystal May 2010 May 2008
Gas Prodigy Jan. 2010 Feb. 2008
Gas Oracle Sept. 2005 Sept. 2005

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 vessels are also drydocked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a "recommendation" which must be rectified by the ship owner within prescribed time limits.

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 our vessels are certified as being "in class" by Bureau Veritas, NKK, Det Norske Veritas, the American Bureau of Shipping and RINA SpA. All new and second hand vessels that we purchase must be certified prior to their delivery under our standard contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel.

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Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We have obtained marine hull and machinery and war risk insurance, which includes the risk of actual or constructive total loss, for all of our vessels. The vessels are each covered up to at least fair market value, with deductibles in amounts ranging from $25,000 to $100,000.

We also arranged increased value insurance for most of the vessels. Under the increased value insurance in case of total loss of the vessel we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the Hull and Machinery policy. Increased value insurance also covers excess liabilities which are not recoverable in full by the Hull and Machinery policies by reason of under insurance.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which covers our third party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs." Subject to the "capping" discussed below, our coverage, except for pollution, is unlimited.

Our current protection and indemnity insurance coverage for pollution is $1.0 billion per vessel per incident. The 14 P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I Association has capped its exposure to this pooling agreement at $4.5 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on its claim records as well as the claim records of all other members of the individual associations, and members of the pool of P&I Associations comprising the International Group.

Legal Proceedings

To our knowledge, we are not currently a party to any material lawsuit that, if adversely determined, would have a material adverse effect on our financial position, results of operations or liquidity. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.

Properties

We have no freehold or leasehold interest in any real property. We lease office space from the Vafias Group. The initial lease term is three years beginning January 3, 2005 with three consecutive

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options to renew for a one-year term at our option. The total rent per year will be €24,000 (US$29,035 based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005). We believe this is no more than would be incurred on an arm's length basis with an unaffiliated landlord.

Exchange Controls

Under Marshall Island law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our ordinary shares.

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ENVIRONMENTAL AND OTHER REGULATIONS

Government regulation significantly affects the ownership and operation of our vessels. They are subject to international conventions, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered.

A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (United States Coast Guard, harbor master or equivalent), classification societies, flag state administration (country of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses and certificates for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that will emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations; however, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, such future requirements may limit our ability to do business, increase our operating costs, force the early retirement of our vessels, and/or affect their resale value, all of which could have a material adverse effect on our financial condition and results of operations.

Environmental Regulation—International Maritime Organization ("IMO")

Our vessels are subject to standards imposed by the International Maritime Organization, or "IMO" (the United Nations agency for maritime safety and the prevention of pollution by ships). In order to operate in the navigable waters of the IMO's member states, liquefied gas carriers must have an IMO Certificate of Fitness demonstrating compliance with construction codes for liquefied gas carriers. These codes, and similar regulations in individual member states, address fire and explosion risks posed by the transport of liquefied gases. Collectively, these standards and regulations impose detailed requirements relating to the design and arrangement of cargo tanks, vents, and pipes; construction materials and compatibility; cargo pressure; and temperature control.

In addition, we are subject to international conventions that regulate pollution in international waters and a signatory's territorial waters. Under the IMO regulations, gas carriers that comply with the IMO certification requirements are deemed to satisfy the requirements of Annex II of the International Convention for the Prevention of Pollution from Ships ("MARPOL") applicable to transportation of chemicals at sea, which would otherwise apply to certain liquefied gases. The IMO recently revised the Annex II regulations that restrict discharges of "noxious liquid substances" during cleaning or deballasting operations. The revisions are scheduled to take effect in January 2007. As recently interpreted by the IMO at meetings in April 2005, these revisions will not impose further restriction on the types of substances gas carriers may carry under their gas carrier code certificates of fitness, nor will they require changes in the manner in which product tanks must be cleaned. In September 1997, the IMO adopted MARPOL Annex VI to address air pollution from ships. Annex VI was ratified in May 2004, and became effective in May 2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibit deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. A plan to comply with the Annex VI regulations is already in place and will be fully effective once Annex VI comes into force. While the IMO typically phases in new requirements in a way that minimizes negative impacts on the ability of vessels to trade, there can be no guarantee that there will not be new conventions, laws or regulations that may have a material adverse effect on our business.

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The operation of our vessels is also affected by the requirements set forth in the IMO's International Management Code for the Safe Operation of Ships and Pollution Prevention, which were adopted in July 1998 ("ISM Code"). The ISM Code requires shipowners and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. Currently, each of the vessels in our fleet is ISM code-certified. However, there can be no assurance that such certification will be maintained indefinitely.

Environmental Regulations—The United States Oil Pollution Act of 1990 ("OPA").

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA applies to discharges of any oil from a vessel, including discharges of fuel and lubricants from an LPG carrier. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its two hundred nautical mile exclusive economic zone. Although our gas carriers will not be carrying oil in bulk as cargo, and will therefore not be subject to liability under the provisions of OPA 90 (except in the case of a discharge of fuel oil or bunkers), gas carriers are considered "vessels" for purposes of OPA financial responsibility requirements discussed below.

Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" and are jointly, severally and strictly liable (unless the discharge of pollutants results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of pollutants from their vessels. OPA defines these other damages broadly to include:

•  natural resources damage and the costs of assessment thereof;
•  real and personal property damage;
•  net loss of taxes, royalties, rents, fees and other lost revenues;
•  lost profits or impairment of earning capacity due to property or natural resources damage; and
•  net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA limits the liability of responsible parties to the greater of $600 per gross ton or $0.5 million per drybulk vessel that is over 300 gross tons (subject to possible adjustment for inflation). These limits of liability do not apply if an incident was directly caused by violation of applicable United States federal safety, construction or operating regulations or by a responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities.

We currently maintain, for each of our vessels, pollution liability coverage insurance in the amount of $1 billion per incident. In addition, we carry hull and machinery and protection and indemnity insurance to cover the risks of fire and explosion. Given the relatively small amount of bunkers our vessels carry, we believe that a spill of oil from the vessels would not be catastrophic. However, under certain circumstances, fire and explosion could result in a catastrophic loss. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. If the damages from a catastrophic spill exceeded our insurance coverage, it would a severe effect on us and could possibly result in our insolvency.

OPA requires owners and operators of vessels to establish and maintain with the United States Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under the

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OPA. In December 1994, the United States Coast Guard implemented regulations requiring evidence of financial responsibility in the amount of $1,500 per gross ton, which includes the OPA limitation on liability of $1,200 per gross ton and the United States Comprehensive Environmental Response, Compensation, and Liability Act liability limit of $300 per gross ton. Under the United States Coast Guard regulations implementing OPA, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance, or guaranty. Under the OPA regulations, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessels in the fleet having the greatest maximum liability under OPA.

The United States Coast Guard's regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA 90 laws, including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses.

The United States Coast Guard's financial responsibility regulations may also be satisfied by evidence of surety bond, guaranty or by self-insurance. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the United States Coast Guard regulations by providing a financial guaranty evidencing sufficient self-insurance.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states, which have enacted such legislation, have not yet issued implementing regulations defining vessels owners' responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.

Environmental Regulation—Other Environmental Initiatives

The European Union is considering legislation that will affect the operation of vessels and the liability of owners for oil pollution. It is difficult to predict what legislation, if any, may be promulgated by the European Union or any other country or authority.

Vessel Security Regulations

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, or MTSA, came into effect in the United States. To implement certain portions of the MTSA, in July 2003, the United States 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 the International Convention for the Safety of Life at Sea, or 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 or, ISPS, Code. Among the various requirements are:

•  on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications;
•  on-board installation of ship security alert systems;

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•  the development of vessel security plans; and
•  compliance with flag state security certification requirements.

The United States Coast Guard regulations, intended to align with international maritime security standards, exempt non-United States vessels from MTSA vessel security measures provided such vessels have on board, by July 1, 2004, a valid International Ship Security Certificate (ISSC) that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code and ensure that our vessels attain compliance with all applicable security requirements within the prescribed time periods. We do not believe these additional requirements will have a material financial impact on our operations.

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MANAGEMENT

Directors and Executive Officers

The following table sets forth information regarding our directors and executive officers. Our Board of Directors is elected annually on a staggered basis, and each director elected holds office for a three-year term. All of our current directors, other than Mr. Vafias, are independent. Officers are elected from time to time by vote of our Board of Directors and hold office until a successor is elected.


Name Age Position
Harry N. Vafias   27   President, CEO and Class III Director
Andrew J. Simmons   50   Chief Financial Officer
Michael G. Jolliffe   55   Chairman of the Board, Class II Director
Thanassis J. Martinos   55   Class I Director
Miranda Xafa   52   Class III Director
David Milligan   58   Chartering Manager*
Nikolaos Markomichelakis   43   Operations Manager*
George Koliopoulos   53   Technical Manager*
* Employee of our fleet manager, Stealth Maritime; primary responsibilities are to us.

The term of our Class I director expires in 2008, the term of our Class II director expires in 2007 and the terms of our Class III directors expire in 2006.

Harry N. Vafias is our President and CEO and a member of our Board of Directors. Mr. Vafias has been actively involved in the tanker and gas shipping industry since 1999. After graduating from City University Business School in the City of London in 1999 with a B.A. in Management Science and from Metropolitan University in 2000 with a Masters degree in Shipping, Trade and Transport, he commenced working at Seascope, a leading ship brokering firm specializing in sale and purchase of vessels and chartering of oil tankers. Mr. Vafias also worked at Braemar, a leading ship brokering firm, where he gained extensive experience in tanker and dry cargo chartering. Seascope and Braemar merged in 2001 to form Braemar Seascope Group plc, a public company quoted on the London Stock Exchange and one of the world's largest ship brokering and shipping service groups. From 2000 until 2004, he worked at Brave Maritime and Stealth Maritime, companies providing comprehensive ship management services, where Mr. Vafias headed the operations and chartering departments of Stealth Maritime and served as manager for the sale and purchase departments of both Brave Maritime and Stealth Maritime.

Andrew J. Simmons, our Chief Financial Officer, joined us in June 2005. Mr. Simmons has over 32 years of experience in the banking industry, with particular expertise in shipping finance. From 2002 until June 2005, Mr. Simmons served as General Manager of Heath Lambert Middle East in Bahrain and subsequently as Director at Heath Lambert (UAE) LLC in the Marine and Project Finance Division where he was responsible for overseeing the identification and development of marine finance for clients within the Dubai and Gulf regions. Mr. Simmons served as the Managing Director of Talal Al Zawawi Enterprises, a conglomerate encompassing trading, business services and retail business units in Oman, from 2000 until 2002, where he was responsible for overseeing the day-to-day operational activities of the company. From 1973 until 2000, Mr. Simmons served as Director, Manager and Vice President at a number of banks including BHF Bank and Guiness Mahon & Co. Ltd., both in the United Kingdom, Taib Bank EC in Bahrain and Mid-Med Bank PLC in Dubai and also served in the International Treasury department of Saatchi & Saatchi PLC.

Michael G. Jolliffe is Chairman of our Board of Directors. He is a director of a number of companies in shipping, oil, textiles, telecommunications and other industries. He is Deputy Chairman of Tsakos Energy Navigation, an oil and product tanker shipping company listed on the New York Stock Exchange. Mr. Jolliffe is also Vice-Chairman of both Klonatex S.A. and Naoussa Spinning Mills

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S.A., two companies quoted on the Athens Stock Exchange that together form the third largest integrated textiles company in Europe. Mr. Jolliffe is a Director of Lannet S.A., Greece's second largest telephone company quoted on the Athens Stock Exchange. Mr. Jolliffe is also Chairman of Wigham-Richardson Shipbrokers Ltd, one of the oldest established shipbroking companies in the City of London, and of Shipping Spares Repairs and Supplies Ltd, an Agency Company based in Piraeus, Greece. He is also joint president of Hanjin Euorbulk Ltd., a joint venture broking company with Hanjin Shipping of Korea. Additionally, Mr. Jolliffe is the President of Eurotrans Hermes Hellas S.A., the Greek agent of the Skoda Group for Trams, Buses and Trains.

Thanassis J. Martinos is a member of our Board of Directors. He has had over 35 years of experience in the shipping industry having served as Co-Managing Director of Thenamaris Ships Management, a ship management company with over three decades of experience servicing major oil companies, traders and government agencies. Since 1991, Mr. Martinos has been the Managing Director of Eastern Mediterranean Maritime Ltd., a ship management company specializing in the management of tankers and dry bulk carriers that presently operates a fleet that exceeds 2.8 million dwt. Mr. Martinos holds a B.S. in Economics from Athens University.

Miranda Xafa is a member of our Board of Directors. Ms. Xafa is currently the Alternate Executive Director at the Board of the International Monetary Fund where she serves as the representative for countries such as Italy, Greece and Portugal. She previously worked as a staff member at the International Monetary Fund where she focused on the design and monitoring of stabilization programs, focusing particularly on Latin America. Ms. Xafa also served as chief economic advisor under Prime Minister Constantin Mitsotakis in Athens, Greece from 1991 to 1993. Following her service to the Prime Minister, Ms. Xafa worked at Salomon Brothers in London, initially as an emerging markets strategist and subsequently as an Athens based market analyst covering Greek and global economic prospects. Ms. Xafa has also served as an adviser to the management of Piraeus Bank and was a director on the board of S&B Industrial Minerals, a public international group of companies listed on the Athens Stock Exchange that is primarily involved in the mining, processing and trade of industrial materials and ores. Ms. Xafa holds both a Masters degree and a Ph.D. in economics from the University of Pennsylvania. She has taught economics at the University of Pennsylvania and Princeton University and is the author of several published articles on international trade policy, the Latin American debt crisis and European monetary unification.

David Milligan is the Chartering Manager of Stealth Maritime. Mr. Milligan has had over 25 years of experience serving as Chartering Manager for a number of companies including Burmah Oil Tankers, Scanoil AS, and the Gatoil Group of Companies. From 1995 until 2004, Mr. Milligan served as the Tanker Chartering Director of the V.Ships Group, one of the world's largest provider of independent ship management and related marine services to the shipping industry, where he was in charge of the tanker department chartering all sizes of tankers including gas tankers, small and specialized chemical vessels. Mr. Milligan attended the University of London and City Polytechnic in London where he passed both his Certificate of Transport and the Institute of Chartered Shipbrokers fellowship exams. He has been a part-time lecturer at the City University of London for the past three years giving lectures on Shipping Practice for the Institute of Chartered Shipbrokers Examinations.

Nikolaos Markomichelakis is the Operations Manager of Stealth Maritime. Mr. Markomichelakis has been the Fleet and Operations Manager of Stealth Maritime since 2000 where he has acted as the Alternate DPA and Security Officer of the company's product, Aframax and VLCC tankers as well as general supervisor of the company's LPG carriers under third party management. He has had over 22 years of experience in the shipping industry having served as Chief Officer or Operator with a number of shipping companies such as Olympic Maritime S.A., Tsakos Shipping Company, Glafki (Hellas) Maritime S.A., Adriatic Tankers Shipping Co., Cardiff Marine Inc., Kristen Navigation Inc., and Larus S.A. Mr. Markomichelakis graduated from Private Nautical Academy Spirourani and Merchant Marine Academy Aspropirgos in Greece.

George Koliopoulos is the Technical Manager of Stealth Maritime. Mr. Koliopoulos has had over 33 years of experience in the shipping industry having served as a third Engineer with Sinergasia Shipbrokers Ltd. in London and as Superintendent Engineer at Varnima Corporation Int. S.A., where

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he was responsible for the operations, maintenance, engine and hull repairs, installations, drydockings and class surveys and claims of three tanker vessels. Mr. Koliopoulos served for 10 years with Anangel Maritime Services Inc. as both group leader to one of the company's Technical Departments and as a member of the team responsible for the final specifications, negotiations and plan approvals for the newbuilding projects of Panamax and Capesize vessels in Korea and Japan. Mr. Koliopoulos is currently the Technical Director of Stealth Maritime where he is responsible for all the technical matters concerning bulk carriers, oil tankers and all newbuildings on order in addition to negotiating specifications with shipyards for recently ordered LPG carriers in Japan. Mr. Koliopoulos attended Sunderland Polytechnic in the United Kingdom where he received a diploma in Naval Architecture and Portsmouth Polytechnic in the United Kingdom where he received a B.A. in Mechanical Engineering.

Committees of the Board of Directors

Prior to completion of this offering, we intend to establish an audit committee comprised of three independent directors which will be responsible for reviewing our accounting controls and recommending to the Board of Directors the engagement of our outside auditors. We also intend to establish a nominating and corporate governance committee and a compensation committee, which will be responsible for establishing our executive officers' compensation and benefits, each comprised of independent directors. We intend to conform to the Nasdaq National Market listing standards on independent directors whether or not those standards would apply to us. Upon the consummation of this offering, the members of each committee will be Messers. Jolliffe and Martinos and Ms. Xafa.

Compensation of Directors and Senior Management

We did not pay any compensation to members of senior management or our directors in 2004. Beginning in the fiscal year ending December 31, 2005, non-executive directors will receive annual fees in the amount of $35,000, plus reimbursement for their out-of-pocket expenses. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. In 2005, such compensation is expected to be in an aggregate amount of €520,000(US$629,096 based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005) on an annualized basis.

Equity Compensation Plan

Prior to the completion of this offering, we will adopt an equity compensation plan, which we refer to as the Plan. The Plan will generally be administered by the compensation committee of our board of directors, except that the full board may act at any time to administer the Plan, and authority to administer any aspect of the Plan may be delegated by our board of directors or by the compensation committee to an executive officer or any other person. The Plan allows the plan administrator to grant awards of shares of our common stock or the right to receive or purchase shares of our common stock (including options to purchase common stock, restricted stock and stock units, bonus stock, performance stock, and stock appreciation rights) to our employees, directors or other persons or entities providing significant services to us or our subsidiaries, and further provides the plan administrator the authority to reprice outstanding stock options or other awards. The actual terms of an award, including the number of shares of common stock relating to the award, any exercise or purchase price, any vesting, forfeiture or transfer restrictions, the time or times of exercisability for, or delivery of, shares of common stock, are to be determined by the plan administrator and set forth in a written award agreement with the participant.

The aggregate number of shares of our common stock for which awards may be granted under the Plan cannot exceed 10% of the number of shares of our common stock issued and outstanding at the time any award is granted. Awards made under the Plan that have been forfeited (including our repurchase of shares of common stock subject to an award for the price, if any, paid to us for such shares of common stock, or for their par value), cancelled or have expired, will not be treated as having been granted for purposes of the preceding sentence.

The Plan permits the plan administrator to make an equitable adjustment to the number, kind and exercise price per share of awards in the event of our recapitalization, reorganization, merger,

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spin-off, share exchange, dividend of common stock, liquidation, dissolution or other similar transaction or events. In addition, the plan administrator may make adjustments in the terms and conditions of any awards in recognition of any unusual or nonrecurring events. Our board of directors may, at any time, alter, amend, suspend or discontinue the Plan. The Plan will automatically terminate ten years after it has been most recently approved by our stockholders.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the owners of more than five percent of our common stock as of the date of our prospectus, and after giving effect to this offering. All of our stockholders, including the stockholders listed in this table, are entitled to one vote for each share of common stock held.


Title of Class Identity of Person or Group Amount
Owned 		Percent of Class
Before Common
Stock Offering 		Amount Owned
After Common
Stock Offering 		Percent of Class
After Common
Stock Offering*
Common Stock, $.01 par value Flawless Management Inc.**   6,000,000     100 %    6,000,000     43.8 % 
  Harry Vafias***   6,000,000     100 %    6,000,000     43.8 % 
* Assumes the underwriters do not exercise their over-allotment option.
** Our CEO, Harry Vafias, is the sole stockholder of Flawless Management Inc., a Marshall Islands company.
*** By virtue of shares owned indirectly through Flawless Management Inc.

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DESCRIPTION OF INDEBTEDNESS

We have entered into a loan agreement dated March 16, 2005 with Fortis Bank (Nederland) N.V., under which it agreed to make available to us an amount of up to $54.0 million. As of June 30, 2005, $50,419,500 was outstanding under the loan agreement, which, as a result of the prepayment of the portion of the loan attributable to the Gas Prodigy described below, is the full amount we may draw under this loan. The borrowings are secured by liens on the nine ships in our fleet as of the date of this prospectus.

The agreement contains covenants requiring us and our subsidiaries to maintain specified financial ratios and satisfy financial covenants.

These financial ratios and covenants include requirements that we:

•  maintain an aggregate minimum cash balance with Fortis Bank of at least $3.0 million;
•  ensure that our ratio of our total liabilities less total stockholders' equity to total assets does not exceed 0.80 to 1.0 at any time; and
•  maintain a ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan of at least 1.25 to 1.

As of June 30, 2005, our cash balance with Fortis Bank was $7.35 million; our ratio of our total liabilities less total stockholders' equity to total assets was 0.041 and our ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan was 2.26.

The agreement also contains customary covenants that require us to maintain adequate insurance coverage and to ensure that our vessels are in compliance with the ISM Code. We and our subsidiaries are prohibited from incurring any additional liability or obligations with other parties except for those reasonably incurred in the ordinary course of business. Additionally, we are prohibited from (i) opening or maintaining any account with another bank or financial institution without prior notification to the bank, (ii) issuing or granting any person a right to any shares in capital or reducing our issued share capital and (iii) entering into any merger, amalgamation, de-merger or any other form of reorganization.

We and our subsidiaries will be permitted to pay dividends under the agreement only for so long as the aggregate amount of the dividend payments made by us and by our subsidiaries does not exceed 50% of our excess cash flow, defined as the amount of our gross operating revenue for all our vessels less the aggregate of our principal and interest payments and our actual gross operating expenses for all our vessels in that financial year.

The interest rate under the agreement is the sum of LIBOR and a margin. The margin varies with the ratio of the outstanding balance of the loan to the aggregate market value of the vessels subject to a mortgage in that period. If the ratio is equal to or lower than 60%, the interest rate will be 0.9% over LIBOR. If the ratio is higher than 60% but lower or equal to 70%, the interest rate will be 0.975% over LIBOR. If the ratio is higher than 70%, the interest rate will be 1.05% over the LIBOR. We paid a non-refundable fee of $162,000 upon the signing of the credit facility.

Although it is not one of our subsidiaries, Gaz de Brazil Inc., an affiliate of the Vafias Group and the owner of the Gas Prodig y, was originally one of the borrowers under the Fortis Bank loan agreement. In order to limit the loan with Fortis Bank solely to vessels comprising our initial fleet, the portion of the Fortis Bank loan attributable to the Gas Prodigy , i.e. $3,580,500, was prepaid on June 10, 2005. The Gas Prodigy is an Identified Vessel, and we have agreed to acquire it from the Vafias Group for a purchase price of $9.5 million, representing its fair market value at the time of such agreement.

In March 2005, we entered into an agreement with Fortis Bank to enter into an interest rate swap in connection with the aforementioned loan agreement. The initial nominal amount of the swap will be $22.5 million amortizing to $4.8 million over its six-year life commencing May 30, 2007. The swap will hedge our risk of increases in three month LIBOR over 4.55% and up to 7.5%, but will not hedge our risk if three month LIBOR equals or exceeds 7.5%.

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In addition, in order to finance a portion of the purchase price for the Marathon , we may borrow $9.75 million under a new credit facility that we intend to obtain. This potential new credit facility would be secured by a security interest in the Marathon . We have had preliminary discussions with potential lenders, although we cannot assure you that we will obtain such financing. We may increase the size of this potential credit facility if we identify additional vessels we have yet to identify that we would like to acquire with additional indebtedness. Such loans would be secured by a security interest in the Marathon and any such additional vessels. If we are unable to obtain a new credit facility to fund the $9.75 million portion of the purchase price for the Marathon , we intend to fund that portion of the acquisition from other sources, which may include a capital contribution from our current sole stockholder or cash on hand.

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RELATED PARTY TRANSACTIONS

Fleet Manager

Stealth Maritime is our fleet manager and, as such, is responsible for our internal administration and for the commercial and technical management of our fleet. Stealth Maritime is a member of the Vafias Group, which has been active in shipping for over 30 years and currently manages a fleet of 30 vessels, making it one of the ten largest ship management companies in Greece. Our CEO is a member of the Vafias family, which controls the Vafias Group.

We have a management agreement with Stealth Maritime with an initial term of five years, under which Stealth Maritime will be responsible for our internal administration and the commercial and technical management of our fleet. We pay Stealth Maritime a management fee of $390 (based on an exchange rate of 1.00:US$1.25) per vessel operating under a voyage or time charter per day on a monthly basis in advance, pro rated for the calendar days we own the vessels. We pay a fee of $125 (based on an exchange rate of 1.00:US$1.25) per vessel per day for each of our vessels operating on bareboat charter. The management fee will be adjusted quarterly based on the United States Dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We will also be obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime will also earn a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold by them on our behalf. In addition, as long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier, which Stealth Maritime may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. This right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. Additional vessels that we may acquire in the future may be managed by Stealth Maritime or other unaffiliated management companies. We believe that the amounts we pay to Stealth Maritime are no more than amounts that we would pay to an unaffiliated ship manager. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. In 2005, such compensation is expected to be in an aggregate amount of €520,000 (US$629,096 based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005) on an annualized basis.

Contribution of Initial Fleet

The Gas Prophet , Gas Tiny , Gas Courchevel and Gas Shanghai were acquired by the Vafias Group. In addition, the Vafias Group entered into memoranda of agreement to acquire the Gas Arctic , the Gas Ice , the Birgit Kosan, the Gas Emperor and the Gas Amazon , and paid the sellers of the Gas Artic and the Gas Ice a total of $1.9 million in deposits. We financed the $50.4 million balance of the purchase prices of the Gas Arctic and the Gas Ice and of the Birgit Kosan , Gas Emperor and Gas Amazon with borrowings under the loan agreement with Fortis Bank and additional capital from our sole stockholder. The Vafias Group contributed to us, in exchange for nominal consideration, the capital stock of the companies whose subsidiaries own these nine vessels, although, as described above, we financed an aggregate of $50.4 million of the purchase price of certain of those vessels. Our sole stockholder, Flawless Management Inc., is a company entirely owned by our CEO, Harry Vafias, who is a member of the Vafias family. After this offering, Flawless Management Inc. will own 43.8% of our outstanding common stock.

In particular, we received from the Vafias Group the shares of the companies whose subsidiaries own the following vessels:

•  Leader Investments Inc., a Marshall Islands company, whose wholly owned subsidiary, VCM Trading Ltd., a Marshall Islands company, is the registered owner of the Gas Prophet ;
•  Atlas Investments S.A., a Marshall Islands company, whose wholly owned subsidiary, LPGONE Ltd., a Marshall Islands company, is the registered owner of the Gas Tiny ;
•  Access Consultants Co., a Marshall Islands company, whose wholly owned subsidiary, Geneve Butane Inc., a Marshall Islands company, is the registered owner of the Gas Courchevel ;

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•  Heather Trading S.A., a Marshall Islands company, whose wholly owned subsidiary, Matrix Gas Trading Ltd., a Marshall Islands company, is the registered owner of the Gas Shanghai ;
•  Oswald Trading Limited and Celidon Investment Inc., both Marshall Islands companies, whose wholly owned subsidiary, Ventspils Gases Ltd., a Malta limited liability company, is the registered owner of the Gas Arctic ;
•  Floyd Properties Co. and Aubine Services Ltd., both Marshall Islands companies, whose wholly owned subsidiary, Semichlaus Exports Ltd., a Malta limited liability company, is the registered owner of the Gas Ice ;
•  Lyonet Holdings Corp., a Marshall Islands company, whose wholly-owned subsidiary, Industrial Materials, Inc., a Marshall Island corporation, is the registered owner of the Birgit Kosan ;
•  Sabrina Enterprises S.A., a Marshall Islands company, whose wholly-owned subsidiary, Aracruz Trading Ltd., a Marshall Islands corporation, is the registered owner of the Gas Amazon ; and
•  Alexis Shipholding S.A. and Aubine Services Ltd., both Marshall Islands companies, whose wholly-owned subsidiary, Pacific Gases Ltd., a Malta limited liability company, is the registered owner of the Gas Emperor.

Acquisition of Identified Vessels

During the six-month period ended June 30, 2005, the Sweet Dream, the Gas Chios, the Gas Crystal , the Gas Eternity , the Gas Legacy, the Gas Oracle and the Gas Cathar were acquired by the Vafias Group. As a result, the Vafias Group currently owns those seven vessels as well as the Gas Prodigy , which had previously been delivered to the Vafias Group. In addition, on August 12, 2005, the Vafias Group entered into an agreement to acquire the Marathon from its owner, which is not affiliated with the Vafias Group. We have entered into agreements with the Vafias Group pursuant to which we will pay $109.9 million to acquire the Identified Vessels from the Vafias Group. We will acquire the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios through the acquisition of the capital stock of their owners, which are Vafias Group affiliates. The owners' current bank debt will be repaid. We intend to finance the aggregate purchase price for the Identified Vessels, other than the Marathon, out of a portion of the net proceeds of this offering and to finance the purchase price for the Marathon with $5.25 million of the net proceeds of this offering, together with $9.75 million of indebtedness under a new credit facility that we intend to obtain. See "Description of Indebtedness". The aggregate purchase price represents the fair market value of the Identified Vessels at the time we agreed to acquire them. The aggregate purchase price to be paid by us represents $6.6 million more than the aggregate price paid by the Vafias Group for the vessels, which reflects the appreciation in the value of the Identified Vessels since the Vafias Group agreed to acquire them. We expect the deliveries of the Identified Vessels to occur between the closing of this offering and the end of November 2005, other than with respect to the Gas Eternity which we expect will be delivered by February 2006.

Payment of Dividend

We received the Gas Prophet , the Gas Tiny , the Gas Courchevel and the Gas Shanghai as well as the cash constituting the full purchase price for the Gas Emperor and a significant portion of the purchase prices for the Gas Arctic , the Gas Ice , the Birgit Kosan and the Gas Amazon , which collectively comprise our entire initial fleet, as capital contributions. Since our initial fleet has been fully leveraged, we determined to return $10.0 million of the original capital contributions we received. Accordingly, on July 4, 2005, we declared a dividend to our existing stockholder of $10.0 million which was paid on July 13, 2005 from cash on hand.

Fortis Bank Loan Agreement

Although it is not one of our subsidiaries, Gaz de Brazil Inc., an affiliate of the Vafias Group and the owner of the Gas Prodig y, was originally one of the borrowers under the Fortis Bank loan

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agreement. In order to limit the loan with Fortis Bank solely to vessels comprising our initial fleet, the portion of the Fortis Bank loan attributable to the Gas Prodigy , i.e. $3,580,500, was prepaid on June 10, 2005. The Gas Prodigy is an Identified Vessel, and we have agreed to acquire it from the Vafias Group for a purchase price of $9.5 million, representing its fair market value at the time of such agreement.

Our Chief Executive Officer

Harry Vafias, our CEO, does not hold any management or executive position with Stealth Maritime or any other Vafias Group affiliate, although Mr. Vafias is technically employed by Stealth Maritime and serves as our CEO under our management agreement with Stealth Maritime. Mr. Vafias does, however, have ownership interests in certain Vafias Group entities.

Office Lease

We will lease office space in Athens, Greece, from an affiliate of the Vafias Group. The initial lease term is three years beginning January 3, 2005 with three consecutive options to renew for a one-year term at our option. The total rent per year will be €24,000(US$29,035 based on the exchange rate of €1.00:US$1.2098 in effect on June 30, 2005). We believe this is no more than would be incurred on an arm's length basis with an unaffiliated landlord.

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REGISTRAR AND TRANSFER AGENT

The registrar and transfer agent for the common stock is American Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 13,700,000 shares of common stock outstanding or 14,855,000 shares if the underwriters' over-allotment option is exercised in full. Of these shares, only the 7,700,000 shares sold in this offering, or 8,855,000 shares if the underwriters' over-allotment option is exercised in full, will be freely transferable in the United States without restriction under the Securities Act, except for any shares purchased by one of our "affiliates", which will be subject to the resale limitations of Rule 144 under the Securities Act. After the consummation of this offering, our existing stockholder will continue to own 6,000,000 shares of common stock which were acquired in private transactions not involving a public offering and these shares are therefore treated as "restricted securities" for purposes of Rule 144. The restricted securities held by our existing stockholder, officers and directors will be subject to the underwriters' 180-day lock-up agreement. Restricted securities may not be resold except in compliance with the registration requirements of the Securities Act or under an exemption from those registration requirements, such as the exemptions provided by Rule 144, Regulation S and other exemptions under the Securities Act.

In general, under Rule 144 as currently in effect, a person or persons whose shares are aggregated, who owns shares that were acquired from the issuer or an affiliate at least one year ago, would be entitled to sell within any three-month period, a number of shares that does not exceed the greater of (i) 1% of the then outstanding shares of our common stock, which would be approximately 137,000 shares immediately after this offering, or (ii) an amount equal to the average weekly reported volume of trading in shares of our common stock on all national securities exchanges and/or reported through the automated quotation system of registered securities associations during the four calendar weeks preceding the date on which notice of the sale is filed with the Commission. Sales in reliance on Rule 144 are also subject to other requirements regarding the manner of sale, notice and availability of current public information about us. A person or persons whose shares are aggregated, who is not deemed to have been one of our affiliates at any time during the 90 days immediately preceding the sale may sell restricted securities in reliance on Rule 144(k) without regard to the limitations described above, provided that two years have expired since the later of the date on which the same restricted securities were acquired from us or one of our affiliates. As defined in Rule 144, an "affiliate" of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, that same issuer.

Our directors and officers and our existing stockholder have agreed during the period beginning from the date of the prospectus and continuing to and including the date 180 days after the date of this prospectus, not to offer, sell, contract to sell or otherwise dispose of any of our securities which are substantially similar to the common stock or which are convertible or exchangeable into securities which are substantially similar to the common stock, without the prior written consent of Cantor Fitzgerald & Co.

As a result of these lock-up agreements and rules of the Securities Act, the restricted shares will be available for sale in the public market, subject to certain volume and other restrictions, as mentioned above, as follows:


Days After the Date of this Prospectus Number of Shares
Eligible for Sale 		Comment
Date of prospectus   0   Shares not locked up and eligible for sale freely or under Rule 144
180 days   6,000,000   Lock-up released; shares will be eligible for sale subject to compliance with Rule 144

Prior to this offering, there has been no public market for our common stock, and no reliable prediction can be made as to the effect, if any, that future sales or the availability of shares for sale

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will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our common stock in the public market, including shares issued upon the exercise of options that may be granted under any employee stock option or employee stock award plan of ours, or the perception that those sales may occur, could adversely affect prevailing market prices for our common stock.

DESCRIPTION OF CAPITAL STOCK

Under our articles of incorporation, our authorized capital stock consists of 100,000,000 shares of common stock, $.01 par value per share, of which 6,000,000 shares are issued and outstanding and fully paid, and 5,000,000 shares of blank check preferred stock, $.01 par value per share. All of our shares of stock are in registered form.

Common Stock

As of the date of this prospectus, we have 6,000,000 shares of common stock outstanding. Upon consummation of this offering, we will have outstanding 13,700,000 shares of common stock or 14,855,000 shares if the underwriters' over-allotment option is exercised in full, out of 100,000,000 shares authorized to be issued. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for dividends. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. All outstanding shares of common stock are, and the shares to be sold in this offering when issued and paid for will be, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any shares of preferred stock which we may issue in the future.

There were 100 shares of common stock outstanding on December 22, 2004, the date our company was formed, and 100 shares of common stock outstanding on June 30, 2005. On August 26, 2005, we effected a 60,000-for-1 stock split.

Other Matters

Our Articles of Incorporation and Bylaws.     Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act, or BCA. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.

Under our bylaws, annual stockholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called by the Board of Directors. Our Board of Directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting.

Directors.     Our directors are elected by a plurality of the votes cast at a meeting of the stockholders by the holders of shares entitled to vote in the election. There is no provision for cumulative voting.

The Board of Directors may change the number of directors by a vote of a majority of the entire board. Each director shall be elected to serve until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. The Board of Directors has the authority to fix the amounts which shall be payable to the members of our Board of Directors for attendance at any meeting or for services rendered to us.

Dividends.     While we cannot assure you that we will do so, and subject to the limitations discussed below, we currently intend to declare and pay regular cash dividends on a quarterly basis from our net profits, in amounts the Board of Directors may from time to time determine are

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appropriate. However, we may have to make provisions for vessel acquisitions and other liabilities that would reduce or eliminate the cash available for distribution as dividends. While we cannot assure you that we will do so, and subject to the limitations set forth below, we expect to declare and pay a dividend per share of $0.1875 in January 2006. Also, from time to time, the Board of Directors may determine to declare and pay quarterly dividends in an amount up to 50% of our net quarterly income as the Board of Directors deems appropriate.

Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, restrictions in our loan agreements, including the loan agreement with Fortis Bank, or other financing arrangements, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. The payment of dividends is not guaranteed or assured, and may be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the LPG carrier market, our earnings would be negatively affected thus limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment thereof.

Dissenters' Rights of Appraisal and Payment.     Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the circuit court in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.

Stockholders' Derivative Actions.     Under the BCA, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

Anti-takeover Provisions of our Charter Documents.     Several provisions of our articles of incorporation and bylaws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a stockholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock

Under the terms of our articles of incorporation, our Board of Directors has authority, without any further vote or action by our stockholders, to issue up to 5,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.

Classified Board of Directors

Our articles of incorporation provide for a Board of Directors serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to

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obtain control of our company. It could also delay stockholders who do not agree with the policies of the Board of Directors from removing a majority of the Board of Directors for two years.

Election and Removal of Directors

Our articles of incorporation and bylaws prohibit cumulative voting in the election of directors. Our bylaws require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Calling of Special Meetings of Stockholders

Our bylaws provide that special meetings of our stockholders may be called only by resolution of our board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary.

Generally, to be timely, a stockholder's notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the date on which we first mailed our proxy materials for the previous year's annual meeting. Our bylaws also specify requirements as to the form and content of a stockholder's notice. These provisions may impede stockholders' ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders.

Business Combinations

Although the BCA does not contain specific provisions regarding "business combinations" between companies organized under the laws of the Marshall Islands and "interested stockholders," we have included these provisions in our articles of incorporation. Specifically, our articles of incorporation prohibit us from engaging in a "business combination" with certain persons for three years following the date the person becomes an interested stockholder. Interested stockholders generally include:

•  persons who are the beneficial owners of 15% or more of the outstanding voting stock of the corporation; and
•  persons who are affiliates or associates of the corporation and who hold 15% or more of the corporation's outstanding voting stock at any time within three years before the date on which the person's status as an interested stockholder is determined.

Subject to certain exceptions, a business combination includes, among other things:

•  certain mergers or consolidations of the corporation or any direct or indirect majority-owned subsidiary of the company;
•  the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation, determined on a consolidated basis, or the aggregate value of all the outstanding stock of the corporation;
•  certain transactions that result in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
•  any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation that is owned directly or indirectly by the interested stockholder; and

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•  any receipt by the interested stockholder of the benefit (except as a stockholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

These provisions of our articles of incorporation do not apply to a business combination if:

•  before a person becomes an interested stockholder, the board of directors of the corporation approves the business combination or transaction in which the stockholder became an interested stockholder;
•  upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than certain excluded shares; or
•  following a transaction in which the person became an interested stockholder, the business combination is (a) approved by the board of directors of the corporation and (b) authorized at a regular or special meeting of stockholders, and not by written consent, by the vote of the holders of at least two-thirds of the voting stock of the corporation not owned by the stockholder.

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MARSHALL ISLANDS COMPANY CONSIDERATIONS

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Business Corporation Act of the Republic of the Marshall Islands, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. For example, the BCA allows the adoption of various anti-takeover measures such as stockholder "rights" plans. While the BCA also provides that it is to be in interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we can not predict whether Marshall Islands courts would reach the same conclusions as United States courts. Thus, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the BCA and the Delaware General Corporation Law relating to stockholders' rights:


Marshall Islands Delaware
Stockholder Meetings
• Held at a time and place as designated in the bylaws • May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the Board of Directors
• May be held within or without the Marshall Islands • May be held within or without Delaware
• Notice: • Notice:
  • Whenever stockholders are required to take action at a meeting, written notice shall state the place, date and hour of the meeting and indicate that it is being issued by or at the direction of the person calling the meeting   • Whenever stockholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any
  • A copy of the notice of any meeting shall be given personally or sent by mail not less than 15 nor more than 60 days before the meeting   • Written notice shall be given not less than 10 nor more than 60 days before the meeting
Stockholder's Voting Rights
• Any action required to be taken by meeting of stockholders may be taken without meeting if consent is in writing and is signed by all the stockholders entitled to vote • Stockholders may act by written consent to elect directors
• Any person authorized to vote may authorize another person to act for him by proxy • Any person authorized to vote may authorize another person or persons to act for him by proxy
• Unless otherwise provided in the articles of incorporation, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one third of the shares entitled to vote at a meeting • For non-stock companies, certificate of incorporation or bylaws may specify the number of members to constitute a quorum. In the absence of this, one-third of the members shall constitute a quorum

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• When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders. • For stock corporations, certificate of incorporation or by-laws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum
• The articles of incorporation may provide for cumulative voting in the election of directors • The certificate of incorporation may provide for cumulative voting
• Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a stockholder meeting • Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by stockholders of each constituent corporation at an annual or special meeting
• Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation's usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a stockholder meeting • Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of a corporation entitled to vote
• Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the stockholders of any corporation • Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of stockholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called stockholder meeting
• Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the stockholders, unless otherwise provided for in the articles of incorporation • Any mortgage or pledge of a corporation's property and assets may be authorized without the vote or consent of stockholders, except to the extent that the certificate of incorporation otherwise provides
           
Directors
• Board must consist of at least one member • Board must consist of at least one member
• Number of members can be changed by an amendment to the bylaws, by the stockholders, or by action of the board • Number of board members shall be fixed by the bylaws, unless the certificate of incorporation fixes the number of directors
• If the board is authorized to change the number of directors, it can only do so by a majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director • If the number of directors is fixed by the certificate of incorporation, a change in the number shall be made only by an amendment of the certificate

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• Removal: • Removal:
  • Any or all of the directors may be removed for cause by vote of the stockholders   • Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides
  • If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the stockholders   • In the case of a classified board, stockholders may effect removal of any or all directors only for cause
Dissenter's Rights of Appraisal
• Stockholder's have a right to dissent from a merger or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares • With limited exceptions, appraisal rights are available for the shares of any class or series of stock of a corporation in a merger or consolidation
• A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment:      
  • Alters or abolishes any preferential right of any outstanding shares having preference; or      
  • Creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or      
  • Alters or abolishes any preemptive right of such holder to acquire shares or other securities; or      
  • Excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class      
Stockholder's Derivative Actions
• An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law • In any derivative suit instituted by a stockholder or a corporation, it shall be averred in the complaint that the plaintiff was a stockholder of the corporation at the time of the transaction of which he complains or that such stockholder's stock thereafter devolved upon such stockholder by operation of law

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• Complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort                                                                               
• Such action shall not be discontinued, compromised or settled, without the approval of the High Court of the Republic                                                                               
• Reasonable expenses including attorney's fees may be awarded if the action is successful                                                                           
• Corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of stock and the shares have a value of less than $50,000                                                                           

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TAX CONSIDERATIONS

The following is a discussion of the material Marshall Islands and United States federal income tax considerations relevant to an investment decision by a potential investor with respect to the common stock. This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities, banks, thrifts or other financial institutions, insurance companies, regulated investment companies, tax-exempt organizations, United States expatriates, persons that hold our common stock as part of a straddle, conversion transaction or hedge, persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code of 1986, or the Code, investors that are subject to the alternative minimum tax, investors whose functional currency is not the United States dollar and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be subject to special rules. This discussion deals only with holders who purchase common stock in connection with this offering and hold the common stock as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common stock.

Marshall Islands Tax Considerations

In the opinion of Watson, Farley & Williams (New York) LLP, the following are the material Marshall Islands tax consequences of our activities to us and stockholders of our common stock. We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our stockholders.

United States Federal Income Tax Considerations

In the opinion of Morgan, Lewis & Bockius LLP, our United States counsel, the following are the material United States federal income tax consequences to us of our activities and, subject to the limitations referred to above under "Tax Considerations," to holders of our common stock. In rendering this opinion Morgan, Lewis & Bockius LLP is relying upon representations that we have made to it regarding our organization, our historic, current and anticipated assets, income and activities and the ownership and trading of our shares. If any of such representations are incorrect, then the conclusions expressed herein may be adversely affected. Morgan, Lewis & Bockius LLP is rendering no opinion regarding the laws of Marshall Islands or Malta. The following discussion of United States federal income tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, all of which are subject to change, possibly with retroactive effect. The discussion below is based, in part, on the description of our business as described in "Business" above and assumes that we conduct our business as described in that section. Except as otherwise noted, this discussion is based on the assumption that we will not maintain an office or other fixed place of business within the United States. We have no current intention of maintaining such an office. References in this discussion to "we" and "us" are to StealthGas Inc. and its subsidiaries on a consolidated basis, unless the context otherwise requires.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: In General

Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as "shipping income," to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or

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ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as "United States-source shipping income."

Shipping income attributable to transportation that both begins and ends in the United States is generally considered to be 100% from sources within the United States. We do not expect to engage in transportation that produces income which is considered to be 100% from sources within the United States.

Shipping income attributable to transportation exclusively between non-United States ports is generally considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.

In the absence of exemption from tax under Section 883, our gross United States-source shipping income, unless determined to be effectively connected with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed without allowance for deductions as described below.

Exemption of Operating Income from United States Federal Income Taxation

Under Section 883 of the Code, we will be exempt from United States federal income taxation on our United States-source shipping income if:

(1)  we are organized in a foreign country (our "country of organization") that grants an "equivalent exemption" to corporations organized in the United States; and
(2)  either
(A)  more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test"; or
(B)  our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test."

Morgan, Lewis & Bockius LLP is rendering no opinion regarding the laws of Malta or the Marshall Islands. We believe, based on Revenue Ruling 2001-48, 2001-2 C.B. 324, and, in the case of the Marshall Islands, an exchange of notes between the United States and the Marshall Islands, 1990-2 C.B. 321, and, in the case of Malta, an exchange of notes between the United States and Malta, 1997-1 C.B. 314, (each an "Exchange of Notes") that the Marshall Islands and Malta, the jurisdictions in which we and our ship-owning subsidiaries are incorporated, grant an "equivalent exemption" to United States corporations. Based on advice received from Marshall Islands counsel, we believe that the Marshall Islands continues to honor the Exchange of Notes and that, since the date the Exchange of Notes was entered into, the tax law of the Marshall Islands has not changed so as to be inconsistent with the Exchange of Notes with the United States. Therefore, we believe that we will be exempt from United States federal income taxation with respect to our United States-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. Following this offering, it may be difficult to satisfy the 50% Ownership Test due to the widely-held ownership of our stock. Our ability to satisfy the Publicly-Traded Test is discussed below.

The Section 883 regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be "primarily traded" on an established securities market in a particular country if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Upon completion of our offering, we anticipate that our common stock, which will be the sole class of our issued and outstanding stock, will be "primarily traded" on the Nasdaq National Market.

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Under the regulations, our common stock will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on the market. We refer to this as the listing threshold. Since our common stock will be the sole class of stock listed on the Nasdaq National Market, we will satisfy the listing requirement.

It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of the stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. We believe we will satisfy the trading frequency and trading volume tests. Even if this were not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied if, as we expect to be the case with our common stock, such class of stock is traded on an established market in the United States and such stock is regularly quoted by dealers making a market in such stock.

Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of our stock will not be considered to be "regularly traded" on an established securities market for any taxable year in which 50% or more of such class of our outstanding shares of the stock is owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of our outstanding stock, which we refer to as the "5 Percent Override Rule."

For purposes of being able to determine the persons who own 5% or more of our stock, or "5% Stockholders," the regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the "SEC," as having a 5% or more beneficial interest in our common stock. The regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Stockholder for such purposes.

We anticipate that approximately 43.8% of our shares of common stock will be owned by our existing stockholder immediately following the offering. 5% Stockholders may, either immediately following the offering or at a later time, own 50% or more of our common stock. In such circumstances, we may be subject to the 5% Override Rule unless we can establish that among the shares included in the closely-held block of our shares of common stock are a sufficient number of shares of common stock that are owned or treated as owned by "qualified stockholders" that the shares of common stock included in such block that are not so treated could not constitute 50% or more of the shares of our common stock for more than half the number of days during the taxable year. In order to establish this, such qualified stockholders would have to comply with certain documentation and certification requirements designed to substantiate their identity as qualified stockholders. For these purposes, a "qualified stockholder" includes (i) an individual that owns or is treated as owning shares of our common stock and is a resident of a jurisdiction that provides an exemption that is equivalent to that provided by Section 883 of the Code and (ii) certain other persons. There can be no assurance that we will not be subject to the 5% Override Rule.

Our CEO, the sole stockholder of our existing stockholder, has entered into an agreement with us regarding his compliance, and the compliance by certain entities that he controls and through which he owns our shares, with the certification requirements designed to substantiate status as qualified stockholders. In certain circumstances, his compliance and the compliance of such entities he controls with the terms of that agreement may enable us and our subsidiaries to qualify for the benefits of Section 883 even where persons each of whom owns, either directly or under applicable attribution rules, 5% or more of our shares own, in the aggregate, more than 50% of our outstanding shares. There can be no assurance, however, that his compliance and the compliance of such entities he controls with the terms of that agreement will enable us or our subsidiaries to qualify for the benefits of Section 883.

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The entities that own the Identified Vessels that we are acquiring through stock acquisitions may not qualify for the benefits of Section 883 for 2005, with the result that United States federal tax, as described below, may apply if such vessels have made or make voyages in 2005 that begin or end in the United States. We do not believe that such vessels have made such a voyage, but do not in all circumstances control whether such a voyage will be made.

To the extent the benefits of Section 883 are unavailable, our United States-source shipping income, to the extent not considered to be "effectively connected" with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, we expect that no more than 50% of our shipping income would be treated as being derived from United States-sources, we expect that the maximum effective rate of United States federal income tax on our gross shipping income would never exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 exemption are unavailable and our United States-source shipping income is considered to be "effectively connected" with the conduct of a United States trade or business, as described below, any such "effectively connected" United States-source shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject to the 30% "branch profits" taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our United States trade or business.

Our United States-source shipping income, other than leasing income, will be considered "effectively connected" with the conduct of a United States trade or business only if:

•  we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
•  substantially all (at least 90%) of our United States-source shipping income, other than leasing income, is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not intend to have, or permit circumstances that would result in having, any vessel operating to the United States on a regularly scheduled basis.

Our United States-source shipping income from leasing will be considered "effectively connected" with the conduct of a United States trade or business only if:

•  we have, or are considered to have a fixed place of business in the United States that is involved in the meaning of such leasing income; and
•  substantially all (at least 90 percent) of our United States-source shipping income from leasing is attributable to such fixed place of business.

For these purposes, leasing income is treated as attributable to a fixed place of business where such place of business is a material factor in the realization of such income and such income is realized in the ordinary course of business carried on through such fixed place of business. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our United States-source shipping income will be "effectively connected" with the conduct of a United States trade or business.

United States Taxation of Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel will be so structured that it will be considered to occur outside of the United States.

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United States Federal Income Taxation of United States Holders

As used herein, the term "United States Holder" means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our common stock, the tax treatment of a partner 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 stock, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a United States Holder will generally 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 or accumulated earnings and profits, as determined under United States 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 United States Holder's tax basis in his common stock on a dollar for dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations 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 stock will generally be treated as "passive income" (or "passive category income" for taxable years beginning after December 31, 2006) or, in the case of certain types of United States Holders, "financial services income" (which will be treated as "general category income" income for taxable years beginning after December 31, 2006) for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a United States Holder who is an individual, trust or estate (a "United States Individual Holder") should be treated as "qualified dividend income" that is taxable to such United States Individual Holders at preferential tax rates (through 2008) provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the Nasdaq National Market); (2) we are not a passive foreign investment company, or 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); and (3) the United States Individual Holder owns the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend. Special rules may apply to any "extraordinary dividend". Generally, an extraordinary dividend is a dividend in an amount which is equal to or in excess of ten percent of a stockholder's adjusted basis (or fair market value in certain circumstances) in a share of common stock paid by us. If we pay an "extraordinary dividend" on our common stock that is treated as "qualified dividend income," then any loss derived by a United States Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a United States Individual Holder. Any dividends paid by us which are not eligible for these preferential rates will be taxed to a United States Individual Holder at the standard ordinary income rates. Legislation has recently been introduced in the United States Senate which, if enacted into law in its present form, would likely preclude, prospectively from the date of enactment, our dividends from being treated as "qualified dividend income" eligible for the preferential tax rates described above.

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a PFIC for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder's tax basis in such stock. Such gain

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or loss will be treated as long-term capital gain or loss if the United States 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 United States-source income or loss, as applicable, for United States foreign tax credit purposes. A United States Holder's ability to deduct capital losses is subject to certain limitations.

PFIC Status and Significant Tax Consequences

Special United States federal income tax rules apply to a United States Holder that holds stock in a foreign corporation classified as a PFIC for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a United States Holder if, for any taxable year in which such holder held our common stock, either:

•  at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or
•  at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income.

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25 percent of the value of the subsidiary's stock. Income earned, or deemed earned, by us in connection with the performance of services will not constitute passive income. By contrast, rental income will generally constitute "passive income" unless we are treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, and Morgan, Lewis & Bockius LLP is not providing an opinion on this issue, our belief 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 and voyage 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, should not constitute passive assets for purposes of determining whether we are a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing PFIC status, the Internal Revenue Service or a court could disagree with our position. In addition, although we currently 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.

Cash proceeds from the offering will be treated as an asset which produces passive income for purposes of determining whether we are a PFIC. Therefore, if we were unable to purchase assets which produce non-passive income with the proceeds of the offering in a timely fashion, then it is possible that we could be treated as a PFIC. However, we believe that we will be able to purchase sufficient assets which produce non-passive income with the proceeds of the offering in a fashion that will permit us to avoid being treated as a PFIC with respect to any taxable year.

Our expectation that we will not be treated as a PFIC is based in part upon our beliefs and expectations regarding the value of the vessels that we will lease on a bareboat basis relative to the value of our other assets. Should our beliefs or expectations turn out to be incorrect, then we could, in certain circumstances, be treated as a PFIC.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder would be subject to different taxation rules depending on whether the United States Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a

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"QEF election." As an alternative to making a QEF election, a United States Holder should be able to make a "mark-to-market" election with respect to our common stock, as discussed below.

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder we refer to as an "Electing Holder," the Electing Holder must report each year for United States 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 stock 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 stock 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 stock. A United States Holder would make a QEF election with respect to any year that our company is a PFIC by filing one copy of IRS Form 8621 with his United States federal income tax return and a second copy in accordance with the instructions to such form. If we were aware that we were to be treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary information in order to make the qualified electing fund election described above.

Taxation of United States 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 common stock is treated as "marketable stock," a United States Holder would be allowed to make a "mark-to-market" election with respect to our common stock, provided the United States Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such holder's adjusted tax basis in the common stock. The United States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States Holder's adjusted tax basis in the common stock over its fair market value 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 United States Holder's tax basis in his common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock 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 United States Holder.

Taxation of United States 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 United States 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:

•  the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;
•  the amount allocated to the current taxable year would be taxed as ordinary income; and
•  the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

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These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our common stock. If a Non-Electing Holder who is an individual dies before January 1, 2010 while owning our common stock, such holder's successor generally will not receive a step-up in tax basis with respect to such stock.

United States Federal Income Taxation of "Non-United States Holders"

A beneficial owner of common stock that is not a United States Holder and is not treated as a partnership for United States federal income tax purposes is referred to herein as a "Non-United States Holder."

Dividends on Common Stock

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-United States Holder's conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States.

Sale, Exchange or Other Disposition of Common Stock

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

•  the gain is effectively connected with the Non-United States Holder's conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States; or
•  the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-United States Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of United States Holders. In addition, in the case of a corporate Non-United States Holder, such holder's earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to a noncorporate United States holder will be subject to information reporting requirements and backup withholding tax if such holder:

•  fails to provide an accurate taxpayer identification number;
•  is notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or
•  in certain circumstances, fails to comply with applicable certification requirements.

Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.

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If a holder sells our common stock to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the holder certifies that it is a non-United States person, under penalties of perjury, or the holder otherwise establishes an exemption. If a holder sells our common stock through a non-United States office of a non-United States broker and the sales proceeds are paid outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if a holder sells our common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding tax is not an additional tax. Rather, a holder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed such stockholder's income tax liability by filing a refund claim with the Internal Revenue Service.

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OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

We estimate the expenses in connection with the issuance and distribution of our common stock in this offering, other than underwriting discounts and commissions, as follows:


SEC Registration Fee $ 16,676  
Printing and Engraving Expenses   250,000  
Legal Fees and Expenses   750,000  
Accountants' Fees and Expenses   450,000  
Nasdaq Entry Fee   100,000  
NASD Fee   2,176  
Blue Sky Fees and Expenses   20,000  
Transfer Agent's Fees and Expenses   7,500  
Miscellaneous Costs   153,648  
Total $ 1,750,000  

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UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement dated                  , 2005 among the underwriters and us, each of the underwriters named below has severally agreed to purchase, and we have agreed to sell to each named underwriter, the number of shares set forth opposite the name of each underwriter.


Underwriters Number of Shares
Cantor Fitzgerald & Co. (1)      
Morgan Keegan & Company, Inc. (2)      
Johnson Rice & Company, L.L.C. (3)      
Hibernia Southcoast Capital, Inc. (4)      
HARRISdirect, LLC (5)      
Total   7,700,000  
(1) 110 East 59th Street, New York, NY 10022
(2) 4400 Post Oak Parkway, Suite 2670, Houston, TX 77027
(3) 639 Loyola Avenue, Suite 2775, New Orleans, LA 70113
(4) 909 Poydras Street, Suite 100, New Orleans, LA 70112
(5) 10002 Harborside Financial Center, 501 Plaza II, Jersey City, NJ 07311

Over-Allotment Option

We have granted the underwriters a 30-day option to purchase up to an aggregate of 1,155,000 additional shares of our common stock at the public offering price set forth on the cover page of this prospectus less underwriting discounts and commissions. This option may be exercised at any time, and from time to time, to cover over-allotments, if any. To the extent that the option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase a number of additional shares proportionate to the underwriter's initial commitment as indicated in the preceding table, and we will be obligated, pursuant to the option, to sell these shares to the underwriters.

Commissions and Expenses

The underwriters have advised us that the underwriters propose to offer our common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, who may include the underwriters, at such offering price less a selling concession not in excess of $        per share. After this offering, the underwriters may change the public offering price and other offering terms.

The following table summarizes the underwriting discounts and commissions that we will pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option to purchase up to 1,155,000 additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay us for the shares.


  No Exercise Full Exercise
Per Share            
Total            

We estimate that the total expenses of this offering, excluding underwriting discounts and commissions paid by us, will be approximately $1.75 million.

Stabilization, Short Positions and Penalty Bids

The underwriters may engage in over-allotment, stabilizing transactions, syndicate covering transactions, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of our common stock, in accordance with Regulation M under the Exchange Act:

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•  Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any short position by either exercising their over-allotment option and/or purchasing shares in the open market;
•  Stabilizing transactions permit bids to purchase our common stock so long as the stabilizing bids do not exceed a specified maximum;
•  Syndicate covering transactions involve purchases of our common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, which is called a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase shares in this offering; and
•  Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time.

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 our common stock. In addition, neither we nor the underwriters make any representation that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Lock-Up Agreements

We have agreed that, without the prior written consent of Cantor Fitzgerald & Co., we will not, directly or indirectly, offer for sale, sell, pledge or otherwise dispose of or sell or grant options, rights or warrants with respect to, any of our common stock or securities convertible into or exchangeable for our common stock, for a period of 180 days from the date of this prospectus. Notwithstanding the foregoing, if (a) during the last 17 days of the 180-day period after the date of this prospectus, we issue an earnings release or publicly announce material news or if a material event relating to us occurs or (b) prior to the expiration of the 180-day period after the date of this prospectus, we announce that we will release earnings during the 16-day period beginning on the last day of the 180-day period, the above restrictions will 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, subject to a written waiver by Cantor Fitzgerald & Co.

Our executive officers, directors and our sole existing stockholder, a company controlled by our CEO, will enter into lock-up agreements under which they will agree not to, without the prior written consent of Cantor Fitzgerald & Co., directly or indirectly, offer for sale, sell, pledge or otherwise

107



dispose of any of our common stock or securities convertible into or exchangeable for our common stock for a period of 180 days from the date of this prospectus. These restrictions will remain in effect beyond the 180-day period under the same circumstances described in the immediately preceding paragraph.

Indemnification

We have agreed to indemnify the underwriters against liabilities relating to this offering, including certain liabilities under the Securities Act and liabilities arising from breaches of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these liabilities.

Public Offering Price

There has been no public market for our common stock prior to this offering. We and the underwriters will negotiate the initial offering price. In determining the price, we and the underwriters expect to consider a number of factors in addition to prevailing market conditions, including:

•  the information set forth in this prospectus and otherwise available to the underwriters;
•  the history and the prospects for the industry in which we compete;
•  the ability of our management;
•  our prospects for future earnings;
•  our current financial position;
•  the general condition of the securities markets at the time of this offering; and
•  the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies.

We and the underwriters will consider these and other relevant factors in relation to the price of similar securities of generally comparable companies. Neither we nor the underwriters can assure investors that an active trading market will develop for our common stock, or that our common stock will trade in the public market at or above the initial offering price.

Internet Distributions

A prospectus in electronic format may be made available on the web sites maintained by Harrisdirect, LLC, which is an underwriter participating in this offering. The representatives may agree to allocate a number of shares to underwriters and selling group members for the sale to their online brokerage account holders. Internet distributions will be allocated by Harrisdirect, LLC on the same basis as other allocations. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders.

LEGAL MATTERS

The validity of the common stock offered by this prospectus, the matter of enforcement of judgments in the Marshall Islands and Marshall Islands tax consequences will be passed upon for us by Watson, Farley & Williams (New York) LLP. United States legal matters related to this offering will be passed upon for us by Morgan, Lewis & Bockius LLP, New York, New York. The underwriters have been represented by Milbank, Tweed, Hadley & McCloy LLP, New York, New York.

108



EXPERTS

The consolidated financial statements of StealthGas Inc. as of December 31, 2004 and for the period from October 12, 2004 to December 31, 2004 and the financial statements of the Vafias Group of LPG Carriers as of December 31, 2004 and for the period from September 9, 2004 to December 31, 2004, included in this prospectus and registration statement, have been audited by Deloitte Hadjipavlou, Sofianos & Cambanis S.A., an independent registered public accounting firm, as stated in their respective reports thereon appearing herein, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

The section of this prospectus entitled "The International Gas Carrier Market" and the other information in this prospectus specifically attributed to Fearnleys has been prepared by Fearnleys, a shipping industry research organization. Fearnleys has confirmed to us that it accurately describes the international gas carrier market, subject to the availability and reliability of the data supporting the statistical and graphical information presented in that section, as indicated in Fearnleys' consent which was filed as an exhibit to the registration statement on Form F-1, of which this prospectus is a part.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Commission a registration statement on Form F-1 under the Securities Act with respect to the common stock offered hereby. For the purposes of this section, the term registration statement means the original registration statement and any and all amendments including the schedules and exhibits to the original registration statement or any amendment. This prospectus does not contain all of the information set forth in the registration statement we filed. Each statement made in this prospectus concerning a document filed as an exhibit to the registration statement is qualified by reference to that exhibit for a complete statement of its provisions. The registration statement, including its exhibits and schedules, may be inspected and copied at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates from the Public Reference Section of the Commission at its principal office at 100 F Street, N.E., Washington, D.C. 20549. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.

We will furnish holders of common stock with annual reports containing audited financial statements and a report by our independent registered public accounting firm, and intend to make available quarterly reports containing selected unaudited financial data for the first three quarters of each fiscal year. The audited financial statements will be prepared in accordance with United States generally accepted accounting principles and those reports will include a "Management's Discussion and Analysis of Financial Condition and Results of Operations" section for the relevant periods. As a "foreign private issuer," we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to stockholders, but, will be required to furnish those proxy statements to stockholders under Nasdaq National Market rules. Those proxy statements are not expected to conform to Schedule 14A of the proxy rules promulgated under the Exchange Act. In addition, as a "foreign private issuer," we will be exempt from the rules under the Exchange Act relating to short swing profit reporting and liability.

109



INDEX TO FINANCIAL STATEMENTS


  Page
Consolidated financial statements of StealthGas Inc.
Report of Independent Registered Public Accounting Firm   F-2  
Consolidated Balance Sheets – December 31, 2004 and June 30, 2005 (unaudited)   F-3  
Consolidated Statements of Income for the period from October 12, 2004 to
December 31, 2004 and six-month period ended June 30, 2005 (unaudited) 		  F-4  
Consolidated Statements of Cash Flows for the period from October 12, 2004 to
December 31, 2004 and six-month period ended June 30, 2005 (unaudited) 		  F-5  
Consolidated Statements of Changes in Stockholder's Equity for the period from
October 12, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) 		  F-6  
Notes to the Consolidated Financial Statements   F-7  
Unaudited pro forma condensed consolidated financial information of StealthGas Inc.
Pro forma condensed consolidated balance sheet   F-18  
Pro forma condensed consolidated statement of income for the six-month period
ended June 30, 2005 		  F-19  
Pro forma condensed consolidated statement of income for the period from
September 9, 2004 to December 31, 2004 		  F-20  
Combined Financial statements of the Vafias Group of LPG Carriers
Combined Report of Independent Registered Public Accounting Firm   F-21  
Combined Balance Sheets – December 31, 2004 and June 30, 2005 (unaudited)   F-22  
Combined Statements of Income for the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited)   F-23  
Combined Statements of Cash Flows for the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited)   F-24  
Combined Statements of Changes in Stockholder's Equity for the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited)   F-25  
Notes to the Combined Financial Statements   F-26  

F-1



Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder
of StealthGas Inc.

We have audited the accompanying consolidated balance sheet of StealthGas Inc. and subsidiaries (the "Company") as of December 31, 2004 and the related consolidated statements of income, stockholder's equity, and cash flows for the period from October 12, 2004 to December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included 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 financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of StealthGas Inc. and subsidiaries at December 31, 2004 and the results of their operations and their cash flows for the period from October 12, 2004 to December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
April 8, 2005, except for Note 11 as to which the date is August 26, 2005

Athens, Greece

F-2



StealthGas Inc.
Consolidated Balance Sheets
December 31, 2004 and June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  Historical
  Note December 31,
2004 		June 30,
2005 		Proforma (1)
      (unaudited) (unaudited)
Assets                        
Current assets                        
Cash and cash equivalents         —     21,217,077        
Receivables from related party   3     1,075,559     —        
Trade receivables, net         19,623     6,297        
Inventories   4     116,291     98,872        
Advances and prepayments         9,130     308,055        
Total current assets         1,220,603     21,630,301        
Non current assets                        
Advances for vessels acquisitions   5     1,905,282     —        
Vessels, net   6     29,385,182     80,840,220        
Deferred finance charges         —     151,258        
Total non current assets         31,290,464     80,991,478        
Total assets         32,511,067     102,621,779        
Liabilities and Stockholders' Equity                        
Current liabilities                        
Payable to related parties   3     —     589,416        
Trade accounts payable         410,398     557,676        
Other accrued liabilities   7     286,125     452,594        
Deferred income   8     476,413     1,002,591        

Current portion of long-term debt 		  9     —     5,427,000        
Total current liabilities         1,172,936     8,029,277        
Non current liabilities                        
Derivative liability   10     —     389,300        
Long-term debt   9     —     44,992,500        
Total liabilities         1,172,936     53,411,077        
Stockholders' equity                        
Common stock 6,000,000 shares authorized and outstanding with a par value of $.01   11     60,000     60,000     60,000  
Additional paid-in capital   12     31,018,456     44,841,528     44,841,528  
Retained earnings/(accumulated deficit)         259,675     4,309,174     (5,690,826 ) 
Total stockholders' equity         31,338,131     49,210,702     39,210,702  
Total liabilities and stockholders' equity         32,511,067     102,621,779     92,621,779  
(1) Gives effect to the payment to our sole stockholder, Flawless Management Inc., of a dividend of $10,000,000 on July 13, 2005.

The accompanying notes are an integral part of these consolidated financial statements.

F-3



StealthGas Inc.
Consolidated statements of income
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  Notes December 31,
2004 		June 30, 2005
      (unaudited)
Revenues                  
Voyage revenues         1,455,551     9,592,605  
Expenses                  
Voyage expenses   14     337,180     383,450  
Vessels' operating expenses   14     564,184     2,435,771  
Management fees   3     81,120     388,615  
General and administrative expenses   12     35,100     234,280  
Depreciation   6     174,086     1,334,219  
Total expenses         1,191,670     4,776,335  
Income from operations         263,881     4,816,270  
Other revenues and (expense)                  
Interest and finance costs, net         —     (562,157 ) 
Loss on derivative         —     (389,300 ) 
Interest income         46     189,233  
Foreign exchange loss         (4,252 )    (4,547 ) 
Other expenses, net         (4,206 )    (766,771 ) 
Net income         259,675     4,049,499  
Earnings per share, basic and diluted   13     0.04     0.67  
Weighted average number of shares, outstanding   13     6,000,000     6,000,000  
Pro Forma Earnings Per Share (unaudited) (1)               0.30  
Pro Forma Weighted Average Shares Outstanding (unaudited)               13,700,000  
(1) Pro forma earnings per share gives effect to our issuance of shares at an assumed offering price of $15.00 per share (representing the mid-point of the range set forth on the cover of this prospectus), reflecting that number of shares sufficient to fund the dividend to our sole stockholder existing immediately prior to this offering assuming the underwriters have not exercised their over-allotment option.

The accompanying notes are an integral part of these consolidated financial statements.

F-4



StealthGas Inc.
Consolidated statements of cash flows
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  Note December 31
2004 		June 30,
2005
      (unaudited)
Cash flows from operating activities                  
Net income for the period         259,675     4,049,499  
Items included in net income not affecting cash flows:                  
Depreciation and amortization         174,086     1,344,961  
Non cash general and administrative expenses   12     35,100     195,000  
Loss on derivative         —     389,300  
Changes in operating assets and liabilities:                  
(Increase) decrease in receivable from related party         (1,075,559 )    1,075,559  
(Increase) decrease in trade receivables         (19,623 )    13,326  
(Increase) decrease in inventories         (116,291 )    17,419  
(Increase) in advances and prepayments         (9,130 )    (298,925 ) 
Increase in payable to related parties         —     589,416  
Increase in trade accounts payable         410,398     147,278  
Increase in other accrued liabilities         286,125     166,469  
Increase in deferred income         476,413     526,178  
Net cash provided by operating activities         421,194     8,215,480  
Cash flows from investing activities                  
Advances for vessels acquisitions         (1,905,282 )    —  
Acquisition of vessels         (29,559,268 )    (50,883,975 ) 
Net cash used in investing activities         (31,464,550 )    (50,883,975 ) 
Cash flows from financing activities                  
Common stock         60,000     —  
Additional paid-in capital         30,983,356     13,628,072  
Deferred finance charges         —     (162,000 ) 
Loan repayment         —     (3,580,500 ) 
Proceeds from long-term debt         —     54,000,000  
Net cash provided by financing activities         31,043,356     63,885,572  
Net Increase in cash and cash equivalents         —     21,217,077  
Cash and cash equivalents at beginning of period         —     —  
Cash and cash equivalents at end of period         —     21,217,077  
Supplemental Cash Flow Information:                  
Cash paid during the period for:                  
Interest payments         —     428,150  

The accompanying notes are an integral part of these consolidated financial statements.

F-5



StealthGas Inc.
Consolidated statements of changes in stockholder's equity
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  Comprehensive
Income 		Common stock
Number of
Shares
(Note 11) 		Amount
(Note 11) 		Additional
Paid-in Capital
(Note 12) 		Retained
Earnings 		Total
Balance, October 12, 2004   —     —     —     —     —     —  
Common stock   —     6,000,000     60,000     —     —     60,000  
Additional Paid-in Capital   —     —     —     30,983,356     —     30,983,356  
Paid-in capital/contributed                                    
Services   —     —     —     35,100     —     35,100  
Net income for the period   259,675     —     —     —     259,675     259,675  
Comprehensive income   259,675     —     —     —     —     —  
Balance, December 31, 2004         6,000,000     60,000     31,018,456     259,675     31,338,131        
Additional Paid-in Capital
(unaudited) 		  —     —     —     13,628,072     —     13,628,072  
Paid-in capital/contributed
Services (unaudited) 		  —     —     —     195,000     —     195,000  
Net income for the period
(unaudited) 		  4,049,499     —     —     —     4,049,499     4,049,499  
Comprehensive income
(unaudited) 		  4,049,499     —     —     —     —     —  
Balance, June 30, 2005 (unaudited)         6,000,000     60,000     44,841,528     4,309,174     49,210,702  

The accompanying notes are an integral part of these consolidated financial statements.

F-6



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

1.    Basis of Presentation and General Information

The accompanying consolidated financial statements include the accounts of StealthGas Inc. and its wholly owned subsidiaries (collectively, the "Company") which, as of June 30,2005 owns a fleet of nine liquefied petroleum gas carriers providing worldwide marine transportation services under long, medium or short-term charters. StealthGas Inc. was formed under the laws of Marshall Islands on December 22, 2004. As of December 31, 2004, under the direction of Stealth Maritime Corporation S.A. the shareholders of the vessel owning companies contributed all of their issued and outstanding shares of common stock to StealthGas Inc. and StealthGas Inc. became the sole owner of all the outstanding shares of all the subsidiaries mentioned in note 1a. below. The transaction described above constitutes a reorganization of companies under common control, and has been accounted for in a manner similar to a pooling of interests, as each ship-owning company was, indirectly, wholly owned by and under the common control of the Vafias Group prior to the transfer of ownership of the companies to StealthGas Inc. Accordingly, the consolidated financial statements of the Company have been presented as if the ship-owning companies were consolidated subsidiaries of the Company as of the dates indicated and using the combined historical carrying costs of the assets and the liabilities of the ship-owning companies listed below:

(a)  Ship-owning companies with vessels in operation:

Name of Company Vessel Name Acquisition Date D.W.T.
VCM Trading Ltd. Gas Prophet October 12, 2004 2,999.28
LPGONE Ltd. Gas Tiny October 29, 2004 1,679.96
Geneve Butane Inc Gas Courchevel November 24, 2004 4,380.00
Matrix Gas Trading Ltd. Gas Shanghai December 07, 2004 3,044.64
Pacific Gases Ltd. Gas Emperor February 02, 2005 5,599.44
Semichlaus Exports Ltd. Gas Ice April 07, 2005 3,590.00
Ventspils Gases Ltd. Gas Arctic April 07, 2005 3,590.00
Industrial Materials Inc. Birgit Kosan April 11, 2005 5,589.76
Aracruz Trading Ltd. Gas Amazon May 20, 2005 5,105.00

At June 30, 2005, five of the above vessels were flying the Marshall Islands flag, two were flying the Malta flag, one the Panama flag and one the Cyprus flag.

(b)  Companies incorporated for vessels to be acquired:

Baroness Holdings Inc.
Stellar Management Limited
Iceland Limited
Fine Tuning Inc.
Northern Yield Shipping Limited
OxfordGas Ltd.
Ocean Blue Limited
Balcan Profit Limited

The Company's vessels are managed by Stealth Maritime Corporation S.A. - Liberia (the "Manager"), a related party. The Manager is a company incorporated in Liberia and registered in Greece on May 17, 1999 under the provisions of law 89/1967, 378/1968 and article 25 of law 27/75 as amended by the article 4 of law 2234/94. (See Note 3).

During 2004 and the second quarter of 2005, six charterers individually accounted for more than 10% of the Company's voyage revenues as follows:

F-7



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


Charterer Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
A   31 %    —  
B   19 %    —  
C   14 %    20 % 
D   12 %    —  
E   —     50 % 
F   —     10 % 

2.    Significant Accounting Policies

Principles of Consolidation:     The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") and include the accounts of the StealthGas Inc. and its wholly owned subsidiaries referred to in note 1a. above. All significant inter-company balances and transactions have been eliminated upon consolidation.

Interim Financial Information (Unaudited):     The interim financial statements for the six-month period ended June 30, 2005 have been prepared by the Company, without audit, and include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of interim period results. The results of operations for the six-month period ended June 30, 2005 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates:     The preparation of consolidated financial statements in conformity with US 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other Comprehensive Income:     The Company follows the provisions of Statement of Financial Accounting Standards 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.

Foreign Currency Translation:     The functional currency of the Company and each of its subsidiaries is the U.S. Dollar because the Company's vessels operate in international shipping markets, which utilize the U.S. Dollar as the functional currency. The accounting books 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 other currencies, are translated to reflect the current exchange rates. Resulting gains or losses are separately reflected in the accompanying consolidated statements of income.

Cash and Cash Equivalents:     The Company considers highly liquid investments such as time deposits and certificates of deposit with original maturity of three months or less to be cash equivalents.

Trade Receivables:     The amount shown as trade receivables includes estimated recoveries from charterers for hire, freight and demurrage billings, net of allowance for doubtful accounts. During 2004 and for the six-month period ended June 30, 2005, all potentially un-collectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts is required at December 31, 2004 and June 30, 2005.

F-8



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

Trade Accounts Payable:     The amount shown as trade accounts payable at the balance sheet date includes payables to suppliers of port services, bunkers, and other goods and services payable by the Company.

Segmented Reporting:     The Company has determined that it operates in one reportable segment, the sea transportation of liquefied gas.

Inventories:     Inventories consist of bunkers (for vessels under voyage charter) and lubricants. The cost is determined by the first-in, first-out method. The Company considers victualling and stores as being consumed and therefore no inventories are taken at the balance sheet date.

Vessels' Cost:     Vessels are stated at cost, which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements, acquisition and expenditures made to prepare the vessel for its initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, otherwise are charged to expenses as incurred.

Impairment of Long-lived Assets:     The Company adopts SFAS No.144 "Accounting for the Impairment or Disposal of Long-lived Assets" in 2004, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard 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 should be recognized when the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount. Measurement of the impairment loss is based on the fair value of the asset as provided by third parties. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company's vessels. As all the Company's vessels are recently acquired, management believes that no review for impairment loss is required at December 31, 2004 and June 30, 2005.

Vessels' Depreciation:     The cost of each of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful life, after considering the estimated residual value. Management estimates the useful life of each of the Company's vessels to be 30 years from the date of their construction.

Accounting for Special Survey and Dry-docking Costs:     Special survey and dry-docking costs and all non-capitalizable repair and maintenance expenses are expensed in the year incurred.

Financing Costs:     Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. (The amortization of financing costs amounted to $10,742 is included in Interest and finance costs, net in the accompanying consolidated income statements). Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing is made.

Pension and Retirement Benefit Obligations – Crew:     The ship-owning companies included in the consolidation employ the crew on board under short-term contracts (usually up to seven months) and accordingly, they are not liable for any pension or any post-retirement benefits.

Accounting for Revenue and Expenses:     Revenue and expenses resulting from each voyage or time charter are accounted for on an accrual basis. Time charter revenues are recognized over the term of the charter as service is provided. Time charter revenues received in advance are recorded as liabilities until charter service is rendered. Under a voyage charter, the revenues and associated voyage costs are recognized on a pro-rata basis over the duration of the voyage. Voyage costs comprise commissions, bunkers and port expenses. The impact of this method of recognizing voyage costs on a pro-rata basis is not materially different from a method of recognizing such costs as incurred.

F-9



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

The operating results of voyages in progress at a reporting date are estimated and recognized pro-rata on a per day basis. Probable losses on voyages are provided for in full at the time such losses can be estimated.

Vessel operating expenses comprise all expenses relating to the operation of the vessel, including crewing, repairs and maintenance, insurance, stores, lubricants and miscellaneous expenses. Vessel operating expenses are accounted for on an accrual basis.

Earnings per Share:     Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. The Company had no dilutive securities outstanding at December 31, 2004 and June 30, 2005.

Income Taxes:     The Company is not liable for any income tax on its net income derived from shipping operations because the countries in which the subsidiaries ship-owning companies are incorporated do net levy tax on income, but rather a tonnage tax on the vessel. (Note 15)

Derivatives:     The SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives' fair value recognized currently in earnings unless specific hedge accounting criteria are met. The Company had no derivatives as of December 31, 2004. At June 30, 2005, there was an interest rate swap outstanding with an approximate fair value of $389,300 (liability). Changes in the estimated fair value of that instrument are recognized in the statement of income.

Recent Accounting Pronouncements:     On January 17, 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). Such Interpretation addresses the consolidation of variable interest entities ("VIEs"), including special purpose entities ("SPEs"), that are not controlled through voting interests or in which the equity investors do not bear the residual economic risks and rewards. The provisions of FIN 46 were effective immediately for transactions entered into by the Company subsequent to January 31, 2003 and became effective for all other transactions as of July 1, 2003. However, in October 2003, the FASB permitted companies to defer the July 1, 2003 effective date to December 31, 2003, in whole or in part. On December 24, 2003, the FASB issued a complete replacement of FIN 46 ("FIN 46R"), which clarified certain complexities of FIN 46 and generally requires adoption no later than December 31, 2003 for entities that were considered SPEs under previous guidance, and no later than March 31, 2004 for all other entities. The adoption of FIN46R did not have a material impact on the Company's financial statements.

In December 2004, the FASB issued SFAS No. 123R that will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB 25. This Statement will be effective as of the beginning of the first annual reporting period that begins after June 15, 2005.

Entities that used the fair-value-based method for either recognition or disclosure under SFAS No. 123 will apply this revised Statement using a modified version of prospective application. Under this transition method, for the portion of outstanding awards for which the requisite service has not yet

F-10



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

been rendered, compensation cost is recognized on or after required effective date based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures.

For periods before the required effective date, those entities may elect to apply a modified version of the retrospective application under which financial statements for periods are adjusted on a basis consistent with the pro forma disclosures required for those periods by SFAS No. 123. The Company is currently evaluating the impact of adopting SFAS No. 123R.

3.    Transactions with Related Party

The Manager provides the vessels with a wide range of shipping services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services, for a fixed daily fee of $390 or $125 if the vessel is on bareboat charter and a brokerage commission of 1.25% on freight, hire and demurrage per vessel. For the period ended December 31, 2004, a total amount of $18,174 ($119,908 for the six-month period ended June 30, 2005 – unaudited) was included as voyage expenses and $81,120 ($388,615 for the six-month period ended June 30, 2005 – unaudited) as operating expenses.

The Manager also acts as a sales and purchase broker of the Company in exchange for a commission fee equal to 1% of the gross sale or purchase price of vessels. For the period ended December 31, 2004, an amount of $292,750 ($522,500 for the six-month period ended June 30, 2005 - unaudited) was capitalized to the cost of the vessels.

The Manager has subcontracted the technical management of the vessels to two unaffiliated ship-management companies, V.Ships Limited ("V.Ships") and Tesma Singapore Pte Ltd ("Tesma"). V.Ships and Tesma provide technical management to the Company's vessels for a fixed annual fee per vessel. Such fees for the period ended December 31, 2004, amounted to $53,988 ($238,407 for the six-month period ended June 30, 2005 - unaudited) and are included in the total management fee of $81,120 ($388,615 for the six-month period ended June 30, 2005 - unaudited).

The Manager maintained and handled the cash generated from the vessels' operations up to March 21, 2005. Subsequently, bank accounts were opened in the name of StealthGas Inc. for all the vessels owned. The current account balance with the Manager at December 31, 2004 was a receivable of $1,075,559 (a payable of $211,385 for the six-month period ended June 30, 2005 - unaudited) which represents revenues collected less payments made by the Manager on behalf of the ship-owning companies.

The Company has a balance payable of $378,031 at June 30, 2005 (unaudited) to Gaz de Brazil Inc., a company under common control. The Company has collected cash from time charter, on behalf of Gaz de Brazil Inc.

4.    Inventories

The amounts shown in the accompanying consolidated balance sheets are analyzed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Bunkers   52,073     —  
Lubricants   64,218     98,872  
Total   116,291     98,872  

F-11



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

5.    Advances for Vessels Acquisitions

The amount shown in the accompanying consolidated balance sheets, relating to advances for vessels acquisitions of $1,905,282 at December 31, 2004, was transferred to vessels in the period ended June 30, 2005 as the vessels were acquired.

6.    Vessels


  Vessel
Cost 		Accumulated
Depreciation 		Net Book
Value
Balance, opening   —     —     —  
Acquisitions   29,559,268     —     29,559,268  
Depreciation for the period   —     (174,086 )    (174,086 ) 
Balance, December 31, 2004   29,559,268     (174,086 )    29,385,182  
Acquisitions (unaudited)   52,789,257     —     52,789,257  
Depreciation for the period (unaudited)   —     (1,334,219 )    (1,334,219 ) 
Balance, June 30, 2005 (unaudited)   82,348,525     (1,508,305 )    80,840,220  

On October 12, 2004, the Company acquired the vessel Gas Prophet for a total cost of $8,486,549. Included in this amount are brokerage commissions of $ 84,000 and pre-delivery expenses of $86,549.

On October 29, 2004, the Company acquired the vessel Gas Tiny for a total cost of $1,310,488. Included in this amount are brokerage commissions of $12,250 and pre-delivery expenses of $85,488.

On November 24, 2004, the Company acquired the vessel Gas Courchevel for a total cost of $9,806,677. Included in this amount are brokerage commissions of $97,500 and pre-delivery expenses of $56,677.

On December 7, 2004, the Company acquired the vessel Gas Shanghai for a total cost of $9,955,554. Included in this amount are brokerage commissions of $99,000 and pre-delivery expenses of $55,554.

On February 2, 2005, the Company acquired the vessel Gas Emperor for a total cost of $11,529,927. Included in this amount are brokerage commissions of $115,000 and pre-delivery expenses of $29,927 (unaudited).

On April 7, 2005, the Company acquired the vessel Gas Ice for a total cost of $9,599,098. Included in this amount are brokerage commissions of $95,000 and pre-delivery expenses of $4,098 (unaudited).

On April 7, 2005, the Company acquired the vessel Gas Arctic for a total cost of $9,609,202. Included in this amount are brokerage commissions of $95,000 and pre-delivery expenses of $14,202(unaudited).

On April 11, 2005, the Company acquired the vessel Birgit Kosan for a total cost of $12,633,388. Included in this amount are brokerage commissions of $125,000 and pre-delivery expenses of $8,388 (unaudited).

On May 19, 2005, the Company acquired the vessel Gas Amazon for a total cost of $9,417,642. Included in this amount are brokerage commissions of $92,500 and pre-delivery expenses of $75,142 (unaudited).

F-12



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

7.    Accrued Liabilities

The amounts shown in the accompanying consolidated balance sheets are analyzed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Interest on long-term debt   —     98,712  
Lease expense   —     15,600  
Vessels' operating and voyage expenses   286,125     338,282  
Total   286,125     452,594  

8.    Deferred Income

The amounts shown in the accompanying consolidated balance sheets are analyzed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Voyage in progress   59,158     —  
Hire received in advance   417,255     1,002,591  
Total   476,413     1,002,591  

9.    Long-term Debt (unaudited)

In March 2005, the Company entered into a $54,000,000 loan agreement with Fortis Bank (the "Fortis Loan"). On June 10, 2005, an amount of $3,580,500 was repaid, leaving an outstanding balance of $50,419,500. The term loan can be drawn down in up to ten tranches subject to the vessel's delivery schedule on or before May 30, 2005 and is repayable in 32 equal consecutive quarterly installments from August 2005 through May 2013, of $1,356,750 plus a balloon payment of $7,003,500 payable together with the last installment. The term loan charges interest at LIBOR plus a margin and is secured by a first priority mortgage over the vessels involved plus the assignment of the vessels' insurances, earnings and the vessels' operating and retention accounts.

The term loan contains financial covenants requiring the Company to ensure that the aggregate market value of the mortgaged vessels at all times exceed 125% of the amount outstanding under the term loan, to maintain minimum cash balances of $3 million at all times, and that the leverage of the company should never exceed the level of 80%. There are also restrictions on the payment of dividends.

The amount outstanding at June 30, 2005 of $50,419,500 bore an average interest rate (including the margin) of 4.0547%.

Bank loan interest expense for the six-month period ended June 30, 2005 amounted to $526,862 and is included in Interest and finance costs, net in the accompanying consolidated statements of income.

F-13



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

The annual principal payments to be made after June 30, 2005 are as follows:


One year period ended June 30 Amount
2006   5,427,000  
2007   5,427,000  
2008   5,427,000  
2009   5,427,000  
2010   5,427,000  
Thereafter   23,284,500  
Total   50,419,500  

10.    Interest Rate Swap Agreement (unaudited)

On March 31, 2005, the Company entered into an agreement to enter into an interest rate swap on the term loan. The initial amount of the swap was $22,549,000 amortizing to $4,764,250 over its six-year life commencing May 30, 2007. If the United States dollar three month LIBOR is less than 7.5%, the fixed rate is 4.55%. If the United States dollar three month LIBOR is equal to or higher than 7.5%, then the fixed rate will be the United States dollar three month LIBOR. As of June 30, 2005, the estimated fair value of the instrument was $389,300 (liability).

11.    Common Stock

On August 26, 2005, the Company effected a 60,000-for-one stock split. All share and per share data give retroactive effect to the stock split. The holders of the shares are entitled to one vote on all matters submitted to a vote of stockholders and to receive all dividends, if any.

12.    Additional Paid-in Capital

The amount shown in the accompanying consolidated balance sheets, as additional paid-in capital, represents payments made by the stockholders for the acquisitions of the Company's vessels.

Included in paid-in capital is the value of executive management services provided through the management agreement with Stealth Maritime S.A. to the Company, as well as the value of the lease expense for the office space that are provided to the Company at no extra charge by Stealth Maritime S.A. The value of the above services is estimated at $35,100 for the period ended December 31, 2004 and $195,000 (excluding office space) for the six-month period ended June 30, 2005 (unaudited) and is recorded as general and administrative expenses in the accompanying consolidated statements of income and as a contribution to paid-in capital in the related accompanying statements of changes in stockholders' equity.

F-14



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

13.    Earnings per Common Share

Basic and diluted earnings per common share are computed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Income:            
Net income for the period available to common stockholders   259,675     4,049,499  
Basic earnings per share:            
Weighted average common shares – outstanding   6,000,000     6,000,000  
Diluted earnings per share:            
Weighted average common shares – diluted   6,000,000     6,000,000  
Basic earnings per share:   0.04     0.67  
Diluted earnings per share:   0.04     0.67  

14.    Voyage Expenses and Vessel Operating Expenses

The amounts in the accompanying consolidated statements of operations are analyzed as follows:


Voyage Expenses Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Port expenses   83,672     28,452  
Bunkers   182,650     15,998  
Commissions charged by third parties   49,684     217,546  
Commissions charged by related party   18,174     119,908  
Other voyage expenses   3,000     1,546  
Total   337,180     383,450  

Vessels' Operating Expenses Period ended
December 31, 2004 		Six-month period
ended June 30, 2005
(Unaudited)
Crew wages and related costs   326,222     1,406,617  
Insurance   39,728     192,517  
Repairs and maintenance   25,408     227,930  
Spares and consumable stores   139,218     443,283  
Miscellaneous expenses   33,608     165,424  
Total   564,184     2,435,771  

15.    Income Taxes

Under the laws of the countries of the companies' incorporation and/or vessels' registration, the 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 consolidated statement of income.

Pursuant to the Internal Revenue Code of the United States (the "Code"), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the Company operating the ships meets certain requirements. Among other things, in order to qualify for this exemption, the

F-15



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

Company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. All the Company's ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must be more than 50% owned by individuals who are residents, as defined, in the country of incorporation or another foreign country that grants an equivalent exemption to U.S. corporations. These companies also currently satisfy the more than 50% beneficial ownership requirement.

In addition, upon completion of the public offering of the Company's shares, the management of the Company believes that by virtue of a special rule applicable to situations where the ship-operating companies are beneficially owned by a publicly traded company like the Company, the more than 50% beneficial ownership requirement can also be satisfied based on the trading volume and the anticipated widely-held ownership of the Company's shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside the Company's control.

16.    Financial Instruments

The principal financial assets of the Company consist of accounts receivable due from charterers and related party. The principal financial liabilities of the Company consist of accounts payable due to suppliers, related party and the loan repayable to the bank. The recorded value of all of the Company's financial assets and liabilities approximate their fair value due to their short-term nature and the variable interest rate of the loan.

17.    Commitments and Contingencies

•  From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any current legal proceedings or claims.
•  In January 2005, the Company entered into a three-year cancelable operating lease for its office facilities that terminates in January 2008. Rental expense for the period January 3 through June 30, 2005 was $15,600. Future rental commitments were payable as follows:

  Amount
(Unaudited)
January 2006   31,200  
January 2007   31,200  
January 2008   31,200  
Total   93,600  
•  On June 20, 2005, the Company entered into memoranda of agreement with related parties, to acquire the Gas Cathar , the Gas Chios , the Gas Prodigy , the Sweet Dream , the Gas Eternity , the Gas Legacy , the Gas Crystal and the Gas Oracle for a total purchase price of $94.9 million. The purchase price for each of these vessels is due upon delivery of the vessels, which is expected to be prior to November 30, 2005.

F-16



StealthGas Inc.
Notes to the consolidated financial statements
For the period from October 12, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)

18.    Subsequent Events (Unaudited)

•  On July 04, 2005, the Company proposed and approved a dividend to its sole shareholder of $10 million which was paid on July 13, 2005.
•  On August 15 th 2005, the Company entered into an agreement with the related party to acquire the vessel Marathon for a purchase price of $15.0 million. The payment of the agreed price is due upon the delivery of the vessel which is expected to be no later than November 10 th 2005.
•  On August 26, 2005, the Company terminated the memoranda of agreement with respect to the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios and entered into stock purchase agreements with Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Ltd. and Continent Gas Inc., the owners of, respectively, the Gas Prodigy , the Gas Oracle , the Sweet Dream and the Gas Chios, for an aggregate purchase price of $39.5 million, the same aggregate purchase price that was to be paid under the terminated memoranda of agreements.

F-17



UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION OF STEALTHGAS INC.

As discussed further in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Lack of Historical Operating Data for Vessels before their Acquisition, the Gas Prodigy, Gas Oracle, Sweet Dream, and Gas Chios were acquired by Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Limited, and Continent Gas Inc., all affiliates of the Vafias Group, from unrelated parties on October 15, 2004, April 26, 2005, May 31, 2005, and May 20, 2005, respectively. Gaz de Brazil Inc., Independent Trader Ltd., Empire Spirit Limited, and Continent Gas Inc. (the "Vafias Group of LPG Carriers") will be acquired by the Company with a portion of the proceeds of the offering. The Company and the Vafias Group of LPG Carriers are entities that are commonly controlled by the Vafias Group. Due to these relationships and the common control therein, the acquisition of the Vafias Group of LPG Carriers by the Company, once consummated, will be accounted for as a combination of entities under common control in a manner similar to a pooling of interests. Such accounting will result in the retroactive restatement of the historical financial statements of the Company as if the Vafias Group of LPG Carriers were consolidated subsidiaries of the Company for all periods presented. This conclusion is based on the guidance in FASB Statement No. 141 "Business Combinations" and EITF 02-05 "Definition of Common Control' in Relation to FASB Statement No. 141."

The following unaudited pro forma condensed consolidated financial information has been prepared by our management and are based on the historical financial statements of (i) the Company and (ii) the Vafias Group of LPG Carriers., the owners of Gas Prodigy, Gas Oracle, Sweet Dream and Gas Chios . The unaudited pro forma condensed consolidated financial information gives retroactive effect to the acquisition of the Vafias Group of LPG Carriers by the Company, as if the Vafias Group of LPG Carriers were a consolidated subsidiaries of the Company for all periods presented.

The unaudited pro forma condensed consolidated financial information does not purport to represent what our results of operations or financial position will be for future periods.

The unaudited pro forma condensed consolidated financial information should be read together with the historical financial statements of StealthGas Inc. and combined historical financial statements of the Vafias Group of LPG Carriers and the related notes, each included elsewhere herein and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

F-18



StealthGas Inc.
Unaudited pro forma condensed consolidated balance sheet
As of June 30, 2005
(Expressed in United States Dollars)


  StealthGas Inc. Vafias Group of
LPG Carriers 		Elimination
Adjustments 		Pro Forma
Assets
Current assets
Cash and cash equivalents   21,217,077     368,636           21,585,713  
Short-term investments   —     168,811           168,811  
Receivables from related party   —     378,031     (378,031 )(1)    —  
Trade receivables, net   6,297     50,363           56,660  
Inventories   98,872     92,475           191,347  
Advances and prepayments   308,055     5,925           313,980  
Restricted cash   —     620,631           620,631  
Total current assets   21,630,301     1,684,872     (378,031 )    22,937,142  
Non current assets
Vessels, net   80,840,220     38,608,930           119,449,150  
Deferred finance charges   151,258     42,000           193,258  
Total non current assets   80,991,478     38,650,930           119,642,408  
Total assets   102,621,779     40,335,802     (378,031 )    142,579,550  
Liabilities and Stockholders' Equity
Current liabilities
Payable to related party   589,416     1,584,902     (378,031 )(1)    1,796,287  
Trade accounts payable   557,676     270,519           828,195  
Other accrued liabilities   452,594     340,564           793,158  
Fair value of acquired time charter   —     1,683,813           1,683,813  
Deferred income   1,002,591     67,234           1,069,825  
Current portion of long-term debt   5,427,000     1,100,000           6,527,000  
Total current liabilities   8,029,277     5,047,032     (378,031 )    12,698,278  
Non current liabilities
Derivative liability   389,300     —           389,300  
Long-term debt   44,992,500     12,900,000     —     57,892,500  
Total liabilities   53,411,077     17,947,032     (378,031 )    70,980,078  
Stockholders' equity
Common stock 6,000,000 shares authorized and outstanding with a par value of $.01   60,000     —           60,000  
Additional paid-in capital   44,841,528     21,707,600           66,549,128  
Retained earnings   4,309,174     681,170           4,990,344  
Total stockholders' equity   49,210,702     22,388,770           71,599,472  
Total liabilities and stockholders' equity   102,621,779     40,335,802     (378,031 )    142,579,550  
(1) To eliminate the related party receivable and payable for cash collected by the Company on behalf of Gaz de Brazil Inc., one of the companies in the Vafias Group of LPG Carriers.

F-19



StealthGas Inc.
Unaudited pro forma condensed consolidated statement of income
For the six-month period ended June 30, 2005
(Expressed in United States Dollars)


  StealthGas Inc. Vafias Group of
LPG Carriers 		Pro Forma
Revenues
Voyage revenues   9,592,605     2,104,374     11,696,979  
Expenses
Voyage expenses   383,450     101,281     484,731  
Vessels' operating expenses   2,435,771     834,709     3,270,480  
Dry-docking costs   —     229,491     229,491  
Management fees   388,615     116,585     505,200  
General and administrative expenses   234,280     —     234,280  
Depreciation   1,334,219     336,541     1,670,760  
Total expenses   4,776,335     1,618,607     6,394,942  
Income from operations   4,816,270     485,767     5,302,037  
Other revenues and (expense)
Interest and finance costs, net   (562,157 )    (76,070 )    (638,227 ) 
Loss on derivatives   (389,300 )    —     (389,300 ) 
Interest income   189,233     86     189,319  
Foreign exchange gain   (4,547 )    (146 )    (4,693 ) 
Other expenses, net   (766,771 )    (76,130 )    (842,901 ) 
Net income   4,049,499     409,637     4,459,136  
Earnings per share, basic and diluted   0.67     1,024.09     0.74  
Weighted average number of shares, outstanding   6,000,000     400     6,000,000  

F-20



StealthGas Inc.
Unaudited pro forma condensed consolidated statement of income
For the period ended December 31, 2004
(Expressed in United States Dollars)


  StealthGas Inc. Vafias Group of
LPG Carriers 		Pro Forma
Revenues
Voyage revenues   1,455,551     592,455     2,048,006  
Expenses
Voyage expenses   337,180     4,023     341,203  
Vessels' operating expenses   564,184     194,826     759,010  
Dry-docking costs   —     —     —  
Management fees   81,120     30,420     111,540  
General and administrative expenses   35,100     —     35,100  
Depreciation   174,086     90,372     264,458  
Total expenses   1,191,670     319,641     1,511,311  
Income from operations   263,881     272,814     536,695  
Other revenues and (expense)
Interest and finance costs, net   —     —     —  
Interest income   46     1     47  
Foreign exchange loss   (4,252 )    (1,282 )    (5,534 ) 
O ther expenses, net   (4,206 )    (1,281 )    (5,487 ) 
Net income   259,675     271,533     531,208  
Earnings per share, basic and diluted   0.04     2,715     0.09  
Weighted average number of shares, outstanding   6,000,000     100     6,000,000  

F-21



Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder
of the Vafias Group of LPG Carriers

We have audited the accompanying combined balance sheet of the Vafias Group of LPG Carriers as defined in Note 1 to the accompanying financial statements (the "Company") as of December 31, 2004 and the related combined statements of income, stockholder's equity, and cash flows for the period from September 9, 2004 through December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included 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 financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such combined financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2004 and the results of its operations and its cash flows for the period from September 9, 2004 to December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

April 8, 2005
Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
Athens, Greece

F-22



Vafias Group of LPG Carriers
Combined Balance Sheets
December 31, 2004 and June 30, 2005 (unaudited)
(Expressed in United States Dollars)


    December 31,
2004 		June 30,
2005
  Notes   (UNAUDITED)
Assets
Current assets
Cash and cash equivalents         —     368,636  
Short-term investment   3     —     168,811  
Trade receivables, net         —     50,363  
Receivable from related party   4     86,912     378,031  
Inventories   5     8,555     92,475  
Advances and prepayments         —     5,925  
Restricted cash         —     620,631  
Total current assets         95,467     1,684,872  
Non current assets
Vessel, net   6     8,010,836     38,608,930  
Deferred finance charges         —     42,000  
Total non current assets         8,010,836     38,650,930  
Total assets         8,106,303     40,335,802  
Liabilities and Stockholder's Equity
Current liabilities
Payable to related party   4     —     1,584,902  
Trade accounts payable         85,527     270,519  
Other accrued liabilities   7     74,694     340,564  
Fair value of acquired time charter   8     1,842,857     1,683,813  
Deferred income         58,000     67,234  
Short-term portion of long-term debt   9     —     1,100,000  
Total current liabilities         2,061,078     5,047,032  
Non current liabilities
Long-term debt   9     —     12,900,000  
Total liabilities         2,061,078     17,947,032  
Stockholder's equity
Common stock 400 shares authorized and outstanding without par value   10     —     —  
Additional paid-in capital   11     5,773,692     21,707,600  
Retained earnings         271,533     681,170  
Total stockholder's equity         6,045,225     22,388,770  
Total liabilities and stockholder's equity         8,106,303     40,335,802  

The accompanying notes are an integral part of these combined financial statements.

F-23



Vafias Group of LPG Carriers
Combined statements of income
For the period from September 9, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


    December 31,
2004 		June 30,
2005
  Notes   (UNAUDITED)
Revenues
Voyage revenues   8     592,455     2,104,374  
Expenses
Voyage expenses   12     4,023     101,281  
Vessel operating expenses   12     194,826     834,709  
Dry-docking costs         —     229,491  
Management fees         30,420     116,585  
Depreciation         90,372     336,541  
Total operating expenses         319,641     1,618,607  
Income from operations         272,814     485,767  
Other revenues and (expense)
Interest and finance costs         —     (76,070 ) 
Interest income         1     86  
Foreign exchange losses         (1,282 )    (146 ) 
Total other expenses, net         (1,281 )    (76,130 ) 
Net income         271,533     409,637  

The accompanying notes are an integral part of these combined financial statements.

F-24



Vafias Group of LPG Carriers
Combined statements of cash flows
For the period from September 9, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  December 31,
2004 		June 30,
2005
    (UNAUDITED)
Cash flows from operating activities
Net income for the period   271,533     409,637  
Items included in net income not affecting cash flows:
Depreciation   90,372     336,541  
Amortization of fair value of time charter   (307,143 )    (859,044 ) 
Changes in operating assets and liabilities:
Increase in receivable from related party   (86,912 )    (291,119 ) 
Increase in trade receivables   —     (50,363 ) 
Increase in inventories   (8,555 )    (83,920 ) 
Increase in advances and prepayments   —     (5,925 ) 
Increase in payable to related party   —     1,584,902  
Increase in trade accounts payable   85,527     184,992  
Increase in other accrued liabilities   74,694     265,870  
Increase in deferred income   58,000     9,234  
Net cash provided by operating activities   177,516     1,500,805  
Cash flows from investing activities
Short-term investment in time deposit   —     (168,811 ) 
Increase in cash retention account   —     (620,631 ) 
Acquisition of vessels   (5,951,208 )    (30,234,635 ) 
Net cash used in investing activities   (5,951,208 )    (31,024,077 ) 
Cash flows from financing activities
Additional paid-in capital   5,773,692     15,933,908  
Deferred finance charges   —     (42,000 ) 
Proceeds from long-term debt   —     14,000,000  
Net cash provided by financing activities   5,773,692     29,891,908  
Net increase in cash and cash equivalents   —     368,636  
Cash and cash equivalents at beginning of period   —     —  
Cash and cash equivalents at end of period   —     368,636  

The accompanying notes are an integral part of these combined financial statements.

F-25



Vafias Group of LPG Carriers
Combined statement of changes in stockholder's equity
For the period from September 9, 2004 to December 31, 2004 and
six-month period ended June 30, 2005 (unaudited)
(Expressed in United States Dollars)


  Common stock
  Comprehensive
Income 		Number of
Shares 		Amount Additional
Paid-in Capital 		Retained
Earnings 		Total
Balance, October 12, 2004   —     —     —     —     —     —  
Common stock   —     100     —     —     —     —  
Additional Paid-in Capital   —     —     —     5,773,692     —     5,773,692  
Net income for the period   271,533     —     —     —     271,533     271,533  
Comprehensive income   271,533     —     —     —     —     —  
Balance, December 31, 2004         100     —     5,773,692     271,533     6,045,225  
Common stock   —     300     —     —     —     —  
Additional paid in capital   —     —     —     15,933,908     —     15,933,908  
Net income for the period (unaudited)   409,637     —     —     —     409,637     409,637  
Comprehensive income (unaudited)   409,637     —     —     —     —     —  
Balance, June 30, 2005 (unaudited)         400     —     21,707,600     681,170     22,388,770  

The accompanying notes are an integral part of these combined financial statements.

F-26



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

1.    Basis of Presentation and General Information

The accompanying combined financial statements include the accounts of the ship-owning companies listed below (collectively the "Company"). The Company owns four liquefied petroleum gas carriers providing worldwide marine transportation services under long, medium or short-term charters. The accompanying combined financial statements were prepared based on the intention of StealthGas Inc, a company under common control with the Company, to acquire the vessels listed below.

One of the ship-owning companies is managed by Stealth Maritime Corporation S.A. – Liberia, while the other three ship-owning companies are managed by Brave Maritime Corporation Inc. – Marshall Islands (collectively the "Managers"). The Managers and the ship-owning companies are related parties through common ownership by the Vafias Group. Stealth Maritime Corporation S.A. – Liberia and Brave Maritime Corporation Inc. – Marshall Islands were incorporated in Liberia on March 12, 1999 and October 26, 1981 respectively and registered in Greece on May 17, 1999 and January 31, 1997 respectively under the provisions of Law 89/1967, 378/1968 and Article 25 of Law 27/75 as amended by the Article 4 of Law 2234/94. (See Note 4).

Companies with vessels in operation:


Name of
Company 		Vessel
Name 		Date of
Acquisition of
Vessel 		Date of
Delivery of
Vessel 		D.W.T. Flag
Gaz de Brazil Inc. Gas Prodigy Sep 9, 2004 Oct 15, 2004 4,200 Marshall Islands
Empire Spirit Ltd. Sweet
Dream 		March 4, 2005 May 31, 2005 3,800 Bahamas
Independent
Trader Ltd. 		Gas Oracle March 24, 2005 April 26, 2005 3,594 Marshall Islands
Continent Gas Inc. Gas Chios April 27, 2005 May 20, 2005 5,140 Panama

Operations commenced upon delivery of the vessels.

2.    Significant Accounting Policies

Basis of Presentation:     The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP").

Interim Financial Information (Unaudited):     The interim financial statements for the six-month period ended June 30, 2005 have been prepared by the Company, and include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of interim period results. The results of operations for the six-month period ended June 30, 2005 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates:     The preparation of financial statements in conformity with US 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other Comprehensive Income:     The Company follows the provisions of Statement of Financial Accounting Standards No. 130 "Statement of Comprehensive Income" (SFAS 130) which requires separate presentation of certain transactions, which are recorded directly as components of stockholder's equity. The Company has no other comprehensive income and, accordingly, comprehensive income equals net income for the periods presented.

Foreign Currency Translation:     The functional currency of the Company is the U.S. Dollar because the vessel operates in international shipping markets, which utilize the U.S. Dollar as the functional

F-27



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

2.    Significant Accounting Policies   (continued)

currency. The accounting books 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 other currencies, are translated to reflect the current exchange rates. Resulting gains or losses are separately reflected in the accompanying statements of income.

Cash and Cash Equivalents:     The Company considers highly liquid investments such as time deposits and certificates of deposit with original maturity of three months or less to be cash equivalents.

Restricted cash:     Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments.

Trade Receivables:     The amount shown as trade receivables includes estimated recoveries from charterers for hire, freight and demurrage billings, net of allowance for doubtful accounts. During 2004 and for the six-month period ended June 30, 2005, all potentially un-collectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts is required at December 31, 2004 and June 30, 2005.

Trade Accounts Payable:     The amount shown as trade accounts payable at the balance sheet date includes payables to suppliers for port services, bunkers, and other goods and services payable by the Company.

Segmented Reporting:     The Company has determined that it operates in one reportable segment, the sea transportation of liquefied gas.

Inventories:     Inventories consist of bunkers (for vessels under voyage charter) and lubricants. The cost is determined by the first-in, first-out method. The Company considers victualling and stores as being consumed and therefore no inventories are shown at the balance sheet date.

Impairment of Long-lived Assets:     The Company adopted SFAS No.144 "Accounting for the Impairment or Disposal of Long-lived Assets" in 2004, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard 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 should be recognized when the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount. Measurement of the impairment loss is based on the fair value of the asset as provided by third parties. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company's vessels. As the Company's vessels have been recently acquired, management believes that no review for impairment loss is required at December 31, 2004 and June 30, 2005.

Vessels' Depreciation:     The cost of the vessel is depreciated on a straight-line basis over the vessels' remaining economic useful life, after considering the estimated residual value. Management estimates the useful life of the vessel to be 30 years from the date of its construction.

Accounting for Special Survey and Dry-docking Costs:     Special survey and dry-docking costs and all non-capitalizable repair and maintenance expenses are expensed in the year incurred.

Financing Costs:     Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing is made.

F-28



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

2.    Significant Accounting Policies   (continued)

Pension and Retirement Benefit Obligations - Crew:     The ship-owning companies employ the crew on board under short-term contracts (usually up to seven months) and accordingly, they are not liable for any pension or any post-retirement benefits.

Accounting for Revenue and Expenses:     Revenue and expenses resulting from each voyage or time charter are accounted for on an accrual basis. Time charter revenues are recognized over the term of the charter as service is provided. Time charter revenues received in advance are recorded as liabilities until charter service is rendered. Under a voyage charter, the revenues and associated voyage costs are recognized on a pro-rata basis over the duration of the voyage. Voyage costs comprise commissions, bunkers and port expenses. The impact of this method of recognizing voyage costs on a pro-rata basis is not materially different from a method of recognizing such costs as incurred.

The operating results of voyages in progress at a reporting date are estimated and recognized pro-rata on a per day basis. Probable losses on voyages are provided for in full at the time such losses can be estimated.

Vessel operating expenses comprise all expenses relating to the operation of the vessel, including crewing, repairs and maintenance, insurance, stores, lubricants and miscellaneous expenses. Vessel operating expenses are accounted for on an accrual basis.

Earnings per Share:     Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. The Company had no dilutive securities outstanding at December 31, 2004 and June 30, 2005.

Income Taxes:     The Company is not liable for any income tax on its net income derived from shipping operations because the countries in which the subsidiaries ship-owning companies are incorporated do net levy tax on income, but rather a tonnage tax on the vessel. (Note 13)

Derivatives:     The SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives' fair value recognized currently in earnings unless specific hedge accounting criteria are met. The Company had no derivatives and did not engage in any hedging activities at December 31, 2004 and June 30, 2005.

Vessel Acquisitions:     Vessels are stated at cost, which consists of the contract price less discounts and any material expenses incurred upon acquisition (initial repairs, improvements, acquisition and expenditures made to prepare the vessel for its initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, otherwise are charged to expenses as incurred.

The Company records all identified tangible and intangible assets associated with the acquisition of a vessel or liabilities at fair value. Where vessels are acquired with existing time charters, the Company allocates the purchase price to the time charters based on the present value (using an interest rate which reflects the risks associated with the acquired charters) of the difference between (i) the contractual amounts to be paid pursuant to the charter terms and (ii) management's estimate of the fair market charter rate, measured over a period equal to the remaining term of the charter. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to voyage revenues over the remaining term of the charter.

F-29



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

2.    Significant Accounting Policies   (continued)

Recent Accounting Pronouncements:     On January 17, 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). Such Interpretation addresses the consolidation of variable interest entities ("VIEs"), including special purpose entities ("SPEs"), that are not controlled through voting interests or in which the equity investors do not bear the residual economic risks and rewards. The provisions of FIN 46 were effective immediately for transactions entered into by the Company subsequent to January 31, 2003 and became effective for all other transactions as of July 1, 2003. However, in October 2003, the FASB permitted companies to defer the July 1, 2003 effective date to December 31, 2003, in whole or in part. On December 24, 2003, the FASB issued a complete replacement of FIN 46 ("FIN 46R"), which clarified certain complexities of FIN 46 and generally requires adoption no later than December 31, 2003 for entities that were considered SPEs under previous guidance, and no later than March 31, 2004 for all other entities. The adoption of FIN46R did not have a material impact on the Company's financial statements.

In December 2004, the FASB issued SFAS No. 123R that will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB 25. This Statement will be effective as of the beginning of the first annual reporting period that begins after June 15, 2005.

Entities that used the fair-value-based method for either recognition or disclosure under SFAS No. 123 will apply this revised Statement using a modified version of prospective application. Under this transition method, for the portion of outstanding awards for which the requisite service has not yet been rendered, compensation cost is recognized on or after required effective date based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures.

For periods before the required effective date, those entities may elect to apply a modified version of the retrospective application under which financial statements for periods are adjusted on a basis consistent with the pro forma disclosures required for those periods by SFAS No. 123. The Company is currently evaluating the impact of adopting SFAS No. 123R.

3.    Short-term Investments

The amount relates to a time deposit with an interest rate of 3.35% that matures on December 1, 2005. The amount corresponds to the interest expense payable on the long-term loan on December 1, 2005.

4.    Transactions with Related Party

The Managers provides the Company with a wide range of shipping services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services. A fixed daily fee of $390 and $125 is charged to vessels on time charter and bareboat hire, respectively, and are included in Operating Expenses. The Managers charge a brokerage commission of 1.25% on freight, hire and demurrage per vessel. For the period ended December 31, 2004 a total amount of $3,566 ($23,081 for the six-month period ended June 30, 2005 (unaudited)) and is recorded in Voyage Expenses.

F-30



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

4.    Transactions with Related Party   (continued)

The Manager also acts as a sales and purchase broker of the Company in exchange for a commission fee equal to 1% of the gross sale or purchase price of vessels. For the period ended December 31, 2004, an amount of $57,750 ($298,500 for the period ended June 30, 2005 (unaudited)) was charged by the Managers and was capitalized to the cost of the vessel (see Note 6).

The Manager has subcontracted the technical management of the vessels to the unaffiliated ship-management companies V.Ships Limited (Cyprus), Tesma (Singapore) and Hanseatic Shipping Co. Ltd (Cyprus). These companies provide technical management to the Company's vessels for a fixed annual fee per vessel. Such fees for the period ended December 31, 2004, amounted to $21,311 ($74,389 for the six-month period ended June 30, 2005 (unaudited)) and are included in total Management Fees of $30,420 ($116,585 for the six-month period ended June 30, 2005 (unaudited)).

The account balance with the Managers at December 31, 2004 was a receivable of $86,912 (a payable of $1,584,902 at June 30, 2005 (unaudited)) which represents revenues collected less payments made by the Manager on behalf of the ship-owning company.

The Company has a balance receivable from related party of $378,031 at June 30, 2005 (unaudited) due from StealthGas Inc., a company under common control and the amount relates to cash collected from time charter, on behalf of the Company.

5.    Inventories

The amounts shown in the accompanying balance sheets are analyzed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30,
2005 (Unaudited)
Lubricants 8,555 92,475
Total 8,555 92,475

6.    Vessel

The amounts in the accompanying combined balance sheets are as follows:


  Vessel Cost Accumulated
Depreciation 		Net Book Value
Balance, opening — — —
Acquisition 8,101,208 — 8,101,208
Depreciation for the period — (90,372) (90,372)
Balance, December 31, 2004 8,101,208 (90,372) 8,010,836
Acquisition (unaudited) 30,934,635 — 30,934,635
Depreciation for the period (unaudited) — (336,541) (336,541)
Balance, June 30, 2005 (unaudited) 39,035,843 (426,913) 38,608,930

F-31



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

6.    Vessel   (continued)

Vessel cost can be analysed as follows:


Vessel Gas Prodigy Sweet Dream Gas Oracle Gas Chios Total
Purchase price 5,775,000 14,000,000 4,850,000 11,000,000 35,625,000
Brokerage fee 57,750 140,000 48,500 110,000 356,250
Pre-delivery expenses 118,458 2,903 45,326 46,737 213,424
Interest income earned on
10% deposit 		— (8,831) — — (8,831)
Fair value of acquired
time charter (Note 8) 		2,150,000 — 700,000 — 2,850,000
Total acquisition cost 8,101,208 14,134,072 5,643,826 11,156,737 39,035,843

7.    Accrued Liabilities

The amounts shown in the accompanying balance sheets are analyzed as follows:


  Period ended
December 31, 2004 		Six-month period
ended June 30,
2005 (Unaudited)
Vessel operating and voyage expenses 74,694 284,912
Accrued interest expense — 55,652
Total 74,694 340,564

8.    Fair value of acquired time charter

This represents the fair value of the time charters acquired at below fair market charter rates on the acquisition of the vessels Gas Prodigy of $2,150,000 and Gas Oracle of $700,000. This amount is amortized on a straight-line basis to the end of the charter term in March, 2006 and May 2006 respectively. The amounts of $307,143 and $859,044 are included in voyage revenue for the periods ended December 31, 2004 and June 30, 2005 (unaudited), respectively.

9.    Long-term Debt (unaudited)

On May 23, 2005, Empire Spirit Ltd. (the owner of Sweet Dream) and Independent Trader Ltd. (the owner of Gas Oracle) entered into a $14,000,000 loan agreement with Den Norske Bank. The total loan amount had been drawn down at June 30, 2005 since both vessels had been delivered. The loan is repayable in 20 equal consecutive semi-annual installments from December 1, 2005 through May 31, 2005 of $550,000 plus a balloon payment of $3,000,000 payable together with the last installment. The loan can be prepaid, without premium or penalty, at any time giving not less than five days prior written notice to the bank.

The term loan charges interest at LIBOR plus a margin and is secured by a first priority mortgage over the vessels involved plus the personal guarantee of the majority shareholder, the assignment of the vessels' insurances, earnings and the vessels' operating and retention accounts.

The term loan contains financial covenants requiring the Company to ensure that the aggregate market value of the mortgaged vessels at all times exceed 125% of the amount outstanding under the term loan.

Accrued bank loan expenses at June 30, 2005 amount to $55,653 and has been calculated using an estimated average interest rate of 4.53% and is included in Interest and Finance Costs, net in the accompanying consolidated statements of income. The actual interest rate at June 30, 2005 (LIBOR plus 1% margin) was 4.71%.

F-32



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

9.    Long-term Debt (unaudited)   (continued)

The annual principal payments to be made after June 30, 2005 are as follows:


One year period ended June 30 Amount
2006 1,100,000
2007 1,100,000
2008 1,100,000
2009 1,100,000
2010 1,100,000
Thereafter 8,500,000
  14,000,000
Current portion of long term loan (1,100,000)
Total 12,900,000

10.    Share Capital

The common stock of the Company represents 400 authorized and outstanding shares with no par value. The holders of the shares are entitled to one vote on all matters submitted to a vote of stockholder's and to receive all dividends, if any.

11.    Additional Paid-in Capital

The amount shown in the accompanying consolidated balance sheets, as additional paid-in capital, represents payments made by the stockholders for the acquisition of the Company's vessel.

12.    Voyage Expenses and Vessel Operating Expenses

The amounts in the accompanying statements of operations are as analyzed as follows:


Voyage Expenses Period ended
December 31, 2004 		Six-month period
ended June 30,
2005 (Unaudited)
Port expenses — 18,498
Bunkers 457 59,702
Commissions charged by related party 3,566 23,081
Total 4,023 101,281

Vessel Operating Expenses Period ended
December 31, 2004 		Six-month period
ended June 30,
2005 (Unaudited)
Crew wages and related costs 100,578 433,384
Insurance 14,717 55,455
Repairs and maintenance 9,483 115,353
Spares and consumable stores 57,186 106,106
Miscellaneous expenses 12,862 124,411
Total 194,826 834,709

13.    Income Taxes

Under the laws of the countries of the ship-owning companies' incorporation and/or vessels' registration, the Company is not subject to tax on international shipping income, however, they are

F-33



Vafias Group of LPG Carriers
Notes to the combined financial statements
For the period from September 9, 2004 to December 31, 2004 and six-month period ended June 30, 2005 (unaudited) (Expressed in United States Dollars)

13.    Income Taxes   (continued)

subject to registration and tonnage taxes, which have been included in vessel operating expenses in the accompanying statement of income.

Pursuant to the Internal Revenue Code of the United States (the "Code"), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the Company operating the ships meets certain requirements. Among other things, in order to qualify for this exemption, the Company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. The Company satisfies these initial criteria. In addition, the Company must be more than 50% owned by individuals who are residents, as defined, in the country of incorporation or another foreign country that grants an equivalent exemption to U.S. corporations. The Company also currently satisfies the more than 50% beneficial ownership requirement.

In addition, upon completion of the public offering of the Company's shares, the management of the Company believes that by virtue of a special rule applicable to situations where the ship-operating company is beneficially owned by a publicly traded company like the Company, the more than 50% beneficial ownership requirement can also be satisfied based on the trading volume and the anticipated widely-held ownership of the Company's shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside the Company's control.

14.    Financial Instruments

The principal financial assets of the Company consist of accounts receivable due from charterer and related party. The principal financial liabilities of the Company consist of accounts payable due to suppliers and related party. The recorded value of all of the Company's financial assets and liabilities approximate their fair value due to their short-term nature.

15.    Commitments and Contingencies

From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any current legal proceedings or claims.

F-34



    



Through and including                     , 2005, which is the 25 th day after the date of this prospectus, all dealers effecting transactions in the common stock, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments.

StealthGas Inc.

7,700,000 Shares

Common Stock

Cantor Fitzgerald & Co.

Morgan Keegan & Company, Inc.

Johnson Rice & Company

Hibernia Southcoast Capital

HARRIS direct

                    , 2005



PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6.    Indemnification of Directors and Officers.

The Bylaws of the Registrant provide that every director and officer of the Registrant shall be indemnified out of the funds of the Registrant against:

(1)  all civil liabilities, loss, damage or expense (including but not limited to liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him as such director or officer acting in the reasonable belief that he has been so appointed or elected notwithstanding any defect in such appointment or election, provided always that such indemnity shall not extend to any matter which would render it void pursuant to any Marshall Islands statute from time to time in force concerning companies insofar as the same applies to the Registrant; and
(2)  all liabilities incurred by him as such director or officer in defending any proceedings, whether civil or criminal, in which judgment is given in his favor, or in which he is acquitted, or in connection with any application under any Marshall Islands statute from time to time in force concerning companies in which relief from liability is granted to him by the court.

Section 60 of the Associations Law of the Republic of the Marshall Islands provides as follows:

Indemnification of directors and officers.

(1)  Actions not by or in right of the corporation.     A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had reasonable cause to believe that his conduct was unlawful.
(2)  Actions by or in right of the corporation.     A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not, opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claims, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

II-1



(3)  When director or officer successful.     To the extent that director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (1) or (2) of this section, or in the defense of a claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
(4)  Payment of expenses in advance.     Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section.
(5)  Indemnification pursuant to other rights .    The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.
(6)  Continuation of indemnification.     The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(7)  Insurance.     A corporation shall have power to purchase and maintain insurance or behalf of any person who is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer against any liability asserted against him and incurred by him in such capacity whether or not the corporation would have the power to indemnify him against such liability under the provisions of this section.

Item 7.    Recent Sales of Unregistered Securities.

Not applicable.

Item 8.    Exhibits and Financial Statement Schedules.

(a)  Exhibits

Exhibit
Number 		Description
1 Form of Underwriting Agreement
3.1 Form of Amended and Restated Articles of Incorporation of the Company
3.2 Form of Amended and Restated Bylaws of the Company
4.1 Form of Stock Certificate
5.1 Opinion of Watson, Farley & Williams (New York) LLP, Marshall Islands counsel to the Company, as to the validity of the Common Stock
8.1 Form of tax opinion of Watson, Farley & Williams (New York) LLP
8.2 Form of tax opinion of Morgan, Lewis & Bockius LLP
10.1 Amended and Restated Management Agreement between the Company and Stealth Maritime S.A.
10.2 Form of Right of First Refusal Agreement among the Company, Harry Vafias and Stealth Maritime S.A.

II-2




Exhibit
Number 		Description
10.3 Form of Equity Compensation Plan
10.4 Form of Memorandum of Agreement for the following Identified Vessels: the Gas Eternity , the Gas Cathar , the Gas Crystal and the Gas Legacy
10.5 Memorandum of Agreement for the Marathon
10.6 Form of Stock Purchase Agreement with respect to acquisition of the owners of the Gas Prodigy , the Gas Oracle , the Sweet Dreams and the Gas Chios .
10.7 Loan Agreement with Fortis Bank (Nederland) N.V. and Deed of Release of Security and Obligations
21 Subsidiaries of the Company
23.1 Consent of Watson, Farley & Williams (New York) LLP (filed as part of Exhibit 5.1)
23.2 Consent of Morgan, Lewis & Bockius LLP (filed as part of Exhibit 8.2)
23.3 Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
23.4 Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
23.5 Consent of Fearnley Consultants A/S
24 Powers of Attorney (included on signature page hereto).

Item 9.    Undertakings.

The undersigned registrant hereby undertakes:

(1)  To provide to the underwriters at the closing specified in the underwriting agreement shares certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
(2)  That for purposes of determining any liability under the Securities Act of 1933, as amended (the "Act"), the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(3)  That for purposes of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(4)  That insofar as indemnification for liabilities arising under the Act 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 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 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 Act and will be governed by the final adjudication of such issue.

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-l and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Athens, Country of Greece on August 26, 2005.


  STEALTHGAS INC.
  By: /s/ Harry N. Vafias
    Name: Harry N. Vafias
    Title: Chief Executive Officer and President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Harry N. Vafias and Andrew J. Simmons, his true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and 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 for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on August 26, 2005 in the capacities indicated.

Signature Title
/s/ Harry N. Vafias Director, President and Chief Executive Officer
(Principal Executive Officer)
Harry N. Vafias
/s/ Andrew J. Simmons Chief Financial Officer
(Principal Accounting Officer)
Andrew J. Simmons
/s/ Michael G. Jolliffe Chairman of the Board of Directors
Michael G. Jolliffe
/s/ Thanassis J. Martinos Director
Thanassis J. Martinos
/s/ Miranda Xafa Director
Miranda Xafa


Authorized Representative

Pursuant to the requirement of the Securities Act of 1933, the undersigned, the duly undersigned representative in the United States of, has signed this Registration Statement in the City of Newark, State of Delaware, on August 26, 2005.


PUGLISI & ASSOCIATES
By: /s/ Donald J. Puglisi  
  Name:  Donald J. Puglisi
  Authorized Representative in the United States


EXHIBIT INDEX


Exhibit
Number 		Description
  1   Form of Underwriting Agreement
  3.1   Form of Amended and Restated Articles of Incorporation of the Company
  3.2   Form of Amended and Restated Bylaws of the Company
  4.1   Form of Stock Certificate
  5.1   Opinion of Watson, Farley & Williams (New York) LLP, Marshall Islands counsel to the Company, as to the validity of the Common Stock
  8.1   Form of tax opinion of Watson, Farley & Williams (New York) LLP
  8.2   Form of tax opinion of Morgan, Lewis & Bockius LLP
  10.1   Amended and Restated Management Agreement between the Company and Stealth Maritime S.A.
  10.2   Form of Right of First Refusal Agreement among the Company, Harry Vafias and Stealth Maritime S.A.
  10.3   Form of Equity Compensation Plan
  10.4   Form of Memorandum of Agreement for the following Identified Vessels: the Gas Eternity , the Gas Cathar , the Gas Crystal and the Gas Legacy
  10.5   Memorandum of Agreement for the Gas Marathon
  10.6   Form of Stock Purchase Agreement with respect to acquisition of the owners of the Gas Prodigy , the Gas Oracle , the Sweet Dreams and the Gas Chios .
  10.7   Loan Agreement with Fortis Bank (Nederland) N.V. and Deed of Release of Security and Obligations
  21   Subsidiaries of the Company
  23.1   Consent of Watson, Farley & Williams (New York) LLP (filed as part of Exhibit 5.1)
  23.2   Consent of Morgan, Lewis & Bockius LLP (filed as part of Exhibit 8.2)
  23.3   Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
  23.4   Consent of Deloitte Hadjipavlou, Sofianos & Cambanis S.A.
  23.5   Consent of Fearnley Consultants A/S
  24   Powers of Attorney (included on signature page hereto). 





                                 STEALTHGAS INC.

                              [7,700,000] SHARES(1)

                                  COMMON STOCK

                             Underwriting Agreement


September [o], 2005

Cantor Fitzgerald & Co.
110 East 59th Street
New York, New York  10022

Morgan Keegan & Company, Inc.
4400 Post Oak Parkway, Suite 2670
Houston, TX 77027

Johnson Rice & Company L.L.C.
639 Loyola Avenue, Suite 2775
New Orleans, Louisiana  70113

Hibernia Southcoast Capital, Inc.
909 Poydras Street, Suite 100
New Orleans, Louisiana  70112

Harrisdirect, LLC
10002 Harborside
501 Financial Center, Plaza II
Jersey City, NJ 07311

As representatives of the several Underwriters listed in Schedule I hereto



c/o      Cantor Fitzgerald & Co.
         110 East 59th Street
         New York, New York  10022



Ladies and Gentlemen:

-----------------------
(1)  Plus an option to purchase from the Company up to an aggregate of [o]
     Option Shares to cover over-allotments.



     StealthGas Inc., a Marshall Islands company (the "COMPANY"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS") an aggregate of [7,700,000] shares of common stock, par value
$.01 per share (the "COMMON STOCK"), of the Company (the "UNDERWRITTEN SHARES")
and, for the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, at the option of the Underwriters, the Company
has also agreed to sell up to an aggregate of [1,155,000] shares of Common Stock
of the Company (the "OPTION SHARES"). The Underwritten Shares and the Option
Shares are herein referred to as the "SHARES". The Shares of Common Stock of the
Company to be outstanding after giving effect to the sale of the Shares are
herein referred to as the "STOCK".

     The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement (Registration No. 333-[o]), including a prospectus, relating to the
Shares. The registration statement, as amended at the time when it shall become
effective including information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is referred to in this Agreement as the "REGISTRATION
STATEMENT," and the prospectus in the form first used to confirm sales of the
Shares is referred to in this Agreement as the "PROSPECTUS." If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Securities Act, then any reference herein to
the term "Registration Statement" shall be deemed to include such Rule 462
registration statement.

         Section 1. Purchase of the Shares. The Company hereby agrees with the
Underwriters as follows:

               (a) The Company agrees to issue and sell the Underwritten Shares
to the several Underwriters as hereinafter provided, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase from the Company the
respective number of Underwritten Shares set forth opposite such Underwriter's
name in Schedule I hereto at a purchase price per share (the "PURCHASE PRICE")
of $[o].

     In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as hereinafter provided, and the Underwriters on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase from the
Company up to the respective number of Option Shares set forth opposite their
names on Schedule I, aggregating [o], at the Purchase Price, for the sole
purpose of covering over-allotments (if any) in the sale of Underwritten Shares
by the several Underwriters.

     If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule I hereto

                                       -2-


(or such number increased as set forth in Section 7 hereof) bears to the
aggregate number of Underwritten Shares being purchased from the Company by the
several Underwriters, subject, however, to such adjustments to eliminate any
fractional Shares as the Underwriters in their sole discretion shall make.

     The Underwriters may exercise the option to purchase the Option Shares at
any time and from time to time on or before the thirtieth day following the date
of this Agreement, by written notice from the Underwriters to the Company. Such
notice shall set forth the aggregate number of Option Shares as to which the
option is being exercised and the date and time when the Option Shares are to be
delivered and paid for, which may be the same date and time as the Closing Date
(as hereinafter defined) but shall not be earlier than the Closing Date nor
later than the tenth full Business Day (as hereinafter defined) after the date
of such notice (unless such time and date are postponed in accordance with the
provisions of Section 7 hereof). Any such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein.

               (b) The Company understands that the Underwriters intend (i) to
make a public offering of the Shares as soon after (A) the Registration
Statement has become effective and (B) the parties hereto have executed and
delivered this Agreement, as in the judgment of the Underwriters is advisable
and (ii) initially to offer the Shares upon the terms set forth in the
Prospectus.

               (c) Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Underwriters, in the case of the Underwritten Shares, on September [o], 2005, or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Underwriters and the Company may agree upon in
writing or, in the case of the Option Shares, on the date and time specified by
the Underwriters in the written notice of the Underwriters' election to purchase
such Option Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the "CLOSING Date" and the time and date for
such payment for the Option Shares, if other than the Closing Date, is herein
referred to as the "ADDITIONAL CLOSING DATE." As used herein, the term "BUSINESS
DAY" means any day other than a day on which banks are permitted or required to
be closed in New York City.


                                      -3-


     Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Underwriters for the respective accounts of the several Underwriters of the
Shares to be purchased on such date registered in such names and in such
denominations as the Underwriters shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection by the Underwriters at the
office of Cantor Fitzgerald & Co. set forth above not later than 1:00 P.M., New
York City time, on the Business Day prior to the Closing Date or the Additional
Closing Date, as the case may be.

         Section 2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:

               (a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement, as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act, and did
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,
in the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information relating
to any Underwriter furnished to the Company in writing by such Underwriter
expressly for use therein;

               (b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) comply, or will comply at the time of the applicable effective date in
the case of the Registration Statement or the filing date in the case of the
Prospectus, as the case may be, in all material respects with the Securities
Act; and the Registration Statement does not and will not, as of the applicable
effective date of the Registration Statement and any amendment thereto, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, as amended or supplemented, if applicable, at
the Closing Date or Additional Closing Date, as the case may be, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing
representations and warranties shall not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing
by such Underwriter expressly for use therein;

                                      -4-


               (c) the financial statements, and the related notes and
supporting schedules, included in the Registration Statement and the Prospectus
present fairly, on a consolidated basis, the financial position of the Company
and its consolidated Subsidiaries (as hereinafter defined) as of the dates
indicated and the results of their operations, cash flows and changes in
stockholders' equity for the periods specified; and those financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein; and (ii) there are no material off-balance sheet
arrangements (as defined in Regulation S-K Item 303(a)(4)(ii)) that may have a
material current or future effect on the Company's financial condition, results
of operations, liquidity, capital expenditures or capital resources;

               (d) since the respective dates as of which information is given
in the Registration Statement and the Prospectus (exclusive of any amendment or
supplement thereto), there has not been any change in the capital stock or
long-term debt of the Company or any of its Subsidiaries, or any material
change, or any development involving a prospective material change, in or
affecting the general affairs, business, prospects, management, consolidated
financial position, stockholders' equity or results of operations of the Company
and its Subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus (exclusive of any amendment or supplement
thereto); and except as set forth or contemplated in the Prospectus (exclusive
of any amendment or supplement thereto), neither the Company nor any of its
Subsidiaries has entered into any transaction or agreement (whether or not in
the ordinary course of business) material to the Company and its Subsidiaries
taken as a whole;

               (e) the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the Republic of the Marshall
Islands, with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than those jurisdictions where the failure to be so
qualified or in good standing would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole;

               (f) each of the Company's Subsidiaries has been duly organized
and is validly existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification, other
than where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole;
and all the outstanding shares of capital stock of each Subsidiary of the
Company have been duly authorized and validly issued, are fully-paid and
non-

                                      -5-


assessable, and are owned by the Company, directly or indirectly, free and clear
of all liens, encumbrances, security interests and claims;

               (g) all of the vessels described in the Prospectus as being owned
by the Company or any of its Subsidiaries are owned directly by Subsidiaries of
the Company; other than its Subsidiaries, the Company does not hold any equity
interest in any other Person;

               (h) this Agreement has been duly authorized, executed and
delivered by the Company;

               (i) (i) each of (x) the management agreement dated [?], 2005
between the Company and Stealth Maritime Corporation S.A. (the "MANAGEMENT
AGREEMENT") and (y) the agreements set forth in Schedule II of this Agreement
(the "MOAS") to purchase the Identified Vessels (as defined in the Prospectus)
has been duly authorized, executed and delivered by the respective parties
thereto, and is a valid and binding agreement of each such party enforceable
against each such party in accordance with its terms; and (ii) each of the
Management Agreement and the MOAs conforms in all material respects to the
description thereof in the Prospectus;

               (j) the Company has an authorized capitalization as set forth in
the Prospectus and its authorized capital stock conforms as to legal matters to
the description thereof set forth in the Prospectus, and all of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable and are not subject to any pre-emptive
or similar rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interests
in the Company or in any of its Subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the issuance of
any capital stock of the Company or any such Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options and there are no
restrictions on subsequent transfers of the Shares under the laws of the
Republic of the Marshall Islands or of Greece;

               (k) the Shares to be issued and sold by the Company hereunder
have been duly authorized and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be duly and
validly issued and will be fully paid and non-assessable with no personal
liability attaching to the ownership thereof and will conform to the
descriptions thereof in the Prospectus; and the issuance of the Shares is not
subject to any preemptive or other comparable rights;

               (l) all material consents, approvals, authorizations, orders,
licenses, registrations, clearances and qualifications of or with any court or
governmental agency or body or any stock exchange authorities or self-regulatory
organizations having

                                      -6-


jurisdiction over the Company or any of its Subsidiaries or any of its or their
properties required for the execution and delivery by the Company of this
Agreement to be duly and validly authorized and for the issuance and sale of the
Shares have been obtained or made and are in full force and effect;

               (m) all dividends and other distributions declared and payable on
the shares of capital stock of the Company may under the current laws and
regulations of the Republic of the Marshall Islands and Greece be paid in United
States dollars and may be freely transferred out of the Marshall Islands or
Greece, and all such dividends and other distributions are not subject to
withholding or other taxes under the current laws and regulations of the
Republic of the Marshall Islands or Greece and are otherwise free and clear of
any other tax, withholding or deduction in, and without the necessity of
obtaining any consents, approvals, authorizations, orders, licenses,
registrations, clearances and qualifications of or with any court or
governmental agency or body or any stock exchange authorities in, the Republic
of the Marshall Islands or Greece;

               (n) (i) neither the Company nor any of its Subsidiaries (x) is in
violation of its respective Articles of Incorporation or By-laws (or similar
organizational or charter documents) or (y) is, or with the giving of notice or
lapse of time or both would be, in violation of or in default under any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which it or any of them or any of their respective properties is bound, except
for violations and defaults of the kind referred to in clause (y) which
individually or in the aggregate are not material to the Company and its
Subsidiaries taken as a whole; (ii) the issue and sale of the Shares and the
performance by the Company of its other obligations under this Agreement and the
consummation of the transactions contemplated herein will not conflict with its
Articles of Incorporation or By-laws (or similar organizational or charter
documents) or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the By-laws (or similar
organizational or charter documents) of the Company or any of its Subsidiaries
or any applicable law or statute or any order, rule or regulation of any court
or governmental agency or body or self-regulatory organization having
jurisdiction over the Company, any of its Subsidiaries or any of their
respective properties; and (iii) no consent, approval, authorization, order,
license, registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations, orders, licenses, registrations
or qualifications (x) as have been obtained under the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") and as may be
required under state securities or Blue Sky Laws in connection with the purchase
and distribution of the Shares by the Underwriters or such as may be required by
the National Association of Securities Dealers, Inc. (the "NASD"), or (y) which
individually or in the aggregate are

                                      -7-


not material to the Company and its Subsidiaries taken as a whole or to the
issue and sale of the Shares and the performance by the Company of its other
obligations under this Agreement and the consummation of the transactions
contemplated herein;

               (o) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties or to
which the Company or any of its Subsidiaries is or may be a party or to which
any property of the Company or any of its Subsidiaries is or may be the subject
which, if determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have, or could reasonably be expected to have,
a material adverse effect on the general affairs, business, prospects,
management, consolidated financial position, stockholders' equity or results of
operations of the Company and its Subsidiaries taken as a whole, and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and there are
no statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as required;

               (p) the Company and its Subsidiaries have good title to all items
of personal property owned by each of them, in each case free and clear of all
liens, encumbrances and defects except such as are described or referred to in
the Prospectus or such as do not materially interfere with the use made or
proposed to be made of such property by the Company and its Subsidiaries (as
described in the Registration Statement and Prospectus); the Company leases all
such properties as are necessary to the conduct of its operations as currently
conducted;

               (q) no relationship, direct or indirect, exists between or among
the Company or any or its Subsidiaries on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Company or any of its
Subsidiaries on the other hand, which is required by the Securities Act to be
described in the Prospectus which is not so described. Since the date of its
incorporation, the Company has not, directly or indirectly, including through
any Subsidiary, extended or maintained credit, or arranged for the extension of
credit, or renewed or amended any extension of credit, in the form of a personal
loan to or for any of its directors or executive officers;

               (r) except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act. The holders of
outstanding shares of the Common Stock are not entitled to preemptive rights,
co-sale rights, rights of first refusal or other rights to subscribe for or
purchase any shares of the Common Stock, and there are no contracts, agreements
or

                                      -8-


understandings between the Company and any person granting such person such
preemptive rights, co-sale rights, rights of first refusal or other rights to
subscribe for or purchase the Shares.

               (s) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");

               (t) the Company does not believe it is a Passive Foreign
Investment Company ("PFIC") within the meaning of Section 1296 of the United
States Internal Revenue Code of 1986, as amended, and does not believe it is
likely to become a PFIC;

               (u) Deloitte & Touche Tohmatsu ("DELOITTE & TOUCHE"), who have
certified certain financial statements of the Company and its Subsidiaries, are
independent public accountants as required by the Securities Act and as
preapproved in accordance with the requirements set forth in Section 10A of the
Exchange Act, Deloitte & Touche have not engaged in any "Prohibited Activities"
(as defined in Section 10A of the Exchange Act) on behalf of the Company;

               (v) the Company and its Subsidiaries have filed all federal,
state, local and foreign tax returns which have been required to be filed and
have paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being contested
in good faith; and, except as disclosed in the Registration Statement and the
Prospectus, there is no tax deficiency which has been or might reasonably be
expected to be asserted or threatened against the Company or any Subsidiary;

               (w) the Company has not taken, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Common Stock;

               (x) neither the Company nor any of its Subsidiaries has
sustained, since the date of the latest audited financial statements included in
the Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus.

               (y) each of the Company and its Subsidiaries owns, possesses or
has obtained, all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case may be,
and to operate its properties and to carry on its business as conducted as of
the date hereof, other than such licenses, permits, certificates,

                                      -9-


consents, orders, approvals, other authorizations, declarations and filings
which individually or in the aggregate are not material to the Company and its
Subsidiaries taken as a whole, and neither the Company nor any such Subsidiary
has received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order, approval
or other authorization, except as described in the Registration Statement and
the Prospectus; and each of the Company and its Subsidiaries is in compliance
with all laws and regulations relating to the conduct of its business as
conducted as of the date hereof other than any failure to so comply that would
not have a material adverse effect on the financial condition and operations or
the business of the Company and its Subsidiaries taken as a whole;

               (z) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company or any of
its Subsidiaries which are likely to have a material adverse effect on the
financial condition and operations or the business of the Company and its
Subsidiaries taken as a whole;

               (aa) each of the Company and its Subsidiaries (i) is in
compliance with any and all applicable foreign, federal, provincial, state and
local laws and regulations, including any applicable regulations and standards
adopted by the International Maritime Organization, relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, petroleum pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) has
received all permits, licenses, other approvals, authorizations and certificates
of financial responsibility required of it under applicable Environmental Laws
to conduct its business and (iii) is in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not have a material adverse effect on the Company
and its Subsidiaries taken as a whole;

               (bb) each of the Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary and in accordance with standard industry
practice in the businesses in which they are engaged; neither the Company nor
any such Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business, except as described in or contemplated by the Prospectus;

               (cc) the Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), which (i) are designed to ensure that material information
relating to the Company, including its consolidated Subsidiaries, is made known
to the Company's principal executive officer and its principal financial officer
by others within those entities, particularly during the preparation of the
Registration Statement; (ii) have been evaluated for effectiveness as of the
date of the filing of the Registration Statement with the

                                      -10-


Commission; and (iii) are effective in all material respects to perform the
functions for which they were established;

               (dd) based on the evaluation of its internal controls over
financial reporting, the Company is not aware of (i) any significant deficiency
or material weakness in the design or operation of internal controls over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting;

               (ee) no stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or on behalf
of the Underwriters to Greece, Malta or the Marshall Islands or any political
subdivision or taxing authority thereof or therein in connection with the sale
and delivery by the Company of the Shares to or for the respective accounts of
the Underwriters or the sale and delivery by the Underwriters of the Shares to
the initial purchasers thereof; and

               (ff) neither the Company nor any of its Subsidiaries has
outstanding, or guarantees, any securities accorded a rating by any "nationally
recognized statistical rating organization", as such term is defined in Rule
436(g)(2) under the Securities Act.

               (gg) the Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.

               (hh) neither the Company nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds,
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.

As used herein, the term "SUBSIDIARY" means a corporation, company or other
entity (i) more than 50% of whose outstanding securities (representing the right
to vote for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but more than 50% of
whose ownership interest representing the right to make decisions for such other
entity is owned or controlled, directly or

                                      -11-


indirectly, by the Company. The only Subsidiaries of the Company are those
listed on Exhibit 21 to the Registration Statement.

         Section 3. Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:

               (a) to use its best efforts to cause the Registration Statement
to become effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and, in any event, to furnish
copies of the Prospectus to the Underwriters in New York City prior to 10:00
a.m., New York City time, on the Business Day next succeeding the date of this
Agreement in such quantities as the Underwriters may reasonably request;

               (b) to deliver, at the expense of the Company, to Cantor
Fitzgerald & Co. a signed copy of the final amendment to the Registration
Statement in the form as declared effective by the Commission, including
exhibits and to each other Underwriter a conformed copy of the Registration
Statement (as originally filed) and each amendment thereto, in each case without
exhibits and, during the period mentioned in Section 3(e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments and
supplements thereto) as the Underwriters may reasonably request;

               (c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the Registration
Statement becomes effective, to furnish to the Underwriters a copy of the
proposed amendment or supplement for review and not to file any such proposed
amendment or supplement to which the Underwriters reasonably object;

               (d) to advise the Underwriters promptly when the Registration
Statement has become effective, when any amendment to the Registration Statement
has been filed or becomes effective, when any supplement to the Prospectus or
any amended Prospectus has been filed and, at the expense of the Company, to
furnish the Underwriters with copies thereof, of any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for any additional information, 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 the Prospectus or the initiation or threatening of any proceeding
for that purpose, of the occurrence of any event, within the period referenced
in Section 3(e) below, as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, and of the receipt by the Company of any notification with
respect to any suspension of the qualification of the Shares for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and to use its best efforts to prevent the issuance of any such stop
order, or of any order preventing or suspending the use of any

                                      -12-


preliminary prospectus or the Prospectus, or of any order suspending any such
qualification of the Shares, or notification of any such order thereof and, if
issued, to obtain as soon as possible the withdrawal thereof;

               (e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for the Underwriters
a prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall occur
as a result of which it is necessary to amend or supplement the Prospectus in
order to ensure that the Prospectus as then amended or supplemented does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Prospectus to comply with law,
forthwith to prepare and furnish, at the expense of the Company, to the
Underwriters and to the dealers (whose names and addresses the Underwriters will
furnish to the Company) to which Shares may have been sold by the Underwriters
on behalf of the Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be necessary so that the
Prospectus as so amended or supplemented will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading or so that the Prospectus will comply
with law;

               (f) to endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; provided that the Company
shall not be required to file a general consent to service of process in any
jurisdiction;

               (g) to make generally available to its security holders and to
the Underwriters as soon as practicable an earnings statement covering a period
of at least twelve months beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder;

               (h) during a period of three years from the effective date of the
Registration Statement, to furnish to the Underwriters copies of all reports or
other communications (financial or other) furnished to holders of the Shares,
and copies of any reports and financial statements furnished to or filed with
the Commission or any national securities exchange or the Nasdaq Stock Market
("Nasdaq"); it being understood and agreed that posting such reports on the
Commission's EDGAR website and/or on the Company's website shall be sufficient;

               (i) (i) for a period of 180 days after the effective date of the
Registration Statement (the "LOCK-UP PERIOD") not to (x) offer, pledge, announce
the intention to sell, sell, contract to sell any option or contract to 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 shares of Stock
or any securities convertible into or

                                      -13-


exercisable or exchangeable for Stock or (y) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the Stock, whether any such transaction described in clause (x)
or (y) above is to be settled by delivery of Stock or such other securities, in
cash or otherwise without the prior written consent of the Underwriters, other
than the Shares to be sold hereunder and any shares of Stock of the Company
issued upon the exercise of options granted and grants of additional options
under existing employee stock option plans; provided, however, if (1) the
Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up Period,
or (2) prior to the expiration of the Lock-Up Period, the Company announces that
it will release earnings results during the 16-day period beginning on the last
day of the Lock-Up Period, the restrictions imposed by this paragraph 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, unless Cantor Fitzgerald & Co. waives, in writing, such
extension; and (ii) to provide written notice to the Underwriters of any event
that would result in an extension of the Lock-Up Period pursuant to the
foregoing.

               (j) to use the net proceeds received by the Company from the sale
of the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";

               (k) to use its best efforts to list, subject to notice of
issuance, the Shares on the Nasdaq;

               (l) not to (and to cause its Subsidiaries not to) take, directly
or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the Shares;

               (m) to file timely with the Commission such reports on Form 20-F
and Form 6-K as may be required by Rule 463 under the Securities Act; and

               (n) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all costs
and expenses incident to the preparation, issuance, execution and delivery of
the Shares, incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), incurred in connection with the registration or qualification of the
Shares under the laws of such jurisdictions as the Underwriters may designate
(including fees of counsel for the Underwriters and its disbursements), in
connection with the listing of the Shares on the Nasdaq, related to the filing
with, and clearance of the offering by, the NASD (including fees of counsel for
the Underwriters and its disbursements), in connection with the printing
(including word processing and duplication costs) and delivery of this
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and shipping, as herein
provided, any expenses

                                      -14-


incurred by the Company in connection with a "road show" presentation to
potential investors, the cost of preparing stock certificates and the cost and
charges of any transfer agent and any registrar.

         Section 4. Conditions of the Underwriters' Obligations. The several
obligations of the Underwriters hereunder to purchase the Shares on the Closing
Date or the Additional Closing Date, as the case may be, are subject to the
performance by the Company of its obligations hereunder and to the following
additional conditions:

               (a) the Registration Statement shall have become effective (or if
a post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than 5:00
P.M., New York City time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
shall be in effect, and no proceedings for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act and in
accordance with Section 3(a) hereof; and all requests for additional information
shall have been complied with to the satisfaction of the Underwriters.

               (b) the representations and warranties of the Company contained
herein shall be true and correct on and as of the Closing Date or the Additional
Closing Date, as the case may be, as if made on and as of the Closing Date or
the Additional Closing Date, as the case may be, and the Company shall have
complied with all agreements and all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date or the Additional Closing
Date, as the case may be.

               (c) since the respective dates as of which information is given
in the Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its Subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, business, prospects, management, consolidated
financial position, results of operations, cash flows or stockholders' equity of
the Company and its Subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the Prospectus (exclusive of any amendment or supplement
thereto), the effect of which in the judgment of the Underwriters makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the Closing Date or the Additional Closing Date, as the case
may be, on the terms and in the manner contemplated in the Prospectus; and
neither the Company nor any of its Subsidiaries shall have sustained since the
date of the latest audited financial statements included in the Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus (exclusive of any amendment or supplement
thereto).

                                      -15-


               (d) the Underwriters shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate signed by
the Chief Executive Officer or Chief Financial Officer of the Company, to the
effect set forth in paragraphs (a), (b) and (c) of this Section 4, and (with
respect to the respective representations, warranties, agreements and conditions
of the Company) to the further effect that there has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, business, prospects, management,
consolidated financial position, stockholders' equity or results of operations
of the Company and its Subsidiaries taken as a whole from that set forth or
contemplated in the Registration Statement.

               (e) Morgan, Lewis & Bockius LLP, United States counsel for the
Company, shall have furnished to the Underwriters their written opinion, dated
the Closing Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, to the effect that:

                    (i) other than as set forth or contemplated in the
Prospectus and insofar as matters of United States federal and New York state
law are concerned, to the best of such counsel's knowledge, there are no legal
or governmental investigations, actions, suits or proceedings pending or
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties or to which the Company or any of its Subsidiaries
is or may be a party or to which any property of the Company or its Subsidiaries
is or may be the subject which, if determined adversely to the Company or any of
its Subsidiaries, would individually or in the aggregate have, or could
reasonably be expected to have, a material adverse effect on the financial
position or results of operations of the Company and its Subsidiaries taken as a
whole; and such counsel does not know of any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement that are
not described or filed as required;

                    (ii) to the extent governed by the laws of the State of New
York, this Agreement has been duly executed and delivered by the Company;

                    (iii) under the laws of the State of New York relating to
personal jurisdiction, the Company has, pursuant to Section 11 of this
Agreement, validly and irrevocably submitted to the personal jurisdiction of any
state or federal court located in the Borough of Manhattan, The City of New
York, New York (each a "NEW YORK COURT") in any action arising out of or
relating to this Agreement or the transactions contemplated hereby, has validly
and irrevocably waived any objection to the venue of a proceeding in any such
court, and has validly and irrevocably appointed the Authorized Agent (as
defined herein) as its authorized agent for the purpose described in Section 11
hereof; and service of process effected on such agent in the manner set forth in
Section 11 hereof will be effective to confer valid personal jurisdiction over
the Company;

                    (iv) the statements in the Prospectus under "Enforceability
of Civil Liabilities," "Management," "Description of Indebtedness" and "Related
Party Transactions" and in the Registration Statement in Item 7, insofar as such

                                      -16-


statements constitute a summary of the terms of legal matters, documents or
proceedings referred to therein, and the statements in the Prospectus under "Tax
Considerations -United States Federal Income Tax Considerations" insofar as such
statements describe United States federal income tax law, fairly summarize the
information called for with respect to such terms, legal matters, documents,
proceedings or descriptions;

                    (v) the issue and sale of the Shares being delivered on the
Closing Date or the Additional Closing Date, as the case may be, and the
performance by the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not result in a
material breach of any of the terms or provisions of, or constitute a default
under, any agreement or instrument, known to such counsel, to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets of the Company
or any of its Subsidiaries is subject;

                    (vi) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental agency or
body is required for the issue and sale of the Shares or the consummation of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or qualifications (A)
as have been obtained under the Securities Act and the Exchange Act and as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters or such as may be
required by the NASD, and (B) as may be required in connection with the
acquisition of any vessel as contemplated in the Prospectus; and

                    (vii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act.

     In rendering such opinions, such counsel may (A) limit its opinions to
matters involving the application of laws of the United States and the State of
New York and (B) rely as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company and certificates
or other written statements of officials of jurisdictions having custody of
documents respecting the corporate existence or good standing of the Company.
The opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are justified
in relying thereon.

     The opinion of Morgan, Lewis & Bockius LLP described above shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.

     Such counsel shall also state that, although they do not assume any
responsibility for, and shall not be deemed to have independently ascertained or
verified, the accuracy, completeness or fairness of the statements made in the
Registration

                                      -17-


Statement or the Prospectus, except to the extent required by subsection (iv) of
this Section 4(e), nothing has come to their attention in the course of
participating with officers and Underwriters of the Company in the preparation
of the Registration Statement that have led them to believe that, insofar as
relevant to the offering of the Shares, (other than the financial statements and
related schedules and other financial and other statistical data contained
therein, as to which such counsel need make no statement) the Registration
Statement, as of its effective date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date and as of the Closing Date, as amended or
supplemented, if applicable, contained or contains any untrue statement of a
material fact or omitted or omits 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.

               (f) Watson, Farley & Williams (New York) LLP, Marshall Islands
counsel for the Company, shall have furnished to the Underwriters their written
opinion, dated the Closing Date or the Additional Closing Date, as the case may
be, in form and substance satisfactory to the Underwriters, substantially to the
effect set forth in Annex A hereto.

     In rendering opinions, such counsel may (A) limit its opinion to matters
involving the application of the Marshall Islands laws and (B) rely as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of such counsel
for the Company shall state that the opinion of any such other counsel upon
which they relied is in form satisfactory to such counsel and, in such counsel's
opinion, the Underwriters and they are justified in relying thereon.

     The opinion of Watson, Farley & Williams (New York) LLP described herein
shall be rendered to the Underwriters at the request of the Company and shall so
state therein.

               (g) The Potamitis Vekris Paparrigopoulos Law Partnership, Greek
counsel for the Company, shall have furnished to the Underwriters their written
opinion, dated the Closing Date or the Additional Closing Date, as the case may
be, in form and substance satisfactory to the Underwriters, to the effect that:

                    (i) no consent or other form of authorization is required
from any court or governmental agency or body or any stock exchange authority in
Greece in connection with the valid execution and delivery by the Company of
this Agreement or the sale of the Shares by the Company or the consummation by
the Company of the transactions contemplated by this Agreement;

                    (ii) all dividends and other distributions declared and
payable on the shares of capital stock of the Company may under the current laws
and regulations of Greece be paid in United States dollars and may be freely
transferred out

                                      -18-


of Greece, and all such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of Greece and are
otherwise free and clear of any other tax, withholding or deduction in and
without the necessity of obtaining any consents, approvals, authorizations,
orders, licenses, registrations, clearances and qualifications of or with any
court or governmental agency or body or any stock exchange authorities in
Greece;

                    (iii) to the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened in Greece to which the
Company or any of its Subsidiaries is a party or to which any property of the
Company or any of its Subsidiaries is the subject;

                    (iv) to the best of such counsel's knowledge, the compliance
by the Company with all of the provisions of this Agreement and the consummation
of the transactions contemplated herein will not conflict in any material
respect with any Greek law;

                    (v) the Company and its Subsidiaries are not required to
file tax returns or pay any taxes in Greece, except in relation to the
registration of the vessels listed in a schedule to such opinion with the Greek
Ships Register;

                    (vi) to the best of such counsel's knowledge, each of the
Company and its Subsidiaries has obtained any licenses and other forms of
authorization from, and has made all declarations and filings with, any
governmental authorities, self-regulatory organizations and any courts and other
tribunals, in Greece, necessary to own or lease, as the case may be, and to
operate the vessel owned by each of its Subsidiaries and to carry on its
business as conducted as of the date of the Prospectus (other than such licenses
or other forms of authorization the failure to obtain would not in the aggregate
have a material adverse effect on the Company and its Subsidiaries taken as a
whole), and neither the Company nor any such Subsidiary has received any actual
notice of any proceeding relating to revocation or modification of any such
license or other form of authorization; and each of the Company and its
Subsidiaries is in compliance in all material respects with all laws and
regulations in Greece relating to the ownership or lease, as the case may be,
and the operation of the vessel owned by each of the Subsidiaries and the
conduct of its business as conducted as of the date of the Prospectus; and

                    (vii) there are no taxes or duties payable in Greece by or
on behalf of the Underwriters in connection with the sale and delivery by the
Company of the Shares to or for the respective accounts of the Underwriters or
the sale and delivery by the Underwriters of the Shares to the initial
purchasers thereof.

     In rendering such opinions, counsel may (A) limit their opinions as to
matters involving the application of Greek laws and (B) rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The

                                      -19-


opinion of such counsel for the Company shall state that the opinion of any such
other counsel upon which they relied is in form satisfactory to such counsel
and, in such counsel's opinion, the Underwriters and they are justified in
relying thereon.

     The opinion of Potamitis Vekris Paparrigopoulos Law Partnership described
above shall be rendered to the Underwriters at the request of the Company and
shall so state therein.

               (h) Messrs GM International, Maltese counsel for the Company,
shall have furnished to the Underwriters their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, to the effect that:

               (i) each of the [insert Maltese Subsidiaries] has been duly
         organized, has duly issued its shares of capital stock and is validly
         existing as a corporation under the laws of Malta, with corporate power
         and authority to own its properties and conduct its business as
         described in the Prospectus; and all of the outstanding shares of
         capital stock of [insert Maltese Subsidiaries] have been duly and
         validly authorized and issued, are owned directly or indirectly by the
         Company, free and clear of all liens, encumbrances, equities or claims;
         the 20% payment on the shares is in accordance with the laws of Malta
         and does not affect the ownership of the shares of each of the [insert
         Maltese Subsidiaries];

               (ii) each of the vessels listed on a schedule to such opinion is
         duly and validly registered as a vessel in the sole ownership of the
         entity indicated as the "Owning Entity" of such vessel on such schedule
         under the laws of Malta; each of said entities has good and marketable
         title thereto, free and clear of all liens, claims, debts or
         encumbrances and defects of title of record, except as indicated on
         such schedule or as described in the Prospectus; and each such vessel
         is in good standing with respect to the payment of past and current
         taxes, fees and other amounts payable under the laws of Malta as would
         affect its registry with the Malta Maritime Authority.

     In rendering such opinions, such counsel may (A) limit its opinion to
matters involving the application of Maltese laws and (B) rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel upon which they
relied is in form satisfactory to such counsel and, in such counsel's opinion,
the Underwriters and they are justified in relying thereon.

         The opinion of Messrs GM International described above shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.

                                      -20-


               (i) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing Date,
as the case may be, Deloitte & Touche shall have furnished to you letters, dated
the respective dates of delivery thereof, in form and substance satisfactory to
you and your counsel, containing statements and information of the type
customarily 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) the Underwriters shall have received on and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Milbank,
Tweed, Hadley & McCloy LLP, counsel to the Underwriters, with respect to the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters.

               (k) the Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for quotation on the
Nasdaq, subject to official notice of issuance.

               (l) The "lock-up" agreements, substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date or Additional
Closing Date, as the case may be.

               (m) on or prior to the Closing Date or Additional Closing Date,
as the case may be, the Company shall have furnished to the Underwriters such
further certificates and documents as the Underwriters shall reasonably request.

               (n) Patton Moreno & Asvat, Panamanian counsel for the Company,
shall have furnished to the Underwriters their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, to the effect that: each of the
vessels listed on a schedule to such opinion is duly and validly registered as a
vessel in the sole ownership of the entity indicated as the "Owning Entity" of
such vessel on such schedule under the laws of Panama; each of said entities has
good and marketable title thereto, free and clear of all liens, claims, debts or
encumbrances and defects of title of record, except as indicated on such
schedule or as described in the Prospectus; and each such vessel is in good
standing with respect to the payment of past and current taxes, fees and other
amounts payable under the laws of Panama as would affect its registry with the
relevant Panamanian governmental or regulatory authorities or self-regulatory
organizations.

     In rendering such opinions, such counsel may (A) limit its opinion to
matters involving the application of Panamanian laws and (B) rely as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of

                                      -21-


documents respecting the corporate existence or good standing of the Company.
The opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are justified
in relying thereon.

     The opinion of Patton Moreno & Asvat described above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.

               (o) [o], Cypriot counsel for the Company, shall have furnished to
the Underwriters their written opinion, dated the Closing Date or the Additional
Closing Date, as the case may be, in form and substance satisfactory to the
Underwriters, to the effect that: each of the vessels listed on a schedule to
such opinion is duly and validly registered as a vessel in the sole ownership of
the entity indicated as the "Owning Entity" of such vessel on such schedule
under the laws of Cyprus; each of said entities has good and marketable title
thereto, free and clear of all liens, claims, debts or encumbrances and defects
of title of record, except as indicated on such schedule or as described in the
Prospectus; and each such vessel is in good standing with respect to the payment
of past and current taxes, fees and other amounts payable under the laws of
Cyprus as would affect its registry with the relevant Cypriot governmental or
regulatory authorities or self-regulatory organizations.

     In rendering such opinions, such counsel may (A) limit its opinion to
matters involving the application of Cypriot laws and (B) rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel upon which they
relied is in form satisfactory to such counsel and, in such counsel's opinion,
the Underwriters and they are justified in relying thereon.

     The opinion of [?] described above shall be rendered to the Underwriters at
the request of the Company and shall so state therein.

         Section 5. Indemnification.

               (a) The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter, their respective directors,
officers, employees and agents, and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted), as incurred, caused by (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto or any preliminary
prospectus or (ii) the omission or alleged omission to state in any preliminary
prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein

                                      -22-


not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter
expressly for use therein.

               (b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, officers, employees and
agents and each person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any loss, claim, damage or liability, as incurred, caused by (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or any preliminary prospectus, or (ii) the omission or alleged omission
to state in any preliminary prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter expressly for use in the
Registration Statement, the Prospectus, any amendment or supplement thereto, or
any preliminary prospectus.

               (c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to any
of the two preceding paragraphs, such person (the "INDEMNIFIED PERSON") shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares and such control persons of Underwriters shall be
designated in writing by Cantor Fitzgerald & Co. and any such separate firm for
the Company, its directors, its officers who sign the Registration Statement,
its employees and agents and such control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement

                                      -23-


of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.

               (d) If the indemnification provided for in the first or second
paragraphs of this Section 5 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above 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 Company on the one
hand and the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Shares. The relative fault of the Company
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters (in the
case of any Underwriter, such information shall be deemed to be the information
relating to such Underwriter referred to in Section 5(b) hereof) and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

               (e) Each of the Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section were
determined

                                      -24-


by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5(e), in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section are several in proportion to the respective
number of Shares set forth opposite their names in Schedule I hereto, and not
joint.

               (f) The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Party at law or in equity.

               (g) The indemnity and contribution agreements contained in this
Section and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.

         Section 6. Termination. Notwithstanding anything herein contained, this
Agreement (or the obligations of the several Underwriters with respect to the
Option Shares) may be terminated in the absolute discretion of the Underwriters,
by notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option Shares,
prior to the Additional Closing Date) (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange or the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange, the Chicago Board of Trade, or the Nasdaq National Market,
(ii) trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Underwriters, is
material and adverse and which, in the judgment of the Underwriters, makes it
impracticable to market the Shares being delivered at the

                                      -25-


Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated in the Prospectus.

         Section 7. Defaulting Underwriters. This Agreement shall become
effective upon the later of (x) execution and delivery hereof by the parties
hereto and (y) release of notification of the effectiveness of the Registration
Statement (or, if applicable, any post-effective amendment) by the Commission.

     If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date by all Underwriters, the
other Underwriters shall be obligated severally in the proportions that the
number of Shares set forth opposite their respective names in Schedule I bears
to the aggregate number of Underwritten Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as the
Underwriters may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 7 by an amount in excess of one-tenth of such number of Shares without
the written consent of such Underwriter. If on the Closing Date or the
Additional Closing Date, as the case may be, any Underwriter or Underwriters
shall fail or refuse to purchase Shares which it or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares with respect to which
such default occurs is more than one-tenth of the aggregate number of Shares to
be purchased on such date, and arrangements satisfactory to the Underwriters and
the Company for the purchase of such Shares are not made within 36 hours after
such default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either Cantor Fitzgerald & Co. or the Company shall have the right to
postpone the Closing Date (or, in the case of the Option Shares, the Additional
Closing Date), but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.

         Section 8. Reimbursement of Underwriters' Expenses. If this Agreement
shall be terminated by the Underwriters, or any of them, because of any failure
or refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Company agrees to reimburse
the Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and expenses of its counsel)

                                      -26-


reasonably incurred by such Underwriter in connection with this Agreement or the
offering contemplated hereunder.

         Section 9. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Company, the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.

         Section 10. Notices, etc. Any action by the Underwriters hereunder may
be taken by the Underwriters jointly or by Cantor Fitzgerald & Co. alone on
behalf of the Underwriters, and any such action taken by the Underwriters
jointly or by Cantor Fitzgerald & Co. alone shall be binding upon the
Underwriters. 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 telecommunication. Notices to the Underwriters shall be given
c/o Cantor Fitzgerald & Co., 135 East 57th Street, New York, New York 10022
(telefax: 212-829-4972); Attention: Marc Blazer. Notices to the Company shall be
given to it at 331 Kifisias Avenue, Building #2, 145 61 Kifisias, Greece
(telefax: 011-30210-625-0018); Attention: Chief Executive Officer.

         Section 11. Submission to Jurisdiction. Each of the parties hereto
irrevocably (i) agrees that any legal suit, action or proceeding arising out of
or based upon this Agreement or the transactions contemplated hereby may be
instituted in any New York Court, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding and (iii) submits to the exclusive
jurisdiction of such courts in any such suit, action or proceeding. The Company
has appointed CT Corporation System, 111 Eighth Avenue, New York, New York, as
its authorized agent (the "AUTHORIZED Agent") upon whom process may be served in
any such action arising out of or based on this Agreement or the transactions
contemplated hereby which may be instituted in any New York Court by any
Underwriter or by any person who controls any Underwriter, expressly consents to
the jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. The Company represents and
warrants that the Authorized Agent has agreed to act as such agent for service
of process and agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Authorized Agent and written notice of such service to the Company shall be
deemed, in every respect, effective service of process upon the Company. The
foregoing provisions shall remain operative and in full force and effect
regardless of any termination of this Agreement.

                                      -27-


         Section 12. Currency. In respect of any judgment or order given or made
for any amount due hereunder that is expressed and paid in a currency (the
"JUDGMENT CURRENCY") other than United States dollars, the Company will
indemnify each Underwriter against any loss incurred by such Underwriter as a
result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the judgment currency for the purpose of
such judgment or order and (ii) the rate of exchange at which an Underwriter is
able to purchase United States dollars with the amount of the judgment currency
actually received by such Underwriter. The foregoing indemnity shall constitute
a separate and independent obligation of the Company and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term rate of exchange shall include any premiums and costs of exchange payable
in connection with the purchase of or conversion into United States dollars. The
foregoing provisions shall remain operative and in full force and effect
regardless of any termination of this Agreement.

         Section 13. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original and all of which together shall constitute
one and the same instrument.

         Section 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.

         Section 15. No Fiduciary Duty. The Company acknowledges and agrees that
(i) the purchase and sale of the Shares pursuant to this Agreement is an
arm's-length commercial transaction between the Company, on the one hand, and
the several Underwriters, on the other, (ii) in connection therewith and with
the process leading to such transaction each Underwriter is acting solely as a
principal and not the agent or fiduciary of the Company, (iii) no Underwriter
has assumed an advisory or fiduciary responsibility in favor of the Company with
respect to the offering contemplated hereby or the process leading thereto
(irrespective of whether such Underwriter has advised or is currently advising
the Company on other matters) or any other obligation to the Company except the
obligations expressly set forth in this Agreement and (iv) the Company has
consulted its own legal and financial advisors to the extent it deemed
appropriate. The Company agrees that it will not claim that the Underwriters, or
any of them, has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to the Company, in connection with such transaction or
the process leading thereto.


         Section 16. Entire Agreement. This Agreement supersedes all prior
agreements and understandings (whether written or oral) between the Company and
the Underwriters, or any of them, with respect to the subject matter hereof.


         Section 17. Waiver of Jury Trial. The Company and each of the
Underwriters hereby irrevocably waives, to the fullest extent permitted by
applicable law,

                                      -28-


any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.




















                                      -29-


         If the foregoing is in accordance with your understanding, please sign
and return six counterparts hereof.


                                            Very truly yours,

                                            STEALTHGAS INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:



Accepted:

Cantor Fitzgerald & Co.
Morgan Keegan & Company, Inc.
Johnson Rice & Company L.L.C.
Hibernia Southcoast Capital, Inc.
Harrisdirect, LLC

By:   Cantor Fitzgerald & Co.



By:
    -----------------------------------
    Name:
    Title:







                                   SCHEDULE I

<TABLE>

                                        NUMBER OF UNDERWRITTEN SHARES TO
                     UNDERWRITER                  BE PURCHASED                         NUMBER OF
                                                                                     OPTION SHARES


Cantor Fitzgerald & Co.                                [o]                                [o]

Morgan Keegan & Company, Inc.                          [o]                                [o]

Johnson Rice & Company L.L.C.                          [o]                                [o]

Hibernia Southcoast Capital, Inc.                      [o]                                [o]

Harrisdirect, LLC                                      [o]                                [o]


           Total                                      [7,700,000]                     [1,155,000]
                                              =====================            ==================
</TABLE>






                                   SCHEDULE II


Memorandum of Agreement relating to Gas Prodigy
Memorandum of Agreement relating to Gas Oracle
Memorandum of Agreement relating to Sweet Dream
Memorandum of Agreement relating to Gas Crystal
Memorandum of Agreement relating to Gas Chios
Memorandum of Agreement relating to Gas Cathar
Memorandum of Agreement relating to Gas Legacy
Memorandum of Agreement relating to Gas Marathon
Memorandum of Agreement relating to Gas Eternity


















                                                                       EXHIBIT A

                            FORM OF LOCK-UP AGREEMENT

                                                             September [o], 2005

Cantor Fitzgerald & Co.



Cantor Fitzgerald & Co.
Morgan Keegan & Company, Inc.
Johnson Rice & Company L.L.C.
Hibernia Southcoast Capital, Inc.
Harrisdirect, LLC

c/o  Cantor Fitzgerald & Co.
     110 East 59th Street
     New York, New York  10022


Ladies and Gentlemen:

     The undersigned wishes to facilitate the public offering (the "Offering")
of shares of common stock (the "Common Stock") of StealthGas Inc. (the
"Company") pursuant to a Registration Statement on Form F-1.

     In order to induce you to act as underwriters in the Offering, the
undersigned hereby irrevocably agrees that it will not, directly or indirectly,
offer, sell, contract to sell, transfer the economic risk of ownership in, make
any short sale of, pledge or otherwise dispose (a "Disposition") of any shares
of Common Stock, options or warrants to acquire any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire any shares of Common Stock (including Common Stock
and options, warrants, securities and rights acquired in, before or after the
Offering, collectively, the "Securities") without the prior written consent of
Cantor Fitzgerald & Co., acting alone, or of the Underwriters acting jointly,
for a period of 180 days from the effective date of the Registration Statement
(the "Lock-Up Period").

     The foregoing paragraph shall not apply to Dispositions by the undersigned
to (i) any shareholder of the Company who has executed a lock-up agreement
substantially in the form of this letter, (ii) any donee who receives such
Securities as a bona fide gift and who has executed a lock-up agreement
substantially in the form of this letter, or (iii) any affiliate of the
undersigned who has executed a lock-up agreement substantially in the form of
this letter.

     In addition, and notwithstanding anything to the contrary set forth herein,
if the undersigned is an individual, he or she may transfer any Securities
either during his or her



lifetime or on death by will or intestacy to his or her immediate family or to a
trust, the beneficiaries of which are exclusively the undersigned and/or a
member or members of his or her immediate family; provided, however, that, prior
to any such transfer, each transferee shall execute an agreement, satisfactory
to Cantor Fitzgerald & Co., pursuant to which each transferee shall agree to
receive and hold such securities subject to the provisions hereof. For the
purposes of this paragraph, "immediate family" shall mean the spouse, lineal
descendant, father, mother, brother or sister of the transferor.

     The undersigned hereby waives any rights of the undersigned to sell any
Securities or any other security issued by the Company pursuant to the
Registration Statement and acknowledges and agrees that, during the Lock-Up
Period, the undersigned has no right to require, and will not request, the
Company to register under the Securities Act of 1933, as amended, such
Securities or other securities beneficially owned by the undersigned.

     If (i) the Company issues an earnings release or material news, or a
material event relating to the Company occurs, during the last 17 days of the
Lock-Up Period, or (ii) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
this 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, unless Cantor Fitzgerald & Co. waives, in
writing, such extension. The undersigned hereby acknowledges that the Company
has agreed in the underwriting agreement relating to the Offering to provide
written notice of any event that would result in an extension of the Lock-Up
Period pursuant to the foregoing to the undersigned (in accordance with Section
3(i) of the Underwriting Agreement) and agrees that any such notice properly
delivered will be deemed to have given to, and received by, the undersigned. The
undersigned hereby further agrees that, prior to engaging in any transaction or
taking any other action that is subject to the terms of this agreement during
the period from the date of this agreement to and including the 34th day
following the expiration of the initial Lock-Up Period, it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as such may have been extended pursuant to the foregoing) has
expired.

     Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to an
underwriting agreement, the terms of which are subject to negotiation between
you and the Company.

     The undersigned understands that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of any Securities held by the undersigned except in
compliance with this agreement.

     This agreement shall terminate and be of no further force and effect if the
Registration Statement is not declared effective on or before [o], 2005.




                                             Very truly yours,



                                             By:
                                                 -------------------------------
                                                 Name:
                                                 Title:












                                                                         ANNEX A

              [WATSON, FARLEY & WILLIAMS (NEW YORK) LLP LETTERHEAD]

[We have acted as special counsel for StealthGas Inc., a Marshall Islands
corporation (the "Company"), and each of the Marshall Islands subsidiaries of
the Company listed on Schedule 1 attached hereto (the "Marshall Islands
Subsidiaries") on matters of Marshall Islands law in connection with the
issuance and sale by the Company of [o] shares of common stock (the "Common
Stock"). The Common Stock is being issued and sold by the Company pursuant to
the Company's Registration Statement on Form F-1 (No. 333-[o]) (the
"Registration Statement"), and the prospectus included therein (the
"Prospectus"), which Registration Statement was declared effective by the
Securities and Exchange Commission on [o], 2005.

This opinion is being delivered to you at the request of the Company in
accordance with the requirements of Section 4(f) of the Underwriting Agreement
dated [o], 2005 (the "Underwriting Agreement") between you and the Company.
Capitalized terms used and not defined herein have the meanings assigned to them
in the Underwriting Agreement.

As such counsel, we have examined the following documents:

(i)      The Registration Statement and the Prospectus;

(ii)     The Underwriting Agreement; and

(iii)    Such other papers, documents, agreements, certificates of public
         officials and certificates of representatives of the Company and the
         Marshall Islands Subsidiaries (collectively, the "Marshall Islands
         Entities") as we have deemed relevant and necessary as the basis for
         the opinions hereafter expressed.

In such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as conformed or photostatic
copies. We have further assumed the validity and enforceability of such
documents under all applicable laws other than Marshall Islands law.

This opinion is limited to the law of the Republic of The Marshall Islands. In
rendering our opinion as to the valid existence in good standing of each of the
Marshall Islands Entities, we have relied solely on Certificates of Goodstanding
issued by the Registrar of Corporations of the Republic of The Marshall Islands,
in each case on [o], 2005.

As used herein, the phrase "to our knowledge" means the actual knowledge, based
on conscious awareness of facts or other information, by any lawyer in our firm
involved in the preparation of this opinion or actively involved in advising or
assisting any of the Marshall Islands Entities in the transactions contemplated
by the Registration Statement, the Prospectus and the Underwriting Agreement.



Based on the foregoing and having regard to legal considerations which we deem
relevant, we are of the opinion that:

1.       Each of the Marshall Islands Entities has been incorporated and is
         validly existing as a corporation in good standing under the law of the
         Marshall Islands with corporate power and authority to own its
         properties and conduct its business as described in the Prospectus.

2.       The Company's authorized share capital is [o].

3.       All issued and outstanding shares of each of the Marshall Islands
         Entities have been duly authorized and are validly issued, fully paid
         and non-assessable and are not subject to any statutory preemptive
         rights or preemptive rights pursuant to the organizational documents or
         bylaws of any of the Marshall Islands Entities.

4.       The Common Stock to be issued and sold by the Company has been duly
         authorized and, when issued and delivered to and paid for by the
         Underwriters in accordance with the terms of the Underwriting
         Agreement, will be validly issued, fully paid and nonassessable, and
         the issuance of the Common Stock is not subject to any statutory
         preemptive rights or preemptive rights pursuant to the organizational
         documents or bylaws of the Company.

5.       No consent, approval, authorization, order, registration or
         qualification of or with any court or governmental agency or body of
         the Republic of The Marshall Islands is required for the execution and
         delivery by the Company of the Underwriting Agreement in order for it
         to be duly and validly authorized.

6.       The Underwriting Agreement has been duly authorized, executed and
         delivered by the Company.

7.       Other than as set forth or contemplated in the Prospectus and insofar
         as matters of Marshall Islands law are concerned, to our knowledge
         there are no legal or governmental investigations, actions, suits or
         proceedings pending or threatened in the Republic of The Marshall
         Islands against or affecting any of the Marshall Islands Entities or
         any of their properties or to which any of the Marshall Islands
         Entities is or may be a party or to which any of their properties is or
         may be the subject.

8.       The compliance by the Company with all of the provisions of the
         Underwriting Agreement and the consummation of the transactions herein
         contemplated will not result in any violation of the provisions of the
         Articles of Incorporation or By-laws of the Company or any of the
         Marshall Islands Subsidiaries or any Marshall Islands statute or any
         order, rule or regulation known to us of any court or governmental
         agency or body in the Marshall Islands having jurisdiction over the
         Company or the Marshall Islands Subsidiaries or any of their
         properties.



9.       No licenses, permits, certificates, consents, orders, approvals and
         other authorizations of, or declarations and filings with, any
         governmental or regulatory authorities of the Republic of The Marshall
         Islands are required for any of the Marshall Islands Entities to own or
         lease, as the case may be, and to operate, its properties and to carry
         on its business as conducted as of the date hereof in the manner
         described in the Prospectus (other than such licenses, permits,
         certificates, consents, orders, approvals and other authorizations the
         failure to obtain would not in the aggregate have a material adverse
         effect on the Company).

10.      No consent, approval, authorization, order, license, registration or
         qualification of or with any court or governmental agency or body the
         Republic of The Marshall Islands is required for the issuance and sale
         of the Common Stock by the Company or the consummation by the Company
         of the transactions contemplated by the Underwriting Agreement, except
         (A) which have been duly obtained and are in full force and effect or
         (B) as may be required in connection with the acquisition of any vessel
         as contemplated in the Prospectus and the registration of any such
         vessel under the law and flag of the Marshall Islands.

11.      The statements in the Prospectus under "Enforceability of Civil
         Liabilities", "Dividend Policy," "Description of Capital Stock" and
         "Marshall Islands Company Considerations," insofar as such statements
         constitute a summary of the terms of the capital stock of the Company,
         Marshall Islands legal matters, documents or proceedings referred to
         therein, and the statements in the Prospectus under "Tax
         Considerations--Marshall Islands Tax Considerations," insofar as such
         statements describe Marshall Islands tax law, fairly present in all
         material respects the information called for with respect to such
         terms, legal matters under Marshall Islands law, documents or
         proceedings.

12.      Assuming that none of the Underwriters is carrying on business or
         conducting transactions in the Republic of The Marshall Islands, no
         stamp or other issuance or transfer taxes or duties and no capital
         gains, income, withholding or other taxes are payable by or on behalf
         of the Underwriters to the Republic of The Marshall Islands or to any
         political subdivision or taxing authority thereof or therein in
         connection with the sale and delivery by the Company of the Common
         Stock to or for the respective accounts of the Underwriters.

13.      Insofar as matters of Marshall Islands law are concerned, the
         Registration Statement and the filing of the Registration Statement
         with the Commission have been duly authorized by and on behalf of the
         Company, and the Registration Statement has been duly executed pursuant
         to such authorization by and on behalf of the Company.

14.      The agreement of the Company to the choice of law provisions set forth
         in Section 11 of the Underwriting Agreement will be recognized by the
         courts of the Marshall Islands; the Company can sue and be sued in its
         own name under the law of the





         Marshall Islands; the irrevocable submission of the Company to the
         exclusive jurisdiction of a New York Court, the waiver by the Company
         of any objection to the venue of a proceeding of a New York Court and
         the agreement of the Company that the Underwriting Agreement shall be
         governed by and construed in accordance with the law of the State of
         New York are legal, valid and binding; service of process effected in
         the manner set forth in Section 11 of the Underwriting Agreement will
         be effective, insofar as the law of the Marshall Islands is concerned,
         to confer valid personal jurisdiction over the Company; and a final
         non-appealable judgment against the Company entered by a court in any
         United States or foreign jurisdiction in any suit, action or proceeding
         would be enforceable against the Company in the courts of the Republic
         of The Marshall Islands without a retrial of the merits of the matter,
         provided that: (a) the judgment was for a sum of money and was final in
         the jurisdiction granting the judgment, (b) the court granting the
         judgment had jurisdiction under the laws of the place where it sat and
         the judgment did not offend principles of the Republic of The Marshall
         Islands as to due process, propriety or public order, and (c) the
         defendant was actually present in person or by duly appointed
         representative, and the judgment did not constitute in effect a default
         judgment.

15.      Assuming that the recipient thereof is not carrying on business or
         conducting transactions in the Republic of the Marshall Islands, all
         dividends and other distributions declared and payable on the shares of
         capital stock of the Company and the Marshall Islands Subsidiaries will
         not be subject to withholding taxes under the law and regulations of
         the Marshall Islands.

16.      Each of the vessels listed on Schedule 2 attached hereto is registered
         in the sole ownership of the entity indicated as the "Owning Entity" of
         such vessel on such schedule under the law of the Marshall Islands;
         each Owning Entity has record title thereto, free and clear of all
         liens, claims, debts or encumbrances and defects of title of record,
         except as indicated on such schedule or as described in the Prospectus;
         and each such vessel is in good standing with respect to the payment of
         past and current taxes, fees and other amounts payable under the law of
         the Marshall Islands as would affect its registration under Marshall
         Islands law.](2)



--------------------

(2) Subject to final negotiation.







             FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION

                                       OF

                                 STEALTHGAS INC.

           PURSUANT TO THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT

         StealthGas Inc., a corporation organized and existing under the
Marshall Islands Business Corporations Act ("BCA"), certifies:

         I. The name of the Corporation is

                                 STEALTHGAS INC.

         II. The date of filing of the Corporation's original articles of
incorporation with the Office of the Registrar of Corporations of the Republic
of the Marshall Islands was December 22, 2004. Articles of Amendment to the
Articles of Incorporation were filed with the Office of the Registrar of
Corporations of the Republic of the Marshall Islands on April 19, 2005 and on
August 26, 2005.

         III. Pursuant to Section 93 of the BCA, these amended and restated
articles of incorporation include an amendment of Sections B and D, amend and
renumber former Section G as Section F, omit former Sections F and H and add new
Sections G through I.

         IV. These amended and restated articles of incorporation were duly
adopted in accordance with the provisions of Sections 88(1) and 93 of the BCA,
the Board of Directors of the Corporation having adopted resolutions by
unanimous written consent in accordance with Section 55(4) of the BCA setting
forth and declaring advisable that these amended and restated articles of
incorporation, including said amendments, and in lieu of a vote of stockholders,
written consent to these amended and restated articles of incorporation,
including said amendments, having been given by the holder of all of the
outstanding stock of the Corporation in accordance with Section 67 of the BCA.

         V. The amended and restated articles of incorporation of the
Corporation shall read as follows:

A.       The name of the Corporation shall be:

                                 STEALTHGAS INC.

B.       The purpose of the Corporation is to engage in any lawful act or
         activity for which corporations may now or hereafter be organized under
         the Marshall Islands Business Corporations Act (the "BCA").

C.       The registered address of the Corporation in the Marshall Islands is
         Trust Company Complex, Ajeltake Road, Ajeltake Island, Marshall Islands
         MH96960. The name of the Corporation's registered agent at such address
         is The Trust Company of the Marshall Islands, Inc. However, the Board
         of Directors may establish branches, offices or agencies in any place
         in the world and may appoint legal representatives anywhere in the
         world.

D.       The aggregate number of shares of stock that the Corporation is
         authorized to issue is one-hundred five-million (105,000,000)
         registered shares with a par value of one cent (US $0.01), consisting
         of one-hundred million (100,000,000) registered shares of common stock
         with a par




         value of one cent (US $0.01) ("Common Stock") and five million
         (5,000,000) registered preferred shares with a par value of one cent
         (US $0.01) (the "Preferred Stock").

         (a) Preferred Stock. The designations and the powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, in respect
of the Preferred Stock are as follows:

         The Board of Directors is expressly authorized, by resolution or
resolutions, to provide, out of the unissued shares of the Preferred Stock, for
series of the Preferred Stock. Before any shares of any such series are issued,
the Board of Directors shall fix, and is expressly empowered to fix, by
resolution or resolutions, the following provisions of the shares thereof:

                  (i) the designation of such series, the number of shares that
         constitute such series and the stated value thereof if different from
         the par value thereof;

                  (ii) whether the shares of such series shall have voting
         rights, in addition to any voting rights provided by law, and, if so,
         the terms of such voting rights (which may be special voting rights),
         whether the shares of such series shall have one vote per share or more
         or less than one vote per share, whether the holders of such series
         shall be entitled to vote on certain matters as a separate class (which
         for such purpose may be comprised solely of such series or of such
         series and one or more other series or classes of stock of the
         Corporation), whether all the shares of such series entitled to vote on
         a particular matter shall be deemed to be voted on such matter in the
         manner that a specified portion of the voting power of the shares of
         such series or separate class are voted and the preference or relation
         which such voting rights shall bear to the voting rights of any other
         class or any other series of this class;

                  (iii) the annual dividend rate (or method of determining such
         rate), if any, payable on such series, the basis on which such holders
         shall be entitled to receive dividends (which may include, without
         limitation, a right to receive such dividends or distributions as may
         be declared on the shares of such series by the board of directors of
         the Corporation, a right to receive such dividends or distributions, or
         any portion or multiple thereof, as may be declared on the Common Stock
         or any other class of stock or, in addition to or in lieu of any other
         right to receive dividends, a right to receive dividends at a
         particular rate or at a rate determined by a particular method, in
         which case such rate or method of determining such rate may be set
         forth), the form of such dividend, the conditions and the dates upon
         which such dividends shall be payable, and the preference or relation
         which such dividends shall bear to the dividends payable on any other
         class or any other series of this class;

                  (iv) whether dividends on the shares of such series shall be
         cumulative and, in the case of shares of a series having cumulative
         dividend rights, the date or dates (or method of determining the date
         or dates) from which dividends on the shares of such series shall be
         cumulative;

                  (v) whether the shares of such series shall be subject to
         redemption in whole or in part, at the option of the Corporation or at
         the option of the holder or holders thereof or upon the happening of a
         specified event or events and, if so, the times, the prices therefor
         (in cash, securities or other property or a combination thereof) and
         any other terms and conditions of such redemption;

                  (vi) the amount or amounts payable upon shares of such series
         upon, and the rights of the holders of such series in, the voluntary or
         involuntary liquidation, dissolution or windingup of the Corporation
         and the relative rights of priority, if any, of payment of the shares
         of such series;




                  (vii) whether the shares of such series shall be subject to
         the operation of a retirement or sinking fund and, if so, the extent to
         which and the manner in which any such retirement or sinking fund shall
         be applied to the purchase or redemption of the shares of such series
         for retirement or other corporate purposes and the terms and provisions
         relative to the operation thereof, including the price or prices (in
         cash, securities or other property or a combination thereof), the
         period or periods within which and any other terms and conditions upon
         which the shares of such series shall be redeemed or purchased, in
         whole or in part, pursuant to the operation of such retirement or
         sinking find;

                  (viii) whether the shares of such series shall be convertible
         into, or exchangeable for, at the option of the holder or the
         Corporation or upon the happening of a specified event, shares of stock
         of any other class or of any other series of this class or any other
         securities or property of the Corporation or any other entity, and, if
         so, the price or prices (in cash, securities or other property or a
         combination thereof) or the rate or rates of conversion or exchange and
         the method, if any, of adjusting the same;

                  (ix) the limitations and restrictions, if any, to be effective
         while any shares of such series are outstanding upon the payment of
         dividends or the making of other distributions on, and upon the
         purchase, redemption or other acquisition by the Corporation of, the
         Common Stock, any other series of the Preferred Stock or any other
         class of capital stock;

                  (x) the conditions or restrictions, if any, upon the creation
         of indebtedness of the Corporation or upon the issue of any additional
         stock, including additional shares of such series or of any other
         series of the Preferred Stock or of any other class of capital stock;
         and

                  (xi) any other powers, preferences or rights, or any
         qualifications, limitations or restrictions thereof.

         Except as otherwise provided by such resolution or resolutions, all
shares of the Preferred Stock shall be of equal rank. All shares of any one
series of the Preferred Stock shall be identical in all respects with all other
shares of such series, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon shall be
cumulative.

         Except as otherwise provided by such resolution or resolutions, all
shares of Preferred Stock that are converted, redeemed, repurchased, exchanged
or otherwise acquired by the Corporation shall be cancelled and retired and
shall not be reissued.

         For all purposes, these Amended and Restated Articles of Incorporation
shall include each resolution (if any) setting forth the terms of a series of
Preferred Stock.

         Except as otherwise required by law or provided in the resolutions of
the Board establishing the voting powers, designations, preferences and
relative, participating, optional or other rights, if any, or the
qualifications, limitations or restrictions of the relevant series, holders of
Common Stock, as such, shall not be entitled to vote on any amendment of these
Amended and Restated Articles of Incorporation that alters or changes the
powers, preferences, rights or other terms of one or more outstanding series of
Preferred Stock if the holders of such affected series are entitled, either
separately or together with the holders of one or more other series of Preferred
Stock, to vote thereon as a separate class pursuant to these Amended and
Restated Articles of Incorporation or pursuant to the BCA as then in effect.

         (b) Options, Warrants and Other Rights. The Board of Directors of the
Corporation is authorized to create and issue options, warrants and other rights
from time to time entitling the holders



thereof to purchase securities or other property of the Corporation or of any
other entity, including any class or series of stock of the Corporation or of
any other entity and whether or not in connection with the issuance or sale of
any securities or other property of the Corporation, for such consideration (if
any), at such times and upon such other terms and conditions as may be
determined or authorized by the Board of Directors and set forth in one or more
agreements or instruments. Among other things and without limitation, such terms
and conditions may provide for the following:

                  (i) adjusting the number or exercise price of such options,
         warrants or other rights or the amount or nature of the securities or
         other property receivable upon exercise thereof in the event of a
         subdivision or combination of any securities, or a recapitalization, of
         the Corporation, the acquisition by any person of beneficial ownership
         of securities representing more than a designated percentage of the
         voting power of any outstanding series, class or classes of securities,
         a change in ownership of the Corporation's securities or a merger,
         statutory share exchange, consolidation, reorganization, sale of assets
         or other occurrence relating to the Corporation or any of its
         securities, and restricting the ability of the Corporation to enter
         into an agreement with respect to any such transaction absent an
         assumption by another party or parties thereto of the obligations of
         the Corporation under such options, warrants or other rights;

                  (ii) restricting, precluding or limiting the exercise,
         transfer or receipt of such options, warrants or other rights by any
         person that becomes the beneficial owner of a designated percentage of
         the voting power of any outstanding series, class or classes of
         securities of the Corporation or any direct or indirect transferee of
         such a person, or invalidating or voiding such options, warrants or
         other rights held by any such person or transferee; and

                  (iii) permitting the Board of Directors (or certain directors
         specified or qualified by the terms of the governing instruments of
         such options, warrants or other rights) to redeem, repurchase,
         terminate or exchange such options, warrants or other rights.

         This paragraph shall not be construed in any way to limit the power of
the board of directors of the Corporation to create and issue options, warrants
or other rights.

         (c) Preemptive and Similar Rights. No holder of shares of the
Corporation shall, by reason thereof, have any preemptive or other preferential
right to acquire, by subscription or otherwise, any unissued or treasury stock
of the Corporation, or any other share of any class or series of the
Corporation's shares to be issued because of an increase in the authorized
capital stock of the Corporation, or any bonds, certificates of indebtedness,
debentures or other securities convertible into shares of the Corporation.
However, the Board of Directors may issue or dispose of any such unissued or
treasury stock, or any such additional authorized issue of new shares or
securities convertible into shares upon such terms as the Board of Directors
may, in its discretion, determine, without offering to stockholders then of
record, or any class of stockholders, any thereof, on the same terms or any
terms.

E. The Corporation shall have every power which a corporation now or hereafter
organized under the BCA may have.

F. The Board of Directors of the Corporation is expressly authorized to make,
alter, amend or repeal bylaws of the Corporation. Notwithstanding any other
provisions of these Amended and Restated Articles of Incorporation or the bylaws
of the Corporation (and notwithstanding the fact that some lesser percentage may
be specified by law, these Amended and Restated Articles of Incorporation or the
bylaws of the Corporation), the affirmative vote of the holders of 66 2/3% or
more of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as one
class) shall be required to amend, alter, change or repeal this Article F.




G. The directors of the Corporation shall be divided into three classes. The
initial term of office of the first such class of directors shall expire at the
annual meeting of stockholders in 2008, the initial term of office of the second
such class of directors shall expire at the annual meeting of stockholders in
2007, and the initial term of office of the third such class of directors shall
expire at the annual meeting of stockholders in 2006, with each such class of
directors to hold office until their successors have been duly elected and
qualified. The board of directors in office at the time of the filing of these
Amended and Restated Articles of Incorporation with the Registrar of
Corporations of the Republic of the Marshall Islands will designate, by
resolution, which of its members will be the first, second or third classes of
directors of the Corporation. At each annual meeting of stockholders, directors
elected to succeed the directors whose terms expire at such annual meeting shall
be elected to hold office for a term expiring at the annual meeting of
stockholders in the third year following the year of their election and until
their successors have been duly elected and qualified. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes in such manner as the board of directors of the Corporation shall
determine, but no decrease in the number of directors may shorten the term of
any incumbent director.

         No director who is part of any such class of directors may be removed
except both for cause and with the affirmative vote of the holders of not less
than 80% of the voting power of all outstanding shares of stock of the
Corporation entitled to vote generally in the election of directors, considered
for this purpose as a single class.

         Vacancies and newly created directorships resulting from any increase
in the authorized number of directors or from any other cause (other than
vacancies and newly created directorships which the holders of any class or
classes of stock or series thereof are expressly entitled by these Amended and
Restated Articles of Incorporation to fill) shall be filled by, and only by, a
vote of not less than the majority of the directors then in office, although
less than a quorum, or by the sole remaining director. Any director appointed to
fill a vacancy or a newly created directorship shall hold office until the next
election of the class of directors of the director which such director replaced
or the class of directors to which such director was appointed, and until his or
her successor is elected and qualified or until his or her earlier resignation
or removal.

         Notwithstanding the foregoing, in the event that the holders of any
class or series of Preferred Stock of the Corporation shall be entitled, voting
separately as a class, to elect any directors of the Corporation, then the
number of directors that may be elected by such holders voting separately as a
class shall be in addition to the number otherwise fixed pursuant to resolution
of the board of directors of the Corporation. Except as otherwise provided in
the terms of such class or series, (i) the terms of the directors elected by
such holders voting separately as a class shall expire at the annual meeting of
stockholders next succeeding their election without regard to the classification
of other directors and (ii) any director or directors elected by such holders
voting separately as a class may be removed, with or without cause, by the
holders of a majority of the voting power of all outstanding shares of stock of
the Corporation entitled to vote separately as a class in an election of such
directors.

         Cumulative voting, as defined in Section 71(2) of the BCA, shall not be
used to elect directors. Notwithstanding any other provisions of these Amended
and Restated Articles of Incorporation or the bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
these Amended and Restated Articles of Incorporation or the bylaws of the
Corporation), the affirmative vote of the holders of 66 2/3% or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) shall be required to amend, alter, change or repeal this Article G.




         No director of the Corporation shall have personal liability to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that this paragraph shall not eliminate
or limit the liability of a director: (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders; (ii) for acts or omissions
not undertaken in good faith or which involve intentional misconduct or a
knowing violation of law; or (iii) for any transaction from which the director
derived an improper personal benefit.

H. (a)   The Corporation may not engage in any Business Combination with any
Interested Stockholder for a period of three years following the time of the
transaction in which the person became an Interested Stockholder, unless:

         (1)  prior to such time, the Board of Directors of the Corporation
              approved either the Business Combination or the transaction which
              resulted in the stockholder becoming an Interested Stockholder;

         (2)  upon consummation of the transaction which resulted in the
              stockholder becoming an Interested Stockholder, the Interested
              Stockholder owned at least 85% of the voting stock of the
              Corporation outstanding at the time the transaction commenced,
              excluding for purposes of determining the number of shares
              outstanding those shares owned (i) by persons who are directors
              and also officers and (ii) employee stock plans in which employee
              participants do not have the right to determine confidentially
              whether shares held subject to the plan will be tendered in a
              tender or exchange offer; or

         (3)  at or subsequent to such time, the Business Combination is
              approved by the Board of Directors and authorized at an annual or
              special meeting of stockholders, and not by written consent, by
              the affirmative vote of at least 66 2/3% of the outstanding voting
              stock that is not owned by the Interested Stockholder; or

         (4)  the stockholder was or became an Interested Stockholder prior to
              the consummation of the initial public offering of the
              Corporation's Common Stock under the United States Securities Act
              of 1933, as amended.

  (b)    The restrictions contained in this section shall not apply if:

         (1)  A stockholder becomes an Interested Stockholder inadvertently and
              (i) as soon as practicable divests itself of ownership of
              sufficient shares so that the stockholder ceases to be an
              Interested Stockholder; and (ii) would not, at any time within the
              three-year period immediately prior to a Business Combination
              between the Corporation and such stockholder, have been an
              Interested Stockholder but for the inadvertent acquisition of
              ownership; or

         (2)  The Business Combination is proposed prior to the consummation or
              abandonment of and subsequent to the earlier of the public
              announcement or the notice required hereunder of a proposed
              transaction which (i) constitutes one of the transactions
              described in the following sentence; (ii) is with or by a person
              who either was not an Interested Stockholder during the previous
              three years or who became an Interested Stockholder with the
              approval of the Board; and (iii) is approved or not opposed by a
              majority of the members of the Board then in office (but not less
              than one) who were Directors prior to any person becoming



              an Interested Stockholder during the previous three years or were
              recommended for election or elected to succeed such Directors by a
              majority of such Directors. The proposed transactions referred to
              in the preceding sentence are limited to:

              (i)    a merger or consolidation of the Corporation (except for a
                     merger in respect of which, pursuant to the BCA, no vote of
                     the stockholders of the Corporation is required);

              (ii)   a sale, lease, exchange, mortgage, pledge, transfer or
                     other disposition (in one transaction or a series of
                     transactions), whether as part of a dissolution or
                     otherwise, of assets of the Corporation or of any direct or
                     indirect majority-owned subsidiary of the Corporation
                     (other than to any direct or indirect wholly-owned
                     subsidiary or to the Corporation) having an aggregate
                     market value equal to 50% or more of either that aggregate
                     market value of all of the assets of the Corporation
                     determined on a consolidated basis or the aggregate market
                     value of all the outstanding shares; or

              (iii)  a proposed tender or exchange offer for 50% or more of the
                     outstanding voting shares of the Corporation.

                  The Corporation shall give not less than 20 days notice to all
Interested Stockholders prior to the consummation of any of the transactions
described in clause (i) or (ii) of section (b)(2) of this Article H.

    (c)  For the purpose of this Article H only, the term:

         (1)  "Affiliate" means a person that directly, or indirectly through
              one or more intermediaries, controls, or is controlled by, or is
              under common control with, another person.

         (2)  "Associate," when used to indicate a relationship with any person,
              means: (i) Any corporation, partnership, unincorporated
              association or other entity 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 shares; (ii) 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 (iii) any relative or spouse of such
              person, or any relative of such spouse, who has the same residence
              as such person.

         (3)  "Business Combination," when used in reference to the Corporation
              and any Interested Stockholder of the Corporation, means:

              (i)    Any merger or consolidation of the Corporation or any
                     direct or indirect majority-owned subsidiary of the
                     Corporation with (A) the Interested Stockholder or any of
                     its affiliates, or (B) with any other corporation,
                     partnership, unincorporated association or other entity if
                     the merger or consolidation is caused by the Interested
                     Stockholder.

              (ii)   Any sale, lease, exchange, mortgage, pledge, transfer or
                     other disposition (in one transaction or a series of
                     transactions), except proportionately as



                     a stockholder of the Corporation, to or with the Interested
                     Stockholder, whether as part of a dissolution or otherwise,
                     of assets of the Corporation or of any direct or indirect
                     majority-owned subsidiary of the Corporation which assets
                     have an aggregate market value equal to 10% or more of
                     either the aggregate market value of all the assets of the
                     Corporation determined on a consolidated basis or the
                     aggregate market value of all the outstanding shares of the
                     Corporation;

              (iii)  Any transaction which results in the issuance or transfer
                     by the Corporation or by any direct or indirect
                     majority-owned subsidiary of the Corporation of any shares,
                     or any share of such subsidiary, to the Interested
                     Stockholder or any affiliate or associate of the Interested
                     Stockholder, except: (A) pursuant to the exercise, exchange
                     or conversion of securities exercisable for, exchangeable
                     for or convertible into shares, or shares of any such
                     subsidiary, which securities were outstanding prior to the
                     time that the Interested Stockholder became such; (B)
                     pursuant to a merger with a direct or indirect wholly-owned
                     subsidiary of the Corporation solely for purposes of
                     forming a holding company; (C) pursuant to a dividend or
                     distribution paid or made, or the exercise, exchange or
                     conversion of securities exercisable for, exchangeable for
                     or convertible into shares, or shares of any such
                     subsidiary, which security is distributed, pro rata to all
                     holders of a class or series of shares subsequent to the
                     time the Interested Stockholder became such; (D) pursuant
                     to an exchange offer by the Corporation to purchase shares
                     made on the same terms to all holders of said shares; or
                     (E) any issuance or transfer of shares by the Corporation;
                     provided however, that in no case under items (C)-(E) of
                     this subparagraph shall there be an increase in the
                     Interested Stockholder's and/or its affiliates' and
                     associates' proportionate share of the any class or series
                     of shares;

              (iv)   Any transaction involving the Corporation or any direct or
                     indirect majority-owned subsidiary of the Corporation which
                     has the effect, directly or indirectly, of increasing the
                     proportionate share of any class or series of shares, or
                     securities convertible into any class or series of shares,
                     or shares of any such subsidiary, or securities convertible
                     into such shares, which is owned by the Interested
                     Stockholder or any affiliate or associate of the Interested
                     Stockholder, except as a result of immaterial changes due
                     to fractional share adjustments or as a result of any
                     purchase or redemption of any shares not caused, directly
                     or indirectly, by the Interested Stockholder; or

              (v)    Any receipt by the Interested Stockholder of the benefit,
                     directly or indirectly (except proportionately as a
                     stockholder of the Corporation), of any loans, advances,
                     guarantees, pledges or other financial benefits (other than
                     those expressly permitted in subparagraphs (i)-(iv) of this
                     paragraph) provided by or through the Corporation or any
                     direct or indirect majority-owned subsidiary of the
                     Corporation.

         (4)  "Control," including the terms "controlling," "controlled by" and
              "under common control with," means the possession, directly or
              indirectly, of the power to direct or cause the direction of the
              management and policies of a person,



              whether through the ownership of voting shares, by contract or
              otherwise. A person who is the owner of 20 percent or more of the
              outstanding voting shares of any corporation, partnership,
              unincorporated association or other entity shall be presumed to
              have control of such entity, in the absence of proof by a
              preponderance of the evidence to the contrary. Notwithstanding the
              foregoing, a presumption of control shall not apply where such
              person holds voting shares, in good faith and not for the purpose
              of circumventing this provision, as an agent, bank, broker,
              nominee, custodian or trustee for one or more owners who do not
              individually or as a group have control of such entity.

         (5)  "Interested Stockholder" means any person (other than the
              Corporation and any direct or indirect majority-owned subsidiary
              of the Corporation) that (i) is the owner of 15% or more of the
              outstanding voting shares of the Corporation, or (ii) is an
              affiliate or associate of the Corporation and was the owner of 15%
              or more of the outstanding voting shares of the Corporation at any
              time within the three-year period immediately prior to the date on
              which it is sought to be determined whether such person is an
              Interested Stockholder; and the affiliates and associates of such
              person; provided, however, that the term "Interested Stockholder"
              shall not include any person whose ownership of shares in excess
              of the 15% limitation set forth herein is the result of action
              taken solely by the Corporation; provided that such person shall
              be an Interested Stockholder if thereafter such person acquires
              additional shares of voting shares of the Corporation, except as a
              result of further Corporation action not caused, directly or
              indirectly, by such person. For the purpose of determining whether
              a person is an Interested Stockholder, the voting shares of the
              Corporation deemed to be outstanding shall include voting shares
              deemed to be owned by the person through application of paragraph
              (8) below, but shall not include any other unissued shares which
              may be issuable pursuant to any agreement, arrangement or
              understanding, or upon exercise of conversion rights, warrants or
              options, or otherwise.

         (6)  "Person" means any individual, corporation, partnership,
              unincorporated association or other entity.

         (7)  "Voting stock" means, with respect to any corporation, shares of
              any class or series entitled to vote generally in the election of
              directors and, with respect to any entity that is not a
              corporation, any equity interest entitled to vote generally in the
              election of the governing body of such entity.

         (8)  "Owner," including the terms "own" and "owned," when used with
              respect to any shares, means a person that individually or with or
              through any of its affiliates or associates:

              (i)    Beneficially owns such shares, directly or indirectly; or

              (ii)   Has (A) the right to acquire such shares (whether such
                     right is exercisable immediately or only after the passage
                     of time) pursuant to any agreement, arrangement or
                     understanding, or upon the exercise of conversion rights,
                     exchange rights, warrants or options, or otherwise;
                     provided, however, that a person shall not be deemed the
                     owner of shares tendered pursuant to a tender or exchange
                     offer made by such person or




                     any of such person's affiliates or associates until such
                     tendered shares is accepted for purchase or exchange; or
                     (B) the right to vote such shares pursuant to any
                     agreement, arrangement or understanding; provided, however,
                     that a person shall not be deemed the owner of any shares
                     because of such person's right to vote such shares if the
                     agreement, arrangement or understanding to vote such shares
                     arises solely from a revocable proxy or consent given in
                     response to a proxy or consent solicitation made to 10 or
                     more persons; or

              (iii)  Has any agreement, arrangement or understanding for the
                     purpose of acquiring, holding, voting (except voting
                     pursuant to a revocable proxy or consent as described in
                     item (B) of subparagraph (ii) of this paragraph), or
                     disposing of such shares with any other person that
                     beneficially owns, or whose affiliates or associates
                     beneficially own, directly or indirectly, such shares.

    (d)  Any amendment of this Article H shall not be effective until 12 months
         after the approval of such amendment at a meeting of the stockholders
         of the Corporation and shall not apply to any Business Combination
         between the Corporation and any person who became an Interested
         Stockholder of the Corporation at or prior to the time of such
         approval.

    (e)  Notwithstanding any other provisions of these Amended and Restated
         Articles of Incorporation or the bylaws of the Corporation (and
         notwithstanding the fact that some lesser percentage may be specified
         by law, these Amended and Restated Articles of Incorporation or the
         bylaws of the Corporation), the affirmative vote of the holders of 66
         2/3% or more of the outstanding shares of capital stock of the
         Corporation entitled to vote generally in the election of directors
         (considered for this purpose as one class) shall be required to amend,
         alter, change or repeal this Article H.

I.       The Corporation may transfer its corporate domicile from the Marshall
Islands to any other place in the world.

                  [Remainder of page intentionally left blank.]







                  IN WITNESS WHEREOF, StealthGas Inc. has caused these Amended
and Restated Articles of Incorporation to be signed as of the ______ day of
_____, 2005, by its Chief Executive Officer and President, who hereby affirms
and acknowledges, under penalty of perjury, that these Amended and Restated
Articles of Incorporation are the act and deed of the Corporation and that the
facts stated herein are true.


                                         STEALTHGAS INC.

                                         By:_________________________
                                            Name:  Harry Vafias
                                            Title: Chief Executive Officer and
                                                   President





                                 STEALTHGAS INC.



                       FORM OF AMENDED AND RESTATED BYLAWS

                         As Adopted ______________, 2005

                                   ARTICLE I
                                    OFFICES

The principal place of business of the Corporation shall be at such place or
places as the directors shall from time to time determine. The Corporation may
also have an office or offices at such other places within or without the
Marshall Islands as the Board of Directors (the "Board") may from time to time
appoint or the business of the Corporation may require.

                                   ARTICLE II
                                  STOCKHOLDERS

Section 1. ANNUAL MEETING. The annual meeting of stockholders of the Corporation
shall be held on such day and at such time and place within or without the
Marshall Islands as the Board may determine, for the purpose of electing
directors and for transacting such other business as may properly be brought
before the meeting. The Chairman of the Board or, in the Chairman's absence,
another person designated by the Board shall act as the Chairman of all annual
meetings of stockholders.

Section 2. SPECIAL MEETINGS. A special meeting of the stockholders may be called
at any time by the Board. Except as may be set forth in the Articles of
Incorporation, no other person or persons are permitted to call a special
meeting. No business may be conducted at the special meeting other than business
brought before the meeting by the Board. If the Chairman of the special meeting
determines that business was not properly brought before the special meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.

Section 3. NOTICE OF MEETINGS. Notice of every annual and special meeting of
stockholders, other than any meeting the giving of notice of which is otherwise
prescribed by law or the Articles of Incorporation, stating the date, time,
place and purpose thereof, and in the case of special meetings, the name of the
person or persons at whose direction the notice is being issued, shall be given
personally (including by telephone) or sent by mail, telegraph, cablegram,
telex, telecopy, electronic mail or other means deemed appropriate by the Board
at least fifteen (15) but not more than sixty (60) days before such meeting, to
each stockholder of record entitled to vote thereat and to each stockholder of
record who, by reason of any action proposed at such meeting would be entitled
to have his or her shares appraised if such action were taken, and the notice
shall include a statement of that purpose and to that effect. If mailed, notice
shall be deemed to have been given when deposited in the mail, directed to the
stockholder at his, her or its address as the same appears on the record of
stockholders of the Corporation or at such address as to which the stockholder
has given notice to the Secretary. Notice of a meeting need not be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting, or who attends the meeting without protesting prior to the conclusion
thereof the lack of notice to him or her.




Section 4. ADJOURNMENTS. Whether or not a quorum shall be present, any meeting
of stockholders, annual or special, may adjourn from time to time to reconvene
at the same or some other place, and notice need not be given of any such
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting the Corporation may
transact any business which might have been transacted at the original meeting.
If the meeting is adjourned for lack of quorum, notice of the new meeting shall
be given to each stockholder of record entitled to vote at the meeting. If after
an adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record on the new
record date entitled to notice in Section 3 of this Article II. The Board of
Directors may postpone any meeting of stockholders or cancel any special meeting
of stockholders by public announcement or disclosure prior to the time scheduled
for the meeting.

Section 5. QUORUM. At all meetings of stockholders, except as otherwise
expressly provided by law or the Articles of Incorporation, there must be
present either in person or by proxy stockholders of record holding at least a
majority of the shares issued and outstanding and entitled to vote at such
meetings in order to constitute a quorum, but if less than a quorum is present,
a majority of those shares present either in person or by proxy shall have power
to adjourn any meeting until a quorum shall be present. Notwithstanding the
previous sentence, at any meeting of stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the total outstanding shares of
such class, present in person or represented by proxy, shall constitute a quorum
for purposes of such class vote unless the representation of a different number
of shares of such class shall be required by law, by the Articles of
Incorporation or by these bylaws.

Section 6. ORGANIZATION. The Chief Executive Officer or, in the absence of the
Chief Executive Officer, the Chairman of the Board shall call all meetings of
the stockholders to order, and shall act as chairman of such meetings. In the
absence of the Chief Executive Officer and the Chairman of the Board, the
members of the Board of Directors who are present shall elect a chairman of the
meeting.

         The Secretary of the Corporation shall act as secretary of all meetings
of the stockholders; and in the absence of the Secretary, the chairman of the
meeting may appoint any person to act as secretary of the meeting. It shall be
the duty of the Secretary of the Corporation to prepare and make, at least ten
days before every meeting of stockholders, a complete list of stockholders
entitled to vote at such meeting, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder.

Section 7. VOTING. At any meeting of stockholders, with respect to a matter for
which a stockholder is entitled to vote, each such stockholder shall be entitled
to one vote for each share it holds, except as otherwise expressly provided by
law or in the Articles of Incorporation. Each stockholder may exercise such
voting right either in person or by proxy; provided, however, that no proxy
shall be valid after the expiration of eleven months from the date such proxy
was authorized unless otherwise provided in the proxy. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in the law of the Marshall
Islands to support an irrevocable power. A stockholder may revoke any



                                       2


proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. If a quorum is
present, and except as otherwise expressly provided by law or the Articles of
Incorporation and except with respect to the election of directors, the
affirmative vote of a majority of the shares of stock represented at the meeting
shall be the act of the stockholders. Subject to the rights of the holders of
any series of preferred stock of the Corporation, directors shall be elected by
a plurality of the votes cast at a meeting of stockholders by the stockholders
entitled to vote in the election.

         Shares of the stock of the Corporation belonging to the Corporation or
to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes.

Section 8. VOTING PROCEDURES AND INSPECTORS. The Corporation may, in advance of
any meeting of stockholders, appoint one or more inspectors of election to act
at the meeting and make a written report thereof. Each inspector, before
entering upon the discharge of the duties of inspector, shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of such person's ability.

         The inspectors shall ascertain the number of shares outstanding and the
voting power of each; determine the shares represented at the meeting and the
validity of proxies and ballots; count all votes and ballots; determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by them; and certify their determination of the number
of shares represented at the meeting, and their count of all votes and ballots.

Section 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action required or
permitted to be taken by the stockholders of the Corporation, or any action
which may be taken at a meeting of the stockholders, may be taken without a
meeting if a consent in writing, setting forth the actions so taken, is signed
by all the stockholders entitled to vote with respect to the subject matter
thereof. Such consent shall have the same effect as a unanimous vote of
stockholders, and may be stated as such in any articles or documents filed with
a Registrar of Corporations.

         The consent shall be delivered to the Corporation by delivery to its
registered office in the Marshall Islands, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be made by hand or by certified or
registered mail, return receipt requested.

Section 10. FIXING OF RECORD DATE. For the purpose of determining the
stockholders entitled to notice of and to vote at any meeting of stockholders,
or to express consent to or dissent from any proposal without a meeting, or for
any other action, the Board may fix a time not more than sixty (60) days prior
to the date of for any such determination of stockholders, nor, in the case of a
meeting of stockholders, less than fifteen (15) days before the date of such
meeting.

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER
STOCKHOLDER PROPOSALS. The matters to be considered and brought before any
meeting of stockholders of the


                                       3


Corporation, including the nomination and election of directors, shall be
limited to only those matters that are brought properly before the meeting in
compliance with the procedures set forth in this Section 11 of Article II.

         In order to be properly brought before any annual meeting of
stockholders, a matter must be (i) specified in the notice of annual meeting
given by or at the direction of the Board, (ii) otherwise brought before the
annual meeting by or at the direction of the Board or (iii) brought before the
annual meeting in the manner specified in this Section 11 of Article II by a
stockholder who holds of record stock of the Corporation entitled to vote at the
annual meeting on such matter (including any election of directors) or by a
person who holds such stock through a nominee or "street name" holder of record
of such stock and can demonstrate to the Corporation such indirect ownership of,
and such person's right to vote, such stock.

         In addition to any other requirements under applicable law, the
Articles of Incorporation and these bylaws, persons nominated by stockholders
for election as directors of the Corporation and any other proposals by
stockholders shall be properly brought before an annual meeting of stockholders
only if notice of any such matter to be presented by a stockholder at such
meeting (a "Stockholder Notice') is delivered to the Secretary at the principal
executive office of the Corporation not less than ninety (90) nor more than one
hundred and twenty (120) days prior to the first anniversary date of the annual
meeting for the preceding year. If (and only if) an annual meeting of
stockholders is not scheduled to be held within a period that commences thirty
(30) days before and ends thirty (30) days after such an anniversary date (an
annual meeting date outside such period being referred to herein as an "Other
Meeting Date"), the Stockholder Notice shall be given in the manner provided in
these bylaws by the later of (i) the close of business on the ninetieth (90th)
day prior to such Other Meeting Date or (ii) the close of business on the tenth
(10th) day following the date on which such Other Meeting Date is first publicly
announced or disclosed by the Corporation.

         Any stockholder who wishes to nominate a person for election as a
director of the Corporation at an annual meeting of stockholders shall deliver,
as part of the Stockholder Notice, a statement in writing setting forth the name
of the person to be nominated, the number and class of all shares of stock of
the Corporation the person owns of record and beneficially, as reported to the
stockholder by the person, the information regarding the person that would be
required to be included in a proxy statement, by the rules and regulations of
the U.S. Securities and Exchange Commission (assuming such rules and regulations
were applicable), for a nominee for election as a director, the person's signed
consent to serve as a director of the Corporation if elected, the stockholder's
name and address, the number and class of all shares of stock of the Corporation
that the stockholder owns of record and beneficially and, in the case of a
person who holds the stock through a nominee or "street name" holder of record,
evidence establishing the person's indirect ownership of the stock and right to
vote the stock for the election of directors at the meeting.

         Any stockholder who gives a Stockholder Notice of any matter (other
than a nomination for director) proposed to be brought before an annual meeting
of stockholders shall deliver, as part of the Stockholder Notice, the text of
the proposal to be presented and a brief written statement of the reasons why
the stockholder favors the proposal and setting forth the stockholder's name and
address, the number and class of all shares of stock of the Corporation


                                       4


the stockholder owns of record and beneficially, any material interest of such
stockholder in the matter proposed (other than as a stockholder), if applicable
and, in the case of a person who holds stock through a nominee or "street name"
holder of record, evidence establishing the person's indirect ownership of the
stock and right to vote the stock on the matter proposed at the annual meeting.

         As used in these bylaws, shares "beneficially owned" shall mean all
shares which a person is deemed to beneficially own pursuant to Rules 13d-3 and
13d-5 under the U.S. Securities Exchange Act of 1934, as amended. If a
stockholder is entitled to vote only for a specific class or category of
directors at an annual or special meeting of stockholders, the stockholder's
right to nominate a person for election as a director at the meeting shall be
limited to such class or category of directors.

         Notwithstanding any provision of this Section 11 of Article II to the
contrary, in the event that the number of directors to be elected to the Board
at the next annual meeting of stockholders is increased by virtue of an increase
in the size of the Board and either all of the nominees for director at the next
annual meeting of stockholders or the size of the increased Board is not
publicly announced or disclosed by the Corporation at least one hundred (100)
days prior to the first anniversary of the preceding year's annual meeting, a
Stockholder Notice shall also be considered timely hereunder, but only with
respect to nominees to stand for election at the next annual meeting as the
result of any new positions created by such increase, if it is delivered to the
Secretary at the principal place of business of the Corporation not later than
the close of business on the tenth (10th) day following the first day on which
all such nominees or the size of the increased Board of Directors shall have
been publicly announced or disclosed by the Corporation.
         Except as provided in the immediately following sentence, no matter
shall be properly brought before a special meeting of stockholders unless the
matter shall have been brought before the meeting pursuant to the Corporation's
notice of such meeting. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing a director to the Board, any
stockholder entitled to vote for the election of such director at such meeting
may nominate a person for election to such position as is specified in the
notice of such meeting, but only if the Stockholder Notice required by this
Section 11 of Article II shall be delivered to the Secretary of the Corporation
at the principal place of business of the Corporation not later than the close
of business on the tenth (10th) day following the first day on which the date of
the special meeting and either the names of all nominees proposed by the Board
of Directors to be elected at such meeting or the number of directors to be
elected shall have been publicly announced or disclosed.

         For purposes of this Section 11 of Article II, a matter shall be deemed
to have been "publicly announced or disclosed" if the matter is disclosed in a
press release reported by the (i) Dow Jones News Service, the Associated Press
or a comparable U.S. national news service or (ii) in a document publicly filed
by the Corporation with the U.S. Securities and Exchange Commission.

         In no event shall the adjournment of an annual meeting or a special
meeting of stockholders, or any announcement thereof, commence a new period for
the giving of notice as


                                       5


provided in this Section 11. This Section 11 of Article II shall not apply to
any nomination of a director in an election in which only the holders of a
particular class of stock of the Corporation (the holders of which may vote by
written consent under the Articles of Incorporation), or a series thereof, are
entitled to vote (unless otherwise provided in the terms of such stock).

         The chairman of any meeting of stockholders, in addition to making any
other determinations that may be appropriate to the conduct of the meeting,
shall have the power and duty to determine whether notice of nominees and other
matters proposed to be brought before a meeting have been duly given in the
manner provided in this Section 11 of Article II and, if not so given, shall
direct and declare at the meeting that such nominees and other matters shall not
be considered.

                                  ARTICLE III
                                   DIRECTORS

Section 1. NUMBER AND TERM OF OFFICE. The affairs, business and property of the
Corporation shall be managed by a Board to consist of such number of directors
as shall be fixed from time to time by a resolution passed by a majority of the
entire Board. Except as otherwise provided by law or in Section 3 of this
Article III, the directors of the Corporation shall be elected at each annual
meeting of stockholders, to replace those directors whose terms expire at such
annual meeting. Except as otherwise provided in Section 1 of this Article III,
each Director shall be elected to serve until the third succeeding annual
meeting of stockholders and until his or her successor shall have been duly
elected and qualified, except in the event of his or her death, resignation,
removal or the earlier termination of his or her term of office. No decrease in
the number of directors shall shorten the term of any incumbent director. The
directors need not be residents of the Marshall Islands or stockholders of the
Corporation. Corporations may, to the extent permitted by law, be elected or
appointed directors.

Section 2. REMOVAL. Any or all of the directors may be removed, with cause by
the affirmative vote of holders of 80% of the voting power of all the
outstanding shares of stock of the Corporation entitled to vote generally in the
election of directors, considered for this purpose as a single class.
Notwithstanding the previous sentence, whenever any director shall have been
elected by the holders of any class of stock of the Corporation voting
separately as a class under the provisions of the Articles of Incorporation,
such director may be removed and the vacancy filled only by the holders of 80%
of the voting power of that class of stock voting separately as a class.

         Except as provided in the Articles of Incorporation, vacancies caused
by any such removal or any vacancy caused by the death or resignation of any
director or for any other reason, and any newly created directorship resulting
from any increase in the authorized number of directors, may be filled by, and
only by, the affirmative vote of a majority of the directors then in office,
although less than a quorum, and any director so elected to fill any such
vacancy or newly created directorship shall hold office until the director's
successor is elected and qualified or until the director's earlier resignation
or removal. No director may be removed without cause by either the stockholders
or the Board.


                                       6


Section 3. VACANCIES. Vacancies in the Board occurring by death, resignation,
creation of new directorship, failure of the stockholders to elect the whole
class of directors required to be elected at any annual election of directors or
for any other reason, including removal of directors for cause, shall be filled
only by the affirmative vote of a majority of the remaining directors then in
office, although less than a quorum, at any special meeting called for that
purpose or at any regular meeting of the Board.

Section 4. REGULAR MEETINGS. Regular meetings of the Board may be held at such
time and place, within or without the Marshall Islands, as may be determined by
resolution of the Board. No notice shall be required for any regular meeting.
Except as otherwise provided by law, any business may be transacted at any
regular meeting of the Board.

Section 5. SPECIAL MEETING. Special meetings of the Board may be called from
time to time by the Chairman, the President, or any officer of the Corporation
who is also a director. The President or the Secretary shall call a special
meeting of the Board upon written request directed to either of them by any two
directors stating the time, place and purpose of such special meeting. Special
meetings of the Board shall be held on a date and at such time and at such
place, within or without the Marshall Islands, as may be designated in the
notice thereof by the officer calling the meeting.

Section 6. NOTICE OF MEETINGS. Notice of the date, time and place of each
meeting of the Board shall be given to each Director at least forty-eight (48)
hours prior to such meeting, unless the notice is given orally or delivered in
person, in which case it shall be given at least twenty-four (24) hours prior to
such meeting. For the purpose of this section, notice shall be deemed to be duly
given to a Director if given to him or her personally (including by telephone)
or if such notice be delivered to such Director by mail, telegraph, cablegram,
telex, teleprinter, telecopy, electronic mail or other electronic means to his
or her last known address. Notice of a meeting need not be given to any Director
who submits a signed waiver of notice, whether before or after the meeting, or
who attends the meeting without protesting, prior to the conclusion thereof, the
lack of notice to him or her.

Section 7. QUORUM. Subject to the provisions of Section 3 of this Article III, a
majority of the directors at the time in office (but, unless the Board shall
consist solely of one director, in no case less than one-third of total number
of directors nor less than two directors), present in person or by proxy or
communications equipment, shall constitute a quorum for the transaction of
business.

Section 8. ORGANIZATION. The Chairman of the Board or, in the absence of the
Chairman of the Board, the Chief Executive Officer shall preside at all meetings
of the Board of Directors. In the absence of the Chairman of the Board and the
Chief Executive Officer, a Chairman shall be elected from among the Directors
present. The Secretary of the Corporation shall act as secretary of all meetings
of the directors. In the absence of the Secretary of the Corporation, the
Chairman may appoint any person to act as secretary of the meeting.

Section 9. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are


                                       7


directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (i) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested directors, or, if the votes of the disinterested directors are
insufficient to constitute an act of the Board as defined in Section 55 of the
BCA, by unanimous vote of the disinterested directors; or (ii) the material
facts as to his or her relationship or interest and as to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.

Section 10. VOTING. The vote of the majority of the directors, present in person
or by proxy or by means of communications equipment, at a meeting at which a
quorum is present shall be the act of the directors.

              Unless otherwise restricted by the Articles of Incorporation or by
these bylaws, any action required or permitted to be taken at any meeting of the
Board, or of any committee thereof, may be taken without a meeting if all
members of the Board, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee, as the case may be.

Section 11. COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES. The Board may
from time to time, in its discretion, fix the amounts which shall be payable to
members of the Board and to members of any committee, for attendance at the
meetings of the Board or of such committee and for services rendered to the
Corporation.

                                   ARTICLE IV
                                   COMMITTEES

         The Board may, by resolution or resolutions passed by a majority of the
entire Board, designate from among its members an executive committee to consist
of one or more of the directors of the Corporation, which, to the extent
provided in said resolution or resolutions, or in these bylaws, shall have and
may exercise, to the extent permitted by law, the powers of the Board in the
management of the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers which may
require it; provided, however, that no committee shall have the power or
authority to (i) submit to stockholders of any action that requires
stockholders' approval by law, (ii) fill a vacancy in the Board or in a
committee thereof, (iii) fix compensation of the directors for serving on the
Board any other committee, (iv) amend or repeal any bylaw or adopt any new
bylaw, or (v) amend or repeal any resolution of the entire Board which by its
terms shall not be so amendable or repealable. In addition, the Board may
designate from among its members other committees to consist of one or more of
the directors of the Corporation, each of which shall perform such functions and
have


                                       8


such authority and powers as shall be delegated to such committee by said
resolution or resolutions or as provided for in these bylaws subject to the
prohibitions on the delegation of power and authority set forth in the preceding
sentence. Members of the executive committee and any other committee shall hold
office for such period as may be prescribed by the vote of the entire Board,
subject, however, to removal at any time by the vote of the Board. Vacancies in
membership of such committees shall be filled by vote of the Board. Committees
may adopt their own rules of procedures and may meet at stated times or on such
notice as they may determine. Each committee shall keep a record of its
proceedings and report the same to the Board when required.

                                   ARTICLE V
                                    OFFICERS

Section 1. NUMBER AND DESIGNATION. The officers of the Corporation shall include
a Chief Executive Officer and a Secretary and may include a Chairman of the
Board, one or more Vice Chairmen of the Board, a President, a Treasurer, a Chief
Financial Officer, one or more Vice-Presidents and such other officers, if any,
as the Board may deem necessary. Officers may be of any nationality and need not
be residents of the Marshall Islands. The officers shall be elected annually by
the Board at its first meeting following the annual election of directors, but
in the event of the failure of the Board to so elect any officer, such officer
may be elected at any subsequent meeting of the Board. The salaries of officers
and any other compensation paid to them shall be fixed from time to time by the
Board. The Board may at any meeting elect additional officers. Each Officer
shall hold office at the pleasure of the Board and may hold more than one
office. Any officer may be removed by the Board at any time with or without
cause. Any vacancy in an office may be filled for the unexpired position of the
term of such office by the Board at any regular or special meeting.

         In addition to the powers and duties of the officers of the Corporation
as set forth in these bylaws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board.

Section 2. CHIEF EXECUTIVE OFFICER. The Board shall designate one of the
officers of the Corporation to be the Chief Executive Officer of the
Corporation. Subject to the control of the Board, the Chief Executive Officer
shall have general charge and control of all the business and affairs of the
Corporation and shall have all powers and shall perform all duties incident to
the position of Chief Executive Officer which may be required by law and such
other duties as are required by the Board. The Chief Executive Officer shall
make reports to the Board and to the stockholders, and shall see that all orders
and resolutions of the Board and of any committee thereof are carried into
effect. The Chief Executive Officer shall preside at all meetings of the
stockholders and shall have such other powers and perform such other duties as
may from time to time be assigned by these bylaws or by the Board of Directors.

Section 3. CHIEF FINANCIAL OFFICER. The Board may designate one of the officers
of the Corporation to be the Chief Financial Officer of the Corporation. Subject
to the control of the Board and the Chief Executive Officer, the Chief Financial
Officer shall have general charge and control of the financial affairs of the
Corporation and shall have all powers and shall perform all duties incident to
the position of Chief Financial Officer. The Chief Financial Officer shall act
in


                                       9


a general executive capacity and assist the Chief Executive Officer in the
administration and operation of the Corporation's financial affairs. The Chief
Financial Officer shall have such other powers and perform such other duties as
may from time to time be assigned by these bylaws or by the Board of Directors
or the Chief Executive Officer.

Section 4. CHAIRMAN AND VICE CHAIRMEN OF THE BOARD. The Board may elect a
Chairman of the Board from among its members. The Chairman of the Board shall
preside at all meetings of the Board and shall have all powers and may perform
all duties incident to the office of Chairman of the Board which shall be
required by law and shall have such other powers and perform such other duties
as shall from time to time be assigned by these bylaws or by the Board. The
Board of Directors also may elect one or more Vice-Chairmen to act in the place
of the Chairman upon his or her absence or inability to act.

Section 5. THE PRESIDENT AND VICE PRESIDENTS. The Board of Directors may elect a
President and one or more Vice Presidents of the Corporation. Subject to the
control of the Board of Directors and the Chief Executive Officer, the President
and each Vice President shall have all powers and shall perform all duties
incident to their respective offices which may be required by law and shall have
such other powers and perform such other duties as may from time to time be
assigned by these bylaws or by the Board of Directors or the Chief Executive
Officer.

Section 6. SECRETARY. The Board shall elect a Secretary who shall act as
Secretary of all meetings of the stockholders and of the Board at which he or
she is present, shall have supervision over the giving and serving of notices of
the Corporation, shall be the custodian of the corporate records of the
corporate seal of the Corporation, shall be empowered to affix the corporate
seal to those documents, the execution of which, on behalf of the Corporation
under its seal, is duly authorized and when so affixed may attest the same, and
shall exercise the powers and perform such other duties as may be assigned to
him or her by the Board or the President.

Section 7. TREASURER. The Board may elect a Treasurer who shall have general
supervision over the care and custody of the funds, securities, and other
valuable effects of the Corporation and shall deposit the same or cause the same
to be deposited in the name of the Corporation in such depositories as the Board
may designate, shall disburse the funds of the Corporation as may be ordered by
the Board, shall have supervision over the accounts of all receipts and
disbursements of the Corporation, shall, whenever required by the Board, render
or cause to be rendered financial statements of the Corporation, shall have the
power and perform the duties usually incident to the office of Treasurer, and
shall have such powers and perform other duties as may be assigned to him or her
by the Board or President.

Section 8. OTHER OFFICERS. The Board may elect other officers of the Corporation
who may exercise such powers and perform such duties as may be assigned to them
by the Board or the Chief Executive Officer.

Section 9. BOND. The Board shall have power to the extent permitted by law to
require any officer, agent or employee of the Corporation to give bond for the
faithful discharge of his or her duties in such form and with such surety as the
Board may deem advisable.


                                       10


                                   ARTICLE VI
                             CERTIFICATES FOR SHARES

Section 1. FORM AND ISSUANCE. The shares of the Corporation shall be represented
by certificates in form meeting the requirements of law, and not inconsistent
with the Articles of Incorporation, and approved by the Board, unless the Board
provides, by resolution, that some or all shares of any or all classes or series
of stock shall be uncertificated. Certificates shall be signed by the Chairman
of the Board, the President or Chief Executive Officer or a Vice-President and
by the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer. These signatures may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or its employee.

Section 2. TRANSFER. The Board shall have power and authority to make such rules
and regulations as they may deem expedient concerning the issuance, registration
and transfer of certificates representing shares of the Corporation's stock, and
may appoint transfer agents and registrars thereof.

Section 3. LOSS OF STOCK CERTIFICATES. The Board may direct a new certificate of
stock to be issued in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed. When authorizing such issue of a new certificate
or certificates, the Board may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his or her legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such sum
as it may direct indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.

                                  ARTICLE VII
                                   DIVIDENDS

Section 1. DECLARATION AND FORM. Subject to the provisions of the Articles of
Incorporation, dividends may be declared in conformity with applicable law by,
and at the discretion of, the Board at any regular or special meeting. Dividends
may be declared and paid in cash, stock or other property of the Corporation.

Section 2. RECORD DATE. The Board may fix a time not exceeding sixty (60) days
preceding the date fixed for the payment of any dividend, the making of any
distribution, the allotment of any rights or the taking of any other action, as
a record time for the determination of the stockholders entitled to receive any
such dividend, distribution, or allotment or for the purpose of such other
action.

                                  ARTICLE VIII
                                 INDEMNIFICATION

Section 1. NATURE OF INDEMNITY. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation),
by reason of the fact that the person is or was or has agreed to


                                       11


become a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, manager, trustee or
in any other capacity for another corporation, partnership, joint venture,
limited liability company, trust, employee benefit plan or other enterprise, or
by reason of any action alleged to have been taken or omitted in such capacity
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person or on his or her
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.

         The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
or in the right of the Corporation to procure judgment in its favor by reason of
the fact that the person is or was or has agreed to become a director or officer
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, manager, trustee or in any other capacity for
another corporation, partnership, joint venture, limited liability company,
trust, employee benefit plan or other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the courts of the Marshall Islands or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the courts of the Marshall Islands or such other court shall deem
proper.


Section 2. SUCCESSFUL DEFENSE. To the extent that a present or former director
or officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 of this
Article VIII or in defense of any claim, issue or matter therein, he or she
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.

Section 3. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any indemnification of
a present or former director or officer of the Corporation under Section 1 of
this Article VIII (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the person is not proper
in the circumstances because he or she has not met the applicable standard of
conduct set forth in Section 1 of this Article VIII. Any such determination
shall be made with respect to a person who is a director or officer at the time
of the determination (1) by a majority vote of the directors who are not parties
to such action, suit or proceeding, even


                                       12


though less than a quorum, or (2) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (3) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders.

Section 4. ADVANCE PAYMENT OF EXPENSES. Unless the Board of Directors otherwise
determines in a specific case, expenses, including attorneys' fees, incurred by
a person who is a director or officer at the time in defending a civil or
criminal or administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized in this
Article VIII. Such expenses (including attorneys' fees) incurred by former
directors and officers may be so paid upon such terms and conditions, if any, as
the Corporation deems appropriate. The Board of Directors may authorize the
Corporation's legal counsel to represent a present or former director or officer
in any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.

Section 5. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing indemnification
provisions shall be deemed to be a contract between the Corporation and each
director and officer who serves in any such capacity at any time while these
provisions as well as the relevant provisions of the BCA are in effect and any
repeal or modification thereof shall not affect any right or obligation then
existing with respect to any state of facts then or previously existing or any
action, suit, or proceeding previously or thereafter brought or threatened based
in whole or in part upon any such state of facts. Such a contract right may not
be modified retroactively without the consent of such director or officer.

         The rights to indemnification and advancement of expenses provided by
this Article VIII shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, insurance policy, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, and shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. The Corporation may enter into an
agreement with any of its directors or officers, providing for indemnification
and advancement of expenses, including attorneys fees, that may change, enhance,
qualify or limit any right to indemnification or advancement of expenses created
by this Article VIII.

Section 6. SEVERABILITY. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each present or former director or
officer as to costs, charges and expenses (including attorneys' fees), judgment,
fines and amounts paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation, to the fullest extent permitted
by any applicable portion of this Article VIII that shall not have been
invalidated and to the fullest extent permitted by applicable law.


                                       13


Section 7. SUBROGATION. In the event of payment of indemnification to a person
described in Section 1 of this Article VIII, the Corporation shall be subrogated
to the extent of such payment to any right of recovery such person may have and
such person, as a condition of receiving indemnification from the Corporation,
shall execute all documents and do all things that the Corporation may deem
necessary or desirable to perfect such right of recovery, including the
execution of such documents necessary to enable the Corporation effectively to
enforce any such recovery.

Section 8. NO DUPLICATION OF PAYMENTS. The Corporation shall not be liable under
this Article VIII to make any payment in connection with any claim made against
a person described in Section 1 of this Article VIII to the extent such person
has otherwise received payment (under any insurance policy, bylaw, agreement or
otherwise) of the amounts otherwise payable as indemnity hereunder.

Section 9. INSURANCE. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director or officer against any liability asserted against such person and
incurred by such person in such capacity whether or not the Corporation would
have the power to indemnify such person against such liability by law or under
the provisions of these bylaws.

Section 10. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to the
extent authorized from time to time by the Board of Directors, provide rights to
indemnification and to the advancement of expenses to employees and agents of
the Corporation similar to those conferred in this Article VIII to directors and
officers of the Corporation.


                                   ARTICLE IX
                                 CORPORATE SEAL

              FORM. The Seal of the Corporation, if any, shall be circular in
form, with the name of the Corporation in the circumference and such other
appropriate legend as the Board may from time to time determine.

                                    ARTICLE X
                                   FISCAL YEAR

              FISCAL YEAR. The fiscal year of the Corporation shall be such
period of twelve consecutive months as the Board may by resolution designate.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

Section 1. CHECKS, NOTES, ETC. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money shall
be signed and, if so required by the Board, countersigned by such officers of
the Corporation and other persons as the Board from time to time shall
designate.


                                       14


        Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the Chairman of the Board, the President, any Vice President, the Treasurer,
any Assistant Secretary, the Controller, any Assistant Controller and such other
officers or persons, if any, as the Board of Directors from time to time may
designate.

Section 2. LOANS. No loans and no renewals of any loans shall be contracted on
behalf of the Corporation except as authorized by the Board. When authorized so
to do, any officer or agent of the Corporation may effect loans and advances for
the Corporation from any bank, trust company or other institution or from any
firm, corporation or individual, and for such loans and advances may make,
execute and deliver promissory notes, bonds or other evidences of indebtedness
of the Corporation. When authorized so to do, any officer or agent of the
Corporation may pledge, hypothecate or transfer, as security for the payment of
any and all loans, advances, indebtedness and liabilities of the Corporation,
any and all stocks, securities and other personal property at any time held by
the Corporation, and to that end may endorse, assign and deliver the same. Such
authority may be general or confined to specific instances.

Section 3. CONTRACTS. Except as otherwise provided by law or in these bylaws or
as otherwise directed by the Board of Directors, the Chairman of the Board, the
President, any Vice President or the Treasurer shall be authorized to execute
and deliver, in the name and on behalf of the Corporation, all agreements,
bonds, contracts, deeds, mortgages, security agreements and other instruments,
either for the Corporation's own account or in a fiduciary or other capacity,
and the seal of the Corporation, if appropriate, shall be affixed thereto by any
of such officers or the Secretary or an Assistant Secretary. The Board of
Directors, the Chairman of the Board, any Vice Chairman, the President or any
Vice President designated by the Board of Directors may authorize any other
officer, employee or agent to execute and deliver, in the name and on behalf of
the Corporation, agreements, bonds, contracts, deeds, mortgages, security
agreements and other instruments, either for the Corporation's own account or in
a fiduciary or other capacity, and, if appropriate, to affix the seal of the
Corporation thereto. The grant of such authority by the Board or any such
officer may be general or confined to specific instances.

Section 4. WAIVERS OF NOTICE. Whenever any notice whatever is required to be
given by law, by the Articles of Incorporation or by these bylaws to any person
or persons, a waiver thereof in writing or by electronic transmission by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.

                                  ARTICLE X I
                                   AMENDMENTS

        These bylaws and any amendment thereof may be altered, amended or
repealed, or new bylaws may be adopted, by the Board or by the holders of 66
2/3% or more of the outstanding stock of the Corporation entitled to vote at any
annual meeting or at any special meeting, provided, in the case of any special
meeting, that notice of such proposed alteration, amendment, repeal or adoption
is included in the notice of the meeting.


                                       15








---------                                                               --------
 Number                                                                  Shares

---------                                                               --------
       INCORPORATED UNDER THE LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS

                                 STEALTHGAS INC.

                     The Corporation is Authorized to Issue
     ======================================================================
                               100,000,000 Shares
                                 of Common Stock
                              Par value $0.01 each

                                5,000,000 Shares
                               of Preferred Stock
                              Par value: $0.01 each
     ======================================================================

This Certifies that
                    ------------------------------------------

is the owner of ___________________________________________________________
fully-paid and non-assessable Share(s) of Common Stock, par
value $0.01 each, of the above Corporation transferable on the books of the
Corporation by the holder hereof in person or by duly authorized Attorney upon
surrender of this Certificate properly endorsed.

The Corporation will furnish to any shareholder upon request and without charge,
a full statement of the designation, relative rights, preferences and
limitations of the shares of each class authorized to be issued by the
Corporation.

         In Witness Whereof, the Corporation has caused this certificate
to be executed by its duly authorized officers.



Dated:
                               Corporate Seal
-----------------------------                  --------------------------------
President or Vice President                    Secretary or Assistant Secretary

COUNTERSIGNED AND REGISTERED:
  AMERICAN STOCK TRANSFER & TRUST COMPANY
   TRANSFER AGENT AND REGISTRAR
   (New York, N.Y.)

     BY:                     (AUTHORIZED SIGNATURE)









                        For Value Received,
                        -------------------------------------------
                        hereby sells, assign and transfers unto

                        PLEASE INSERT SOCIAL SECURITY OR OTHER
                        IDENTIFYING NUMBER OF ASSIGNEE




                        __________________________ Shares represented by
                        the within Certificate, and does hereby
                        irrevocably constitute and appoint
                        _____________________ Attorney to transfer the
                        said Shares on the books of the within named
                        Corporation with full power of substitution in the
                        premises.

                        Dated:  _________________    By:_________________


                        In the presence of

                        --------------------------
                          Signature of Witness


















                                        WATSON, FARLEY & WILLIAMS (NEW YORK) LLP
                                                                 100 Park Avenue
                                                        New York, New York 10017

                                                              Tel (212) 922 2200

                                                              Fax (212) 922 1512

August 29, 2005

StealthGas Inc.
331 Kifissias Avenue
Erithrea 14561
Athens, Greece


Ladies & Gentlemen:





STEALTHGAS INC.

We have acted as special counsel as to matters of the law of the Republic of The
Marshall Islands ("Marshall Islands Law") for StealthGas Inc., a Marshall
Islands corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form F-1 (No. 333-[o]) (such Registration Statement,
as amended at the effective date thereof, being referred to herein as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations thereunder, with respect to the issuance and sale by
the Company of up to 8,855,000 shares of common stock (the "Common Stock") of
the Company.

In so acting, we have examined originals, or copies, certified to our
satisfaction, of (i) the Registration Statement and the prospectus (the
"Prospectus") included therein, (ii) the form of the underwriting agreement (the
"Underwriting Agreement") among the Company and the underwriters named therein,
relating to the issuance and sale of the Common Stock, and (iii) originals, or
copies certified to our satisfaction, of all such records of the Company,
agreements and other documents, certificates of public officials, officers and
representatives of the Company 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 Company.

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, upon due execution and delivery of the
Underwriting Agreement by the parties thereto



London o Athens o Paris o New York o Singapore o Bangkok o Rome

Watson, Farley & Williams (New York) LLP is a limited liability partnership
registered in England and Wales with registered number OC312253. It is regulated
by the Law Society of England and Wales and its members are solicitors or
registered foreign lawyers. A list of members of Watson, Farley & Williams (New
York) LLP and their professional qualifications is open to inspection at the
above address. Any reference to a 'partner' in relation to Watson, Farley &
Williams (New York) LLP means a member, consultant or employee of Watson, Farley
& Williams (New York) LLP.

Watson, Farley & Williams (New York) LLP or an affiliated undertaking has an
office in each of the cities listed above.



StealthGas Inc.
August 29, 2005                                                           Page 2

substantially in the form examined by us, when the Common Stock is issued and
delivered against payment therefor in accordance with the terms of the
Underwriting Agreement, the Registration Statement and Prospectus, the Common
Stock 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 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
WATSON, FARLEY & WILLIAMS (NEW YORK) LLP






                                        WATSON, FARLEY & WILLIAMS (NEW YORK) LLP
                                                                 100 Park Avenue
                                                        New York, New York 10017

                                                              Tel (212) 922 2200

                                                              Fax (212) 922 1512

August 29, 2005

StealthGas Inc.
331 Kifissias Avenue
Erithrea 14561
Athens, Greece


Ladies & Gentlemen:


STEALTHGAS INC.

We have acted as special counsel as to matters of the law of the Republic of The
Marshall Islands ("Marshall Islands Law") for StealthGas Inc., a Marshall
Islands corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form F-1 (No. 333-[o]) (such Registration Statement,
as amended at the effective date thereof, being referred to herein as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations thereunder, with respect to the issuance and sale by
the Company of up to 8,855,000 shares of common stock (the "Common Stock") of
the Company.

In so acting, we have examined originals, or copies, certified to our
satisfaction, of (i) the Registration Statement and the prospectus (the
"Prospectus") included therein, and (ii) originals, or copies certified to our
satisfaction, of all such records of the Company, agreements and other
documents, certificates of public officials, officers and representatives of the
Company 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 Company.

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 the statements in the Prospectus under the
caption "Tax Considerations - Marshall Islands Tax Considerations", insofar as
such statements constitute summaries of the legal matters


London o Athens o Paris o New York o Singapore o Bangkok o Rome

Watson, Farley & Williams (New York) LLP is a limited liability partnership
registered in England and Wales with registered number OC312253. It is regulated
by the Law Society of England and Wales and its members are solicitors or
registered foreign lawyers. A list of members of Watson, Farley & Williams (New
York) LLP and their professional qualifications is open to inspection at the
above address. Any reference to a `partner' in relation to Watson, Farley &
Williams (New York) LLP means a member, consultant or employee of Watson, Farley
& Williams (New York) LLP.

Watson, Farley & Williams (New York) LLP or an affiliated undertaking has an
office in each of the cities listed above.


StealthGas Inc.
August 29, 2005                                                           Page 2

referred to therein, fairly present the information expected to be relevant to
holders of the Common Stock offered pursuant to the Prospectus and fairly
summarize the matters referred to therein.

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 caption
"Tax Considerations - Marshall Islands Tax Considerations". 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
WATSON, FARLEY & WILLIAMS (NEW YORK) LLP









                                                                   Exhibit 8.2

                           [Letterhead of Morgan, Lewis & Bockius LLP]



                                                         August 29, 2005

StealthGas Inc.
331 Kifissias Avenue
Erithrea 14561
Athens, Greece


Ladies and Gentlemen:

         We have acted as United States tax counsel to StealthGas Inc., a
company organized under the laws of the Marshall Islands (the "Company"), in
connection with the preparation and filing with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"1933 Act"), by the Company of a Registration Statement on Form F-1 (the
"Registration Statement"). Pursuant to the Registration Statement, the Company
is offering 8,855,000 shares of its common stock, which includes shares to be
sold upon exercise of the underwriters' over-allotment option.

         We hereby confirm that the discussion contained in the Registration
Statement under the heading "Tax Considerations - United States Federal Income
Tax Considerations", insofar as such discussion describes United States federal
income tax law, is, subject to the limitations and conditions set forth therein,
accurate in all material respects. In rendering this opinion we are relying upon
the accuracy of representations made to us by the Company, including
representations regarding the organization of the Company and its subsidiaries,
their assets, income and activities and the ownership and trading of their
shares. This opinion is limited to United States federal income tax law and is
based upon United States federal income tax law as in effect on the date hereof.

         IRS CIRCULAR 230 DISCLOSURE - To ensure compliance with requirements
imposed by the Internal Revenue Service, we inform you that any U.S. federal tax
advice contained in this communication is not intended or written to be used,
and cannot be used, for the purpose of (i) avoiding penalties under the Internal
Revenue Code or (ii) promoting, marketing or recommending to another party any
transaction or matter addressed herein.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Registration
Statement under the heading "Tax Considerations - United States Federal Income
Tax Considerations." In giving such consent, we do not thereby concede that we
are within the category of persons whose consent is required






under Section 7 of the 1933 Act, as amended, or the rules and regulations of the
Commission thereunder.



Very truly yours,

/s/ Morgan, Lewis & Bockius LLP







                                                                    Exhibit 10.1


                        STEALTH MARITIME CORPORATION S.A.
                    AMENDED AND RESTATED MANAGEMENT AGREEMENT






                                TABLE OF CONTENTS

1.   APPOINTMENT

2.   TERM

3.   THE MANAGER'S GENERAL OBLIGATIONS

4.   MANAGER'S POWERS

5.   TECHNICAL MANAGEMENT SERVICES

     *CREWING

     *REPAIRS

6.   COMMERCIAL MANAGEMENT SERVICES

     *SALE AND PURCHASE

     *CHARTERS

     *OPERATIONS AND FREIGHT COLLECTION

     *INSURANCE

     *ACCOUNTING

     *AUDITING

     *BUDGETS AND MANAGEMENT OF FUNDS

7.   ADMINISTRATION

8.   EXECUTIVE OFFICER SERVICES

9.   REMUNERATION

10.  INDEMNITY

11.  HIMALAYA

12.  FORCE MAJEURE

13.  TERMINATION

14.  MODIFICATION

15.  ASSIGNABILITY OF AGREEMENT

16.  CONFIDENTIALITY

17   GOVERNING LAW

18.  ARBITRATION

19.  NOTICES

20.  ENTIRE AGREEMENT




                                                                          PAGE 1


                    AMENDED AND RESTATED MANAGEMENT AGREEMENT

This Amended and Restated Agreement is made as of June 20, 2005 between
STEALTHGAS INC. of the Marshall Islands (the "Owner") and the companies
(collectively called the "Subsidiaries") identified from time to time on
Schedule A hereto (the "Schedule"), and STEALTH MARITIME CORPORATION S.A. of
Liberia (the "Manager").

Whereas

         (A)      The Subsidiaries are the registered owners of the ships (the
                  "Vessels") particularly described in Schedule A annexed
                  hereto, as such Schedule may be amended from time to time.

         (B)      The Owner, the Subsidiaries and the Manager entered into a
                  Management Agreement, dated as of December 23, 2004 (the
                  "Appointment Date"), pursuant to which the Manager has been
                  providing technical and commercial management services in
                  respect of the Vessels.

         (C)      The Owner desires the Manager to also provide the services of
                  a chief executive officer and chief financial officer of the
                  Owner (the "Executive Officer Arrangements").

         (D)      The parties desire to amend and restate the terms and
                  conditions of the Management Agreement to include the
                  Executive Officer Arrangements, and to adopt this Agreement to
                  supersede and replace the Management Agreement as the
                  agreement governing the technical and commercial management of
                  the Vessels.

Now therefore the parties hereto agree as follows:



1.       APPOINTMENT

The Manager is hereby appointed by Owner as technical and commercial manager and
hereby accepts such appointment on the terms and conditions of this Agreement.

1.0.1    With effect from the date hereof and continuing unless and until
         terminated as provided herein, the Owner hereby appoints the Manager,
         and the Manager hereby agrees to act as, Manager of each Vessel.

1.0.2    The Manager undertakes to use its best endeavors to provide its
         Management Services specified in clauses 5, 6 and 7 of this Agreement,
         on behalf of the Owner in accordance with sound ship management
         practice.

1.0.3    The Manager may, with the consent of StealthGas Inc., appoint any
         person or entity (the "Sub-Managers"), at any time throughout the
         duration of this Agreement, to discharge any of the Manager's duties.

2.       TERM

         This Agreement shall come into effect on the date hereof and shall
         continue for a period of five years from the Appointment Date.
         Thereafter it shall be extended on a year to year basis unless either
         party hereto, at least six months' prior to the end of the then current
         term, shall give written notice to the other that it wishes to
         terminate this Agreement at the end of the then current term.

3.       THE MANAGER'S GENERAL OBLIGATIONS

3.0.1    Manager shall, on behalf of Owner, attend to the day-to-day technical
         and commercial management of each Vessel in accordance with sound
         technical and commercial shipping industry standards.

                                                                          PAGE 2

3.0.2    In the exercise of its duties hereunder Manager shall act fully in
         accordance with the reasonable policies, guidelines and instructions
         from time to time communicated to it by Owner and serve Owner
         faithfully and diligently in the performance of this Agreement,
         according to technical and commercial shipping industry standards.

3.0.3    In the performance of this Agreement, Manager shall protect the
         interests of Owner in all matters directly or indirectly relating to
         each Vessel.

3.0.4    Manager shall ensure that adequate manpower is employed by it to
         perform its obligations under this agreement. Insofar as practicable,
         it shall use its best efforts to ensure fair distribution of available
         manpower, supplies and services as between each Vessel and all other
         vessels under its management (each, an "Other Vessel").

3.0.5    The Manager will provide to the Owner the services of the Owner's chief
         executive officer ("CEO") and chief financial officer ("CFO") during
         the term of this Agreement, for which the Owner will reimburse the
         Manager for the full amount of compensation paid to the Owner's CEO and
         CFO by the Manager.

4.       MANAGER'S POWER

4.0.1    Manager is entitled to carry out its duties under the terms of this
         Agreement as provided in relative clauses herein as Owner's agent at
         its own discretion.

4.0.2    In the performance of this Agreement, Manager shall be authorized to
         perform the services described in Clauses 5 and 6 and to do all such
         things or take all such actions related to such performance in
         accordance with technical and commercial industry standards.

4.0.3    Manager is under no circumstances authorized to mortgage or otherwise
         encumber each Vessel, as security for loans or other amounts due. To
         the extent permitted by law, Manager will take all reasonable measures
         to avoid creating liens on each Vessel for services or necessaries,
         which are not the responsibility of Owner.

5.       TECHNICAL MANAGEMENT SERVICES




         *CREW

5.0.1    The Manager shall provide adequate and properly qualified Crew for each
         Vessel as required by the Owners, provision of which includes but is
         not limited to the following functions:

         o        Employment of master, officers, and crew (hereinafter
                  collectively referred to as the "Crew" for each Vessel);

         o        Arrangement of transportation of the Crew, including
                  repatriation;


         o        Training of the Crew;

         o        Supervision of the efficiency of the Crew and administration
                  of all other Crew matters such as planning for the manning of
                  each Vessel;

         o        Arrangement for payment of the Crew;

         o        Arrangements and administration of pensions and Crew
                  insurance;

         o        Discipline and union negotiations;

         o        Enforcement of appropriate standing orders.

                                                                          PAGE 3



         *REPAIRS AND MAINTENANCE

The Manager shall provide technical management, which includes, but is not
limited to the following functions:

5.0.2    Provisions of competent personnel to supervise the maintenance and
         general efficiency of each Vessel;

5.0.3    Arrangement and supervision of drydockings, repairs, alterations and
         upkeep of each Vessel to the standards required by the Owner provided
         that the Manager shall be entitled to incur the necessary expenditure
         to ensure that each Vessel will comply with all requirements and
         recommendations of the classification society and with the laws and
         regulations of the country of registry of each Vessel and of the places
         where each Vessel trades;

5.0.4    Arrangement of the supply of necessary provisions, stores, spares and
         lubricating oil;

5.0.5    Appointment of surveyors and technical consultants as the Manager may
         consider from time to time to be necessary;

5.0.6    Development, implementation and maintenance of a Safety Management
         System (SMS) in accordance with ISM Code;

5.0.7    Maintaining each Vessel in such condition as to be acceptable to major
         charterers as well oil majors' vetting standards, if required;

5.0.8    Arranging surveys (including oil major vetting) associated with the
         commercial operation of each Vessel.


6        COMMERCIAL MANAGEMENT SERVICES

6.01     The Manager shall identify vessels for purchase, perform class records
         review and physical inspection and make recommendation to the Owner as
         to whether any vessel should be bought. Any costs incurred by the
         Manager for inspection of such vessel for possible purchase to be fully
         reimbursed by the Owner.

6.02     After approval has been granted by the Owner for the purchase of the
         identified vessel, the Manager shall on behalf of the Owner proceed to
         purchase same under the best possible terms and conditions in
         accordance with industry standards.

6.03     Manager shall perform all functions necessary to allow Owners to take
         physical delivery of the vessel and proceed with commercially managing
         the same.

6.04     Manager shall also sell vessel(s) on behalf of the Owner at the Owner's
         request.

6.05     Manager shall proceed to market the vessel for sale, solicit offers,
         negotiate the sale of any of the Owner's vessels under the best
         possible terms and conditions in accordance with industry standards.

6.06     Manager shall perform all functions necessary to enable the owner to
         physically deliver the vessel to her contractual buyer.




         *CHARTERS

6.07     Seek and negotiate employment for each Vessel under voyage or period
         charter or under any other form of contract and on behalf of the Owner
         to approve, conclude and execute any such contract.

6.08     Manager shall have the authority to fix voyage charters in accordance
         with the trading restrictions defined in Clause 6.10.

                                                                          PAGE 4

6.09     Fix the Vessels and Manager's Other Vessel in a fair manner.

6.10     Manager will use due diligence to ensure that each Vessel will be
         employed between safe ports, safe anchorages and safe berths, so far as
         this can be established by exercising due diligence.

         Manager will include in the Charter Parties an appropriate War Risks
         Clause, Clause Paramount and any other Owner's protective clauses where
         applicable in accordance with the custom of trade.

6.11     To arrange the scheduling of each Vessel according to the terms of the
         Vessel's employment.

6.12     To carry out all necessary communications with shippers, charterers and
         other involved with their receiving and handling of each Vessel at the
         loading and discharging ports, including notices required under the
         terms of the Vessel's employment.

         On behalf of and in the name of the Owner to issue or cause to be
         issued to shippers customary bills of lading or other documents
         required under the terms of the Vessels' employment.

         Owner authorizes Manager to permit cargo discharge in accordance with
         Letter of Indemnities issued, or invocation of same, and signed by the
         charters and/or bank, working as per Owner's P&I club.

6.13     To invoice on behalf of Owner all freights and other sums due to Owner
         and accounts receivables arising from the operation of the Vessels. To
         give receipts therefore, to make any and all claims for monies due to
         Owner and to issue releases upon receipt of payment of such claims and
         in connection with the settlement of such claims.

         To furnish the Master of each Vessel appropriate voyage instructions
         and monitor voyage performance. Manager will use its best efforts to
         achieve the most economical, efficient and quick dispatch of each
         Vessel between ports and at ports and terminals.

6.14     With prior consent of Owner, to institute, defend, intervene in,
         settle, compromise or abandon any legal proceedings by or against Owner
         or by or against each Vessel or which in any way concerns each Vessel,
         their freight, earnings and disbursements or concerning the crews and
         officers on board each Vessel and for the purposes of this clause the
         expression "Legal Proceedings" shall include arbitration, civil
         regulatory and criminal proceedings of all kinds. The handling of all
         such claims and legal matters shall always be consistent with the
         instructions and requirements of each Vessel's P&I club, Hull
         Underwriters, or other insurers.

         To provide Owner with the following services:

         o        Appoint and negotiate fees for vessel husbandry agents at
                  ports when necessary.

         o        Negotiate, arrange and stem fuel requirements as required for
                  intended trading.


         o        Arranging berths or anchorages.

         o        Arranging for entry and clearance of each Vessel and all other
                  services relating to each Vessel's movements at port,
                  including tugs and pilots.

         o        Preparing laytime statements and or hire statements including
                  obtaining port documents and expense supports necessary for
                  such calculation.




         *INSURANCE

6.15     The Manager shall arrange such insurances as the Owner shall have
         instructed and agreed, in particular as regards insured values,
         deductibles and franchises.


                                                                          PAGE 5

         All insurance policies shall be in the joint names of Owner and Manager
         provided that, unless the Manager gives express prior consent, no
         liability to pay premiums or P&I calls shall be imposed on the Manager,
         notwithstanding the restrictions on P&I cover which would thereby
         result.



         *ACCOUNTING AND REPORTING

6.16     The Manager shall:

         Establish an accounting system which meets the requirements of
         applicable law and provide regular accounting services, supply regular
         reports and records in accordance herewith;

         Establish an effective system of internal controls as required by
         applicable law;

         Maintain the records of all costs and expenditures incurred hereunder
         as well as data necessary or proper for the settlement of accounts
         between the parties;

         Assist the Owner with the preparation of any and all registration
         statements, periodic or other reports, proxy statements and other
         documents as may be required by applicable law.




         *AUDITING

6.17     The Manager shall at all times maintain and keep true and correct
         accounts and shall make the same available for inspection and auditing
         by the Owner and such times as may be mutually agreed.




         *BUDGETS AND THE MANAGEMENT OF FUNDS

6.18     The Manager shall present to the Owner annually a budget for the
         following twelve months in such form as the Owner requires. Annual
         budgets shall be prepared by the Manager and submitted to the Owner not
         less than one month before the anniversary date of the Manager's
         financial year.

         The Owner shall indicate to the Manager its acceptance and approval of
         the annual budget within one month of presentation and in the absence
         of any such indication the Manager shall be entitled to assume that the
         Owner has accepted the said budget.

         Following the agreement of the budget, the Manager shall prepare and
         present to the Owner its estimated working capital requirement of each
         Vessel and the Manager shall each month update this estimate. Based
         thereon, the Manager shall each month request that the Owner provide
         the funds required to run each Vessel for the ensuing month, including
         the payment of any occasional or extraordinary items of expenditure,
         such as emergency repair costs, additional insurance premiums, bunkers
         or provisions. Such funds shall be received by the Manager within ten
         days after the receipt of such request and shall be held to the credit
         of the Owner in a separate account.

         The Owner shall place with the Manager for the duration of this
         Agreement an amount equal to one month's estimated running expenses as
         a working capital reserve. Upon termination of this Agreement all
         moneys remaining within the working capital reserve shall be returned
         to the Owner subject to the terms and conditions of this Agreement.

         The Manager shall produce a quarterly comparison between budgeted and
         actual expenditure of each Vessel, if required to do so by the Owner.

         Notwithstanding anything contained herein, the Manager shall in no
         circumstances be required to use or commit its own funds to finance the
         provision of the Management Services.

                                                                          PAGE 6

7.       ADMINISTRATION

         Manager shall, at its own expense, provide all office accommodations,
         office equipment, communication, office stationery and office staff, as
         is required for the provision of its services hereunder.

         The Manager shall handle and settle all claims arising out of the
         Management Services hereunder.

         The Manager shall also have power to obtain legal or technical or other
         outside expert advice in relation to the handling and settlement of
         claims and disputes or all other matters affecting the interest of the
         Owner with respect to each Vessel.

         The Owner shall arrange for the provision of any necessary guarantee
         bond or security.

         Any costs incurred by the Manager in carrying out its obligations
         according to this Agreement shall be settled by the Owner.

8.       EXECUTIVE OFFICER SERVICES

8.0.1    The Manager will provide to the Owner the services of the Owner's CEO
         and CFO during the term of this Agreement, for which the Owner will
         reimburse the Manager for the full amount of compensation paid by the
         Manager to the Owner's CEO and CFO to serve as the Owner's CEO and CFO,
         respectively, during the term of this Agreement.

8.0.2    The Manager will use its best efforts to enter into employment
         agreements with such individuals as are identified from time to time by
         the Board of Directors of the Owner, in its sole discretion, to serve
         as CEO and CFO of the Owner on terms and conditions satisfactory to the
         Owner. Without limiting the generality of the foregoing, all material
         terms of such employment agreements, including, without limitation, the
         duration, the termination provisions thereof, the compensation
         (including base salary, bonus and other compensation) payable
         thereunder and the permitted number of vacation days, shall be subject
         to the prior written approval of the Owner.

8.03     The Manager shall report to the Board of Directors of the Owner not
         less than once every 90 days with respect to the performance by the CEO
         and CFO of their respective duties during such time period.

8.04     The Board of Directors of the Owner, in its sole discretion, shall be
         entitled to direct the Manager (i) to remove any individual serving as
         CEO or CFO of the Owner from such position and (ii) to appoint such
         other individual to serve as successor CEO or CFO, as the case may be,
         of the Owner as the Board of Directors of the Owner shall select.
         Furthermore, the Manager agrees that it will not remove the individuals
         serving from time to time as the CEO or CFO of the Owner from their
         respective positions without the prior written consent of the Owner. In
         the event the Owner requires the Manager to terminate the CEO or CFO,
         the Owner will indemnify the Manager for any damages arising out of
         such termination, including for breach of any employment agreement.

9.       REMUNERATION

9.0.1    In consideration of the obligations undertaken by Manager under this
         Agreement, Owner shall pay Manager a commission fee equal to one and a
         quarter of one per cent (1.25%) calculated on the gross freight,
         demurrage and charter hire obtained for the employment of each Vessel
         on contracts or charter parties entered into by Manager during the term
         of this Agreement, payable to Manager on the dates when such freight
         demurrage of charter-hire, as the case may be, is paid or otherwise
         collected.

9.0.2    Owner shall also pay a commission fee equal to one percent (1.0%)
         calculated on the price set forth in the memorandum of agreement for
         any vessel bought or sold for and on behalf of STEALTHGAS INC.

                                                                          PAGE 7

9.0.3    In addition to the commission fees due to Manager under Clauses 9.0.1
         and 9.0.2 above and for as long as this Agreement is in effect, Owner
         shall also pay Manager a management fee of US$390-per day per vessel
         payable monthly in advance (pro-rated for the number of days the Owner
         owns each Vessel during the month), except that for any vessel
         operating on bareboat charter, Owner shall pay Manager a Management fee
         of US$125-per day per vessel. The management fees set forth in this
         clause 9.03 are based on a U.S. Dollar/Euro exchange rate of 1.25:1.00,
         and the management fees payable during any particular calendar quarter
         during the term of this Agreement will be adjusted from the management
         fees set forth in this clause 9.0.3 based on the U.S. Dollar/Euro
         exchange rate published by Bloomberg LP two days prior to the end of
         the preceding calendar quarter.

9.0.4    The Manager shall at no extra cost to the Owner, provide its own office
         accommodation, office staff and stationery.

9.0.5    Unless the Agreement is terminated by Owner in accordance with Clauses
         13.0.3 (iii) and (iv) of this Agreement or by reason of default by
         gross negligence or misconduct of Manager, its Directors, officers
         and/or employees in the performance under this Agreement, upon
         termination of this Agreement in relation to each Vessel, the
         Management fee will be continued at the above rate in effect for 90
         days from the date of termination. This is to cover operational and
         accounting costs of finalizing each Vessel's disbursements, demurrage,
         etc. In addition, the Owner shall continue to pay the following:

         i)       Crew support costs for a further period of three calendar
                  months; and

         ii)      An equitable proportion of any management staff redundancy
                  costs which may materialize.

9.0.6    Superintendents' Fees

         When necessary or desirable to evaluate each Vessel's physical
         condition, and/or supervise ship board activities, and/or attend to
         repairs and drydockings the Manager shall arrange for visitations by a
         Superintendent at various intervals during the term of this Agreement.

         Should it be necessary for a Superintendent to visit each Vessel for a
         period of greater than five days during any successive twelve-month
         term (the first term commencing from the Appointment Date) the Manager
         shall be entitled to charge the Owner US $500 for every additional day.

10.      INDEMNITY

10.0.1   Except as provided in 10.0.2 below, neither Manager nor any officer,
         director, shareholder or employee thereof shall be liable to Owner or
         to any third party, including any Master, Officer or Crewmember
         employed on a Vessel or in connection therewith, for any loss or damage
         arising directly or indirectly out of the performance by Manager of any
         of its obligations in respect of each Vessel under this Agreement.
         Owner shall indemnify and hold harmless and defend Manager, its
         officers, directors, shareholders and employees against any and all
         claims and demands (including costs and reasonable attorneys fees of
         defending such claims or demand) and any other losses or liabilities
         arising directly or indirectly out of the performance by Manager of any
         of its duties in respect of each Vessel under this Agreement.

10.0.2   The provisions of Clause 10.0.1 shall not apply with respect to any
         loss, damage, claim, demand, or liability if and to the extent that the
         same results for Manager's, its officers', Directors', Shareholders' or
         Employees' gross negligence or willful misconduct in the performance of
         its duties under this Agreement.

10.0.3   Clause 10 shall survive termination of this Agreement.

11.      HIMALAYA

         "Himalaya" It is hereby expressly agreed that no employee or agent of
         the Manager (including every sub-contractor form time to time employed
         by the Manager) shall in any circumstances whatsoever be under


                                                                          PAGE 8

         any liability whatsoever to the Owner 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 Clause 11, every exemption,
         limitation, condition and liberty herein contained and every right,
         exemption from liability, defense and immunity of whatsoever nature
         applicable to the Manager to which the Manager is entitled hereunder
         shall also be available and shall extend to protect every such employee
         or agent of the Manager acting as aforesaid and for the purpose of all
         the foregoing provisions of this Clause 11 the Manager is or shall be
         deemed to be acting as agent or trustee on behalf of and for the
         benefit of all persons who are or might be his servants or agents from
         time to time (including subcontractors as aforesaid) and all such
         persons shall to this extent be or be deemed to be parties to this
         Agreement.

12.      FORCE MAJEURE

12.0.1   Neither party shall be liable to the other for loss or damage resulting
         from delay or failure to perform this Agreement, or any contract
         hereunder, either in whole or in part, when any such delay or failure
         shall be due to causes beyond its control due to civil war,
         insurrections, piracy, terrorism, strikes, riots, fires, floods,
         explosions, earthquakes, serious accidents, or any acts of God, or
         failure of transportation, epidemics, quarantine restrictions, or labor
         trouble causing cessation, slowdown, or interruption of work.

12.0.2   In the event that a situation giving rise to force majeure which
         prevents a party from performing under this Agreement, the parties
         shall confer as to the further fulfillment or termination of this
         Agreement.

13.      TERMINATION

13.0.1   The Manager shall be entitled to terminate the Agreement by notice in
         writing if any moneys payable by the Owner shall not have been received
         in the Manager's nominated account within ten days of payment having
         been requested in writing by the Manager. The Manager shall also be
         entitled to terminate this Agreement by notice in writing if after the
         receipt of written notice of objection thereto from the Manager to the
         Owner, the Owner proceeds to employ each Vessel in a trade or in a
         manner which is, in the opinion of the Manager, likely to be
         detrimental to its reputation as Manager or be prejudicial to the
         commercial interest of the Manager.

13.0.2   The Owner shall be entitled to terminate Manager's appointment
         hereunder by providing notice as per clause 2 to the Manager if:

         a)       Any money payable to Owner under or pursuant to this Agreement
                  is not promptly paid or accounted for in full by Manager in
                  accordance with the provisions of this Agreement, or

         b)       Manager neglects or fails to perform its principal duties and
                  obligations under this Agreement in any material respect, and
                  such neglect or failure is not remedied within 30 days after
                  written notice of the same is given to Manager by Owner.

13.0.3   Notwithstanding the provision in Clause 13.0.1 and Clause 13.0.2 of
         this Agreement and without prejudice to the accrued rights, if any, or
         Remedies of the parties under or pursuant to this Agreement.

         (i)      If Owner ceases to be the owner of a Vessel by reason of a
                  sale thereof; or

         (ii)     If a Vessel becomes an actual or constructive or compromised
                  or arranged total loss; or

         (iii)    If a Vessel is requisitioned for title or any other compulsory
                  acquisition of a Vessel occurs, otherwise than by requisition
                  by hire; or

         (iv)     If a Vessel is captured, seized, detained or confiscated by
                  any government or persons acting or purporting to act on
                  behalf of any government and is not released from such
                  capture, seizure, detention or confiscation;


                                                                          PAGE 9

         then this Agreement shall no longer apply to that Vessel; or

         (v)      If Owner or the Manager ceases to conduct business, or all or
                  substantially all of the properties or assets of either such
                  party is sold, seized or appropriated; or

         (vi)     Owner or Manager shall file a petition under any bankruptcy
                  law or shall make an assignment for the benefit of its
                  creditors, or otherwise seek relief under any law for the
                  protection of debtors or shall adopt a plan of liquidation, or
                  a petition shall be filed against Owner or Manager seeking to
                  have it declared an insolvent or a bankrupt, and such petition
                  is not dismissed or stayed within 90 days of its filing, or if
                  Owner or Manager shall admit in writing its insolvency or its
                  inability to pay its debts as they mature, or if an order is
                  made for the appointment of a liquidator, manager, receiver or
                  trustee of Owner or Manager of all or a substantial part of
                  its assets, then this Agreement shall forthwith terminate and
                  be of no further force and effect.

13.0.4   For the purpose of clause 13.0.3 hereof

         (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 the
                  Owner or its designee ceases to be registered as the Owner of
                  the Vessel.

         (ii)     A Vessel shall not be deemed to be lost unless either the
                  Vessel has become an actual total loss or agreement has been
                  reached with the underwriters in respect of her constructive,
                  compromised or arranged total loss or if such agreement with
                  the underwriters is not reached it is adjudged by a competent
                  tribunal that a constructive loss of the Vessel has occurred.

         (iii)    The termination of this Agreement shall be without prejudice
                  to all rights accrued due between Manager and Owner prior to
                  the date of termination.

14.      MODIFICATION OF AGREEMENT

         No modification or any further representation, promise, or agreement in
         connection with subject matter under this Agreement shall be binding,
         unless made in writing and signed on behalf of the parties by duly
         authorized representatives.

15.      ASSIGNABILITY OF AGREEMENT

         This Agreement is not assignable by either party without the prior
         written consent of the other.

16.      CONFIDENTIALITY

         Except as may be required by applicable law, any non-public or
         confidential information relating to the business or affairs of Owner
         or Owner's principals obtained by Manger in the performance of this
         Agreement shall be kept strictly confidential.

         Except as may be required by applicable law this Agreement including
         all terms, details conditions and period is to be kept private and
         confidential and beyond the reach of any third party. Notwithstanding
         the foregoing, the Owner shall be permitted to file this Agreement as
         an exhibit to any registration statement filed by the Owner with the
         U.S. Securities and Exchange Commission in connection with the initial
         public offering of its capital stock.

         Except as may be required by applicable law, any non-public or
         confidential information relating to the business or affairs of Manager
         and/or Manager's Principals obtained by Owner or Owner's Principals in
         the performance of this Agreement shall be kept strictly confidential.

17.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
         Greek Law.

                                                                         PAGE 10
18.      ARBITRATION

18.0.1   All disputes arising out of this Agreement shall be arbitrated at
         London in the following manner. One arbitrator is to be appointed by
         each of the parties hereto and a third by the two so chosen. Their
         decision or that of any two of them shall be final and for the purpose
         of enforcing any award, this Agreement may be made a rule of the court.
         The arbitrators shall be commercial persons, conversant with shipping
         matters. Such arbitration is to be conducted in accordance with the
         rules of the London Maritime Arbitrators Association terms current at
         the time when the arbitration proceeding are commenced and in
         accordance with the Arbitration Act 1996 or any statutory modification
         or re-enactment thereof.

18.0.2   In the event that Owner or Manager shall state a dispute and designate
         an Arbitrator, in writing, the other party shall have twenty (20) days,
         excluding Saturdays, Sundays and legal holidays to designate its
         arbitrator, the failure to do so of which the appointed arbitrator can
         render an award hereunder.

18.0.3   The arbitrators may grant any relief, and render an award, which they
         or a majority of them deem just and equitable and within the scope of
         the Agreement of the parties, including but not limited to the posting
         of security. Awards pursuant to this Clause may include costs,
         including a reasonable allowance for attorneys' fees and judgments may
         be entered upon any award made herein in any court having jurisdiction.

19.      NOTICES

19.0.1   Any notice or other communication required to be given or made
         hereunder shall be in writing and may be served by sending same by
         registered airmail electronic-mail, telex, facsimile or by delivering
         the same (against receipt) to the address of the party to be served to
         such address as may from time to time be notified by that party for the
         purpose.

19.0.2   Any notice served by post as aforesaid shall be deemed conclusively
         duly served five days after the same shall have posted. Notices served
         by telex aforesaid shall be deemed conclusively to have been served on
         the day following of the same, provided evidence of transmission
         appears on the particular notice

19.0.3   Notices to Manager shall be made as follows:

         Apollon Business Center- Building No. 2
         331, Kifisia Avenue, Kifisia
         145 61, Athens
         Phone: +30-210-6252849
         Fax: +30-210-6252817
         E-mail: maritime@stealth.gr

         Notices to Owner shall be made as follows:

         Apollon Business Center- Building No. 2
         331, Kifisia Avenue, Kifisia
         145 61, Athens
         Phone: +30-210-6250001-15
         Fax: +30-210-6250018-019
         E-mail: maritime@brave.gr

20.0     ENTIRE AGREEMENT

         This Agreement contains the entire agreement of the parties with
         respect to the subject matter hereof and supersedes all prior
         agreements and understandings, either verbal or written, between the
         parties with respect to such subject matter, and no amendment of any
         provision hereof will be binding upon any party unless in writing and
         signed by the party agreeing to such amendment.



                                                                         PAGE 11


/s/ Harry Vafias                                   /s/ illegible
--------------------------                         ----------------------------
FOR AND ON BEHALF OF OWNER                         FOR AND ON BEHALF OF MANAGER








                        RIGHT OF FIRST REFUSAL AGREEMENT

      This Right of First Refusal Agreement (this "Agreement") is made effective
as of , 2005 among: (a) Stealth Maritime Corporation S.A., a Liberian
corporation ("Stealth Maritime"); Harry N. Vafias, an individual residing at
Hydras 5, Kifissias, Athens, Greece (together with Stealth Maritime, the
"Grantors"); and (b) StealthGas Inc., a Marshall Islands company (the
"Company").

                                   BACKGROUND


      A.   The Company and its vessel owning subsidiaries have entered into that
           certain management agreement (the "Management Agreement") with
           Stealth Maritime whereby Stealth Maritime is responsible for the
           commercial, technical and strategic management of vessels owned by
           the Company.

      B.   The Company and its vessel owning subsidiaries desire to enter into
           an amended and restated management agreement, (the "Amended and
           Restated Management Agreement"), amending and restating the terms of
           and conditions of the Management Agreement governing the technical
           and commercial management of vessels owned by the Company.

      C.   In order to induce the Company to enter into the Amended and Restated
           Management Agreement and to facilitate the acquisition by the Company
           of additional vessels, which will also become subject to the Amended
           and Restated Management Agreement, each of the Grantors desires to
           grant the Company a right of first refusal to purchase or charter-in
           any liquefied petroleum gas vessels (a "Subject Vessel") which any of
           the Grantors, or any entity with respect to which Harry N. Vafias is
           an executive officer, director or the principal shareholder, may
           consider for acquisition or chartering-in in the future.

                                   AGREEMENT

      In order to induce the Company to enter into the Amended and Restated
Management Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantors and the Company
agree to the following:

      1.   Vessel Acquisition Restriction, Etc. Each of the Grantors agrees with
the Company that, from the date hereof and so long as: (i) Stealth Maritime, or
any entity with respect to which Harry N. Vafias is an executive officer,
director or the principal shareholder, manages vessels owned or chartered-in by
the Company and/or (ii) Harry N. Vafias is an executive officer or director of
the Company, it will (and Harry N. Vafias will ensure that each entity with
respect to which he is an executive officer, director or the principal
shareholder will):

            a.  promptly notify the Company of any acquisition or proposed
                acquisition by such Grantor, or by any entity with respect to
                which Harry N. Vafias is an executive officer, director or the
                principal shareholder, of a Subject Vessel by delivering a
                notice to the Company, advising it of the details of the
                acquisition or proposed acquisition of a Subject Vessel,
                including its terms, and offering to sell the Subject Vessel to
                the Company on substantially the same terms plus any costs of
                the Subject Vessel's acquisition and net costs of carrying the
                Subject Vessel since its acquisition; and

            b.  promptly notify the Company of any chartering-in or proposed
                chartering-in by such Grantor, or by any entity with respect to
                which Harry N. Vafias is an executive officer, director or the
                principal shareholder, of a Subject Vessel by delivering a
                notice to the Company, advising it of the details of the any
                chartering-in or proposed chartering-in of a Subject




                Vessel, including its terms, and offering the opportunity of
                chartering-in the Subject Vessel to the Company on substantially
                the same terms.

         2. Response Notice. Within five (5) business days after receipt of any
notice referred to in Section 1(a) or 1(b) above, the Company will have the
right, but not the obligation, to deliver to the Grantors a notice (a "Response
Notice") that states whether the Company wishes, as the case may be, either (x)
to purchase the Subject Vessel described in the notice referred to in Section
1(a) above upon the terms stated therein and subject to the negotiation and
execution of a memorandum of agreement or other contract of sale or (y) to
charter-in the Subject Vessel described in the notice referred to Section 1(b)
above upon the terms stated therein and subject to the negotiation and execution
of a charter party agreement. If the Company wishes to purchase or charter-in,
as the case may be, the Subject Vessel, the Company will have forty-five days
(45) after delivery of its Response Notice to complete the acquisition or enter
into a charter party agreement, as the case may be. If the Company fails to
deliver a Response Notice within the aforementioned five (5) business days, then
the Company will be deemed to have declined to purchase or charter-in, as the
case may be, the Subject Vessel and each of the Grantors, or any entity with
respect to which Harry N. Vafias is an executive officer, director or the
principal shareholder, will have the right to own and operate or charter-in the
same. The Company will have the right to designate any other entity to acquire
or charter-in the Subject Vessel so long as such entity is an affiliate of the
Company. The Company shall have no right to assign its rights hereunder except
as provided in this Section 2.

         3. Notices. All notices, requests, demands and other communications to
any party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission, or similar writing) and shall be given to such party at
its respective address or facsimile number set forth below or at such other
address or facsimile numbers as such party may hereafter specify for the purpose
by notice to the other party hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section 3 and
telephonic confirmation of receipt thereof is obtained or (ii) if given by mail,
prepaid overnight courier or any other means, when received at the address
specified in this Section or when delivery at such address is refused.

Notices to the Grantors shall be made as follows:

           Stealth Maritime
           Appollon Business Center - Building No. 2
           331, Kifissias Avenue, Kifisia
           14561, Athens, Greece
           Phone: +30 210 625 2849
           Fax: +30 210 625 2817

Notices to the Company shall be made as follows:



                                       2


           StealthGas Inc.
           331, Kifissias Avenue, Kifisia
           14561, Athens, Greece
           Phone: +30 210 625 2849
           Fax: +30 210 625 0018-019

         4. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with the laws of
England.

         5. Further Assurances. Each of the Grantors agrees to execute,
acknowledge and deliver all such instruments and take all such actions as the
Company from time to time may reasonably request in order to further effectuate
the purposes of this Agreement and to carry out the terms hereof and to better
assure and confirm to the Company its rights, powers and remedies hereunder.

         6. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs,
executors, administrators, successors and permitted assigns. This Agreement is
not assignable by either party without the prior written consent of the other
party except as provided in Section 2 hereof.

         7. Severability. If any term, covenant or condition of this Agreement
is held to be invalid, illegal or unenforceable in any respect, then this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision or part of a provision had never been contained in this Agreement.

         8. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of such
counterparts together shall constitute one agreement. To facilitate execution of
this Agreement, the parties may execute and exchange counterparts of signature
pages by telephone facsimile.




                            [Signature page follows.]



                                       3


         IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date set forth above.


                                    STEALTH MARITIME CORPORATION S.A.


                                    By:
                                        ----------------------------------------
                                    Name:
                                    Title:



                                    --------------------------------------------
                                    Harry N. Vafias


                                    STEALTHGAS INC.


                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:







--------------------------------------------------------------------------------

                                 STEALTHGAS INC.

                          2005 EQUITY COMPENSATION PLAN

--------------------------------------------------------------------------------

1.       Purpose of the Plan

         The purpose of this 2005 Equity Compensation Plan (the "Plan") is to
advance the interests of the Company and its stockholders by providing a means
(a) to attract, retain, and reward directors, officers, other employees and
persons who provide services to the Company and its Subsidiaries, and to enable
such persons to acquire or increase a proprietary interest in the Company in
order to promote a closer identity of interests between such persons and the
Company's stockholders, (b) to link compensation to measures of the Company's
performance in order to provide additional incentives, including stock-based
incentives and cash-based incentives, to such persons for the creation of
stockholder value, and (c) to enable such persons to acquire or increase a
proprietary interest in the Company in order to promote a closer identity of
interests between such persons and the Company's stockholders.

2.       Definitions

         Capitalized terms used in the Plan and not defined elsewhere in the
Plan shall have the meaning set forth in this Section.

         2.1 "Award" means a compensatory award made pursuant to the Plan
pursuant to which a Participant receives, or has the opportunity to receive
Shares or cash.

         2.2 "Award Agreement" means a written document prescribed by the
Committee and provided to a Participant evidencing the grant of an Award under
the Plan.

         2.3 "Beneficiary" means the person(s) or trust(s) entitled by will or
the laws of descent and distribution to receive any rights with respect to an
Award that survive such Participant's death provided that if at the time of a
Participant's death, the Participant had on file with the Committee a written
designation of a person(s) or trust(s) to receive such rights, then such
person(s) (if still living at the time of the Participant's death) or trust(s)
shall be the "Beneficiary" for purposes of the Plan.

         2.4 "Board" means the Board of Directors of the Company.

         2.5 "Committee" means the committee appointed by the Board to
administer the Plan or the Board, where the Board is acting as the Committee or
performing the functions of the Committee, as set forth in Section 3.

         2.6 "Company" means StealthGas Inc., a corporation organized under the
laws of the Republic of the Marshall Islands.

         2.7 "Participant" means any employee or director who has been granted
an Award under the Plan.

         2.8 "Shares" means common shares of the Company and such other
securities as may be substituted or resubstituted for Shares pursuant to Section
6.

                                       1


         2.9 "Subsidiary" means an entity that is, either directly or through
one or more intermediaries, controlled by the Company.

3.       Administration

         3.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board, unless the Board shall appoint a different committee.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, and that authority specifically reserved to the
Board under the terms of the Plan, the Company's Articles of Incorporation,
By-Laws, or applicable law shall be exercised by the Board and not by the
Committee. The Board shall serve as the Committee in respect of any Awards made
to any director of the Company who is not otherwise employed by the Company.

         3.2 Powers and Duties of Committee. In addition to the powers and
duties specified elsewhere in the Plan, the Committee shall have full authority
and discretion to:

             (a) adopt, amend, suspend, and rescind such rules and regulations
and appoint such agents as the Committee may deem necessary or advisable to
administer the Plan;

             (b) correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Award,
rules and regulations, Award Agreement, or other instrument hereunder;

             (c) make determinations relating to eligibility for and
entitlements in respect of Awards, and to make all factual findings related
thereto; and

             (d) make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or advisable
for the administration of the Plan. All determination and decisions of the
Committee shall be final and binding upon a Participant or any person claiming
any rights under the Plan from or through any Participant, and the Participant
or such other person may not further pursue his or her claim in any court of law
or equity or other arbitral proceeding.

             (e) Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
delegate, on such terms and conditions as it determines in its sole and absolute
discretion, to one or more senior executives of the Company (i) the authority to
make grants of Awards to officers (other than executive officers) and employees
of the Company and any Subsidiary and (ii) other administrative
responsibilities. Any such allocation or delegation may be revoked by the
Committee at any time.

         3.3 Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
Subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
behalf of the Committee or members thereof shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect to any such
action, determination, or interpretation.




                                       2





4.       Limitations on Awards

         4.1 Aggregate Number of Shares Available for Awards. The aggregate
number of Shares for which Awards may be granted under this Plan shall not
exceed 10% of the number of Shares issued and outstanding at the time any Award
is granted. Awards made under this Plan which are forfeited (including a
repurchase or cancellation of Shares subject thereto by the Company in exchange
for the price, if any, paid to the Company for such Shares, or for their par or
other nominal value), cancelled or have expired, shall be disregarded for
purposes of the preceding sentence.

         4.2 Type of Shares Deliverable. The Shares delivered in connection with
Awards may consist, in whole or in part, of authorized and unissued Shares, or
Shares acquired in the market for the account of a Participant.

5.       Awards

         5.1 Eligibility. The Committee shall have the discretion to select
Award recipients from among the following categories of eligible recipients: (i)
individuals who are employees (including officers) of the Company or any
Subsidiary, (ii) individuals who are members of the Board and not otherwise
employed by the Company or any Subsidiary, (iii) any other individual or entity
who provides substantial personal services to the Company or any Subsidiary,
(iv) any individual who has agreed to become an employee of the Company or a
Subsidiary, provided that no such person may receive any payment or exercise any
right relating to an Award until such person has commenced employment, and (v)
individuals formerly employed by the Company or any Subsidiary as compensation
in respect of their employment with the Company or any Subsidiary.

         5.2 Type of Awards. The Committee shall have the discretion to
determine the type of Awards to be granted under the Plan. Such Awards may be in
a form payable in either Shares or cash, including, but not limited to, options
to purchase Shares, restricted Shares, bonus Shares, appreciation rights, share
units, performance units and dividend equivalents. The Committee is authorized
to grant Awards as a bonus, or to grant Awards in lieu of obligations of the
Company or any Subsidiary to pay cash or grant other awards under other plans or
compensatory arrangements, to the extent permitted by such other plans or
arrangements. Shares issued pursuant to an Award in the nature of a purchase
right (e.g., options) shall be purchased for such consideration, paid for at
such times, by such methods, and in such forms, including cash, Shares, other
Awards, or other consideration, as the Committee shall determine.

         5.3 Terms and Conditions of Awards. The Committee shall determine the
size of each Award to be granted (including, where applicable, the number of
Shares to which an Award will relate), and all other terms and conditions of
each such Award (including, but not limited to, any exercise price, grant price,
or purchase price, any restrictions or conditions relating to transferability,
forfeiture, exercisability, or settlement of an Award, and any schedule or
performance conditions for the lapse of such restrictions or conditions, and
accelerations or modifications thereof, based in each case on such
considerations as the Committee shall determine). The Committee may determine
whether, to what extent, and under what circumstances an Award may be settled,
or the exercise price of an Award may be paid, in cash, Shares, other Awards, or
other consideration, or an Award may be canceled, forfeited, or surrendered.

         5.4 Option Repricing. As to any Award granted as an option to purchase
Shares or an appreciation right payable in Shares, the Committee is authorized
to subsequently reduce the applicable exercise price relating to such Award, or
take such other action as may be considered a repricing of such Award under
generally accepted accounting principles.



                                       3


         5.5 Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
Subsidiary, or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive payment from the
Company or any Subsidiary and in granting a new Award, the Committee may
determine that the value of any surrendered Award or award may be applied to
reduce the exercise price of any option or appreciation right or purchase price
of any other Award.

6.       Adjustments

         In the event of any change in the outstanding Shares by reason of any
Share dividend or split, reorganization, recapitalization, merger, amalgamation,
consolidation, spin-off, combination or exchange of Shares, repurchase,
liquidation, dissolution or other corporate exchange, any large, special and
non-recurring dividend or distribution to stockholders, or other similar
corporate transaction, the Committee may make such substitution or adjustment,
if any, as it deems to be equitable and in order to preserve, without enlarging,
the rights of Participants, as to (i) the number and kind of Shares which may be
delivered in connection with Awards granted thereafter, (ii) the number and kind
of Shares subject to or deliverable in respect of outstanding Awards, and (iii)
the exercise price, grant price or purchase price relating to any Award. In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including cancellation of
Awards in exchange for the intrinsic (i.e., in-the-money) value, if any, of the
vested portion thereof, substitution of Awards using securities or other
obligations of a successor or other entity, acceleration of the expiration date
for Awards, or adjustment to performance goals in respect of Awards) in
recognition of unusual or nonrecurring events (including events described in the
preceding sentence, as well as acquisitions and dispositions of businesses and
assets) affecting the Company, any Subsidiary or any business unit, or the
financial statements of the Company or any Subsidiary, or in response to changes
in applicable laws, regulations, or accounting principles. Notwithstanding the
foregoing, if any such event will result in the acquisition of all or
substantially all of the Company's outstanding Shares, then if the document
governing such acquisition (e.g., merger agreement) specifies the treatment of
outstanding Awards, such treatment shall govern without the need for any action
by the Committee.

7.       General Provisions

         7.1 Compliance with Laws and Obligations. The Company shall not be
obligated to issue or deliver Shares in connection with any Award or take any
other action under the Plan in a transaction subject to the registration
requirements of any applicable securities law, any requirement under any listing
agreement between the Company and any securities exchange or automated quotation
system, or any other law, regulation, or contractual obligation of the Company,
until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full. Certificates
representing Shares issued under the Plan will be subject to such stop-transfer
orders and other restrictions as may be applicable under such laws, regulations,
and other obligations of the Company, including any requirement that a legend or
legends be placed thereon.

         7.2 Limitations on Transferability. Awards and other rights under the
Plan will not be transferable by a Participant except to a Beneficiary in the
event of the Participant's death (to the extent any such Award, by its terms,
survives the Participant's death), and, if exercisable, shall be exercisable
during the lifetime of a Participant only by such Participant or his guardian or
legal representative; provided, however, that such Awards and other rights may
be transferred during the lifetime of the Participant, for purposes of the
Participant's estate planning or other purposes consistent with the purposes of
the Plan (as determined by the Committee), and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent permitted by the Committee. Awards and other rights under the Plan may
not be pledged,



                                       4


mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to
the claims of creditors. A Beneficiary, transferee, or other person claiming any
rights under the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award Agreement applicable to such
Participant, except as otherwise determined by the Committee, and to any
additional terms and conditions deemed necessary or appropriate by the
Committee.

         7.3 No Right to Continued Employment; Leaves of Absence. Neither the
Plan, the grant of any Award, nor any other action taken hereunder shall be
construed as giving any employee, consultant, director, or other person the
right to be retained in the employ or service of the Company or any of its
Subsidiaries (for the vesting period or any other period of time), nor shall it
interfere in any way with the right of the Company or any of its Subsidiaries to
terminate any person's employment or service at any time. Unless otherwise
specified in the applicable Award Agreement, (i) an approved leave of absence
shall not be considered a termination of employment or service for purposes of
an Award under the Plan, and (ii) any Participant who is employed by or performs
services for a Subsidiary shall be considered to have terminated employment or
service for purposes of an Award under the Plan if such Subsidiary is sold or no
longer qualifies as a Subsidiary of the Company, unless such Participant remains
employed by the Company or another Subsidiary.

         7.4 Taxes. The Company and any Subsidiary is authorized to withhold
from any delivery of Shares in connection with an Award, any other payment
relating to an Award, or any payroll or other payment to a Participant, amounts
of withholding and other taxes due or potentially payable in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company, its Subsidiaries and Participants to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to
withhold Shares or receive or accept Shares by way of repurchase, Participant
services, or other consideration and to make cash payments in respect thereof in
satisfaction of withholding tax obligations.

         7.5 Changes to the Plan and Awards. The Board may amend, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment shall be subject to the approval of the Company's stockholders at
or before the next annual meeting of stockholders for which the record date is
after the date of such Board action if such stockholders approval is required by
any applicable law, regulation or stock exchange rule, and the Board may
otherwise, in its discretion, determine to submit other such amendments to
stockholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under any Award theretofore granted. The Committee may amend,
suspend, discontinue, or terminate any Award theretofore granted and any Award
Agreement relating thereto; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under such Award. Any action taken by the Committee pursuant to
Section 6 shall not be treated as an action described in this Section 7.5.

         7.6 No Right to Awards; No Shareholder Rights. No Participant or other
person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Participants, employees,
consultants, or directors. No Award shall confer on any Participant any of the
rights of a shareholder of the Company unless and until Shares are duly issued
or transferred and delivered to the Participant in accordance with the terms of
the Award.

         7.7 Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations



                                       5


under the Plan to deliver cash, Shares, other Awards, or other consideration
pursuant to any Award, which trusts or other arrangements shall be consistent
with the "unfunded" status of the Plan unless the Committee otherwise
determines.

         7.8 Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor the submission of the Plan or of any amendment to stockholders for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements as it may deem desirable,
including the granting of awards otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.

         7.9 Successors and Assigns. The Plan and Award Agreements may be
assigned by the Company to any successor to the Company's business. The Plan and
any applicable Award Agreement shall be binding on all successors and assigns of
the Company and a Participant, including any permitted transferee of a
Participant, the Beneficiary or estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.

         7.10 Governing Law. The Plan and all Award Agreements shall be governed
by and construed in accordance with the laws of the Republic of the Marshall
Islands, without giving effect to any choice of law or conflict of law provision
or rule that would cause the application of the laws of any jurisdiction other
than the Republic of the Marshall Islands.

         7.11 Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.

         7.12 Plan Termination. Unless earlier terminated by the Board, the Plan
shall terminate on the day before the tenth anniversary of the later of the date
the Company's stockholders originally approved the Plan (August __, 2005) or the
date of any subsequent shareholder approval of the Plan. Upon any such
termination of the Plan, no new authorizations of grants of Awards may be made,
but then-outstanding Awards shall remain outstanding in accordance with their
terms, and the Committee otherwise shall retain its full powers under the Plan
with respect to such Awards.



                                       6







                                                                    Exhibit 10.4


The Form of Memorandum of Agreement for the following Identified Vessels is
identical with respect to each vessel with the exception of the following
specifications.

GAS ETERNITY

Agreement dated: June 22, 2005

Seller: Gass Success Limited

Buyer: Balcan Profit Limited

Classification Society/Class: BV

Built: 1998

By: Watanabe dockyard, Japan

Flag: Malta

Place of registration: Valetta, Malta

Call sign: DYAR

Grt/Nrt: 3,549/1,064

Register Number: IMO 9196450

Purchase Price: $12,912,500

Expected time of delivery of vessel: January 15 - February 15, 2006

Cancellation date: February 15, 2006 at buyer's option



GAS CATHAR

Agreement dated: June 28, 2005

Seller: Jungle Investment Limited

Buyer: Stellar Management Limited

Classification Society/Class: NK

Built: 2001

By: Watanabe Shipbuilding Co., Japan

Flag: Malta

Place of registration: Valetta, Malta

Call sign: H9PE

Grt/Nrt: 5,849/2,081

Register Number: 29954-KJ IMO 9250505


Purchase Price: $19,982,500

Expected time of delivery of vessel: November 1 - 30, 2005

Cancellation date: November 30, 2005 at buyer's option

Spares and Bunkers: There will be no payment for remaining unused bunkers.



GAS CRYSTAL

Agreement dated: June 22, 2005

Seller: East Technologies Limited

Buyer: Iceland Limited

Classification Society/Class: NK

Built: 1990

By: Shinhama Dockyard Ltd., Japan

Flag: Malta

Place of registration: Valetta, Malta

Call sign: 9HW07

Grt/Nrt: 3,888/1,167

Register number: IMO8913215/ON8887

Purchase price: $9,500,000

Expected time of delivery of vessel: November 1 - 30, 2005

Cancellation date: November 30, 2005 at buyer's option



GAS LEGACY

Agreement dated: June 22, 2005

Seller: Quicksilver Shipping Limited

Buyer: Northern Yield Shipping Limited

Classification Society/Class: NK

Built: 1998

By: Shitanoe Zosen, Japan

Flag: Cyprus

Place of registration: Limassol, Cyprus

Call sign: A3BM9

Grt/Nrt: 3,392/1,018

Register number: 9186948


Purchase price: $13,050,000

Expected time of delivery of vessel: November 1 - 30, 2005

Cancellation date: November 30, 2005 at buyer's option












                               ------------------------------------------------
                                Norwegian Shipbrokers' Association Memo-
                                randum of Agreement for sale and purchase of
                                ships. Adopted by the Baltic and International
MEMORANDUM OF AGREEMENT         Maritime Council (BIMCO) in 1956.
                                                  Code-name
                                                SALEFORM 1993
DATED:                          Revised 1966, 1983, 1986/87.
                               ------------------------------------------------


[                ], Sellers, have agreed to sell, and

[                ], hereunder called the Buyers, have agreed to buy

Name:

Classification Society/Class:



Built:                         By:

Flag:                          Place of Registration:

Call Sign:                     Grt/Nrt:


Register Number:

hereunder called the Vessel, on the following terms and considtions:

DEFINITIONS

"Banking days" are days on which banks are open both in the country of the
currency stipulated for the Purchase Price in Clause 1 and in the place of
closing stipulated in Clause 8.

"in writing" or "written" means a letter handed over from the Sellers to the
Buyers or vice versa, a registered letter, telex, telefax or other modem form
of written communication.

"Classification Society" or "Class" means the Society referred to in line 4.

1.   PURCHASE PRICE

2.   DEPOSIT

It has been agreed between both parties that there will be no 10% deposit lodged
by buyers, the sellers will receive at the time of the closing of title the 100%
purchase price of the vessel together with extra payment for bunkers and
lubricants remaining on board at the time of delivery.

3.   PAYMENT

The said Purchase Price shall be paid in full free of bank charges to sellers
bank on delivery of the Vessel, but not later than 3 banking days after the
Vessel is in every respect physically ready for delivery in accordance with the
terms and conditions of this Agreement and Notice of Readiness has been given in
accordance with Clause 5.

4.   INSPECTIONS

     The Buyers have inspected the Vessel and have accepted the Vessel following
     this inspection and the sale is outright and definite, subject only to the
     terms and conditions of this Agreement.

5.   NOTICES, TIME AND PLACE OF DELIVERY

a)   The Sellers shall keep the Buyers well informed of the Vessel's itinerary
     and shall provide the Buyers with 15, 10 and 5 days notice of the estimated
     time of arrival at the intended place of delivery. When the Vessel is at
     the place of delivery and in every respect physically ready for delivery in
     accordance with this Agreement, the Sellers shall give the Buyers a written
     Notice of Readiness for delivery.

b)   The Vessel shall be delivered and taken over safely afloat at a safe and
     accessible berth or anchorage or at sea worldwide but always within IWL.

     in the Sellers' option.

     Expected time of delivery:



                                   ----------
This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.



     Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): in buyers option

c)   If the Sellers anticipate that, notwithstanding the exercise of due
     diligence by them, the Vessel will not be ready for delivery by the
     cancelling date they may notify the Buyers in writing stating the date when
     they anticipate that the Vessel will be ready for delivery and propose a
     new cancelling date. Upon receipt of such notification the Buyers shall
     have the option of either cancelling this Agreement in accordance with
     Clause 14 within 7 running days of receipt of the notice or of accepting
     the new date as the new cancelling date. If the Buyers have not declared
     their option within 7 running days of receipt of the Sellers' notification
     or if the Buyers accept the new date, the date proposed in the Seller's
     notification shall be deemed to be the new cancelling date and shall be
     substituted for the cancelling date stipulated in line 61.

     If this Agreement is maintained with the new cancelling date all other
     terms and conditions hereof including those contained in Clauses 5 a) and 5
     c) shall remain unaltered and in full force and effect. Cancellation or
     failure to cancel shall be entirely without prejudice to any claim for
     damages the Buyers may have under Clause 14 for the Vessel not being ready
     by the original cancelling date.

d)   Should the Vessel become an actual, constructive or compromised total loss
     before delivery the deposit together with interest earned shall be released
     immediately to the Buyers whereafter this Agreement shall be null and void.

6.   DRYDOCKING/DIVERS INSPECTION

     There will be no drydocking or divers inspections however sellers will give
     buyers a document stating that vessel hasn't touched bottom for as long as
     its been under their ownership.

7.   SPARES/BUNKERS, ETC.

The Sellers shall deliver the Vessel to the Buyers with everything belonging to
her on board and on shore. All spare parts and spare equipment including spare
tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any,
belonging to the Vessel at the time of inspection used or unused, whether on
board or not shall become the Buyers' property, but spares on order are to be
excluded. Forwarding charges, if any, shall be for the Buyers' account. The
Sellers are not required to replace spare parts including spare tail-end
shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare
and used as replacement prior to delivery, but the replaced items shall be the
property of the Buyers. The radio installation and navigational equipment shall
be included in the sale without extra payment if they are the property of the
Sellers. Unused stores and provisions shall be included in the sale and be taken
over by the Buyers without extra payment.

The Sellers have the right to take ashore crockery, plates, cutlery, linen and
other articles bearing the Sellers' flag or name, provided they replace same
with similar unmarked items. Library, forms, etc., exclusively for use in the
Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers'
and Crew's personal belongings including the slop chest are to be excluded from
the sale, as well as the following additional items (including items on hire):

The Buyers shall take over the remaining bunkers and unused lubricating oils in
storage tanks and sealed drums and pay the current net market price (excluding
barging expenses) at the port and date of delivery of the Vessel.

Payment under this Clause shall be made at the same time and place and in the
same currency as the Purchase Price.

8.   DOCUMENTATION

The place of closing: athens

In exchange for payment of the Purchase Price the Sellers shall furnish the
Buyers with delivery documents, namely:

a)   Legal Bill of Sale in a form recordable in .............. (the country in
     which the Buyers are to register the Vessel), warranting that the Vessel is
     free from all encumbrances, mortgages and maritime liens or any other debts
     or claims whatsoever, duly legalized by the consul of such country



                                   ----------
This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.



     or other competent authority.

b)   Current Certificate of Ownership issued by the competent authorities of the
     flag state of the Vessel.

c)   Confirmation of Class issued within 72 hours prior to delivery.

d)   Current Certificate issued by the competent authorities stating that the
     Vessel is free from registered encumbrances.

e)   Certificate of Deletion of the Vessel from the Vessel's registry or other
     official evidence of deletion appropriate to the Vessel's registry at the
     time of delivery, or, in the event that the registry does not as a matter
     of practice issue such documentation immediately, a written undertaking by
     the Sellers to effect deletion from the Vessel's registry forthwith and
     furnish a Certificate or other official evidence of deletion to the Buyers
     promptly and latest within 4 (four) weeks after the Purchase Price has been
     paid and the Vessel has been delivered.

f)   Any such additional document as may reasonably be required by the competent
     authorities for the purpose of registering the Vessel, provided the Buyers
     notify the Sellers of any such documents as soon as possible after the date
     of this Agreement.

At the time of delivery the Buyers and Sellers shall sign and delivery to each
other a Protocol of Delivery and Acceptance confirming the date and time of
delivery of the Vessel from the Sellers to the Buyers.

At the time of delivery the Sellers shall hand to the Buyers the classification
certificate(s) as well as all plans etc., which are on board the Vessel. Other
certificates which are on board the Vessel shall also be handed over to the
Buyers unless the Sellers are required to retain same, in which case the Buyers
to have the right to take copies. Other technical documentation which may be in
the Sellers' possession shall be promptly forwarded to the Buyers at their
expense, if they so request. The Sellers may keep the Vessel's log books but the
Buyers to have the right to take copies of same.

9.   Encumbrances

The Sellers warrant that the Vessel, at the time of delivery, is free from all
charters, encumbrances, mortgages and maritime liens or any other debts
whatsoever. The Sellers hereby undertake to indemnify the Buyers against all
consequences of claims made against the Vessel which have been incurred prior to
the time of delivery.

10.  TAXES, ETC.

Any taxes, fees and expenses in connection with the purchase and registration
under the Buyers' flag shall be for the Buyers' account, whereas similar charges
in connection with the closing of the Sellers' register shall be for the
Sellers' account.

11.  CONDITION ON DELIVERY

The Vessel with everything belonging to her shall be at the Sellers' risk and
expense until she is delivered to the Buyers, but subject to the terms and
conditions of this Agreement she shall be delivered and taken over as she was at
the time of inspection, fair wear and tear excepted. However, the Vessel shall
be delivered with her class maintained without condition/recommendation*, free
of average damage affecting the Vessel's class, and with her classification
certificates and national certificates, as well as all other certificates the
Vessel had at the time of inspection, valid and without
condition/recommendation* by Class or the relevant authorities at the time of
delivery.

"Inspection" in this Clause 11, shall mean the Buyers' inspection according to
Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the
signing of this Agreement. If the Vessel is taken over without inspection, the
date of this Agreement shall be the relevant date.


*    Notes, if any, in the surveyor's report which are accepted by the
     Classification Society without condition/recommendation are not to be taken
     into account.

12.  name/markings


                                   ----------
This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.



          non applicable

13.  BUYERS' DEFAULT

Should the Purchase Price not be paid in accordance with Clause 3, the Sellers
have the right to cancel the Agreement, in which case the deposit together with
interest earned shall be released to the Sellers.

14.  SELLERS' DEFAULT

Should the Sellers fail to give Notice of Readiness in accordance with Clause 5
a) or fail to be ready to validly complete a legal transfer by the date
stipulated in line 61 the Buyers shall have the option of cancelling this
Agreement provided always that the Sellers shall be granted a maximum of 3
banking days after Notice of Readiness has been given to make arrangements for
the documentation set out in Clause 8. If after Notice of Readiness has been
given but before the Buyers have taken delivery, the Vessel ceases to be
physically ready for delivery and is not made physically ready again in every
respect by the date stipulated in line 61 and new Notice of Readiness given, the
Buyers shall retain their option to cancel. Should the Sellers fail to give
Notice of Readiness by the date stipulated in line 61 or fail to be ready to
validly complete a legal transfer as aforesaid they shall make due compensation
to the Buyers for their loss and for all expenses together with interest if
their failure is due to proven negligence and whether or not the Buyers cancel
this Agreement.

15.  BUYERS' REPRESENTATIVES

Non applicable

16.  ARBITRATION

a)*  This agreement shall be governed by and construed in accordance with
     English law and any dispute arising out of this Agreement shall be referred
     to arbitration in London in accordance with the Arbitration Acts 1950 and
     1979 or any statutory modification or re-enactment thereof for the time
     being in force, one arbitrator being appointed by each party. On the
     receipt by one party of the nomination in writing of the other party's
     arbitrator, that party shall appoint their arbitrator within fourteen days,
     failing which the decision of the single arbitrator appointed shall apply.
     If two arbitrators properly appointed shall not agree they shall appoint an
     umpire whose decision shall be final.



17.  SUBJECTS

Should the buyers fail to price the IPO by 20 Oct. then this moa will be
considered null and voice. In such case buyers to have no obligation to purchase
the vessel. Should the purchase price, following the stealthgas IPO pricing not
be paid in accordance with this agreement, the sellers have the right to cancel
the agreement, sellers shall be entitled to claim compensation for their losses
and for all expenses incurred together with interest.


FOR THE SELLERS                                       FOR THE BUYERS


-------------                                         ----------------


ATTORNEY-IN-FACT


                                   ----------
This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.







                               ------------------------------------------------
                                Norwegian Shipbrokers' Association Memo-
                                randum of Agreement for sale and purchase of
                                ships. Adopted by the Baltic and International
MEMORANDUM OF AGREEMENT         Maritime Council (BIMCO) in 1956.
                                                  Code-name
                                                SALEFORM 1993
DATED: 20TH JUNE 2005           Revised 1966, 1983, 1986/87.
                               ------------------------------------------------

  EMPIRE SPIRIT LTD, marshall islands hereunder called the Sellers, have agreed
                     to sell, and

  BARONESS HOLDINGS INC., marshall islands hereunder called the Buyers, have
                          agreed to buy

Name: SWEET DREAM

Classification Society/Class: NK



Built: 1997                    By: Fukuoka shipbuilding, Japan

Flag: Bahamas                  Place of Registration: Nassau, Bahamas

Call Sign: C6TW3                   Grt/Nrt: 4402 / 1321

Register Number: 8000864 / IMO 9151149


hereunder called Vessel, on the following terms and condition:

DEFINITIONS

"Banking days" are days on which banks are open both in the country of the
currency stipulated for the Purchase Price in Clause 1 and in the place of
closing stipulated in Clause 8.

"in writing" or "written" means a letter handed over from the Sellers to the
Buyers or vice versa, a registered letter, telex, telefax or other modern form
of written communication.

"Classification Society" or "Class" means the Society referred to in line 4.

1.   PURCHASE PRICE $14,000,000

2.   DEPOSIT

It has been agreed between both parties that there will be no 10% deposit lodged
by buyers, the sellers will receive at the time of the closing of title the 100%
purchase price of the vessel together with extra payment for bunkers and
lubricants remaining on board at the time of delivery.

3.   PAYMENT

The said Purchase Price shall be paid in full free of bank charges to sellers
bank

on delivery of the Vessel, but not later than 3 banking days after the Vessel is
in every respect physically ready for delivery in accordance with the terms and
conditions of this Agreement and Notice of Readiness has been given in
accordance with Clause 5.

4.   INSPECTIONS

     The Buyers have inspected the Vessel
     and have accepted the Vessel following this inspection and the sale is
     outright and definite, subject only to the terms and conditions of this
     Agreement.

5.   NOTICES, TIME AND PLACE OF DELIVERY

a)   The Sellers shall keep the Buyers well informed of the Vessel's itinerary
     and shall provide the Buyers with 15, 10 and 5 days notice of the estimated
     time of arrival at the intended place of delivery. When the Vessel is at
     the place of delivery and in every respect physically ready for delivery in
     accordance with this Agreement, the Sellers shall give the Buyers a written
     Notice of Readiness for delivery.

b)   The Vessel shall be delivered and taken over safely afloat at a safe and
     accessible berth or anchorage or at sea worldwide but always within IWL.

     in the Sellers' option.

     Expected time of delivery: 1-30 November 2005




This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.



     Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 30th of November
                                                               in buyers option

c)   If the Sellers anticipate that, notwithstanding the exercise of due
     diligence by them, the Vessel will not be ready for delivery by the
     cancelling date they may notify the Buyers in writing stating the date when
     they anticipate that the Vessel will be ready for delivery and propose a
     new cancelling date. Upon receipt of such notification the Buyers shall
     have the option of either cancelling this Agreement in accordance with
     Clause 14 within 7 running days of receipt of the notice or of accepting
     the new date as the new cancelling date. If the Buyers have not declared
     their option within 7 running days of receipt of the Sellers' notification
     or if the Buyers accept the new date, the date proposed in the Seller's
     notification shall be deemed to be the new cancelling date and shall be
     substituted for the cancelling date stipulated in line 61.

     If this Agreement is maintained with the new cancelling date all other
     terms and conditions hereof including those contained in Clauses 5 a) and 5
     c) shall remain unaltered and in full force and effect. Cancellation or
     failure to cancel shall be entirely without prejudice to any claim for
     damages the Buyers may have under Clause 14 for the Vessel not being ready
     by the original cancelling date.

d)   Should the Vessel become an actual, constructive or compromised total loss
     before delivery the deposit together with interest earned shall be released
     immediately to the Buyers whereafter this Agreement shall be null and void.

6.   DRYDOCKING/DIVERS INSPECTION

     There will be not drydocking or divers inspections however sellers will
     give buyers a document stating that vessel hasn't touched bottom for as
     along as its been under their ownership.

7.   SPARES/BUNKERS, ETC.

The Sellers shall deliver the Vessel to the Buyers with everything belonging to
her on board and on shore. All spare parts and spare equipment including spare
tail-end shaft(s) and/or spare propeller(s)/propeller blade(s). If any,
belonging to the Vessel at the time of inspection used or unused, whether on
board or not shall become the Buyers' property, but spares on order are to be
excluded. Forwarding charges, if any, shall be for the Buyers' account. The
Sellers are not required to replace spare parts including spare tail-end
shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare
and used as replacement prior to delivery, but the replaced items shall be the
property of the Buyers. The radio installation and navigational equipment shall
be included in the sale without extra payment if they are the property of the
Sellers. Unused stores and provisions shall be included in the sale and be taken
over by the Buyers without extra payment.

The Sellers have the right to take ashore crockery, plates, cutlery, linen and
other articles bearing the Sellers' flag or name, provided they replace same
with similar unmarked items. Library, forms, etc., exclusively for use in the
Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers'
and Crew's personal belongings including the slop chest are to be excluded from
the sale, as well as the following additional items (including items on hire):

There will be no payment for bunkers or lubricants since those belong to the
charterers.

8.   DOCUMENTATION

The place of closing: athens

In exchange for payment of the Purchase Price the Sellers shall furnish the
Buyers with delivery documents, namely:

a)   Legal Bill of Sale in a form recordable in .............. (the country in
     which the Buyers are to register the Vessel), warranting that the Vessel is
     free from all encumbrances, mortgages and maritime liens or any other debts
     or claims whatsoever, duly legalized by the consul of such country or other
     competent authority.

b)   Current Certificate of Ownership issued by the competent authorities of the
     flag state of the Vessel.

c)   Confirmation of Class issued within 72 hours prior to delivery.




This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.




d)   Current Certificate issued by the competent authorities stating that the
     Vessel is free from registered encumbrances.

e)   Certificate of Deletion of the Vessel from the Vessel's registry or other
     official evidence of deletion appropriate to the Vessel's registry at the
     time of delivery, or, in the event that the registry does not as a matter
     of practice issue such documentation immediately, a written undertaking by
     the Sellers to effect deletion from the Vessel's registry forthwith and
     furnish a Certificate or other official evidence of deletion to the Buyers
     promptly and latest within 4 (four) weeks after the Purchase Price has been
     paid and the Vessel has been delivered.

f)   Any such additional document as may reasonably be required by the competent
     authorities for the purpose of registering the Vessel, provided the Buyers
     notify the Sellers of any such documents as soon as possible after the date
     of this Agreement.

At the time of delivery the Buyers and Sellers shall sign and delivery to each
other a Protocol of Delivery and Acceptance confirming the date and time of
delivery of the Vessel from the Sellers to the Buyers.

At the time of delivery the Sellers shall hand to the Buyers the classification
certificate(s) as well as all plans etc., which are on board the Vessel. Other
certificates which are on board the Vessel shall also be handed over to the
Buyers unless the Sellers are required to retain same, in which case the Buyers
to have the right to take copies. Other technical documentation which may be in
the Sellers' possession shall be promptly forwarded to the Buyers at their
expense, if they so request. The Sellers may keep the Vessel's log books but the
Buyers to have the right to take copies of same.

9.   Encumbrances

The Sellers warrant that the Vessel, at the time of delivery, is free from all
charters, encumbrances, mortgages and maritime liens or any other debts
whatsoever. The Sellers hereby undertake to indemnify the Buyers against all
consequences of claims made against the Vessel which have been incurred prior to
the time of delivery.

10.  TAXES, ETC.

Any taxes, fees and expenses in connection with the purchase and registration
under the Buyers' flag shall be for the Buyers' account, whereas similar charges
in connection with the closing of the Sellers' register shall be for the
Sellers' account.

11.  CONDITION ON DELIVERY

The Vessel with everything belonging to her shall be at the Sellers' risk and
expense until she is delivered to the Buyers, but subject to the terms and
conditions of this Agreement she shall be delivered and taken over as she was at
the time of inspection, fair wear and tear excepted.

However, the Vessel shall be delivered with her class maintained without
condition/recommendation*, free of average damage affecting the Vessel's class,
and with her classification certificates and national certificates, as well as
all other certificates the Vessel had at the time of inspection, valid and
without condition/recommendation* by Class or the relevant authorities at the
time of delivery.

"Inspection" in this Clause 11, shall mean the Buyers' inspection according to
Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the
signing of this Agreement. If the Vessel is taken over without inspection, the
date of this Agreement shall be the relevant date.


*    Notes, if any, in the surveyor's report which are accepted by the
     Classification Society without condition/recommendation are not to be taken
     into account.

12.  name/markings

     non applicable

13.  BUYERS' DEFAULT

Should the Purchase Price not be paid in accordance with Clause 3, the Sellers
have the right to


This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.




cancel the Agreement, in which case the deposit together with interest earned
shall be released to the Sellers.

14.  SELLERS' DEFAULT

Should the Sellers fail to give Notice of Readiness in accordance with Clause 5
a) or fail to be ready to validly complete a legal transfer by the date
stipulated in line 61 the Buyers shall have the option of cancelling this
Agreement provided always that the Sellers shall be granted a maximum of 3
banking days after Notice of Readiness has been given to make arrangements for
the documentation set out in Clause 8. If after Notice of Readiness has been
given but before the Buyers have taken delivery, the Vessel ceases to be
physically ready for delivery and is not make physically ready again in every
respect by the date stipulated in line 61 and new Notice of

Readiness given, the Buyers shall retain their option to cancel. Should the
Sellers fail to give Notice of Readiness by the date stipulated in line 61 or
fail to be ready to validly complete a legal transfer as aforesaid they shall
make due compensation to the Buyers for their loss and for all expenses together
with interest if their failure is due to proven negligence and whether or not
the Buyers cancel this Agreement.

15.  BUYERS' REPRESENTATIVES

Non applicable

16.  ARBITRATION

a)*  This agreement shall be governed by and construed in accordance with
     English law and any dispute arising out of this Agreement shall be referred
     to arbitration in London in accordance with the Arbitration Acts 1950 and
     1979 or any statutory modification or re-enactment thereof for the time
     being in force, one arbitrator being appointed by each party. On the
     receipt by one party of the nomination in writing of the other party's
     arbitrator, that party shall appoint their arbitrator within fourteen days,
     failing which the decision of the single arbitrator appointed shall apply.
     If two arbitrators properly appointed shall not agree they shall appoint an
     umpire whose decision shall be final.

17.  SUBJECTS

Should the buyers fail to price the IPO by 20 Oct. then this moa will be
considered null and void. In such case buyers to have no obligation to purchase
the vessel. Should the purchase price, following the stealthgas IPO pricing not
be paid in accordance with this agreement, the sellers have the right to cancel
the agreement, sellers shall be entitled to claim compensation for their losses
and for all expenses incurred together with interest.

Charterers have to approve the new owners taking over the existing charterparty
within 3 working days otherwise the deal is null and void.

18.  CHARTER

The vessel will be delivered with bareboat attached to REO investments s.a
running until december 2005 (about). Buyers have read and accepted all terms of
the charterparty.



FOR THE SELLERS                                       FOR THE BUYERS

/s/ illegible                                         /s/ Harry Vafias

ATTORNEY-IN-FACT                                      Harry Vafias



This contract is a computer generated copy of the SALEFORM 1993 form, printed
under license from the Norwegian Shipbrokers' Association, using the BIMCO
Charter Party Editor. Any insertion or deletion to the form must be clearly
visible. In event of any modification being made to the preprinted text of this
document, which is not clearly visible, the original document, as recommended by
BIMCO, shall apply. The Norwegian Shipbrokers' Association and BIMCO assume no
responsibility for any loss or damage caused as a result of discrepancies
between the original document and this document.









Exhibit 10.6

The Form of Share Purchase Agreement for the following Identified Vessels is
identical with respect to each vessel with the exception of the following
specifications.

GAS ORACLE

Owner: Independent Trader Ltd., a Marshall Islands company

Purchase Price: $5,000,000

Shares: 100 registered shares, $0.01 par value



GAS CHIOS

Owner: Continent Gas Inc., a Marshall Islands company

Purchase price: $11,000,000

Shares: 100 registered shares, $0.01 par value



GAS PRODIGY

Owner: Gaz de Brazil Inc., a Marshall Islands company

Purchase price: $9,500,000

Shares: 100 registered shares, $0.01 par value


SWEET DREAM

Owner: Empire Spirit Ltd., a Marshall Islands company

Purchase Price: $14,000,000

Shares: 100 registered shares, $0.01 par value



Exhibit 10.6

                            STOCK PURCHASE AGREEMENT

         This STOCK PURCHASE AGREEMENT dated as of August _____, 2005 (the
"Agreement"), by and among Stealth Maritime Corporation S.A., a Liberian company
("Stealth Maritime"), [            ], a [             ] company (the "Owner"),
and StealthGas Inc., a Marshall Islands company ("StealthGas").

         WHEREAS, Stealth Maritime caused the Owner to be incorporated and to
acquire the [  ] (the "Vessel");

         WHEREAS, Stealth Maritime desires to cause the Owner to issue to
StealthGas [ ] registered shares (the "Shares") of common stock, $[ ] par value,
of the Owner; and

         WHEREAS, StealthGas desires to pay Stealth Maritime $[      ] as
consideration for causing the Owner to issue the shares of the Owner;

         NOW, THEREFORE, in consideration of, and subject to, the mutual
promises, agreements, terms and conditions made herein, and intending to be
legally bound, the parties hereto do hereby agree as follows: ARTICLE 1.

                                PURCHASE AND SALE
Section 1.01. Purchase and Sale of the Shares. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Stealth Maritime shall cause
the Owner to issue to StealthGas all of its issued and outstanding shares of
common stock, and StealthGas shall pay to Stealth Maritime the sum of $[ ] in
cash, in consideration for causing the Owner to issue all of its issued and
outstanding shares of common stock to StealthGas.
Section 1.02. Closing. The closing of the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall take place at such time,
date and place no later than thirty (30) calendar days after satisfaction (or
waiver as provided herein) of the conditions set forth in Article 4 (other than
those conditions that by their nature will be satisfied at the Closing) as shall
be mutually agreed in writing by the parties hereto. The date on which the
Closing occurs is referred to herein as the "Closing Date." Section 1.03.
Deliveries. At the Closing, Stealth Maritime will cause the Owner to issue and
deliver, and the Owner hereby agrees to issue and deliver, to StealthGas stock
certificates evidencing the Shares duly registered in the name of StealthGas
with necessary tax stamps affixed against delivery by StealthGas of $[ ] to
Stealth Maritime by wire transfer of immediately available funds to an account
designated by Stealth Maritime at least one day prior to the Closing Date.

                                   ARTICLE 2.


                   REPRESENTATIONS AND WARRANTIES OF THE OWNER

     Stealth Maritime represents and warrants to StealthGas that each statement
contained in this Article 2 is true and correct as of the date hereof.

     Section 2.01. Organization, Authority, Etc. of Stealth Maritime. Stealth
Maritime is a corporation duly organized, validly existing and in good standing
under the laws of Liberia, with all requisite corporate authority to conduct its
business as it is now being conducted and to own its properties and to lease
those properties leased by it.

     Section 2.02. Organization, Authority, Etc. of the Owner. The Owner is a
corporation duly organized, validly existing and in good standing under the laws
of the Marshall Islands, with all requisite corporate authority to own and
operate the Vessel. The Owner has not conducted any business except business
related to the ownership and operation of the Vessel nor does the Owner have any
assets or liabilities other than those associated with the Vessel and such
business.

     Section 2.03. Material Liabilities. All material liabilities of the Owner
are reflected in the financial statements of the Vafias Group of LPG Carriers
for the period ended December 31, 2004 and the six-month period ended June 30,
2005 which are included in the draft Registration Statement on Form F-1 of
StealthGas, dated August 29, 2005. Since the date of those financial statements
the Owner has not incurred any additional material liabilities.

     Section 2.04. Capitalization. The Shares, when issued to StealthGas will be
duly and validly issued, free of preemptive rights, fully paid and
non-assessable. The Shares, when so issued, will constitute the only issued and
outstanding shares of the capital stock of the Owner and there are no
outstanding options, warrants or other rights entitling any person to acquire
any capital stock or other securities of the Owner.

     Section 2.05. Operating Condition. The Vessel is in good operating
condition (subject to normal wear and tear), free from any material defects, the
Vessel is in-class and is not in need of any material repairs and is insured
against those types of risks and in amounts of coverage consistent with those
amounts generally carried by other shipping companies.

     Section 2.06. Consents. Any necessary consents of third parties, including
any government agency, any lender, charterer or any other person, necessary in
connection with the issuance of shares of the Owner have been obtained without
any material conditions.

     Section 2.07. Litigation. As of the date of this Agreement, there are no
pending or threatened claims, including claims by charterers relating to the
Vessel.

                                   ARTICLE 3.

                          COVENANTS OF STEALTH MARITIME

     Section 3.01. Indebtedness; Release of Liens. On or prior to the Closing
Date, Stealth Maritime shall cause all of the Owner's bank debt relating to the
Vessel to be extinguished. On or prior to the Closing Date, Stealth Maritime
shall have caused to be released any mortgage,


                                      -2-



lien, pledge, charge, security interest or any other encumbrance in and upon the
Owner's assets or properties, including the Vessel. ARTICLE 4.


                              CONDITIONS TO CLOSING

     Section 4.01. Conditions to Obligations of StealthGas. The obligations of
StealthGas to consummate the sale of Shares contemplated by this Agreement are
subject to the satisfaction on or prior to the Closing Date of the condition
that each of the representations and warranties of Stealth Maritime set forth in
this Agreement shall be true and correct at and as of the Closing Date as if
made at and as of the Closing Date and Stealth Maritime shall have performed or
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with at or prior to the Closing Date;
and Stealth Maritime, as of the Closing Date, shall be deemed to have certified
that the representations and warranties of Stealth Maritime set forth in this
Agreement are true and correct as if made at and as of the Closing Date and that
Stealth Maritime has performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with at or prior to the Closing Date.

     Section 4.02. Conditions to Obligations of StealthGas and Stealth Maritime.
The obligations of StealthGas and Stealth Maritime to consummate the sale of
Shares contemplated by this Agreement are subject to the consummation of the
initial public offering of the common stock of StealthGas on or prior to the
Closing Date.

                                   ARTICLE 5.

                                  MISCELLANEOUS

     Section 5.01. Choice of Law. This Agreement shall be construed in
accordance with the laws of Greece without giving effect to the conflicts of law
principles thereof.

     Section 5.02. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties in respect of the transactions
contemplated herein and supersedes any previous agreements and understandings
(written or oral), including, without limitation, the memorandum of agreement
with respect to the sale of the Vessel to a subsidiary of the Owner, among the
parties or any of them with respect thereto.

     Section 5.03. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.

     Section 5.04. Headings. The article and section headings of this Agreement
are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.

     Section 5.05. Severability. In case any of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, any such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement,

                                      -3-



but this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to make it valid, legal, and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal, or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision or part of
a provision had never been contained in this Agreement.

     Section 5.06. Amendments. This Agreement may be amended, modified or
supplemented only by a written instrument signed by StealthGas and Stealth
Maritime.

     Section 5.07. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original but all of which together shall constitute
one and the same document.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



IN WITNESS WHEREOF, the parties hereto have executed or caused this Stock
Purchase Agreement to be executed as of the date set forth above.

                                   STEALTHGAS INC.


                                   By: ____________________________________
                                       Name:
                                       Title:

                                   STEALTH MARITIME CORPORATION S.A.


                                   By: ______________________________________
                                       Name:
                                       Title:

                                   [                     ]

                                   By: ______________________________________
                                       Name:
                                       Title:




                 Signature Page to [ ] Stock Purchase Agreement





















                               Date 16 March 2005





                  MATRIX GAS TRADING LTD., GAZ DE BRAZIL INC.,
               VCM TRADING LTD., GENEVE BUTANE INC., LPGONE LTD.,
                 SEMICHLAUS EXPORTS LTD., VENTSPILS GASES LTD.,
                    PACIFIC GASES LTD., ARACRUZ TRADING LTD.,
                  INDUSTRIAL MATERIALS INC. AND STEALTHGAS INC.
                         as joint and several borrowers




                                     - and -




                          FORTIS BANK (NEDERLAND) N.V.
                                    as Lender




                -------------------------------------------------
                                 LOAN AGREEMENT
                -------------------------------------------------



            relating to a US$54,000,000 facility to part finance the
                   cost of the LPG carriers "GAS AMAZON", "GAS
                  ARCTIC", "GAS ICE" and "BIRGIT KOSAN" and to
           refinance part of the acquisition cost of the LPG carriers
                      "GAS EMPEROR", "GAS COURCHEVAL", "GAS
                   PRODIGY", "GAS SHANGHAI", "GAS PROPHET" and
                                   "GAS TINY"





                                      INDEX

CLAUSE                                                               PAGE

1        INTERPRETATION                                                 3

2        FACILITY                                                      20

3        DRAWDOWN                                                      20

4        INTEREST                                                      20

5        INTEREST PERIODS                                              22

6        DEFAULT INTEREST                                              22

7        REPAYMENT AND PREPAYMENT                                      23

8        CONDITIONS PRECEDENT                                          25

9        REPRESENTATIONS AND WARRANTIES                                26

10       GENERAL UNDERTAKINGS                                          27

11       CORPORATE UNDERTAKINGS                                        30

12       INSURANCE                                                     31

13       SHIP COVENANTS                                                35

14       SECURITY COVER                                                39

15       PAYMENTS AND CALCULATIONS                                     40

16       APPLICATION OF RECEIPTS                                       40

17       APPLICATION OF EARNINGS                                       41

18       EVENTS OF DEFAULT                                             43

19       FEES AND EXPENSES                                             46

20       INDEMNITIES                                                   47

21       NO SET-OFF OR TAX DEDUCTION                                   49

22       ILLEGALITY, ETC                                               49

23       INCREASED COSTS                                               50

24       SET-OFF                                                       51

25       TRANSFERS AND CHANGES IN LENDING OFFICE                       51


                                        2





26       VARIATIONS AND WAIVERS                                        52

27       NOTICES                                                       53

28       JOINT AND SEVERAL LIABILITY                                   54

29       SUPPLEMENTAL                                                  55

30       LAW AND JURISDICTION                                          55

SCHEDULE 1  DRAWDOWN NOTICE                                            57

SCHEDULE 2  DETAILS OF BORROWERS                                       58

SCHEDULE 3  DETAILS OF SHIPS                                           60

SCHEDULE 4  CONDITION PRECEDENT DOCUMENTS                              61


EXECUTION PAGE                                                         64


THIS AGREEMENT is made on 16 March 2005

BETWEEN

(1)      MATRIX GAS TRADING LTD., GAZ DE BRAZIL INC., VCM TRADING LTD., GENEVE
         BUTANE INC., LPGONE LTD., SEMICHLAUS EXPORTS LTD., VENTSPILS GASES
         LTD., PACIFIC GASES LTD., ARACRUZ TRADING LTD., INDUSTRIAL MATERIALS
         INC. and STEALTHGAS INC. as joint and several borrowers; and

(2)      FORTIS BANK (NEDERLAND) N.V., acting through its office at Coolsingel
         93, 3012 AE Rotterdam, The Netherlands as "LENDER".

BACKGROUND

(A)      The Lender has agreed to make available to the Borrowers a facility in
         up to 10 Advances of up to the lesser of (a) US$54,000,000 and (b) an
         amount equal to 62 per cent. of the lesser of (i) the aggregate of the
         Market Value of the Ships and (ii) the aggregate of the Purchase Price
         of the Ships, for the purpose of part financing or refinancing (as the
         case may be) the Purchase Price of each Ship.

(B)      The Borrowers may, if they wish, from time to time hedge their exposure
         under this Agreement to interest rate fluctuations by entering into
         interest rate swap transactions with the Lender.

IT IS AGREED as follows:



1        INTERPRETATION

1.1      DEFINITIONS. Subject to Clause 1.5, in this Agreement:

         "ACCOUNTING INFORMATION" means the annual audited combined accounts to
         be provided by the Borrowers to the Lender in accordance with Clause
         10.6;



                                       3


         "ACCOUNTS SECURITY DEED" means a deed creating security in respect of
         the Earnings Account and the Retention Account, to be in favour of the
         Lender, in such form as the Lender may approve or require;

         "ADVANCE" means the principal amount of each borrowing by the Borrowers
         under this Agreement;

         "APPROVED MANAGER" means, in relation to a Ship, Stealth, being the
         commercial manager of the Ship and either V Ships Cyprus whose
         principal office is at V. Ships House, 13 Omonia Avenue, 3312 Limassol,
         Cyprus, or TESMA Denmark A/S. whose principal office is at Camillo
         Eitzen House, Smakkedalen 8, DK 2820, Gentofte, Denmark, or TESMA
         Singapore Pte Ltd whose principal office is at 30 Old Toh Tuck Road,
         #05-04 Sembawang Kimtrans Logistics Centre, Singapore 597654,
         Singapore, being the technical manager of the Ship or any other company
         which the Lender may approve from time to time as the commercial and/or
         technical manager of the Ship;

         "ARACRUZ" means Aracruz Trading Ltd. a company incorporated and
         existing under the laws of the Marshall Islands and having its
         registered office is at Trust Company Complex, Ajeltake Road, Ajeltake
         Island, Majuro, Marshall Islands, MH96960;

         "ASSET COVER RATIO" means at any time, the ratio of:

         (a)      the aggregate of:

                  (i)      the aggregate Market Values of the Ships then subject
                           to a Mortgage; and

                  (ii)     the net realisable value of any additional security
                           previously provided under Clause 14 of this
                           Agreement; to

         (b)      the Loan;

         "AVAILABILITY PERIOD" means the period commencing on the date of this
         Agreement and ending on:

         (a)      30 May 2005 (or such later date as the Lender may agree with
                  the Borrowers, such agreement not to be unreasonably withheld
                  by the Lender); or

         (b)      if earlier, the date on which the Commitment is fully
                  borrowed, cancelled or terminated;

         "BAREBOAT CHARTER" means, each of the BIRGIT KOSAN Bareboat Charter and
         the GAS ICE Bareboat Charter, and in the plural means both of them;

         "BAREBOAT CHARTERER" means, in the case of "BIRGIT KOSAN", Exmar Kosan
         and, in the case of "GAS ICE", Finaval, and in the plural means both of
         them;

         "BIRGIT KOSAN BAREBOAT CHARTER" means the bareboat charterparty in
         relation to "BIRGIT KOSAN" dated 4 January 2005 and entered into
         between Industrial as owner and Exmar Kosan as bareboat charterer;

         "BIRGIT KOSAN BAREBOAT CHARTER PERIOD" means, the period during which
         "BIRGIT KOSAN" is operating under the BIRGIT KOSAN Bareboat Charter;


                                       4


         "BIRGIT KOSAN MOA" means a memorandum of agreement dated 5 January 2005
         and entered into between Maryse as seller and Industrial (as nominee of
         Stealth) as buyer in relation to the sale and purchase of "BIRGIT
         KOSAN";

         "BIRGIT KOSAN TRIPARTITE AGREEMENT" means the agreement dealing with
         (inter alia) the operation of "BIRGIT KOSAN" during the BIRGIT KOSAN
         Bareboat Charter Period, made or to be made between (i) Industrial,
         (ii) Exmar Kosan and (iii) the Lender, in such form as the Lender may
         approve or require;

         "BORROWERS" means, together, Matrix, Gaz, VCM, Geneve, Lpgone,
         Semichalaus, Ventsplis, Pacific, Aracruz, Industrial and Stealthgas,
         and in the singular means any of them; "BUSINESS DAY" means a day on
         which banks are open in London, Piraeus, Rotterdam and, in respect of a
         day on which a payment is required to be made under a Finance Document,
         also in New York City;

         "BUSINESS DAY" means a day in which banks are open in London, Piraeus,
         Rotterdam and, in respect of a day on which payment is required to be
         made under a Finance Document, also in New York City;

         "BUYERS" means, together, Ventspils, Semichlaus, Aracruz and Industrial
         in their capacity as the buyers of "GAS ARCTIC", "GAS ICE", "GAS
         AMAZON" and "BIRGIT KOSAN" respectively pursuant to the MOAs, and in
         the singular means any of them;

         "CHARTER" means, in relation to a Ship, any time charter or other
         contract for its employment (other than the Bareboat Charter relative
         to that Ship) for a term of at least 12 months, or capable of exceeding
         12 months, whether or not already in existence at the date of this
         Agreement, to be performed at any time during the Security Period;

         "CHARTER ASSIGNMENT" means in relation to a Ship, a specific assignment
         of the rights of the relevant Shipowner under any future Charter
         pursuant to Clause 13.15 and any quarantee of such Charter, to be
         executed by that Shipowner in favour of the Lender in such form as the
         Lender may approve or require;

         "COMMITMENT" means $54,000,000, as that amount may be reduced,
         cancelled or terminated in accordance with this Agreement;

         "CONFIRMATION" and "EARLY TERMINATION DATE", in relation to any
         continuing Transaction, have the meanings given in the Master
         Agreement;

         "CONTRACTUAL CURRENCY" has the meaning given in Clause 20.4;

         "DEBT TO VALUE RATIO" means, at any relevant time, the ratio of the
         Loan to the aggregate Market Value of the Ships subject to a Mortgage
         at that time;

         "DEED OF COVENANT" means, in relation to each of "GAS EMPEROR", "GAS
         ICE" and "GAS ARTIC", a deed of covenant collateral to the Mortgage
         relating to that Ship executed or to be executed by the relevant
         Shipowner in favour of the Lender in such form as the Lender may
         approve or require and, in the plural, means all of them;

         "DELIVERY DATE" means, in relation to a Ship, the date on which that
         Ship is delivered to the relevant Buyer pursuant to the MOA relative to
         that Ship;

         "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 Borrowers for the Advance to be made, or (as the context requires)
         the date on which the Advance is actually made;


                                       5


         "DRAWDOWN NOTICE" means a notice in the form set out in Schedule 1 (or
         in any other form which the Lender 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
         Shipowner owning the Ship 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 Shipowner owning the Ship 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

         (c)      if and whenever the Ship is employed on terms whereby any
                  moneys falling within paragraphs (a) or (b) 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 an account in the joint names of the Borrowers
         with the Lender in Rotterdam designated "Matirx Gas Trading Ltd. c.s. -
         Earnings Account" and having account number 25.33.05.535, or any other
         account (with that or another office of the Lender) which is designated
         by the Lender as the Earnings Account for the purposes of this
         Agreement;

         "EAST GATE" means East Gate Shipping Limited, a company incorporated
         and existing under the laws of Hong Kong and having its registered
         office at 28 Sankt Annae Plads P.O. Box 2147, 1291 Copenhagen K,
         Denmark;

         "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
                  and/or any Vessel and/or any operator or manager of the Ship
                  is at fault or allegedly at fault or otherwise liable to any
                  legal or administrative action; or


                                       6


         (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 any Vessel 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;

         "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 18.1;

         "EXCESS CASH FLOW" means, in relation to each financial year of the
         Holding Company, an amount equal to the actual aggregate gross
         operating revenues of all the Ships during that financial year (or
         budgeted gross operating revenue in the case of the final month of that
         financial year) less the aggregate of:

         (a)      the amount of principal and interest payable during that
                  financial year in accordance with the terms of this Agreement;
                  and

         (b)      actual gross operating expenses of all the Ships during that
                  financial year (or budgeted gross operating expenses in the
                  case of the final month of that financial year) including (for
                  the avoidance of doubt) expenditure necessarily incurred in
                  that financial year by the Shipowners in operating, insuring,
                  maintaining, repairing and generally trading the Ships (but
                  excluding any exceptional and extraordinary expenses);

         "EXMAR KOSAN" means Exmar Kosan Ltd., a company incorporated and
         existing under the laws of Hong Kong;

         "FINANCE DOCUMENTS" means:

         (a)      this Agreement;

         (b)      the Master Agreement;

         (c)      the Mortgages;

         (d)      the Deeds of Covenant;

         (e)      the General Assignments;

         (f)      the Master Agreement Assignment;

         (g)      the Accounts Security Deed;

         (h)      the Tripartite Agreements;

         (i)      the GAS ARCTIC Charter Assignment;

         (j)      any Charter Assignment; and


                                       7


         (k)      any other document (whether creating a Security Interest or
                  not) which is executed at any time by any Borrower 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 Lender under this Agreement or any of
                  the other 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 foreign exchange transaction 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;

         "FINAVAL" means Finaval S.P.A., a company incorporated under the laws
         of Italy and having its registered office at Via Maurizio Bufalini 8,
         00161 Rome, Italy;

         "GAS AMAZON MOA" means a memorandum of agreement dated 13 January 2005
         and entered into between East Gate as seller and Aracruz as buyer in
         relation to the sale and purchase of "GAS AMAZON";

         "GAS ARCTIC CHARTER ASSIGNMENT" means in relation to the GAS ARCTIC
         Time Charterparty, a specific assignment of the rights of Ventspils
         under the GAS ARCTIC Time Charterparty, to be executed by Ventspils in
         favour of the Lender in such form as the Lender may approve or require;

         "GAS ARCTIC MOA" means a memorandum of agreement dated 10 January 2005
         and entered into between Transporti as seller and Ventspils as buyer in
         relation to the sale and purchase of "GAS ARCTIC";

         "GAS ARCTIC TIME CHARTERPARTY" means the time charterparty entered or
         to be entered into between Ventspils as owner and Finaval as charterer
         in relation to "GAS ARCTIC", in such form as the Lender may approve or
         require;

         "GAS ICE BAREBOAT CHARTER" means the bareboat charterparty in relation
         to "GAS ICE" dated 23 February 2005 and entered into between Semichlaus
         as owner and Finaval as bareboat charterer;

         "GAS ICE BAREBOAT CHARTER PERIOD" means the period during which "GAS
         ICE" is operating under the GAS ICE Bareboat Charter;


                                       8



         "GAS ICE MOA" means a memorandum of agreement dated 10 January 2005 and
         entered into between Transporti as seller and Semichlaus as buyer in
         relation to the sale and purchase of "GAS ICE";

         "GAS ICE TRIPARTITE AGREEMENT" means an agreement dealing with (inter
         alia) the operation of "GAS ICE" during the GAS ICE Bareboat Charter
         Period, made or to be made between (i) Semichlaus, (ii) Finaval and
         (iii) the Lender, in such form as the Lender may approve or require;

         "GAZ" means Gaz de Brazil Inc., a company incorporated and existing
         under the laws of the Marshall Islands and having its registered office
         is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
         Marshall Islands, MH96960;

         "GENERAL ASSIGNMENT" means, in relation to each Ship, a general
         assignment of the Earnings, the Insurances and any Requisition
         Compensation of that Ship, in such form as the Lender may approve or
         require, and in the plural means all of them;

         "GENEVE" means Geneve Butane Inc., a company incorporated and existing
         under the laws of the Marshall Islands and having its registered office
         is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
         Marshall Islands, MH96960;

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

         "HOLDING COMPANY" means Stealthgas in its capacity as ultimate
         beneficial owner of each of the other Borrowers;

         "INDUSTRIAL" means Industrial Materials Inc., a company incorporated
         and existing under the laws of the Marshall Islands and having its
         registered office is at Trust Company Complex, Ajeltake Road, Ajeltake
         Island, Majuro, Marshall Islands, MH96960;

         "INSURANCES" means, in relation to a Ship:

         (a)      all policies and contracts of insurance, including entries of
                  the Ship in any protection and indemnity or war risks
                  association, which are effected in respect of the Ship, her
                  Earnings or otherwise in relation to 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 5;

         "ISM CODE" means, in relation to its application to each Borrower, 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


                                       9


                  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 each Ship within the periods specified by the ISM Code; and

         (b)      all other documents and data which are relevant to the ISM SMS
                  and its implementation and verification which the Lender may
                  require; and

         (c)      any other documents which are prepared or which are otherwise
                  relevant to establish and maintain a Ship's or a Shipowner's
                  compliance with the ISM Code which the Lender 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;

         "LENDER" means Fortis Bank (Netherland) N.V., acting through its branch
         at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (or through
         another branch notified to the Borrower under Clause 25.6) or its
         successor or assign;

         "LAURITZEN" meand Lauritzen Kosan A/S, a company incorporated in
         Denmark and having its registered office at 28 Sankt Annae Plads, P.O.
         Box 2147, 1291 Copenhagen K, Denmark;

         "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 Telerate
                  Page 3750 at or about 11.00 a.m. (London time) on the second
                  Business Day prior to the commencement of that Interest Period
                  (and, for the purposes of this Agreement, "Telerate Page 3750"
                  means the display designated as "Page 3750" on the Telerate
                  Service or such other page as may replace Page 3750 on that
                  service for the purpose of displaying rates comparable to that
                  rate) or on such other service as may be nominated by the
                  British Bankers' Association as the information vendor for the
                  purpose of displaying the British Bankers' Association
                  Interest Settlement Rates for Dollars; or

         (b)      in relation to an Interest Period of any other duration or if
                  no rate is quoted on Telerate Page 3750, the rate per annum
                  determined by the Lender to be the arithmetic mean (rounded
                  upwards, if necessary, to the nearest one-sixteenth of one per
                  cent.) of the rates per annum determined by the Lender as the
                  rate at which deposits in Dollars are offered to the Lender by
                  leading banks in the London Interbank Market at the Lender's
                  request at or about 11.00 a.m. (Rotterdam 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;


                                       10


         "LPGONE" means Lpgone Ltd., a company incorporated and existing under
         the laws of the Marshall Islands and having its registered office is at
         Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
         Islands, MH96960;

         "LOAN" means the principal amount 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 $1,000,000 or the equivalent in any other currency;

         "MARGIN" means, at any time when the Debt to Value Ratio is:

         (a)      equal to or lower than 60 per cent., 0.9 per cent. per annum;
                  or

         (b)      higher than 60 per cent. and lower or equal to 70 per cent.,
                  0.975 per cent. per annum; or

         (b)      higher than 70 per cent., 1.050 per cent per annum;

         "MARKET VALUE" means the market value of a Ship at any date determined
         in accordance with Clause 14.3;

         "MARYSE" means Maryse Shipping Limited, a company incorporated and
         existing under the laws of the Republic of Liberia and having its
         registered address at 80 Broad Street, Monrovia, Liberia;

         "MASTER AGREEMENT" means the master agreement (on the 1992 ISDA
         (Multicurrency - Crossborder) form) made or to be made between the
         Borrowers and the Lender and includes all Transactions from time to
         time entered into and Confirmations from time to time exchanged
         thereunder;

         "MASTER AGREEMENT ASSIGNMENT" means the assignment of the Master
         Agreement in favour of the Lender executed or to be executed by the
         Borrowers, in such form as the Lender may approve or require;

         "MATRIX" means Matrix Gas Trading Ltd. a company incorporated and
         existing under the laws of the Marshall Islands and having its
         registered office is at Trust Company Complex, Ajeltake Road, Ajeltake
         Island, Majuro, The Marshall Islands, MH96960;

         "MOAS" means, together, the "GAS ARCTIC" MOA, the "GAS ICE" MOA, the
         "GAS AMAZON" MOA and the "BIRGIT KOSAN" MOA, and in the singular, means
         any of them;

         "MORTGAGE"  means:

         (a)      in the case of "GAS EMPEROR", a first priority Cypriot
                  mortgage executed or to be executed by Pacific in favour of
                  the Lender;

         (b)      in the case of "GAS ICE", a first priority Maltese mortgage
                  executed or to be executed by Semichlaus in favour of the
                  Lender;

         (c)      in the case of "GAS ARCTIC", a first priority Maltese mortgage
                  executed or to be executed by Ventspils in favour of the
                  Lender;


                                       11


         (d)      in the case of "BIRGIT KOSAN", a first preferred Panamanian
                  mortgage, to be executed by Industrial in favour of the
                  Lender;

         (e)      in the case of "GAS COURCHEVAL", a first preferred Marshall
                  Islands mortgage, to be executed by Geneve in favour of the
                  Lender;

         (f)      in the case of "GAS PRODIGY", a first preferred Marshall
                  Islands mortgage, to be executed by Gaz in favour of the
                  Lender;

         (g)      in the case of "GAS SHANGHAI", a first preferred Marshall
                  Islands mortgage, to be executed by Matrix in favour of the
                  Lender;

         (h)      in the case of "GAS PROPHET", a first preferred Marshall
                  Islands mortgage, to be executed by VCM in favour of the
                  Lender;

         (i)      in the case of "GAS TINY", a first preferred Marshall Islands
                  mortgage, to be executed by Lpgone in favour of the Lender;

         (j)      in the case of "GAS AMAZON", a first preferred Marshall
                  Islands mortgage, to be executed by Aracruz in favour of the
                  Lender,

         each to be in such form as the Lender may approve or require and in the
         singular means any of them;

         "NEGOTIATION PERIOD" has the meaning given in Clause 4.6;

         "PACIFIC" means Pacific Gases Ltd. a company incorporated and existing
         under the laws of Malta and having its registered office is at 147/1
         St. Lucia Street, Valletta, Malta;

         "PAYMENT CURRENCY" has the meaning given in Clause 20.4;

         "PERMITTED SECURITY INTERESTS" means:

         (a)      Security Interests created by the Finance Documents;

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

         (c)      liens for salvage;

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

         (e)      liens for master's disbursements incurred in the ordinary
                  course of trading and any other lien arising by operation of
                  law or otherwise in the ordinary course of the operation,
                  repair or maintenance of a Ship, provided such liens do not
                  secure amounts more than 30 days overdue (unless the overdue
                  amount is being contested by the Borrower in good faith by
                  appropriate steps) and subject, in the case of liens for
                  repair or maintenance, to Clause 13.12(g);

         (f)      any Security Interest created in favour of a plaintiff or
                  defendant in any proceedings or arbitration as security for
                  costs and expenses where the Borrower is actively prosecuting
                  or defending such proceedings or arbitration in good faith;
                  and


                                       12


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

         "PERTINENT DOCUMENT" means:

         (a)      any Finance Document;

         (b)      any policy or contract of insurance contemplated by or
                  referred to in Clause 12 or any other provision of this
                  Agreement or another Finance Document;

         (c)      any other document contemplated by or referred to in any
                  Finance Document; and

         (d)      any document which has been or is at any time sent by or to
                  the Lender in contemplation of or in connection with any
                  Finance Document or any policy, contract or document falling
                  within paragraphs (b) or (c);

         "PERTINENT JURISDICTION", in relation to a company, means:

         (a)      England and Wales;

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

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

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

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

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

         "PERTINENT MATTER" means:

         (a)      any transaction or matter contemplated by, arising out of, or
                  in connection with a Pertinent Document; or

         (b)      any statement relating to a Pertinent Document or to a
                  transaction or matter falling within paragraph (a),

         and covers any such transaction, matter or statement, whether entered
         into, arising or made at any time before the signing of this Agreement
         or on or at any time after that signing;

         "POTENTIAL EVENT OF DEFAULT" means an event or circumstance which, with
         the giving of any notice, the lapse of time, a determination of the
         Lender and/or the satisfaction of any other condition, would constitute
         an Event of Default;


                                       13


         "PURCHASE PRICE" means, in relation to a Ship, the aggregate amount
         paid or to be paid by the relevant Shipowner to the seller of the Ship
         pursuant to the memorandum of agreement which relates to the sale and
         purchase of that Ship;

         "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 PERSON" has the meaning given in Clause 18.7;

         "REPAYMENT DATE" means a date on which a repayment is required to be
         made under Clause 7;

         "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 joint names of the
         Borrowers with the Lender in Rotterdam designated "Stealthgas Inc. -
         Retention Account" and having account number 25.30.05.527, or any other
         account (with that or another office of the Lender) which is designated
         by the Lender as the Retention Account for the purposes of this
         Agreement;

         "SEMICHLAUS" means Semichlaus Exports Ltd., a company incorporated and
         existing under the laws of Malta and having its registered office is at
         147/1 St. Lucia Street, Valletta, Malta;

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

         "SECURITY INTEREST" means:

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

         (b)      the security rights of a plaintiff under an action in rem; 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 this paragraph (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 Shareholder and any other person (except
         the Lender) 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 last 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 Lender notifies the
         Borrowers and the Security Parties that:


                                       14




         (a)      all amounts which have become due for payment by any 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 any Borrower nor any Security Party has any future or
                  contingent liability under Clause 19, 20, or 21 or any other
                  provision of this Agreement or another Finance Document; and

         (d)      the Lender does 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 a 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;

         "SELLER"  means:

         (a)      in the case of "GAS ICE", Transporti;

         (b)      in the case of "GAS ARCTIC", Transporti;

         (c)      in the case of "GAS AMAZON", East Gate; and

         (d)      in the case of "BIRGIT KOSAN", Maryse,


         and in the plural means all of them;

         "SEMICHLAUS" means Semichlaus Exports Ltd., a company incorporated and
         existing under the laws of Malta having its registered office at 147/1
         St Lucia St., Valletta, Malta;

         "SHAREHOLDER" means, in relation to a Borrower, the company or
         individual referred to in Schedule 2 as the holder of all, or a part of
         the issued share capital of that Borrower;

         "SHIPOWNERS" means, together, Matrix, Gaz, VCM, Geneve, Lpgone,
         Semichlaus, Ventspils, Pacific, Aracruz and Industrial, and in the
         singular means any of them;

         "SHIPS" means, together:

         (a)      the 1995-built LPG Carrier of 5,013 cubic metres registered
                  under Cypriot flag in the ownership of Pacific with the name
                  "GAS EMPEROR" ("GAS EMPEROR");

         (b)      the 1991-built LPG Carrier of 3,436 cubic metres currently
                  registered under Italilan flag in the ownership of Transporti
                  with the name CAP ANNE, to be sold to Semichlaus pursuant to
                  the GAS ICE MOA and registered under Maltese flag in the
                  ownership of Semichlaus with the name "GAS ICE" ("GAS ICE");

         (c)      the 1992-built LPG Carrier of 3,436 cubic metres currently
                  registered under Italian flag in the ownership of Trasporti
                  with the name "CAP PATRICIA", to be sold to Ventspils pursuant
                  to the GAS ARCTIC MOA and registered under Panamanian flag in
                  the ownership of Ventspils with the name "GAS ARCTIC" ("GAS
                  ARCTIC");


                                       15


         (k)      the 1994-built LPG Carrier of 5,012 cubic metres currently
                  registered under Panmanian flag in the ownership of Maryse
                  with the name "BIRGIT KOSAN" , to be sold to Industrial as the
                  nominee of Stealth pursuant to the BIRGIT KOSAN MOA and
                  registered under Maltese flag in the ownership of Industrial
                  with the name "BIRGIT KOSAN" ("BIRGIT KOSAN");

         (l)      the 1991-built LPG Carrier of 4,109 cubic metres registered
                  under Marshall Islands flag in the ownership of Geneve with
                  the name of "GAS COURCHEVAL" ("GAS COURCHEVAL");

         (m)      the 1995-built LPG Carrier of 3,000 cubic metres registered
                  under Marshall Islands flag in the ownership of Gaz with the
                  name "GAS PRODOGY" ("GAS PRODIGY");

         (n)      the 1999-built LPG Carrier of 3,526 cubic metres registered
                  under Marshall Islands flag in the ownership of Matrix with
                  the name "GAS SHANGHAI" ("GAS SHANGHAI");

         (o)      the 1996-built LPG Carrier of 3,556 cubic metres registered
                  under Marshall Islands flag in the ownership of VCM with the
                  name "GAS PROPHET" ("GAS PROPHET");

         (p)      the 1991-built LPG Carrier of 1,320 cubic metres registered
                  under Marshall Islands flag in the ownership of Lpgone with
                  the name "GAS TINY" ("GAS TINY");

         (q)      the 1992-built LPG Carrier of 6,562 cubic metres currently
                  registered under Hong Kong flag in the ownership of East Gate
                  with the name "KAISA", to be sold to Aracruz pursuant to the
                  GAS AMAZON MOA and registered under Marshall Islands flag in
                  the ownership of Aracruz with the name "GAS AMAZON" ("GAS
                  AMAZON"),

         and, in the singular, means any of them;

         "STEALTH" means Stealth Maritime Corporation S.A., a company
         incorporated and existing under the laws of the Republic of Liberia and
         having its registered office at 80 Broad Street, Monrovia, Liberia;

         "STEALTHGAS" means Stealthgas Inc., a company incorporated and existing
         under the laws of the Marshall Islands and having its registered office
         at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the
         Marshall Islands, MH96960;

         "SWAP EXPOSURE" means, as at any relevant date the aggregate net amount
         in Dollars which would be payable by the Borrowers to the Lender 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
         Transactions entered into between the Borrowers and the Lender;

         "TOTAL ASSETS" means, at any time, the total assets as shown in the
         most recent Accounting Information adjusted to reflect the market value
         of all vessels owned by members of the Group, as determined by
         valuations in accordance with Clause 14.4 as at any relevant date;

         "TOTAL DEBT" means, at any time, Total Liabilities less Total
         Shareholders' Equity;

         "TOTAL LIABILITIES" and "TOTAL SHAREHOLDER'S EQUITY" means, as at any
         date, the total


                                       16


         liabilities (including, for the avoidance of doubt, total shareholder's
         equity) and total shareholder's equity respectively of the Group
         determined in accordance and as shown 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 its 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 1 year
                  without any right to an extension) unless it is within 1 month
                  redelivered to the full control of the Shipowner owning the
                  Ship;

         (c)      any arrest, capture, seizure or detention of the Ship
                  (including any hijacking or theft) unless it is within 30 days
                  redelivered to the full control of the Shipowner 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:

                  (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 Shipowner 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 Lender that
                  the event constituting the total loss occurred;

         "TRANSPORTI" means Transporti Petrolchimici TPC S.p.A., a company
         incorporated and existing under the laws of Italy and having its
         registered address at Via Nino Bixio, 20/1, 16043 Chiavari, Genoa,
         Italy;

         "TRANSACTION"  has the meaning given in the Master Agreement;

         "TRIPARTITE AGREEMENTS" means, together the BIRGIT KOSAN Tripartite
         Agreement and the GAS ICE Tripartite Agreement, and in the singular
         means either of them;

         "VCM" means VCM Trading Ltd., a company incorporated and existing under
         the laws of the Marshall Islands and having its registered office is at
         Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
         Islands, MH96960; and

         "VENTSPILS" means Ventspils Gases Ltd., a company incorporated and
         existing under the laws of Malta and having its registered office is at
         147/1 St. Lucia Street, Valletta, Malta.

1.2      CONSTRUCTION OF CERTAIN TERMS.  In this Agreement:

         "APPROVED" means, for the purposes of Clause 12, approved in writing by
         the Lender;


                                       17


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

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

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

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

         "DOCUMENT" includes a deed; also a letter or fax;

         "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 its 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 order or decree, any form of delegated legislation,
         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 12 or any other provision of this Agreement or another
         Finance Document;

         "PARENT COMPANY" has the meaning given in Clause 1.4;

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

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

         "PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
         protection and indemnity association managed in London, including
         pollution risks and the proportion (if any) of any sums payable to any
         other person or persons in case of collision which are not recoverable
         under the hull and machinery policies by reason of the incorporation in
         them 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 whether or not having the force of law of any
         governmental, intergovernmental or supranational body, agency,
         department or regulatory, self-regulatory or other authority or
         organisation;


                                       18


         "SUBSIDIARY" has the meaning given in Clause 1.4;

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

         "WAR RISKS" includes the risk of mines and all risks excluded by clause
         23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the
         Institute Time Clauses (Hulls)(1/11/1995).

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 days,

         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 attaching 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; or

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

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

1.5      GENERAL INTERPRETATION.  In this Agreement:

         (a)      references in Clause 1.1 to a Finance Document or any other
                  document being in the form of a particular appendix include
                  references to that form with any modifications to that form
                  which the Lender approves or reasonably requires;

         (b)      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;

         (c)      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;

         (d)      words denoting the singular number shall include the plural
                  and vice versa; and


                                       19




         (e)      Clauses 1.1 to 1.5 apply unless the contrary intention
                  appears.

1.6      HEADINGS. In interpreting a Finance Document or any provision of a
         Finance Document, all clause, sub-clause and other headings in that and
         any other Finance Document shall be entirely disregarded.

2        FACILITY

2.1      AMOUNT OF FACILITY. Subject to the other provisions of this Agreement,
         the Lender shall make a loan facility of up to the lesser of (a)
         $54,000,000 and (b) 62 per cent. of the lesser of (i) the aggregate
         Market Value of the Ships and (ii) the aggregate Purchase Price of the
         Ships, available to the Borrowers in up to 10 Advances.

2.2      PURPOSE OF ADVANCES. The Borrowers undertake with the Lender to use
         each Advance only for the purpose stated in the preamble to this
         Agreement.

3        DRAWDOWN

3.1      REQUEST FOR ADVANCE. Subject to the following conditions, the Borrowers
         may request an Advance or Advances to be made by ensuring that the
         Lender receives a completed Drawdown Notice not later than 11.00 a.m.
         (Rotterdam time) 2 Business Days prior to the intended Drawdown Date.

3.2      AVAILABILITY.  The conditions referred to in Clause 3.1 are that:

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

         (b)      each Advance shall relate to a different Ship than any
                  previous Advance drawn down;

         (c)      no Advance shall exceed 62 per cent. of the lesser of (i) the
                  Market Value of the Ship to which it relates and (ii) the
                  Purchase Price of that Ship; and

         (d)      the aggregate amount of the Advances shall not exceed the
                  Commitment.

3.3      DRAWDOWN NOTICE IRREVOCABLE. A Drawdown Notice must be signed by a
         director or other authorised person of a Borrower; and once served, a
         Drawdown Notice cannot be revoked without the prior consent of the
         Lender.

3.4      DISBURSEMENT OF ADVANCE. Subject to the provisions of this Agreement,
         the Lender shall on each Drawdown Date make available the relevant
         Advance to the Borrowers; and payment to the Borrowers shall be made to
         the account which the Borrowers specify in the relevant Drawdown
         Notice.

3.5      DISBURSEMENT OF ADVANCE TO THIRD PARTY. The payment of an Advance by
         the Lender under Clause 3.4 shall constitute the making of the Advance
         and the Borrowers shall at that time become indebted, as principal and
         direct obligors, to the Lender in an amount equal to that Advance.

4        INTEREST

4.1      PAYMENT OF NORMAL INTEREST. Subject to the provisions of this
         Agreement, interest on the Loan in respect of each Interest Period
         shall be paid by the Borrowers on the last day of that Interest Period.



                                       20




4.2      NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement,
         the rate of interest on the Loan in respect of an Interest Period shall
         be the aggregate of the Margin and LIBOR for that Interest Period.

4.3      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.

4.4      NOTIFICATION OF MARKET DISRUPTION. The Lender shall promptly notify the
         Borrowers if no rate is quoted on Telerate Page 3750 or if for any
         reason the Lender is unable to obtain Dollars in the London Interbank
         Market in order to fund the Loan (or any part of it) during any
         Interest Period, stating the circumstances which have caused such
         notice to be given.

4.5      SUSPENSION OF DRAWDOWN. If the Lender's notice under Clause 4.4 is
         served before an Advance is made, the Lender's obligation to make the
         Advance shall be suspended while the circumstances referred to in the
         Lender's notice continue.

4.6      NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. If the Lender's notice
         under Clause 4.4 is served after an Advance is made, the Borrowers and
         the Lender shall use reasonable endeavours to agree, within the 30 days
         after the date on which the Lender serves its notice under Clause 4.4
         (the "NEGOTIATION PERIOD"), an alternative interest rate or (as the
         case may be) an alternative basis for the Lender to fund or continue to
         fund the Loan during the Interest Period concerned.

4.7      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.

4.8      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 Lender shall set an interest period and
         interest rate representing the cost of funding of the Lender in Dollars
         or in any available currency of the Loan plus the applicable Margin;
         and the procedure provided for by this Clause 4.8 shall be repeated if
         the relevant circumstances are continuing at the end of the interest
         period so set by the Lender.

4.9      NOTICE OF PREPAYMENT. If the Borrowers do not agree with an interest
         rate set by the Lender under Clause 4.8, the Borrowers may give the
         Lender not less than 10 Business Days' notice of their intention to
         prepay at the end of the interest period set by the Lender.

4.10     PREPAYMENT. A notice under Clause 4.9 shall be irrevocable; and on the
         last Business Day of the interest period set by the Lender, the
         Borrowers shall prepay (without premium or penalty) the Loan, together
         with accrued interest thereon at the applicable rate plus the Margin.

4.11     APPLICATION OF PREPAYMENT. The provisions of Clause 7 shall apply in
         relation to the prepayment.

4.12     CALCULATION OF DEBT TO VALUE RATIO. The Lender shall calculate the Debt
         to Value Ratio on (a) the earlier of (i) the date falling 3 months
         after the Drawdown Date for the final Advance and (ii) 30 June 2005 and
         (b) every 6 months thereafter (each a "REVIEW DATE") for the purposes
         of calculating the Margin and shall advise the Borrowers in writing
         within 10 Business Days of each Review Date of the Margin which will
         apply for the 6-month period commencing on the relevant Review Date
         PROVIDED THAT in respect of each Review Date other than the first
         Review Date, the Lender shall only be obliged to



                                       21




         advise the Borrowers of the Margin which will apply for the 6-month
         period commencing on the relevant Review Date if that Margin will be
         different to the Margin which applies immediately prior to the relevant
         Review Date.

5        INTEREST PERIODS

5.1      COMMENCEMENT OF INTEREST PERIODS. The first Interest Period applicable
         to an Advance shall commence on the Drawdown Date relative to that
         Advance and each subsequent Interest Period shall commence on the
         expiry of the preceding Interest Period.

5.2      DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 5.3 and 5.4,
         each Interest Period shall be:

         (a)      1, 3, 6, 9 or 12 months as notified by the Borrowers to the
                  Lender not later than 11.00 a.m. (Rotterdam time) 2 Business
                  Days before the commencement of the Interest Period PROVIDED
                  THAT the Borrowers may not select more than three 1 month
                  Interest Periods in any calendar year unless otherwise agreed
                  by the Lender; or

         (b)      in the case of the first Interest Period applicable to the
                  second and any subsequent Advance, a period ending on the last
                  day of the Interest Period applicable to the Advances then
                  current, whereupon all Advances shall be consolidated and
                  treated as a single Advance; or

         (c)      3 months, if the Borrowers fail to notify the Lender by the
                  time specified in paragraph (a); or

         (d)      such other period as the Lender may agree with the Borrowers.

5.3      DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENTS. In respect of
         an amount due to be repaid under Clause 7 on a particular Repayment
         Date, an Interest Period shall end on that Repayment Date.

5.4      NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
         after the Borrowers have selected and the Lender has agreed an Interest
         Period longer than 6 months, the Lender notifies the Borrowers by 11.00
         a.m. (London 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.

6        DEFAULT INTEREST

6.1      PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrowers shall pay
         interest in accordance with the following provisions of this Clause 6
         on any amount payable by the Borrowers under any Finance Document which
         the Lender 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 18.4, the date on which it became immediately due and
                  payable.



                                       22




6.2      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 Lender to be 2 per cent. above:

         (a)      in the case of an overdue amount of principal, the higher of
                  the rates set out at Clauses 6.3(a) and (b); or

         (b)      in the case of any other overdue amount, the rate set out at
                  Clause 6.3(b).

6.3      CALCULATION OF DEFAULT RATE OF INTEREST. The rates referred to in
         Clause 6.2 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 applicable
                  to it);

         (b)      the applicable Margin plus, in respect of successive periods
                  of any duration (including at call) up to 3 months which the
                  Lender may select from time to time:

                  (i)      LIBOR; or

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

6.4      NOTIFICATION OF INTEREST PERIODS AND DEFAULT RATES. The Lender shall
         promptly notify the Borrowers of each interest rate determined by it
         under Clause 6.3 and of each period selected by it for the purposes of
         paragraph (b) of that Clause; but this shall not be taken to imply that
         the Borrowers are liable to pay such interest only with effect from the
         date of the Lender's notification.

6.5      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.

6.6      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.

6.7      APPLICATION TO MASTER AGREEMENT. For the avoidance of doubt this Clause
         6 does not apply to any amount payable under the Master Agreement in
         respect of any continuing Transaction as to which section 2(e) (Default
         Interest, Other Amounts) of the Master Agreement shall apply.

7        REPAYMENT AND PREPAYMENT

7.1      AMOUNT OF REPAYMENT INSTALMENTS. The Borrowers shall repay the Loan by
         32 equal consecutive three-monthly instalments of $1,453,125 each and a
         balloon instalment of $7,500,000.

7.2      REPAYMENT DATES. The first instalment shall be repaid on the date
         falling 3 months after the earlier of:

         (a)      the Delivery Date applicable to the last of the Ships to be
                  delivered to its Shipowner (the "FINAL DELIVERY DATE");

         (b)      30 May 2005 (or such later date as the Lender may agree with
                  the Borrowers),



                                       23


                  and the last instalment, along with the balloon instalment,
                  shall be repaid on the earlier of:

         (c)      the date falling on the eighth anniversary of the Final
                  Delivery Date; and

         (d)      30 May 2013.

7.3      FINAL REPAYMENT DATE. On the final Repayment Date, the Borrowers shall
         additionally pay to the Lender all other sums then accrued or owing
         under any Finance Document.

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

7.5      CONDITIONS FOR VOLUNTARY PREPAYMENT. The conditions referred to in
         Clause 7.4 are that:

         (a)      a partial prepayment shall be $500,000 or a multiple of
                  $500,000;

         (b)      the Lender has received from the Borrowers at least 15 days'
                  prior written notice specifying the amount to be prepaid and
                  the date on which the prepayment is to be made; and

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

7.6      EFFECT OF NOTICE OF PREPAYMENT. A prepayment notice may not be
         withdrawn or amended without the consent of the Lender and the amount
         specified in the prepayment notice shall become due and payable by the
         Borrowers on the date for prepayment specified in the prepayment
         notice.

7.7      MANDATORY PREPAYMENT. Without prejudice to the provisions of Clause 14,
         the Borrowers shall be obliged to prepay the relevant proportion of the
         Loan 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 the 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,

         and in this Clause 7.7 "RELEVANT PROPORTION" means such amount
         necessary to ensure that following the sale or Total Loss of a Ship,
         the Asset Cover Ratio is equal to the Asset Cover Ratio immediately
         prior to the sale or Total Loss (as the case may be) of that Ship.

7.8      AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
         accrued interest (and any other amount payable under Clause 20 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 20.1(b) but without premium or penalty.

7.9      APPLICATION OF PARTIAL PREPAYMENT. Each partial prepayment shall be
         applied pro rata against the repayment instalments, including, without
         limitation, the balloon instalment, specified in Clause 7.1.


                                       24




7.10     NO REBORROWING.  No amount prepaid may be reborrowed.

8        CONDITIONS PRECEDENT

8.1      DOCUMENTS, FEES AND NO DEFAULT. The Lender's obligation to make an
         Advance is subject to the following conditions precedent:

         (a)      that, on or before the service of the first Drawdown Notice,
                  the Lender receives the documents described in Part A of
                  Schedule 4, in form and substance satisfactory to it and its
                  lawyers;

         (b)      that, on the each Drawdown Date but prior to the making of the
                  relevant Advance, the Lender receives the documents described
                  in Part B of Schedule 4 in relation to that Advance, in form
                  and substance satisfactory to it and its lawyers;

         (c)      that, on a Drawdown Date relating to an Advance which shall be
                  used to part-finance either "BIRGIT KOSAN" or "GAS ICE" but
                  prior to the making of such Advance, the Lender receives (in
                  addition to those documents described in Part B of Schedule 4
                  and in relation to the Ship to which such Advance relates) the
                  documents described in Part C of Schedule 4, in form and
                  substance satisfactory to it and its lawyers;

         (d)      that, before the service of the first Drawdown Notice, the
                  Lender receives the arrangement fee referred to in Clause 19.1
                  and has received payment of the expenses referred to in Clause
                  19.2; and

         (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;

                  (ii)     the representations and warranties in Clause 9.1 and
                           those of any 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 4.4
                           has occurred and is continuing; and

         (f)      that, if the ratio set out in Clause 14.1 were applied
                  immediately following the making of the Advance, the Borrowers
                  would not be obliged to provide additional security or prepay
                  part of the Loan under that Clause; and

         (g)      that the Lender has received, and found to be acceptable to
                  it, any further opinions, consents, agreements and documents
                  in connection with the Finance Documents which the Lender may
                  request by notice to the Borrowers prior to the relevant
                  Drawdown Date.

8.2      WAIVERS OF CONDITIONS PRECEDENT. If the Lender, at its discretion,
         permits an Advance to be borrowed before certain of the conditions
         referred to in Clause 8.1 are satisfied, the Borrowers shall ensure
         that those conditions are satisfied within 5 Business Days after the
         relevant Drawdown Date (or such longer period as the Lender may
         specify).



                                       25




9        REPRESENTATIONS AND WARRANTIES

9.1      GENERAL. Each Borrower represents and warrants to the Lender as
         follows.

9.2      STATUS. Each Borrower is duly incorporated and validly existing and in
         good standing under the laws of its place of incorporation as indicated
         in Schedule 2.

9.3      SHARE CAPITAL AND OWNERSHIP. Each Borrower has an authorised and issued
         share capital as set out in Schedule 2 and the legal title and
         beneficial ownership of all those shares is held, free of any Security
         Interest or other claim, by the relevant Shareholder or Shareholders.

9.4      CORPORATE POWER. Each Borrower, or in the case of paragraph (a), each
         Buyer, has the corporate capacity, and has taken all corporate action
         and obtained all consents necessary for it:

         (a)      to execute the MOA to which it is a party, to purchase and pay
                  for the relevant Ship under that MOA and to register that Ship
                  in its name under the relevant flag;

         (b)      to execute the Finance Documents to which that Borrower is a
                  party; and

         (c)      to borrow under this Agreement, to enter into Transactions
                  under the Master Agreement and to make all the payments
                  contemplated by, and to comply with, those Finance Documents
                  to which that Borrower is a party and the Master Agreement.

9.5      CONSENTS IN FORCE. All the consents referred to in Clause 9.4 remain in
         force and nothing has occurred which makes any of them liable to
         revocation.

9.6      LEGAL VALIDITY; EFFECTIVE SECURITY INTERESTS. The Finance Documents to
         which each 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):

         (a)      constitute that Borrower's legal, valid and binding
                  obligations enforceable against that 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.

9.7      NO THIRD PARTY SECURITY INTERESTS. Without limiting the generality of
         Clause 9.6, at the time of the execution and delivery of each Finance
         Document:

         (a)      each Borrower which is a party to that Finance Document 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.

9.8      NO CONFLICTS. The execution by each Borrower of each Finance Document
         to which it is a party, and the borrowing by that 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


                                       26




         (b)      the constitutional documents of that Borrower; or

         (c)      any contractual or other obligation or restriction which is
                  binding on that Borrower or any of its assets.

9.9      NO WITHHOLDING TAXES. All payments which each Borrower is liable to
         make under the Finance Documents to which it is a party may be made
         without deduction or withholding for or on account of any tax payable
         under any law of any Pertinent Jurisdiction.

9.10     NO DEFAULT. No Event of Default or Potential Event of Default has
         occurred and is continuing.

9.11     INFORMATION. All information which has been provided in writing by or
         on behalf of the Borrowers or any Security Party to the Lender in
         connection with any Finance Document satisfied the requirements of
         Clause 10.5; all audited and unaudited accounts which have been so
         provided satisfied the requirements of Clause 10.7; and there has been
         no material adverse change in the financial position or state of
         affairs of any Borrower from that disclosed in the latest of those
         accounts.

9.12     NO LITIGATION. No legal or administrative action involving any Borrower
         (including, in the case of each Shipowner, action relating to any
         alleged or actual breach of the ISM Code) has been commenced or taken
         or, to any Borrower's knowledge, is likely to be commenced or taken.

9.13     VALIDITY AND COMPLETENESS OF MOAS. Each MOA constitutes valid, binding
         and enforceable obligations of the parties thereto respectively in
         accordance with their terms; and:

         (a)      each copy of an MOA delivered to the Lender before the date of
                  this Agreement is a true and complete copy of such MOA
                  (including, without limitation, any addenda thereto); and

         (b)      no amendments or additions to any MOA have been agreed nor has
                  any Buyer or any Seller waived any of their respective rights
                  under an MOA.

9.14     NO REBATES ETC. There is no agreement or understanding to allow or pay
         any rebate, premium, commission, discount or other benefit or payment
         (howsoever described) to any Buyer, any Seller or any third party in
         connection with the purchase by a Buyer of a Ship other than as
         disclosed to the Lender in writing on or prior to the date of this
         Agreement.

9.15     COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement,
         the Borrowers are in compliance with Clauses 10.2, 10.4, 10.9 and
         10.13.

9.16     TAXES PAID. Each Borrower has paid all taxes applicable to, or imposed
         on or in relation to that Borrower, its business and, in the case of a
         Borrower which is a Shipowner, the Ship owned by it.

9.17     ISM CODE COMPLIANCE. All requirements of the ISM Code as they relate to
         the Shipowners, the Approved Manager, the Bareboat Charterer and each
         Ship have been complied with.

10       GENERAL UNDERTAKINGS

10.1     GENERAL. Each Borrower undertakes with the Lender to comply, or, in the
         case of Clauses 10.17 and 10.18, procure the compliance by the Holding
         Company, with the



                                       27




         following provisions of this Clause 10 at all times during the Security
         Period, except as the Lender may otherwise permit.

10.2     TITLE; NEGATIVE PLEDGE.  Each Shipowner will:

         (a)      hold the legal title to, and own the entire beneficial
                  interest in the Ship owned by it, her Insurances and Earnings,
                  free from all Security Interests and other interests and
                  rights of every kind, except for those created by the Finance
                  Documents and the effect of assignments contained in the
                  Finance Documents and except for Permitted Security Interests;
                  and

         (b)      not create or permit to arise any Security Interest (except
                  for Permitted Security Interests) over any other asset,
                  present or future including, but not limited to, the
                  Borrowers' rights against the Lender under the Master
                  Agreement or all or any part of the Borrowers' interest in any
                  amount payable to the Borrowers by the Lender under the Master
                  Agreement.

10.3     NO DISPOSAL OF ASSETS. No Borrower will 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; 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.

10.4     NO OTHER LIABILITIES OR OBLIGATIONS TO BE INCURRED. No Borrower will
         incur any liability or obligation except liabilities and obligations:

         (a)      under the Finance Documents to which it is a party;

         (b)      in the case of a Buyer pursuant to the MOA to which it is a
                  party;

         (c)      in the case of each Shipowner, liabilities or obligations
                  reasonably incurred in the ordinary course of operating and
                  chartering the Ship owned by it; and

         (d)      in the case of the Holding Company liabilities or obligations
                  reasonably incurred in the ordinary course of its business.

10.5     INFORMATION PROVIDED TO BE ACCURATE. All financial and other
         information which is provided in writing by or on behalf of a Borrower
         under or in connection with any Finance Document will be true and not
         misleading and will not omit any material fact or consideration.

10.6     PROVISION OF FINANCIAL STATEMENTS. The Borrowers will send to the
         Lender:

         (a)      as soon as possible, but in no event later than 180 days after
                  the end of each financial year of the Holding Company, the
                  audited consolidated accounts of the Group; and

         (b)      as soon as possible, but in no event later than 90 days after
                  the end of each half year in each financial year of the
                  Holding Company, the unaudited management accounts of the
                  Group in a format approved by the Lender, which are certified
                  as to their correctness by the chief financial officer of the
                  Holding Company,

         in each case together with a certificate signed by the chief financial
         officer of the Holding Company confirming that the Holding Company is
         as at the date of that certificate in

                                       28


         compliance with the financial covenants specified in Clauses 10.17 and
         10.18 and that the Asset Cover Ratio is above 1.25:1.

10.7     FORM OF FINANCIAL STATEMENTS. All accounts (audited and unaudited)
         delivered under Clause 10.6 will:

         (a)      be prepared in accordance with all applicable laws and
                  generally accepted accounting principles consistently applied;

         (b)      give a true and fair view of the state of affairs of the
                  relevant parties at the date of those accounts and of their
                  profit for the period to which those accounts relate; and

         (c)      fully disclose or provide for all significant liabilities of
                  the Group.

10.8     SHAREHOLDER AND CREDITOR NOTICES. Each Borrower will send to the
         Lender, at the same time as they are despatched, copies of all
         communications which are despatched to that Borrower's shareholders or
         creditors or any class of them.

10.9     CONSENTS. Each Borrower will maintain in force and promptly obtain or
         renew, and will promptly send certified copies to the Lender of, all
         consents required:

         (a)      for that Borrower to perform its obligations under any Finance
                  Document and any MOA to which it is a party;

         (b)      for the validity or enforceability of any Finance Document to
                  which it is a party; and

         (c)      if that Borrower is a Shipowner, for that Borrower to continue
                  to own and operate the Ship owned by it, and

         (d)      if that Borrower is Industrial or Ventspils, for it to
                  continue to perform its obligations under the relevant
                  Bareboat Charter,

         and that Borrower will comply with the terms of all such consents.

10.10    MAINTENANCE OF SECURITY INTERESTS.  Each 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), 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 may be
                  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.

10.11    NOTIFICATION OF LITIGATION. Each Borrower will provide the Lender with
         details of any legal or administrative action involving that Borrower,
         any Security Party, the Approved Manager or, in the case of each
         Shipowner, the Ship owned by it, her Earnings or her Insurances and, in
         the case of each of Industrial and Ventspils, the relevant Bareboat
         Charterer, as soon as such action is instituted or it becomes apparent
         to that Borrower that it is likely to be instituted, unless it is clear
         that the legal or administrative action cannot be considered material
         in the context of any Finance Document.

                                       29


10.12    NO AMENDMENT TO MOA. No Buyer will agree to any amendment or supplement
         to, or waive or fail to enforce, the MOA to which it is a party or any
         of its provisions.

10.13    PRINCIPAL PLACE OF BUSINESS. Each Borrower will maintain its place of
         business, and keep its corporate documents and records, at the address
         stated in Clause 27.2; and no Borrower will establish, or do anything
         as a result of which it would be deemed to have, a place of business in
         the United Kingdom or the United States of America.

10.14    CONFIRMATION OF NO DEFAULT. Each Borrower will, within 2 Business Days
         after service by the Lender of a written request, serve on the Lender a
         notice which is signed by the director of that Borrower and which:

         (a)      states that no Event of Default or Potential Event of Default
                  has occurred; or

         (b)      states that no Event of Default or Potential Event of Default
                  has occurred, except for a specified event or matter, of which
                  all material details are given.

10.15    NOTIFICATION OF DEFAULT. Each Borrower will notify the Lender as soon
         as that Borrower becomes aware of:

         (a)      the occurrence of an Event of Default or a Potential Event of
                  Default; or

         (b)      any matter which indicates that an Event of Default or a
                  Potential Event of Default may have occurred,

         and will keep the Lender fully up-to-date with all developments.

10.16    PROVISION OF FURTHER INFORMATION. Each Borrower will, as soon as
         practicable after receiving the request, provide the Lender with any
         additional financial or other information relating:

         (a)      any Borrower, any Ship, any Earnings, or any Insurances or
                  either Bareboat Charterer; or

         (b)      to any other matter relevant to, or to any provision of, a
                  Finance Document,

         which may be requested by the Lender at any time.

10.17    MINIMUM CASH BALANCE. For the duration of the Security Period, the
         members of the Group will maintain cash deposits with the Lender, free
         of Security Interests except in favour of the Lender pursuant to this
         Agreement and the other Finance Documents, in an aggregate amount of
         not less than $3,000,000.

10.18    LEVERAGE OF HOLDING COMPANY. The Holding Company shall ensure that the
         ratio of Total Long Term Debt to Total Assets shall not exceed 0.80:1
         at any time.

11       CORPORATE UNDERTAKINGS

11.1     GENERAL. Each Borrower also undertakes with the Lender to comply with
         the following provisions of this Clause 11 at all times during the
         Security Period except as the Lender may otherwise permit.

11.2     MAINTENANCE OF STATUS. Each Borrower will maintain its separate
         corporate existence and remain in good standing under the laws of its
         place of incorporation indicated in Schedule 2.

                                       30


11.3     NEGATIVE UNDERTAKINGS.  No Borrower will:

         (a)      carry on any business other than, in the case of a Shipowner,
                  the ownership, chartering and operation of the Ship owned by
                  it and, in the case of the Holding Company, investing in
                  companies which own or are to acquire LPG carriers; or

         (b)      pay any dividend or make any other form of distribution or
                  effect any form of redemption, purchase or return of share
                  capital except in accordance with Clause 11.4; or

         (c)      provide any form of credit or financial assistance to:

                  (i)      a person who is directly or indirectly interested in
                           that 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 that
         Borrower than those which it could obtain in a bargain made at arms'
         length;

(d)      open or maintain any account with any bank or financial institution
         except (i) accounts with the Lender for the purposes of the Finance
         Documents if that Borrower is a Shipowner, (ii) accounts with any other
         bank or financial institution notified in writing to the Lender in the
         case of the Holding Company and (iii) the existing account opened by
         Geneve and held in its name with Alpha Bank,

         PROVIDED THAT the exemption set out in sub-paragraph (iii) of this
         Clause 11.3(d) shall be without prejudice to the obligations of Geneve
         under Clause 17.1;

         (e)      issue, allot or grant any person a right to any shares in its
                  capital or repurchase or reduce its issued share capital;

         (f)      acquire any shares or other securities other than US or UK
                  Treasury bills and certificates of deposit issued by major
                  North American or European banks, or enter into any
                  transaction in a derivative; or

         (g)      enter into any form of amalgamation, merger or de-merger or
                  any form of reconstruction or reorganisation.

11.4     PAYMENT OF DIVIDENDS. Subject to no Event of Default having occurred,
         the Borrowers may in any financial year, declare and pay by way of
         dividends an amount of up to 50 per cent. of the Excess Cash Flow of
         the Group for that financial year.

12       INSURANCE

12.1     GENERAL. Each Borrower also undertakes with the Lender to comply, or as
         the case may be, procure compliance, with the following provisions of
         this Clause 12 at all times during the Security Period except as the
         Lender may otherwise permit.

12.2     MAINTENANCE OF OBLIGATORY INSURANCES. Each Shipowner shall keep the
         Ship owned by it insured at the expense of that Shipowner against:

         (a)      fire and usual marine risks (including hull and machinery and
                  excess risks);


         (b)      war risks;

         (c)      protection and indemnity risks; and

                                       31




         (d)      any other risks against which the Lender considers, having
                  regard to practices and other circumstances prevailing at the
                  relevant time, it would in the opinion of the Lender be
                  reasonable for that Shipowner to insure and which are
                  specified by the Lender by notice to that Shipowner.

12.3     TERMS OF OBLIGATORY INSURANCES. Each Shipowner shall effect such
         insurances:

         (a)      in Dollars;

         (b)      in the case of fire and usual marine risks and war risks, in
                  an amount on an agreed value basis at least the greater of (i)
                  such amount, which when aggregated with the amount for which
                  any other Ship then subject to a Mortgage is insured, is equal
                  to 130 per cent. of the aggregate of the Loan and the Swap
                  Exposure and (ii) the market value of the Ship owned by it;
                  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 in the international marine insurance market
                  (currently $1,000,000,000);

         (d)      in relation to protection and indemnity risks in respect of
                  the full tonnage of the Ship owned by it;

         (e)      on approved terms; 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.

12.4     FURTHER PROTECTIONS FOR THE LENDER. In addition to the terms set out in
         Clause 12.3, each Shipowner shall procure that the obligatory
         insurances shall:

         (a)      whenever the Lender requires, name (or be amended to name) the
                  Lender as additional named assured for its rights and
                  interests, warranted no operational interest and with full
                  waiver of rights of subrogation against the Lender, but
                  without the Lender thereby being liable to pay (but having the
                  right to pay) premiums, calls or other assessments in respect
                  of such insurance;

         (b)      name the Lender as loss payee with such directions for payment
                  as the Lender may specify;

         (c)      provide that all payments by or on behalf of the insurers
                  under the obligatory insurances to the Lender shall be made
                  without set-off, counterclaim or deductions or condition
                  whatsoever;

         (d)      provide that such obligatory insurances shall be primary
                  without right of contribution from other insurances which may
                  be carried by the Lender;

         (e)      provide that the Lender may make proof of loss if any of the
                  Shipowners fail to do so.

                                       32


12.5     RENEWAL OF OBLIGATORY INSURANCES.  Each Shipowner shall:

         (a)      at least 7 days before the expiry of any obligatory insurance
                  effected by it:

                  (i)      notify the Lender of the brokers (or other insurers)
                           and any protection and indemnity or war risks
                           association through or with whom that Borrower
                           proposes to renew that obligatory insurance and of
                           the proposed terms of renewal; and

                  (ii)     obtain the Lender's approval to the matters referred
                           to in paragraph (i);

         (b)      at least 7 days before the expiry of any obligatory insurance
                  effected by it, renew that obligatory insurance in accordance
                  with the Lender's approval pursuant to paragraph (a); 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 Lender in writing of the terms and conditions of the
                  renewal.

12.6     COPIES OF POLICIES; LETTERS OF UNDERTAKING. Each Shipowner shall ensure
         that all approved brokers provide the Lender with pro forma copies of
         all policies relating to the obligatory insurances which they are to
         effect or renew and of a letter or letters or undertaking in a form
         required by the Lender 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 12.4;

         (b)      they will hold such policies, and the benefit of such
                  insurances, to the order of the Lender in accordance with the
                  said loss payable clause;

         (c)      they will advise the Lender immediately of any material change
                  to the terms of the obligatory insurances;

         (d)      they will notify the Lender, 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
                  Shipowner or its agents and, in the event of their receiving
                  instructions to renew, they will promptly notify the Lender 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 Shipowner 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 Lender.

12.7     COPIES OF CERTIFICATES OF ENTRY. Each Shipowner shall ensure that any
         protection and indemnity and/or war risks associations in which the

         Ship owned by it is entered provides the Lender with:

         (a)      a certified copy of the certificate of entry for that Ship;

         (b)      a letter or letters of undertaking in such form as may be
                  required by the Lender; and

         (c)      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.

                                       33




12.8     DEPOSIT OF ORIGINAL POLICIES. Each Shipowner shall ensure that all
         policies relating to obligatory insurances effected by it are deposited
         with the approved brokers through which the insurances are effected or
         renewed.

12.9     PAYMENT OF PREMIUMS. Each Shipowner shall punctually pay all premiums
         or other sums payable in respect of the obligatory insurances effected
         by it and produce all relevant receipts when so required by the Lender.

12.10    GUARANTEES. Each Shipowner 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.

12.11    COMPLIANCE WITH TERMS OF INSURANCES. No Shipowner shall do nor omit to
         do (nor permit 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 under an obligatory
         insurance repayable in whole or in part; and, in particular:

         (a)      each Shipowner 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 12.7(c)) ensure that the
                  obligatory insurances are not made subject to any exclusions
                  or qualifications to which the Lender has not given its prior
                  approval;

         (b)      no Shipowner 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)      each Shipowner shall make (and promptly supply copies to the
                  Lender of) 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)      no Shipowner shall employ the Ship owned by it, nor 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.

12.12    ALTERATION TO TERMS OF INSURANCES. No Shipowner shall either make or
         agree to any alteration to the terms of any obligatory insurance nor
         waive any right relating to any obligatory insurance.

12.13    SETTLEMENT OF CLAIMS. No Shipowner shall settle, compromise or abandon
         any claim under any obligatory insurance for Total Loss or for a Major
         Casualty, and shall do all things necessary and provide all documents,
         evidence and information to enable the Lender to collect or recover any
         moneys which at any time become payable in respect of the obligatory
         insurances.

12.14    PROVISION OF COPIES OF COMMUNICATIONS. Each Shipowner shall provide the
         Lender, at the time of each such communication, copies of all written

         communications between that Shipowner and:

         (a)      the approved brokers; and

         (b)      the approved protection and indemnity and/or war risks
                  associations; and

                                       34




         (c)      the approved insurance companies and/or underwriters, which
                  relate directly or indirectly to:

                  (i)      that Shipowner'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 Shipowner
                           and any of the persons referred to in paragraphs (a)
                           or (b) relating wholly or partly to the effecting or
                           maintenance of the obligatory insurances.

12.15    PROVISION OF INFORMATION. In addition, each Shipowner shall promptly
         provide the Lender (or any persons which it may designate) with any
         information which the Lender (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 12.16 below or dealing with or
                  considering any matters relating to any such insurances,

         and the Shipowners shall, forthwith upon demand, indemnify the Lender
         in respect of all fees and other expenses incurred by or for the
         account of the Lender in connection with any such report as is referred
         to in paragraph (a).

12.16    MORTGAGEE'S INTEREST AND ADDITIONAL PERILS. The Lender shall be
         entitled from time to time to effect, maintain and renew a mortgagee's
         interest additional perils insurance in respect of any Ship, a
         mortgagee's political risks insurance and a mortgagee's interest marine
         insurance in such amounts, on such terms, through such insurers and
         generally in such manner as the Lender may from time to time consider
         appropriate and the Borrowers shall upon demand fully indemnify the
         Lender 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       SHIP COVENANTS

13.1     GENERAL. Each Borrower also undertakes with the Lender to comply with,
         or to procure compliance with (as the case may be), with the following
         provisions of this Clause 13 at all times during the Security Period,
         except as the Lender may otherwise permit.

13.2     SHIP'S NAME AND REGISTRATION. Each Shipowner shall keep the Ship owned
         by it registered in its name at the ship registry and port indicated in
         Schedule 3, 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 the Ship owned by it.

13.3     REPAIR AND CLASSIFICATION. Each Shipowner 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 that Ship's present class (namely that
                  indicated in Schedule 3) free of overdue recommendations and
                  conditions affecting the Ship's class; and


                                       35




         (c)      so as to comply with all laws and regulations applicable to
                  vessels registered at ports in the flag state relevant to that
                  Ship 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.

13.4     MODIFICATION. No Shipowner shall make or allow any modification or
         repairs to, or replacement of, any Ship or equipment installed on the
         Ship which would or might materially alter the structure, type or
         performance characteristics of any Ship or materially reduce its value.

13.5     REMOVAL OF PARTS. No Shipowner shall remove or allow the removal of 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 Lender and
         becomes on installation on the relevant Ship the property of the
         relevant Shipowner and subject to the security constituted by the
         relevant Mortgage PROVIDED THAT a Shipowner 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.

13.6     SURVEYS. Each Shipowner 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 Lender provide the
         Lender, with copies of all survey reports.

13.7     INSPECTION. Each Shipowner shall permit the Lender (by surveyors or
         other persons appointed by it for that purpose) to board the Ship owned
         by it at all reasonable times to inspect its condition or to satisfy
         themselves about proposed or executed repairs and shall afford all
         proper facilities for such inspections.

13.8     PREVENTION OF AND RELEASE FROM ARREST. Each Shipowner 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, her Earnings or her Insurances;

         (b)      all taxes, dues and other amounts charged in respect of the
                  Ship owned by it, her Earnings or her Insurances; and

         (c)      all other outgoings whatsoever in respect of the Ship owned by
                  it, her Earnings or her Insurances,

         and, forthwith upon receiving notice of the arrest of the Ship owned by
         it, or of its detention in exercise or purported exercise of any lien
         or claim, that Borrower shall procure its release by providing bail or
         otherwise as the circumstances may require.

13.9     COMPLIANCE WITH LAWS ETC.  Each Shipowner shall:

         (a)      comply, or procure compliance with the ISM Code, all
                  Environmental Laws and all other laws or regulations relating
                  to the Ship owned by it, its ownership, operation and
                  management or to the business of that Shipowner;

         (b)      not employ the Ship owned by it nor allow its employment in
                  any manner contrary to any law or regulation in any relevant
                  jurisdiction including but not limited to the ISM 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

                                       36


                  consent of the Lender has been given and that Shipowner has
                  (at its expense) effected any special, additional or modified
                  insurance cover which the Lender may require.

13.10    PROVISION OF INFORMATION. Each Borrower shall promptly provide the
         Lender with any information which it requests regarding:

         (a)      the Ship owned by it, its employment, position and
                  engagements;

         (b)      the Earnings and payments and amounts due to the master and
                  crew of the Ship owned by it;

         (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;

         (e)      its compliance, the Approved Manager's compliance the
                  compliance of the Ship owned by it and (in the case of each of
                  "BIRGIT KOSAN" and "GAS ICE"), the relevant Bareboat
                  Charterer's compliance, with the ISM Code,

         and, upon the Lender's request, provide copies of any current charter
         relating to the Ship owned by it, of any current charter guarantee and
         of the Ship's Document of Compliance.

13.11    NOTIFICATION OF CERTAIN EVENTS. Each Shipowner shall immediately notify
         the Lender by fax, confirmed forthwith, 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 its Earnings
                  or any requisition of that Ship for hire;


         (e)      any intended dry docking of the Ship owned by it;

         (f)      any Environmental Claim made against that Shipowner or in
                  connection with the Ship owned by it, or any Environmental
                  Incident;

         (g)      any claim for breach of the ISM Code being made against that
                  Shipowner, the Approved Manager or a Bareboat Charterer (as
                  the case may be) 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 not being
                  complied with,

         and that Shipowner shall keep the Lender advised in writing on a
         regular basis and in such detail as the Lender shall require of that
         Shipowner's, the Approved Manager's, a Bareboat Charterer's or any
         other person's response to any of those events or matters.

                                       37




13.12    RESTRICTIONS ON CHARTERING, APPOINTMENT OF MANAGERS ETC. No Shipowner
         shall, in relation to the Ship owned by it:

         (a)      other than, in the case of each of "BIRGIT KOSAN" and "GAS
                  ICE", pursuant to the relevant Bareboat Charter, let that Ship
                  on demise charter for any period;

         (b)      other than, in the case of "GAS ARCTIC", pursuant to the GAS
                  ARCTIC Time Charterparty, enter into any time or consecutive
                  voyage charter in respect of that Ship for a term which
                  exceeds, or which by virtue of any optional extensions may
                  exceed, 13 months;

         (c)      enter into any charter in relation to that Ship under which
                  more than 2 months' hire (or the equivalent) is payable in
                  advance;

         (d)      charter that Ship otherwise than on bona fide arm's length
                  terms at the time when that Ship is fixed;

         (e)      appoint a manager of that Ship other than the Approved Manager
                  or agree to any alteration to the terms of the Approved
                  Manager's appointment;

         (f)      de-activate or lay up that Ship; or

         (g)      put that Ship into the possession of any person for the
                  purpose of work being done upon her in an amount exceeding or
                  likely to exceed $500,000 (or the equivalent in any other
                  currency) unless that person has first given to the Lender and
                  in terms satisfactory to it a written undertaking not to
                  exercise any lien on that Ship or the Earnings for the cost of
                  such work or any other reason.

13.13    NOTICE OF MORTGAGE.  Each Shipowner shall:

         (a)      keep the relevant Mortgage registered against the Ship owned
                  by it as a valid first priority or first preferred mortgage;
                  and

         (b)      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
                  Shipowner to the Lender.

13.14    SHARING OF EARNINGS. No Borrower shall enter into any agreement or
         arrangement for the sharing of any Earnings.

13.15    TIME CHARTER ASSIGNMENT. If any Borrower enters into any Charter
         (subject to obtaining the consent of the Lender in accordance with
         Clause 13.13(b)), the relevant Borrower shall, at the request of the
         Lender, execute in favour of the Lender a Charter Assignment in
         relation to such Charter, and shall deliver to the Lender such other
         documents equivalent to those referred to at paragraphs 3, 4 and 5 of
         Part A of Schedule 4 hereof as the Lender may require.

13.16    COMPLIANCE WITH INSURANCE AND SHIP COVENANTS. Each of Industrial and
         Ventspils shall procure the performance by Lauritzen and Finaval
         respectively of all the covenants and undertakings to be observed,
         performed and complied with, by or on behalf of each of Industrial and
         Ventspils respectively under Clause 12 (other than Clause 12.16) and
         Clause 13 and, to the extent that each Bareboat Charterer duly performs
         and discharges its obligations set out in this Clause 13.16 or to the
         further extent that each Bareboat Charterer, by its performance of the
         relevant Bareboat Charter, performs and discharges further obligations
         of Industrial or Ventspils (as the case may be) contained in the
         Finance Documents, then such performance and discharge shall, to that
         extent, be deemed due performance and discharge of Industrial's or
         Ventspil's obligations (as the case may be) under the Finance
         Documents.

                                       38


14       SECURITY COVER

14.1     MINIMUM REQUIRED SECURITY COVER. Clause 14.2 applies if the Lender
         notifies the Borrowers that the Asset Cover Ratio is below 1.25 to 1.

14.2     PROVISION OF ADDITIONAL SECURITY; PREPAYMENT. If the Lender serves a
         notice on the Borrowers under Clause 14.1, the Borrowers shall, within
         1 month after the date on which the Lender's notice is served, either:

         (a)      provide, or ensure that a third party provides, additional
                  security which, in the reasonable opinion of the Lender, has a
                  net realisable value at least equal to the shortfall in the
                  Asset Cover Ratio and is documented in such terms as the
                  Lender may approve or require; or

         (b)      prepay such part (at least) of the Loan as will eliminate the
                  shortfall in the Asset Cover Ratio.

14.3     VALUATION OF SHIPS. The market value of a Ship at any date is that
         shown by the arithmetic average of two valuations, each prepared:

         (a)      as at a date not more than 14 days previously;

         (b)      by an independent sale and purchase shipbroker which the
                  Lender has approved or appointed for the purpose;

         (c)      with or without physical inspection of the Ship (as the Lender
                  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.

14.4     VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
         additional security which is provided under Clause 14.2 and which
         consists of a Security Interest over a vessel shall be that shown by a
         valuation complying with the requirements of Clause 14.3.

14.5     VALUATIONS BINDING. Any valuation under Clause 14.2, 14.3 or 14.4 shall
         be binding and conclusive as regards the Borrowers, as shall be any
         valuation which the Lender makes of any additional security which does
         not consist of or include a Security Interest.

14.6     PROVISION OF INFORMATION. The Borrowers shall promptly provide the
         Lender and any shipbroker or expert acting under Clause 14.3 or 14.4
         with any information which the Lender or the shipbroker or expert may
         request for the purposes of the valuation; and, if the Borrowers fail
         to provide the information by the date specified in the request, the
         valuation may be made on any basis and assumptions which the shipbroker
         or the Lender (or the expert appointed by it) considers prudent.

14.7     PAYMENT OF VALUATION EXPENSES. Without prejudice to the generality of
         the Borrowers' obligations under Clauses 19.2, 19.3 and 20.3, the
         Borrowers shall, on demand, pay the Lender the amount of the fees and
         expenses of any shipbroker or expert instructed by the Lender under
         this Clause and all legal and other expenses incurred by the Lender in
         connection with any matter arising out of this Clause.

                                       39


14.8     APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to any
         prepayment pursuant to Clause 14.2(b).

15       PAYMENTS AND CALCULATIONS

15.1     CURRENCY AND METHOD OF PAYMENTS. All payments to be made by any
         Borrower to the Lender under a Finance Document shall be made to the
         Lender:

         (a)      by not later than 11.00 a.m. (New York City time) on the due
                  date;

         (b)      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 Lender shall
                  specify as being customary at the time for the settlement of
                  international transactions of the type contemplated by this
                  Agreement); and

         (c)      to the account of the Lender at ABN AMRO Bank N.V. of 355
                  Madison Avenue, New York NY 10117, U.S.A. (SWIFT address:
                  ABNAUS33; Account No. 637070342741), or to such other account
                  with such other bank as the Lender may from time to time
                  notify to the Borrowers.

15.2     PAYMENT ON NON-BUSINESS DAY. If any payment by any 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.

15.3     BASIS FOR CALCULATION OF PERIODIC PAYMENTS. All interest 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.

15.4     LENDER ACCOUNTS. The Lender shall maintain an account showing the
         amounts advanced by the Lender and all other sums owing to the Lender
         from the Borrowers and each Security Party under the Finance Documents
         and all payments in respect of those amounts made by the Borrowers and
         any Security Party.

15.5     ACCOUNTS PRIMA FACIE EVIDENCE. If the account maintained under Clauses
         15.4 shows an amount to be owing by a Borrower or a Security Party to
         the Lender, that account shall be prima facie evidence that that amount
         is owing to the Lender.

16       APPLICATION OF RECEIPTS

16.1     NORMAL ORDER OF APPLICATION. Except as any Finance Document may
         otherwise provide, any sums which are received or recovered by the
         Lender 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 (or any of them) in such
                  order of application and/or such proportions as the Lender may
                  specify by notice to the Borrowers and the Security Parties;


                                       40




         (b)      SECONDLY: in retention of an amount equal to any amount not
                  then due and payable under any Finance Document but which the
                  Lender, by notice to the Borrowers and the Security 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 this Clause; and

         (c)      THIRDLY: any surplus shall be paid to the Borrowers or to any
                  other person appearing to be entitled to it.

16.2     VARIATION OF ORDER OF APPLICATION. The Lender may, at its reasonable
         discretion, by notice to the Borrowers and the Security Parties,
         provide for a different manner of application from that set out in
         Clause 16.1 either as regards a specified sum or sums or as regards
         sums in a specified category or categories.

16.3     NOTICE OF VARIATION OF ORDER OF APPLICATION. The Lender may give
         notices under Clause 16.2 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.

16.4     APPROPRIATION RIGHTS OVERRIDDEN. This Clause 16 and any notice which
         the Lender gives under Clause 16.2 shall override any right of
         appropriation possessed, and any appropriation made, by any Borrower or
         any Security Party.

17       APPLICATION OF EARNINGS

17.1     PAYMENT OF EARNINGS. Each Shipowner undertakes with the Lender to
         ensure that, throughout the Security Period:

         (a)      (subject only to the provisions of the General Assignments to
                  which that Shipowner is a party), all the Earnings of the Ship
                  owned by it are paid to the Earnings Account; and

         (b)      all payments by the Lender to a Borrower under each
                  Transaction are paid to the Earnings Account.

17.2     APPLICATION OF EARNINGS. Each Shipowner undertakes with the Lenders
         that money from time to time credited to, or for the time being
         standing to the credit of, the Earnings Account shall, unless and until
         an Event of Default or Potential Event of Default shall have occurred
         (whereupon the provisions of Clause 16.1 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 Shipowner 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 Borrowers under this Agreement other than the payments
                  of principal and interest pursuant to Clauses 7.1 and 4.1;

         (c)      in or towards making the transfers to the Retention Account
                  required pursuant to Clause 17.3; and

         (d)      as to any surplus from time to time arising on the Earnings
                  Account following application as aforesaid, to be paid to the
                  relevant Shipowner or to whomsoever it may direct.

17.3     MONTHLY RETENTIONS. The Borrowers undertake with the Lender to ensure
         that, on the date falling one month after the date on which the final
         Drawdown Notice is served and

                                       41


         on the same day in each subsequent month throughout the Security
         Period, there is transferred to the Retention Account out of the
         Earnings received in the Earnings Account during the preceding month:

         (a)      one-third of the amount of the repayment instalment falling
                  due under Clause 7 on the next Repayment Date; and

         (b)      the relevant fraction of the aggregate amount of interest on
                  the Loan which is payable on the next due date for payment of
                  interest under this Agreement.

         The "RELEVANT FRACTION" is a fraction of which the numerator is 1 and
         the denominator the number of months comprised in the then current
         Interest Period (or, if the period is shorter, the number of months
         from the later of the commencement of the current Interest Period or
         the last due date for payment of interest to the next due date for
         payment of interest under this Agreement).

17.4     SHORTFALL IN EARNINGS. If the aggregate Earnings received in the
         Earnings Account are insufficient in any month for the required amount
         to be transferred to the Retention Account under Clause 17.3, the
         Borrowers shall make up the amount of the insufficiency on demand from
         the Lender; but, without thereby prejudicing the Lender's right to make
         such demand at any time, the Lender may permit the Borrowers to make up
         all or part of the insufficiency by increasing the amount of any
         transfer under Clause 17.3 from the Earnings received in the next or
         subsequent months.

17.5     APPLICATION OF RETENTIONS. Until an Event of Default or a Potential
         Event of Default occurs, the Lender shall on each Repayment Date and on
         each due date for the payment of interest under this Agreement apply in
         accordance with Clause 15.1 so much of the balance on the Retention
         Account as equals:

         (a)      the repayment instalment due on that Repayment Date; or

         (b)      the amount of interest payable on that interest payment date,

         in discharge of the Borrowers' liability for that repayment instalment
         or that interest.

17.6     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 Lender to its customers for Dollar deposits of similar
         amounts and for periods similar to those for which such balances appear
         to the Lender likely to remain on the Retention Account.

17.7     RELEASE OF ACCRUED INTEREST. Interest accruing under Clause 17.6 shall
         be released to the Borrowers on each Repayment 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 17.3 been transferred in
         that and each previous month.

17.8     LOCATION OF ACCOUNTS.  Each Borrower shall promptly:

         (a)      comply with any requirement of the Lender as to the location
                  or re-location of the Earnings Account and the Retention
                  Account (or any of them); and

         (b)      execute any documents which the Lender specifies to create or
                  maintain in favour of the Lender a Security Interest over
                  (and/or rights of set-off, consolidation or other rights in
                  relation to) the Earnings Account and the Retention Account.

                                       42


17.9     DEBITS FOR EXPENSES ETC. The Lender shall be entitled (but not obliged)
         from time to time to debit the Earnings Account without prior notice in
         order to discharge any amount due and payable to it under Clause 19 or
         20 or payment of which it has become entitled to demand under Clause 19
         or 20.

17.10    BORROWERS' OBLIGATIONS UNAFFECTED. The provisions of this Clause 17 (as
         distinct from a distribution effected under Clause 17.5) do not affect:

         (a)      the liability of the Borrowers to make payments of principal
                  and interest on the due dates; or

         (b)      any other liability or obligation of the Borrowers or any
                  Security Party under any Finance Document.

18       EVENTS OF DEFAULT

18.1     EVENTS OF DEFAULT.  An Event of Default occurs if:

         (a)      any 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 8.2, 10.2, 10.3, 10.17, 10.18,
                  11.2, 11.3 or 14.1; or

         (c)      any breach by any Borrower or any Security Party occurs of any
                  provision of a Finance Document (other than a breach covered
                  by paragraph (a) or (b)) if, in the opinion of the Lender,
                  such default is capable of remedy and such default continues
                  unremedied 10 days after written notice from the Lender
                  requesting action to remedy the same; or

         (d)      (subject to any applicable grace period specified in any
                  Finance Document) any breach by any of the Borrowers or any
                  Security Party occurs of any provision of a Finance Document
                  (other than a breach caused by paragraph (a), (b) or (c)); or

         (e)      any representation, warranty or statement made by, or by an
                  officer of, a Borrower or a Security Party in a Finance
                  Document or in the 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:

                  (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,

                                       43


                           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


         (g)      any of the following occurs in relation to a Relevant Person:

                  (i)      a Relevant Person becomes, in the opinion of the
                           Lender, 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, $500,000 or more or the equivalent in
                           another currency and such execution, attachment,
                           arrest, sequestration or distress is not withdrawn
                           within 7 days of its commencement; 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 a Borrower
                           which is, or is to be, effected for the purposes of
                           an amalgamation or reconstruction previously approved
                           by the Lender 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); or

                  (viii)   in a Pertinent Jurisdiction other than England, any
                           event occurs or any procedure is commenced which, in
                           the opinion of the Lender, is similar to any of the
                           foregoing; or

         (h)      any Borrower ceases or suspends carrying on its business or a
                  part of its business which, in the opinion of the Lender, is
                  material in the context of this Agreement; or

         (i)      it becomes unlawful in any Pertinent Jurisdiction or
                  impossible:

                  (i)      for any Borrower or any Security Party to discharge
                           any liability under a Finance Document or to comply
                           with any other obligation which the Lender considers
                           material under a Finance Document; or

                                       44




                  (ii)     for the Lender to exercise or enforce any right
                           under, or to enforce any Security Interest created
                           by, a Finance Document; or

         (j)      any consent necessary to enable any Shipowner or the Bareboat
                  Charterer to own, operate or charter the Ship owned or
                  chartered by it (as the case may be) or to enable any Borrower
                  or any Security Party to comply with any provision which the
                  Lender considers material of a Finance Document, an MOA or the
                  Bareboat Charter 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)      it appears to the Lender that, without its prior consent, a
                  change has occurred or probably has occurred after the date of
                  this Agreement in the ultimate beneficial ownership of any of
                  the shares in any Borrower or the Shareholders or in the
                  ultimate control of the voting rights attaching to any of
                  those shares; or

         (l)      any provision which the Lender considers 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 security constituted by a Finance Document is in any way
                  imperilled or in jeopardy; or

         (n)      an Event of Default (as defined in Section 14 of the Master
                  Agreement) occurs;

         (o)      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
                  Lender; or

         (p)      any other event occurs or any other circumstances arise or
                  develop including, without limitation:

                  (i)      a change in the financial position, state of affairs
                           or prospects of any Borrower or any Shareholder; or

                  (ii)     any accident or other event involving any Ship or
                           another vessel owned, chartered or operated by a
                           Relevant Person,

         in the light of which the Lender considers that there is a significant
         risk that the Borrowers are, or will later become, unable to discharge
         their liabilities under the Finance Documents as they fall due.

18.2     ACTIONS FOLLOWING AN EVENT OF DEFAULT. On, or at any time after, the
         occurrence of an Event of Default the Lender may:

         (a)      serve on the Borrowers a notice stating that all obligations
                  of the Lender to the Borrowers under this Agreement are
                  terminated; and/or

         (b)      serve on the Borrowers 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

         (c)      take any other action which, as a result of the Event of
                  Default or any notice served under paragraph (a) or (b), the
                  Lender is entitled to take under any Finance Document or any
                  applicable law.

                                       45


18.3     TERMINATION OF COMMITMENT. On the service of a notice under Clause
         18.2(a) the Commitment, and all other obligations of the Lender to the
         Borrowers under this Agreement, shall terminate.

18.4     ACCELERATION OF LOAN. On the service of a notice under Clause 18.2(b),
         the Loan, all accrued interest and all other amounts accrued or owing
         from the Borrowers 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.

18.5     MULTIPLE NOTICES; ACTION WITHOUT NOTICE. The Lender may serve notices
         Clauses 18.2(a) and (b) simultaneously or on different dates and it may
         take any action referred to in Clause 18.2 if no such notice is served
         or simultaneously with or at any time after the service of both or
         either of such notices.

18.6     EXCLUSION OF LENDER LIABILITY. Neither the Lender nor any receiver or
         manager appointed by the Lender, shall have any liability to a 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 the Lender or a receiver or manager
         from liability for losses shown to have been caused directly and mainly
         by the dishonesty or the wilful misconduct of the Lender's own officers
         and employees or (as the case may be) such receiver's or manager's own
         partners or employees.

18.7     RELEVANT PERSONS. In this Clause 18 a "RELEVANT PERSON" means a
         Borrower, a Security Party, and any company which is a subsidiary of,
         or which appears to the Lender to be under the ultimate control, direct
         or indirect, of a Borrower.

18.8     INTERPRETATION. In Clause 18.1(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 18.1(g) "PETITION" includes an
         application.

19       FEES AND EXPENSES

19.1     ARRANGEMENT FEE. The Borrowers shall pay to the Lender on the date of
         this Agreement, a non-refundable arrangement fee of $162,000.

19.2     COSTS OF NEGOTIATION, PREPARATION ETC. The Borrowers shall pay to the
         Lender on its demand the amount of all expenses incurred by the Lender
         in connection with the negotiation, preparation, execution or
         registration of any Finance Document or any related document or with
         any transaction contemplated by a Finance Document or a related
         document.

19.3     COSTS OF VARIATIONS, AMENDMENTS, ENFORCEMENT ETC. The Borrowers shall
         pay to the Lender, on the Lender's demand, the amount of all expenses
         incurred by the Lender in connection with:

         (a)      any amendment or supplement to a Finance Document, or any
                  proposal for such an amendment to be made;


                                       46




         (b)      any consent or waiver by 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
                  14 or any other matter relating to such security; or

         (d)      any step taken by the Lender 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.

19.4     DOCUMENTARY TAXES. The Borrowers shall promptly pay any tax payable on
         or by reference to any Finance Document, and shall, on the Lender's
         demand, fully indemnify the Lender against any claims, expenses,
         liabilities and losses resulting from any failure or delay by the
         Borrowers to pay such a tax.

19.5     CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
         Lender, which states that a specified amount, or aggregate amount, is
         due to the Lender under this Clause 19 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.

20       INDEMNITIES

20.1     INDEMNITIES REGARDING BORROWING AND REPAYMENT OF LOAN. The Borrowers
         shall fully indemnify made or brought against the Lender on its demand
         in respect of all claims, expenses, liabilities and losses which are
         incurred by the Lender, or which the Lender 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;

         (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 Borrowers 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 Borrowers on the amount concerned
                  under Clause 6);

         (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 18,

         and in respect of any tax (other than tax on its overall net income)
         for which the Lender is liable in connection with any amount paid or
         payable to the Lender (whether for its own account or otherwise) under
         any Finance Document.

20.2     BREAKAGE COSTS. Without limiting its generality, Clause 20.1 covers any
         claim, expense, liability or loss, including a loss of a prospective
         profit, incurred by the Lender:

         (a)      in liquidating or employing deposits from third parties
                  acquired or arranged to fund or maintain all or any part of
                  the Loan and/or any overdue amount (or an aggregate amount
                  which includes the Loan or any overdue amount); and


                                       47




         (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) to hedge any exposure arising under
                  this Agreement or a number of transactions of which this
                  Agreement is one.

20.3     MISCELLANEOUS INDEMNITIES. The Borrowers shall fully indemnify the
         Lender on its demand in respect of all claims, expenses, liabilities
         and losses which may be made or brought against or incurred by the
         Lender, in any country, as a result of or in connection with:

         (a)      any action taken, or omitted or neglected to be taken, under
                  or in connection with any Finance Document by the Lender or by
                  any receiver appointed under a Finance Document;

         (b)      any other Pertinent Matter,

         other than claims, expenses, liabilities and losses which are shown to
         have been directly and mainly caused by the dishonesty or wilful
         misconduct of the officers or employees of the Lender.

         Without prejudice to its generality, this Clause 20.3 covers any
         claims, expenses, liabilities and losses which arise, or are asserted,
         under or in connection with any law relating to safety at sea, the ISM
         Code or any Environmental Law.

20.4     CURRENCY INDEMNITY. If any sum due from any Borrower or any Security
         Party to the Lender 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 any 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 Borrowers shall indemnify the Lender against the loss arising when
         the amount of the payment actually received by the Lender is converted
         at the available rate of exchange into the Contractual Currency.

         In this Clause 20.4, the "AVAILABLE RATE OF EXCHANGE" means the rate at
         which the Lender 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 20.4 creates a separate liability of the Borrowers which is
         distinct from their other liabilities under the Finance Documents and
         which shall not be merged in any judgment or order relating to those
         other liabilities.

20.5     APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause
         20.4 does not apply in respect of sums due from the Borrowers to the
         Lender under or in connection with the Master Agreement as to which
         sums the provisions of Section 8 (Contractual Currency) of the Master
         Agreement shall apply.

20.6     CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
         Lender, which states that a specified amount, or aggregate amount, is
         due to the Lender under this

                                       48


         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       NO SET-OFF OR TAX DEDUCTION

21.1     NO DEDUCTIONS. All amounts due from the Borrowers 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 a Borrower is required by law to make.

21.2     GROSSING-UP FOR TAXES. If a Borrower is required by law to make a tax
         deduction from any payment:

         (a)      that Borrower shall notify the Lender as soon as it becomes
                  aware of the requirement;

         (b)      that 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 the Lender 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.

21.3     EVIDENCE OF PAYMENT OF TAXES. Within one month after making any tax
         deduction, the Borrower concerned shall deliver to the Lender
         documentary evidence satisfactory to the Lender that the tax had been
         paid to the appropriate taxation authority.

21.4     EXCLUSION OF TAX ON OVERALL NET INCOME. In this Clause 21 "TAX
         DEDUCTION" means any deduction or withholding for or on account of any
         present or future tax except tax on the Lender's overall net income.

21.5     APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 21
         does not apply in respect of sums due from the Borrowers to the Lender
         under or in connection with the Master Agreement as to which sums the
         provisions of Section 2(d) (Deduction or Withholding for Tax) of the
         Master Agreement shall apply.

22       ILLEGALITY, ETC

22.1     ILLEGALITY. This Clause 22 applies if the Lender notifies the Borrowers
         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 Lender to maintain or give effect to any of its obligations
         under this Agreement in the manner contemplated by this Agreement.

22.2     NOTIFICATION AND EFFECT OF ILLEGALITY. On the Lender notifying the
         Borrowers under Clause 22.1, the Commitment shall terminate; and
         thereupon or, if later, on the date

                                       49


         specified in the Lender's notice under Clause 22.1 as the date on which
         the notified event would become effective the Borrowers shall prepay
         the Loan in full in accordance with Clause 7.

22.3     MITIGATION. If circumstances arise which would result in a notification
         under Clause 22.1 then, without in any way limiting the rights of the
         Lender under Clause 22.3, the Lender shall use reasonable endeavours to
         transfer its obligations, liabilities and rights under this Agreement
         and the Finance Documents to another office or financial institution
         not affected by the circumstances but the Lender shall not be under any
         obligation to take any such action if, in its opinion, to do would or
         might:

         (a)      have an adverse effect on its business, operations or
                  financial condition; or

         (b)      involve it in any activity which is unlawful or prohibited or
                  any activity that is contrary to, or inconsistent with, any
                  regulation; or

         (c)      involve it in any expense (unless indemnified to its
                  satisfaction) or tax disadvantage.

23       INCREASED COSTS

23.1     INCREASED COSTS. This Clause 23 applies if the Lender notifies the
         Borrowers that it 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)      complying with any regulation (including any which relates to
                  capital adequacy or liquidity controls or which affects the
                  manner in which the Lender allocates capital resources to its
                  obligations under this Agreement) which is introduced, or
                  altered, or the interpretation or application of which is
                  altered, after the date of this Agreement,

         the Lender (or a parent company of it) has incurred or will incur an
         "INCREASED COST".

23.2     MEANING OF "INCREASED COST". In this Clause 23, "INCREASED COST" means:

         (a)      an additional or increased cost incurred as a result of, or in
                  connection with, the Lender having entered into, or being a
                  party to, this Agreement or having taken an assignment of
                  rights under this Agreement, of funding or maintaining the
                  Commitment or performing its obligations under this Agreement,
                  or of having outstanding all or any part of the Loan or other
                  unpaid sums; or

         (b)      a reduction in the amount of any payment to the Lender under
                  this Agreement or in the effective return which such a payment
                  represents to the Lender or on its capital;

         (c)      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 Loan or (as the case may require)
                  the proportion of that cost attributable to the Loan; or

         (d)      a liability to make a payment, or a return foregone, which is
                  calculated by reference to any amounts received or receivable
                  by the Lender under this Agreement,

         but not an item attributable to a change in the rate of tax on the
         overall net income of the Lender (or a parent company of it) or an item
         covered by the indemnity for tax in Clause 20.1 or by Clause 21.

                                       50


         For the purposes of this Clause 23.2 the Lender may in good faith
         allocate or spread costs and/or losses among its assets and liabilities
         (or any class of its assets and liabilities) on such basis as it
         considers appropriate.

23.3     PAYMENT OF INCREASED COSTS. The Borrowers shall pay to the Lender, on
         its demand, the amounts which the Lender from time to time notifies the
         Borrowers that it has specified to be necessary to compensate it for
         the increased cost.

23.4     NOTICE OF PREPAYMENT. If the Borrowers are not willing to continue to
         compensate the Lender for the increased cost under Clause 23.3, the
         Borrowers may give the Lender not less than 14 days' notice of their
         intention to prepay the Loan at the end of an Interest Period.

23.5     PREPAYMENT. A notice under Clause 23.4 shall be irrevocable; and on the
         date specified in the Borrowers' notice of intended prepayment, the
         Commitment shall terminate and the Borrowers shall prepay (without
         premium or penalty) the Loan, together with accrued interest thereon at
         the applicable rate plus the Margin.

23.6     APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to the
         prepayment.

24       SET-OFF

24.1     APPLICATION OF CREDIT BALANCES.  The Lender may 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 a Borrower
                  at any office in any country of the Lender in or towards
                  satisfaction of any sum then due from that Borrower to the
                  Lender 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 that 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 Lender
                           considers appropriate.

24.2     EXISTING RIGHTS UNAFFECTED. The Lender shall not be obliged to exercise
         any of its rights under Clause 24.1; 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 the Lender is
         entitled (whether under the general law or any document).

24.3     NO SECURITY INTEREST. This Clause 24 gives the Lender a contractual
         right of set-off only, and does not create any equitable charge or
         other Security Interest over any credit balance of the Borrower.

25       TRANSFERS AND CHANGES IN LENDING OFFICE

25.1     TRANSFER BY BORROWERS. No Borrower may, without the consent of the
         Lender transfer any of its rights or obligations under any Finance
         Document.

25.2     ASSIGNMENT BY LENDER. The Lender may assign all or any of the rights
         and interests which it has under or by virtue of the Finance Documents
         without the consent of any Borrower.

                                       51


25.3     RIGHTS OF ASSIGNEE. 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, a
         direct or indirect assignee of any of the Lender's rights or interests
         under or by virtue of the Finance Documents shall be entitled to
         recover damages by reference to the loss incurred by that assignee as a
         result of the breach or misrepresentation irrespective of whether the
         Lender would have incurred a loss of that kind or amount.

25.4     SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. The 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, any Borrower; and the Lender may assign, in any manner
         and terms agreed by it, all or any part of those rights to an insurer
         or surety who has become subrogated to them.

25.5     DISCLOSURE OF INFORMATION. The Lender may disclose to a potential
         assignee or sub-participant any information which the Lender has
         received in relation to any Borrower, any Security Party or their
         affairs under or in connection with any Finance Document, unless the
         information is clearly of a confidential nature.

25.6     CHANGE OF LENDING OFFICE. The Lender may change its lending office by
         giving notice to the Borrowers and the change shall become effective on

         the later of:

         (a)      the date on which the Borrowers receive the notice; and

         (b)      the date, if any, specified in the notice as the date on which
                  the change will come into effect.



26       VARIATIONS AND WAIVERS

26.1     VARIATIONS, WAIVERS ETC. BY LENDER. A document shall be effective to
         vary, waive, suspend or limit any provision of a Finance Document, or
         the Lender's rights or remedies under such a provision or the general
         law, only if the document is signed, or specifically agreed to by fax
         or telex, by the Borrowers and the Lender and, if the document relates
         to a Finance Document to which a Security Party is party, by that
         Security Party.

26.2     EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
         satisfies the requirements of Clause 26.1, no document, and no act,
         course of conduct, failure or neglect to act, delay or acquiescence on
         the part of the Lender (or any person acting on its behalf) shall
         result in the Lender (or any person acting on its behalf) 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 a 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.

                                       52




27       NOTICES

27.1     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.

27.2     ADDRESSES FOR COMMUNICATIONS.  A notice shall be sent:

         (a)      to a Borrower:                 c/o Stealthgas Inc.
                                                 331 Kiffisias Avenue
                                                 Kiffisia  145 61
                                                 Greece
                                                 Fax No: +30 210 625 2817

         (b)      to the Lender:                 Fortis Bank (Nederland) N.V.
                                                 Coolsingel 93
                                                 3012 AE Rotterdam
                                                 The Netherlands
                                                 Fax No:  +30 10 401 5323

                                                 and in the event that a
                                                 notice concerns the Master
                                                 Agreement, with a copy to:

                                                 Fortis Bank Oslo
                                                 Haakon VII Gate 10
                                                 0161 Oslo
                                                 Norway
                                                 Fax No.: + 47 2311 4940

         or to such other address as the relevant party may notify the other.

27.3     EFFECTIVE DATE OF NOTICES.  Subject to Clauses 27.4 and 27.5:

         (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 telex or fax shall be deemed to be
                  served, and shall take effect, 2 hours after its transmission
                  is completed.

27.4     SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 27.3 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 27.5) be deemed to be served, and
         shall take effect, at 9 a.m. on the next day which is such a business
         day.

27.5     ILLEGIBLE NOTICES. Clauses 27.3 and 27.4 do not apply if the recipient
         of a notice notifies the sender within 1 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.

                                       53


27.6     ENGLISH LANGUAGE. Any notice under or in connection with a Finance
         Document shall be in English.

27.7     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:

         (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.

27.8     MEANING OF "NOTICE". In this Clause 28 "NOTICE" includes any demand,
         consent, authorisation, approval, instruction, waiver or other
         communication.

28       JOINT AND SEVERAL LIABILITY

28.1     GENERAL. All liabilities and obligations of the Borrowers under this
         Agreement shall, whether expressed to be so or not, be several and, if
         and to the extent consistent with Clause 28.2, joint.

28.2     NO IMPAIRMENT OF BORROWER'S OBLIGATIONS. The liabilities and
         obligations of a Borrower shall not be impaired by:

         (a)      this Agreement being or later becoming void, unenforceable or
                  illegal as regards any other Borrower;

         (b)      the Lender entering into any rescheduling, refinancing or
                  other arrangement of any kind with any other Borrower;

         (c)      the Lender releasing any other Borrower or any Security
                  Interest created by a Finance Document; or

         (d)      any combination of the foregoing.

28.3     PRINCIPAL DEBTORS. Each Borrower declares that it is and will,
         throughout the Security Period, remain a principal debtor for all
         amounts owing under this Agreement and the Finance Documents and no
         Borrower shall in any circumstances be construed to be a surety for the
         obligations of any other Borrower under this Agreement.

28.4     SUBORDINATION. Subject to Clause 28.5, during the Security Period, no
         Borrower shall:

         (a)      claim any amount which may be due to it from any other
                  Borrower whether in respect of a payment made, or matter
                  arising out of, this Agreement or any Finance Document, or any
                  matter unconnected with this Agreement or any Finance
                  Document; or

         (b)      take or enforce any form of security from any other Borrower
                  for such an amount, or in any other way seek to have recourse
                  in respect of such an amount against any asset of any other
                  Borrower; or

         (c)      set off such an amount against any sum due from it to any
                  other Borrower; or


                                       54




         (d)      prove or claim for such an amount in any liquidation,
                  administration, arrangement or similar procedure involving any
                  other Borrower or other Security Party; or

         (e)      exercise or assert any combination of the foregoing.

28.5     BORROWER'S REQUIRED ACTION. If during the Security Period, the Lender,
         by notice to a Borrower, requires it to take any action referred to in
         paragraphs (a) to (d) of Clause 28.4, in relation to any other
         Borrower, that Borrower shall take that action as soon as practicable
         after receiving the Lender's notice.

29       SUPPLEMENTAL

29.1     RIGHTS CUMULATIVE, NON-EXCLUSIVE. The rights and remedies which the
         Finance Documents give to the Lender 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     COUNTERPARTS. A Finance Document may be executed in any number of
         counterparts.

29.4     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.

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 LENDER. Clause 30.2 is
         for the exclusive benefit of the Lender, which reserves the rights:

         (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.
                  Neither 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.

                                       55


30.4     PROCESS AGENT. Each Borrower irrevocably appoints Richards Butler at
         its registered office for the time being, presently at Beaufort House,
         15 St. Botolph Street, London EC3A 7EE, 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     LENDER'S RIGHTS UNAFFECTED. Nothing in this Clause 30 shall exclude or
         limit any right which the Lender 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.


THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.






                                       56



                                   SCHEDULE 1

                                 DRAWDOWN NOTICE




To:      Fortis Bank (Nederland) N.V.
         Coolsingel 93, 3012 AE
         Rotterdam
         The Netherlands

Attention: Tom Van Vonderen
                                                                            2005



                                 DRAWDOWN NOTICE

1        We refer to the loan agreement (the "LOAN AGREEMENT") dated [o]
         February 2005 and made between us, as Borrowers, and you, as Lender, in
         connection with a facility of up to US$54,000,000. Terms defined in the
         Loan Agreement have their defined meanings when used in this Drawdown
         Notice.

2        We request to borrow an Advance in relation to "[o]" as follows:

         (a)      Amount: US$[o];

         (b)      Drawdown Date: [o];

         (c)      Duration of the first Interest Period shall be [o] months;

         (d)      Payment instructions : account in our name and numbered [o]
                  with [o] of [o].

3        We represent and warrant that:

         (e)      the representations and warranties in Clause 9 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;

         (f)      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 Lender.


                                                    [Name of Signatory]
                                           .....................................
                                                          Director
                                                     for and on behalf of
                                                             [o]



                                       57






                                   SCHEDULE 2

                              DETAILS OF BORROWERS

<TABLE>

--------------------------------------------------------------------------------
BORROWER                   REGISTERED ADDRESS                 COUNTRY OF
                                                              INCORPORATION

--------------------------------------------------------------------------------

Aracruz Trading Ltd.       Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Gaz de Brazil Inc.         Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Geneve Butane Inc.         Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Industrial Materials Inc.  Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Lpgone Ltd.                Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------
BORROWER                   AUTHORISED SHARE   ISSUED SHARE        SHAREHOLDER(S), EACH
                           CAPITAL            CAPITAL             INCORPORATED IN THE MARSHALL
                                                                  ISLANDS
--------------------------------------------------------------------------------------------------

Aracruz Trading Ltd.       100 registered     100 bearer shares   Sabrina Enterprises S.A.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Gaz de Brazil Inc.         100 registered     100 bearer shares   Fairdeal Enterprises Corp.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Geneve Butane Inc.         100 registered     100 bearer shares   Access Consultants Co.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Industrial Materials Inc.  100 registered     100 bearer shares   Lyonet Holdings Corp.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Lpgone Ltd.                100 registered     100 bearer shares   Atlas Investments S.A.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------
</TABLE>


                                       58




<TABLE>

--------------------------------------------------------------------------------
BORROWER                   REGISTERED ADDRESS                 COUNTRY OF
                                                              INCORPORATION

--------------------------------------------------------------------------------

Matrix Gas Trading Ltd.    Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Pacific Gases Ltd.         147/1 St. Lucia Street             Malta
                           Valletta, Malta


--------------------------------------------------------------------------------

Semichlaus Exports Ltd.    147/1 St. Lucia Street             Malta
                           Valletta, Malta


--------------------------------------------------------------------------------

VCM Trading Ltd.           Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

Ventspils Gases Ltd.       147/1 St. Lucia Street             Malta
                           Valletta, Malta



--------------------------------------------------------------------------------

Stealthgas Inc.            Trust Company Complex, Ajeltake    Marshall Islands
                           Road, Ajeltake Island, Majuro,
                           Marshall Islands, MH96960


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------
BORROWER                   AUTHORISED SHARE   ISSUED SHARE        SHAREHOLDER(S), EACH
                           CAPITAL            CAPITAL             INCORPORATED IN THE MARSHALL
                                                                  ISLANDS
--------------------------------------------------------------------------------------------------

Matrix Gas Trading Ltd.    100 registered     100 bearer shares   Heather Trading S.A.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Pacific Gases Ltd.         2000 shares of     500 shares of LM1   Alexis Shipholding S.A. (325
                           LM1 each           each, each          shares) and Grazia Maritime
                                              20% paid up         Ltd. (175 shares)

--------------------------------------------------------------------------------------------------

Semichlaus Exports Ltd.    2000 shares of     500 shares of LM1   Floyd Properties Co.(325
                           LM1 each           each, each          shares) and Aubine Services
                                              20% paid up         Ltd. (175 shares)

--------------------------------------------------------------------------------------------------

VCM Trading Ltd.           100 registered     100 bearer shares   Leader Investments Inc.
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------

Ventspils Gases Ltd.       2000 shares of     500 shares of LM1   Oswald Trading Limited (325
                           LM1 each           each, each          shares0 and
                                              20% paid up         Celidon Investments Inc. (175
                                                                  shares)

--------------------------------------------------------------------------------------------------

Stealthgas Inc.            100 registered     100 bearer shares   Charalambos Vafias
                           and/or bearer      by way of bearer
                           shares of no par   stock certificates
                           value.             nos. 1 and 2

--------------------------------------------------------------------------------------------------
</TABLE>



                                       59






                                   SCHEDULE 3

                                DETAILS OF SHIPS

<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
SHIP              FLAG                  OWNER          CLASS NOTATION                                CLASSIFICATION SOCIETY
------------------------------------------------------------------------------------------------------------------------------------

"BIRGIT KOSAN     Panama                Industrial                                                   Nippon Kaiji Kyokai

------------------------------------------------------------------------------------------------------------------------------------

"GAS AMAZON"      Marshall Islands      Aracruz                                                      Bureau Veritas

------------------------------------------------------------------------------------------------------------------------------------

"GAS ARCTIC"      Malta                 Ventspils                                                    RINA

------------------------------------------------------------------------------------------------------------------------------------

"GAS COURCHEVAL"  Marshall Islands      Geneve         1*HULL *MACH Liquefied gas carrier            Bureau Veritas
                                                       Unrestricted navigation ICE CLASS 1C oAUT
                                                       UMS
------------------------------------------------------------------------------------------------------------------------------------

"GAS EMPEROR"     Cyprus                Pacific        1 *HULL *MACH Liquefied gas carrier           Bureau Veritas
                                                       Unrestricted navigation
------------------------------------------------------------------------------------------------------------------------------------

"GAS ICE"         Malta                 Semichlaus                                                   RINA

------------------------------------------------------------------------------------------------------------------------------------

"GAS PRODIGY"     Marshall Islands      Gaz            1*HULL *MACH Liquefied gas carrier            Bureau Veritas
                                                       Unrestricted navigation
------------------------------------------------------------------------------------------------------------------------------------

"GAS PROPHET"     Marshall Islands      VCM            NS* MNS*                                      Nippon Kaiji Kyokai

------------------------------------------------------------------------------------------------------------------------------------

"GAS TINY"        Marshall Islands      Lpgone         1*HULL *MACH Liquefied gas carrier            Bureau Veritas
                                                       Unrestricted navigation

------------------------------------------------------------------------------------------------------------------------------------

"GAS SHANGHAI"    Marshall Islands      Matrix         *A1, Liquefied gas carrier, (E), *AMS         American Bureau of Shipping

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       60




                                   SCHEDULE 4
                          CONDITION PRECEDENT DOCUMENTS


                                     PART A

The following are the documents referred to in Clause 8.1(a).

1        A duly executed original of each Finance Document (and of each document
         required to be delivered by each Finance Document) other than those
         referred to in Part B or Part C.

2        Copies of the constitutional documents of each Borrower and each
         Security Party.

3        Copies of resolutions of the shareholders and directors of each
         Borrower and each Security Party authorising the execution of each of
         the Finance Documents to which that Borrower or that Security Party is
         a party and, in the case of a Borrower, authorising named officers to
         give the Drawdown Notices and other notices under this Agreement, and
         in the case of each Buyer ratifying the execution of the relevant MOA.

4        The original of any power of attorney under which any Finance Document
         is executed on behalf of the Borrower or a Security Party.

5        Copies of all consents which any Borrower or any Security Party
         requires to enter into, or make any payment under, any Finance Document
         or an MOA.

6        The originals of any mandates or other documents required in connection
         with the opening or operation of the Earnings Account and the Retention
         Account and all other information required by the Lender in relation to
         its "know your customer" regulations (whether in connection with the
         opening of the Earnings Account, the Retention Account or otherwise).

7        Copies of the MOAs and all addenda thereto and of all documents signed
         or issued by the Buyers or the Sellers under or in connection with any
         of them.

8        Such documentary evidence as the Lender and its legal advisers may
         require in relation to the due authorisation and execution by each
         Seller of the MOA to which it is a party and of all documents to be
         executed by each Seller under the MOA to which it is a party.

9        Such evidence satisfactory to the Lender of the Purchase Price of each
         Ship which is already in the ownership of a Shipowner at the date on
         which the first Drawdown Notice is served.

10       Documentary evidence that the agent for service of process named in
         Clause 30 has accepted its appointment.

11       If the Lender so requires, in respect of any of the documents referred
         to above, a certified English translation prepared by a translator
         approved by the Lender.





                                       61





                                     PART B

In this Part B of Schedule 4, "RELEVANT SHIP" means the Ship whose acquisition
is to be part-financed or part refinanced (as the case may be) by the Advance
being drawn down on the relevant Drawdown Date.

The following are the documents referred to in Clause 8.1(b).

                                                  65
1        A duly executed original of the Mortgage, the General Assignment and,
         if applicable, the Deed of Covenant (and of each document to be
         delivered by each of them) relating to the Relevant Ship.

2        Documentary evidence that:

         (a)      in accordance with the information contained in Schedule 3,
                  the Relevant Ship is definitively and permanently registered
                  in the name of the relevant Shipowner under the flag and at
                  the port specified in Schedule 3;

         (b)      the Relevant Ship is in the absolute and unencumbered
                  ownership of the relevant Shipowner save as contemplated by
                  the Finance Documents;

         (c)      the Relevant Ship maintains the class as set out in Schedule 3
                  with the relevant Classification Society free of all overdue
                  recommendations and conditions of such Classification Society;

         (d)      the Mortgage relating to the Relevant Ship has been duly
                  registered against that Ship as a valid first preferred or
                  priority (as the case may be) ship mortgage in accordance with
                  the laws of the relevant 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.

3        Documents establishing that the Relevant Ship will, as from the first
         Drawdown Date, be managed by the applicable Approved Manager on terms
         acceptable to the Lender, together with:

         (a)      a letter of undertaking executed by the Approved Manager in
                  favour of the Lender in the terms required by the Lender
                  agreeing certain matters in relation to the management of the
                  Relevant Ship and subordinating the rights of the Approved
                  Manager against the relevant Shipowner to the rights of the
                  Lender under the Finance Documents; and

         (b)      copies of the Approved Manager's Document of Compliance and of
                  the Relevant Ship's Safety Management Certificate (together
                  with any other details of the applicable safety management
                  system which the Lender requires).

4        Satisfactory valuations of the Relevant Ship addressed to the Lender,
         stated to be for the purposes of this Agreement and dated not earlier
         than 30 days before the Drawdown Date for the Advance relevant to that
         Ship, from 2 independent London sale and purchase shipbroker selected
         by the Lender.

5        A satisfactory survey report addressed to the Lender, stated to be for
         the purposes of this Agreement and dated not earlier than 30 days
         before the relevant Drawdown Date from the technical manager of the
         relevant Ship in respect of the physical condition of that Ship
         PROVIDED THAT when 4 such reports have been provided in relation to 4
         different Ships, this condition precedent shall no longer apply.

                                       62


6        Favourable legal opinions from lawyers appointed by the Lender on such
         matters concerning the laws of Cyprus, Malta, Panama, the Marshall
         Islands and such other relevant jurisdiction as the Lender may require.





                                     PART C

The following are the documents referred to in Clause 8.1(c).


1        A duly executed original of the relevant Tripartite Deed (and of each
         document to be delivered pursuant thereto).

2        Documentary evidence that the relevant Ship has been unconditionally
         delivered by the relevant Shipowner to, and accepted by, the relevant
         Bareboat Charterer for operation under the relevant Bareboat Charter;

3        Copies of the constitutional documents of the relevant Bareboat
         Charterer;

4        Copies of resolutions of the shareholders and directors of the relevant
         Bareboat Charterer authorising the execution of the relevant Tripartite
         Agreement and ratifying its entry into the relevant Bareboat Charter.

5        The original power of attorney under which any Finance Document is
         executed on behalf of the relevant Bareboat Charterer.

6        A copy of the relevant Bareboat Charter and any addenda thereto.

7        Favourable legal opinions from lawyers appointed by the Lender on such
         matters concerning the laws of the Marshall Islands, Malta, Panama,
         Cyprus, The Netherlands and such other relevant jurisdiction as the
         Lender may require.


Each 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 a
Borrower.



                                       63




                                 EXECUTION PAGE


BORROWERS



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
MATRIX GAS TRADING LTD.                             )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
GAZ DE BRAZIL INC.                                  )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
VCM TRADING LTD.                                    )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
GENEVE BUTANE INC.                                  )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
LPGONE LTD.                                         )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
SEMICHLAUS EXPORTS LTD.                             )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
VENTSPILS GASES LTD.                                )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
PACIFIC GASES LTD.                                  )


                                       64




SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
ARACRUZ TRADING LTD.                                )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
INDUSTRIAL MATERIALS INC.                           )



SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
STEALTHGAS INC.                                     )




LENDER


SIGNED by                                           )         /s/ illegible
for and on behalf of                                )
FORTIS BANK (NEDERLAND) N.V.                        )





Witness to all                                       )   /s/ George Paleokrassas
the above signatures:                                )



Name: George Paleokrassas, Solicitor


Address: Watson, Farley & Williams
         2 Defteras Merarchias
         Piraeus, 185 36 Greece



                                       65






                                Date 10 June 2005




                          FORTIS BANK (NEDERLAND) N.V.
                                    as Lender

                                      -and-

                  MATRIX GAS TRADING LTD., GAZ DE BRAZIL INC.,
               VCM TRADING LTD., GENEVE BUTANE INC., LPGONE LTD.,
                 SEMICHLAUS EXPORTS LTD., VENTSPILS GASES LTD.,
                    PACIFIC GASES LTD., ARACRUZ TRADING LTD.,
                  INDUSTRIAL MATERIALS INC. AND STEALTHGAS INC.
                         as joint and several Borrowers




           ----------------------------------------------------------

                   DEED OF RELEASE OF SECURITY AND OBLIGATIONS

          ------------------------------------------------------------


         relating to security granted by Gaz de Brazil Inc. in relation
                        to the LPG carrier "GAS PRODIGY"
               to secure a facility of (originally) US$54,000,000
                         with US$54,000,000 outstanding
               for the financing of the LPG carriers "GAS AMAZON",
                   "GAS ARCTIC", "GAS ICE" and "BIRGIT KOSAN"
             and the refinancing of the LPG carriers "GAS EMPEROR",
                "GAS COURCHEVAL", "GAS PRODIGY", "GAS SHANGHAI",
                          "GAS PROPHET" and "GAS TINY"









                           WATSON, FARLEY & WILLIAMS
                                    Piraeus







                                      INDEX

CLAUSE                                                                 PAGE

1     INTERPRETATION                                                      1

2     RELEASE OF SECURITY INTERESTS                                       2

3     REASSIGNMENT OF ASSIGNED PROPERTY                                   2

4     FURTHER DOCUMENTS                                                   2

5     EFFECTIVE DATE                                                      2

6     EXPENSES                                                            2

7     COUNTERPARTS                                                        2

8     LAW AND JURISDICTION                                                3

SCHEDULE FORM OF NOTICE OF REASSIGNMENT                                   4

EXECUTION PAGES                                                           5









THIS DEED is made on          June 2005

BETWEEN

(1)      FORTIS BANK (NEDERLAND) N.V. acting through its office at Coolsingel
         93, 3012 AE Rotterdam, The Netherlands (the "LENDER"); and

(2)      MATRIX GAS TRADING LTD., GAZ DE BRAZIL INC., VCM TRADING LTD., GENEVE
         BUTANE INC., LPGONE LTD., SEMICHLAUS EXPORTS LTD., VENTSPILS GASES
         LTD., PACIFIC GASES LTD., ARACRUZ TRADING LTD., INDUSTRIAL MATERIALS
         INC. and STEALTHGAS INC. as joint and several borrowers (the
         "BORROWERS").

BACKGROUND

(A)      By a loan agreement dated 16 March 2005 and made between (i) the
         Borrowers and (ii) the Lender, the Lender has made available to the
         Borrowers a facility of (originally) US$54,000,000, of which
         US$54,000,000 is outstanding on the date of this Deed (prior to taking
         into account the prepayment of the Loan referred to in Recital (B)).

(B)      In respect of the Released Ship, the Borrowers have, on the date of
         this Deed, prepaid the relevant proportion of Loan, being US$3,580,500,
         to the Lender.

(C)      This Deed sets out the terms and conditions on which the Lender agrees,
         at the request of the Borrowers, to the release of the Security
         Interests created by the Released Finance Documents and to the release
         of the Released Borrower from its obligations under the Continuing
         Finance Documents.

IT IS AGREED as follows:



1        INTERPRETATION

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

1.2      DEFINITIONS. In this Deed, unless the contrary intention appears:

         "CONTINUING BORROWERS" means all the Borrowers other than the Released
         Borrower;

         "CONTINUING FINANCE DOCUMENTS" means all the Finance Documents other
         than the Released Finance Documents;

         "EFFECTIVE DATE"  means 30 March 2005;

         "LOAN AGREEMENT" means the Loan Agreement dated 16 March 2005 referred
         to in Recital (A);

         "RELEASED BORROWER" means Gaz de Brazil Inc., a company incorporated
         and existing under the laws of the Marshall Islands and having its
         registered office at Trust Company Complex, Ajeltake Road, Ajeltake
         Island, Majuro, The Marshall Islands;

         "RELEASED FINANCE DOCUMENTS" means each of the Mortgage and the General
         Assignment in respect of the Released Ship;

         "RELEASED SHIP" means the 1995-built LPG Carrier of 3,000 cubic metres
         registered under Marshall Islands flag in the ownership of the Relevant
         Borrower with the name "GAS PRODIGY".






1.3      APPLICATION OF CONSTRUCTION AND INTERPRETATION PROVISIONS OF LOAN


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

2        RELEASE OF SECURITY INTERESTS AND OBLIGATIONS

2.1      RELEASE OF SECURITY INTERESTS. In consideration of the prepayment of
         the Loan referred to in Recital (B), the Lender releases:

(a)      all Security Interests created in its favour by the Released Borrower
         under the Released Finance Documents; and

(b)      the Released Borrower from its obligations under the Loan Agreement and
         the other Finance Documents.

2.2      OBLIGATIONS OF CONTINUING BORROWERS. The Continuing Borrowers, by
         executing this Deed, confirm and agree that other than those Security
         Interests and obligations released pursuant to Clause 2.1, the terms
         and conditions of, and all of their obligations under, the Continuing
         Finance Documents shall remain in full force and effect.

3        REASSIGNMENT OF ASSIGNED PROPERTY

3.1      REASSIGNMENT. The Lender, without any warranty, representation,
         covenant or other recourse, reassigns to the Released Borrower, all
         rights and interests of every kind which the Lender now has to, in or
         in connection with the Assigned Property (as defined in the General
         Assignment relating to the Released Ship.

4        FURTHER DOCUMENTS

4.1      DELIVERY OF FURTHER DOCUMENTS. The Lender shall promptly after
         execution and delivery of this Deed deliver to the Released Borrower:

(a)      evidence that the Mortgage relating to the Released Ship has been
         discharged; and

(b)      an executed notice of reassignment of Insurances relating to the
         Released Ship in the form set out in the Schedule.

5        EFFECTIVE DATE

5.1      EFFECTIVE DATE. The Borrowers and the Lender agree that the provisions
         of this Deed shall be deemed to have taken effect as of the Effective
         Date.

6        EXPENSES

6.1      EXPENSES. The provisions of clause 19 (fees and expenses) of the Loan
         Agreement shall apply to this Deed as if they were expressly
         incorporated in this Deed with any appropriate modifications.

7        SUPPLEMENTAL

7.1      COUNTERPARTS.  This Deed may be executed in any number of counterparts.

7.2      THIRD PARTY RIGHTS. A person who is not a party to this Deed has no
         right under the Contracts (Rights of Third Parties) Act 1999 to enforce
         or to enjoy the benefit of any term of this Deed.




                                       2





8        LAW AND JURISDICTION

8.1      GOVERNING LAW. This Deed shall be governed by and construed in
         accordance with English law.

8.2      INCORPORATION OF LOAN AGREEMENT PROVISIONS. The provisions of clause 30
         (law and jurisdiction) of the Loan Agreement shall apply to this Deed
         as if they were expressly incorporated in this Agreement with any
         necessary modifications.


THIS DEED has been duly executed as a Deed on the date stated at the beginning
of this Deed



























                                       3






                                    SCHEDULE

                  FORM OF NOTICE OF REASSIGNMENT OF INSURANCES


                        M. V. "GAS PRODIGY" (THE "SHIP")


We, FORTIS BANK (NEDERLAND) N.V., being the assignee of all rights and interest
of every kind of GAZ DE BRAZIL INC. (the "ASSIGNOR") to, in or in connection
with all policies and contracts of insurance, including entries of the Ship in
any protection and indemnity or war risks association (the "INSURANCES") in
respect of the Ship pursuant to a first priority assignment dated 21 March 2005
(the "ASSIGNMENT") GIVE NOTICE that we have reassigned to the Assignor all of
our rights and interest of every kind to, in or in connection with the
Insurances under the Assignment and, with effect from 30 March 2005, we have no
further interest in or claim over the Insurances.




-----------------------------------

for and on behalf of
FORTIS BANK (NEDERLAND) N.V.

Date:                  June 2005























                                       4





                                 EXECUTION PAGES


LENDER


EXECUTED as a DEED                                  ) /s/ Illegible
by                                                  )
for and on behalf of                                )
FORTIS BANK                                         )
(NEDERLAND) N.V.                                    )




BORROWERS


SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
MATRIX GAS TRADING LTD.                             )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
GAZ DE BRAZIL INC.                                  )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
VCM TRADING LTD.                                    )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
GENEVE BUTANE INC.                                  )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
LPGONE LTD.                                         )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
SEMICHLAUS EXPORTS LTD.                             )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
VENTSPILS GASES LTD.                                )




                                       5




SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
PACIFIC GASES LTD.                                  )




SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
ARACRUZ TRADING LTD.                                )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
INDUSTRIAL MATERIALS INC.                           )



SIGNED by                                           ) /s/ Illegible
for and on behalf of                                )
STEALTHGAS INC.                                     )



Witness to all of the above signatures:
























                                       6










Exhibit 21

SUBSIDIARIES OF STEALTHGAS INC.

Access Consultants Co.
Alexis Shipholding S.A.
Aracruz Trading Ltd.
Atlas Investments S.A.
Aubine Services Ltd.
Balcan Profit Limited
Baroness Holdings Inc.
Celidon Investments Inc.
Fine Tuning Inc.
Floyd Properties Co.
Geneve Butane Inc.
Grazia Maritime Ltd.
Heather Trading S.A.
Iceland Limited
Industrial Materials Inc.
Leader Investments Inc.
Lpgone Ltd.
Lyonet Holdings Corp.
Matrix Gas Trading Ltd.
Northern Yield Shipping Limited
Ocean Blue Limited
Oxford Gas Ltd.
Oswald Trading Limited
Pacific Gases Ltd.
Sabrina Enterprises S.A.
Semichlaus Exports Ltd.
Stellar Management Limited
VCM Trading Ltd.
Ventspils Gases Ltd.



























            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-1 of our report
dated April 8, 2005, except for Note 11 as to which the date is August 26, 2005,
relating to the financial statements of StealthGas Inc. appearing in the
Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.



/s/ Deloitte
Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
August 29, 2005
Athens, Greece























            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-1 of our report
dated April 8, 2005 relating to the combined financial statements of the Vafias
Group of LPG Carriers appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.




/s/ Deloitte
Deloitte
Hadjipavlou, Sofianos & Cambanis S.A.
August 29, 2005
Athens, Greece











August 29, 2005



StealthGas Inc.
331 Kifissias Avenue
Erithrea 14561
Athens, Greece

Gentlemen:

At your request we have reviewed the sections of the Prospectus entitled "Risk
Factors" and "The International Gas Carrier Market," and the statistical and
graphical information contained therein, and in any other instance where we are
identified as the source of information in the prospectus included in the
Registration Statement (Registration No. 333-______) on Form F-1 (the
"Prospectus") of StealthGas Inc. (the "Company"). Based on our review of this
material, we confirm that such sections of the Prospectus and the statistical
and graphical information contained therein accurately describe the
international gas carrier market in all material respects based on available
data. We hereby consent to the filing of this letter as an exhibit to the
Registration Statement of the Company of 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 under the heading "Experts" in the
Prospectus.

FEARNLEYS A/S


Name:   /s/ Sverre Bjorn Svenning
Title:  Managing Director