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Exhibit 10.4  

 
 

EAGLE BULK SHIPPING INC.
  2005 STOCK INCENTIVE PLAN    
    

1.    Purpose; Establishment. 

        The
Eagle Bulk Shipping Inc. 2005 Stock Incentive Plan (the "Plan") is intended to attract and retain employees, non-employee directors and independent contractors of
the Company, to motivate them to achieve long-term Company goals and to further align their interests with those of the Company's stockholders. The Plan was adopted and approved by the
Board and the stockholders of the Company effective as of the effective date of the Company's initial public offering of shares. 

2.    Definitions. 

        As
used in the Plan, the following definitions apply to the terms indicated below: 

	(a)
	"Administrative
Actions" shall have the meaning set forth in Section 4(b).

	(b)
	"Affiliate"
means, with respect to any Person, any other Person (directly or indirectly) controlling, controlled by or under common control with such Person or any other Person
designated by the Committee in which any Person has an interest.

	(c)
	"Agreement"
shall mean the written agreement between the Company and a Participant evidencing an Award or a notice of an Award delivered to a Participant by the Company in hard copy
paper form, electronically via the Internet or through other electronic means.

	(d)
	"Award"
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus, Dividend Equivalent or Other Award granted pursuant to the terms of the
Plan.

	(e)
	"Board"
shall mean the Board of Directors of the Company.

	(f)
	"Business
Criteria" shall mean (1) return on total stockholder equity; (2) earnings or book value per share of Company Stock; (3) net income (before or after
taxes); (4) earnings before all or any interest, taxes, depreciation and/or amortization ("EBIT", "EBITA" or "EBITDA"); (5) return on assets, capital or investment; (6) market
share; (7) cost reduction goals; (8) earnings from continuing operations; (9) levels of expense, costs or liabilities; (10) department, division or business unit level
performance; (11) operating profit; (12) sales or revenues; (13) stock price appreciation; (14) total stockholder return; (15) implementation or completion of
critical projects or processes; (16) specified dividend threshold or (17) any combination of the foregoing. Where applicable, Business Criteria may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, an Affiliate, or a
department, division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all
as determined by the Committee. The Business Criteria may be subject to a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which
specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Each of the
Business Criteria shall be determined, where applicable, in accordance with generally accepted accounting principles and shall be subject to certification by the Committee; provided that the Committee
shall have the authority to make equitable adjustments to the Business Criteria in recognition of unusual or non-recurring events affecting the Company or any Affiliate or the financial
statements of the Company or any Affiliate, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary 

 

or
unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles. 

	(g)
	"Cause"
shall mean, unless otherwise defined in the Participant's Agreement, employment agreement, or other written agreement describing the Participant's terms of employment with the
Company, (i) the Participant's continuing refusal to perform his duties or to follow a lawful direction of the Company; (ii) the Participant's intentional act or acts of dishonesty which
Participant intended to result in his personal, more-than-immaterial enrichment; or (iii) the Participant's documented willful malfeasance or willful misconduct in
connection with his employment or Participant's willful and deliberate insubordination; or (iv) the Participant is convicted of a felony.

	(h)
	"Change
in Control" shall mean, unless otherwise defined in the Participant's Agreement, the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person, other than an Investor or its Affiliates, becomes the beneficial owner, directly or indirectly, of (i) more than 50% of the voting stock
of the Company or (ii) all or substantially all of the assets of the Company; provided, however, that for each Award subject to Section 409A of the Code, a Change in Control shall be
deemed to have occurred under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the
assets of the Company shall also be deemed to have occurred under Section 409A of the Code.

	(i)
	"Code"
shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations or guidance promulgated thereunder.

	(j)
	"Committee"
shall mean a committee of the Board, which, unless otherwise determined by the Board, shall consist of two or more persons, each of whom shall qualify as a "nonemployee
director" within the meaning of Rule 16b-3 and, following expiration of the Section 162(m) Grandfathering Period, as an "outside director" within the meaning of
Section 162(m) of the Code.

	(k)
	"Company"
shall mean Eagle Bulk Shipping Inc., a Republic of the Marshall Islands corporation.

	(l)
	"Company
Stock" shall mean the common stock of the Company, par value $.01 per share.

	(m)
	"Covered
Employee" shall have the meaning set forth in Section 162(m) of the Code.

	(n)
	"Disability"
shall mean that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of
not less than three months under an accident and health plan covering employees of the Company or an Affiliate of the Company.

	(o)
	"Dividend
Equivalent" shall mean a right, granted pursuant to the terms of Section 13 hereof, to be paid an amount determined with respect to the dividends declared and paid
with respect to outstanding shares of Company Stock, as specified in, and pursuant to the terms of, an applicable Agreement.

	(p)
	"Effective
Date" shall mean the effective date of the Company's initial public offering of shares. 

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	(q)
	"Fair
Market Value" of the Company Stock shall be calculated as follows: (i) if the Company Stock is listed on a national securities exchange, then the Fair Market Value shall
be the closing selling price for the Company Stock reported on the applicable composite tape or other comparable reporting system on the applicable date, or if the applicable date is not a trading
day, on the most recent trading day immediately prior to the applicable date; or (ii) if prices are not regularly reported for the Company Stock as described in clause (i) above, then
the Fair Market Value shall be determined in good faith by the Committee in its sole discretion or under procedures established by the Committee, whose determination shall be conclusive and binding.

	(r)
	"Incentive
Stock Option" shall mean an Option that qualifies as an "incentive stock option" within the meaning of Section 422 of the Code, or any successor provision, and which
is designated by the Committee as an Incentive Stock Option.

	(s)
	"Investor"
shall mean Eagle Ventures LLC, a Republic of the Marshall Islands limited liability company.

	(t)
	"Nonqualified
Stock Option" shall mean an Option other than an Incentive Stock Option.

	(u)
	"Option"
shall mean an option to purchase shares of Company Stock granted pursuant to Section 8 hereof.

	(v)
	"Other
Award" shall mean an Award granted pursuant to Section 14 hereof.

	(w)
	"Participant"
shall mean an employee, non-employee director or independent contractor of the Company or its Affiliate to
whom an Award is granted pursuant to the Plan.

	(x)
	"Person"
shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company,
governmental body or other entity of any kind.

	(y)
	"Restricted
Stock" shall mean a share of Company Stock which is granted pursuant to the terms of Section 10 hereof.

	(z)
	"Restricted
Stock Unit" shall mean the right, granted pursuant to Section 11 hereof, to receive in cash or shares the Fair Market Value of a share of Company Stock.

	(aa)
	"Rule 16b-3"
shall mean the Rule 16b-3 promulgated under the Exchange Act, as amended from time to time.

	(bb)
	"Section 162(m)
Grandfathering Period" shall mean the period beginning on the Effective Date and ending on the earliest of (i) the expiration of the Plan;
(ii) an amendment of the Plan that results in a material modification; (iii) the issuance of all Company Stock that has been allocated under the Plan; or (iv) the first meeting of
shareholders at which directors of the Company are to be elected that occurs after the close of the third calendar year following the calendar year in which the Effective Date occurs.

	(cc)
	"Stock
Appreciation Right" shall mean the right to receive, upon exercise of the right, the applicable amounts as described in Section 9 hereof.

	(dd)
	"Stock
Bonus" shall mean a bonus payable in shares of Company Stock granted pursuant to Section 12 hereof.

	(ee)
	"Termination
of Affiliation" occurs on the first day on which an individual is for any reason no longer an employee, director or independent contractor of the Company or any
Affiliate of the Company, or with respect to an individual who is an employee or director of, or independent contractor to, a corporation which is an Affiliate, the first day on which such corporation
ceases to be an Affiliate of the Company. 

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3.    Stock Subject to the Plan. 

	(a)
	Shares
Available for Awards. The maximum number of shares of Company Stock reserved for issuance under the Plan shall be 2.6 million shares (subject to adjustment as provided
herein). Such shares may be authorized but unissued shares of Company Stock or authorized and issued shares of Company Stock held in the Company's treasury.

	(b)
	Individual
Limitation; Limitation on Certain Awards. Following the expiration of the Section 162(m) Grandfathering Period, the maximum number of shares of Company Stock to
which Awards relate that may be granted to any Participant during any calendar year shall not exceed 1.3 million shares (subject to adjustment as provided herein).

	(c)
	Adjustment
for Change in Capitalization. In the event that any dividend or other distribution is declared (whether in the form of cash, Company Stock, or other property), or there
occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate
transaction or event, the Committee shall equitably adjust, in its sole and absolute discretion, (i) the number and type of shares (or other securities or property) with respect to which Awards
may be granted, (ii) the number and type of shares (or other securities or property (including cash)) subject to outstanding Awards, and (iii) the grant or exercise price with respect to
any Award provided, in each case that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such
adjustment would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and provided further, that with
respect to Options and Stock Appreciation Rights, unless otherwise determined by the Committee, such adjustment shall be made in accordance with the provisions of Section 424(h) of the Code.

	(d)
	Reuse
of Shares. The following shares of Company Stock shall again become available for Awards: (1) any shares subject to an Award that remain unissued upon the cancellation,
surrender, exchange or termination of such Award without having been exercised or settled; (2) any shares subject to an Award that are retained by the Company as payment of the exercise price
or tax withholding obligations with respect to an Award; and (3) a number of shares equal to the number of previously owned shares of Company Stock surrendered to the Company as payment of the
exercise price of an Option or to satisfy tax withholding obligations with respect to an Award. In addition, (x) to the extent an Award is paid or settled in cash, the number of shares of
Company Stock with respect to which such payment or settlement is made shall again be available for grants of Awards pursuant to the Plan and (y) in the event of the exercise of a Stock
Appreciation Right granted in relation to an Option, the excess of the number of shares subject to the Stock Appreciation Right over the number of shares delivered upon the exercise of the Stock
Appreciation Right shall again be available for grants of Awards pursuant to the Plan. 

4.    Administration of the Plan. 

	(a)
	General.
The Plan shall be administered by the Committee. The Committee shall have the authority in its sole discretion, subject to and not inconsistent with the express provisions of
the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including,
without limitation, the authority to grant Awards; to determine the persons to whom and the time or times at which Awards shall be granted; to determine the type and number of Awards to be granted,
the number of shares of Company Stock or cash or other property to which an Award may relate and the terms, conditions, restrictions and performance criteria relating to any Award; to determine
whether, to what extent, and under 

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what
circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; to construe and interpret the Plan and any Award; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of Agreements; and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee may, in
its sole and absolute discretion, without amendment to the Plan, (1) accelerate the date on which any Option or Stock Appreciation Right becomes exercisable, (2) waive or amend the
operation of Plan provisions respecting exercise after termination of employment (provided that the term of an Option or Stock Appreciation Right may not be extended beyond 10 years from the
date of grant), (3) accelerate the vesting date, or waive any condition imposed hereunder, with respect to any share of Restricted Stock, Restricted Stock Unit, Stock Bonus, Dividend Equivalent
or Other Award, and (4) otherwise adjust any of the terms applicable to any such Award in a manner consistent with the terms of the Plan. 

	(b)
	Indemnification.
No member of the Committee (or a delegate of the Committee), and no officer of the Company, shall be liable for any action taken or omitted to be taken by such
individual or by any other member of the Administrator or officer of the Company in connection with the performance of duties under this Plan (the "Administrative Actions"), except for such
individual's own willful misconduct or as expressly provided by law. Further, the Committee (and all delegates of the Committee), in addition to such other rights of indemnification as they may have
as members of the Board or officers of the Company or an Affiliate, any individual serving as a Committee member shall be indemnified and held harmless by the Company to the fullest extent allowed by
law against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any Administrative Action.

	(c)
	Awards
to Non-Employee Directors. Notwithstanding anything in the Plan to the contrary, the powers and authority of the Committee shall be exercised by the Board in the
case of Awards made to non-employee directors. 

5.    Eligibility. 

        The
persons who shall be eligible to receive Awards pursuant to the Plan shall be such employees of the Company and its Affiliates, independent contractors to the Company and its
Affiliates, and non-employee directors of the Company and its Affiliates, in each case as the Committee (or, in the case of non-employee directors, the Board) shall select from
time to time. The grant of an Award hereunder to any employee, non-employee director or independent contractor shall impose no obligation on
the Company or any Affiliate to continue the employment or service of a Participant and shall not lessen or affect the Company's or such Affiliate's right to terminate the employment or service of
such Participant. No Participant or other person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of
Awards, or of multiple Awards granted to a Participant. The terms and conditions of Awards and the Committee's determinations and interpretations with respect thereto need not be the same with respect
to each Participant (whether or not such Participants are similarly situated). Notwithstanding any provision of the Plan, to the extent that any Award would be subject to Section 409A of the
Code, no such Award may be granted if it would fail to comply with the requirements set forth in Section 409A of the Code. 

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   6.    Awards Under the Plan; Agreement. 

        The
Committee may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Bonuses, Dividend Equivalents and Other Awards in such amounts and with such
terms and conditions as the Committee shall determine, subject to the provisions of the Plan. Each Award granted under the Plan (except an unconditional Stock Bonus) shall be evidenced by an Agreement
which shall contain such provisions as the Committee may in its sole discretion deem necessary or desirable and which are not in conflict with the terms of the Plan. By accepting an Award, a
Participant shall be deemed to agree that the Award shall be subject to all of the terms and provisions of the Plan and the applicable Agreement. 

7.    Termination of Affiliation. 

        Except
as otherwise provided by the Committee or in the applicable Agreement, the extent to which the Participant shall have the right to exercise, vest in, or receive payment in respect
of an Award following Termination of Affiliation shall be determined in accordance with the following provisions: 

	(a)
	For
Cause. If a Participant has a Termination of Affiliation for Cause, (i) the Participant's Restricted Stock and Restricted Stock Units that are forfeitable shall thereupon
be forfeited; and (ii) any unexercised Option and Stock Appreciation Right shall terminate effective immediately upon such Termination of Affiliation.

	(b)
	On
Account of Death or Disability. If a Participant has a Termination of Affiliation on account of death or Disability, then:

	(i)
	the
Participant's Restricted Stock and Restricted Stock Units that were forfeitable shall thereupon become nonforfeitable; and

	(ii)
	any
unexercised Option or Stock Appreciation Right, whether or not exercisable on the date of such Termination of Affiliation, may be exercised, in whole or in part,
within the first 12 months after such Termination of Affiliation (but only during the option term) and shall terminate immediately thereafter (provided, however, that a Stock Appreciation Right
settled in cash shall be exercisable only to the extent that such exercise complies with Section 409A of the Code); such Option or Stock Appreciation Right may be exercised to the extent
permitted under this section by the Participant or, after the Participant's death, by (i) the Participant's personal representative or the person to whom the Option or Stock Appreciation Right,
as applicable, is transferred by will or the applicable laws of descent and distribution, or (ii) the Participant's beneficiary designated in accordance with Section 30 hereof.

	(c)
	Any
Other Reason. If a Participant has a Termination of Affiliation for any reason other than for Cause, death, or Disability, then:

	(i)
	the
Participant's Restricted Stock and Restricted Stock Units, to the extent forfeitable on the date of the Participant's Termination of Affiliation, shall be forfeited
on such date;

	(ii)
	any
unexercised Option or Stock Appreciation Right, to the extent not exercisable immediately before the Participant's Termination of Affiliation shall terminate
immediately upon such Termination of Affiliation, and to the extent exercisable immediately before the Participant's Termination of Affiliation, may be exercised in whole or in part, not later than
three months after such Termination of Affiliation (but only during the option term) and shall terminate immediately thereafter (provided, however, that a Stock Appreciation Right settled in cash
shall be exercisable only to the extent that such exercise complies with Section 409A of the Code); such Option or Stock 

6

 

Appreciation
Right may be exercised to the extent permitted under this section by the Participant or, after the Participant's death, by (i) the Participant's personal representative or the
person to whom the Option or Stock Appreciation Right, as applicable, is transferred by will or the applicable laws of descent and distribution, or (ii) the Participant's beneficiary designated
in accordance with Section 30; 

8.    Options. 

	(a)
	Identification
of Options. Each Option shall be clearly identified in the applicable Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. All Options shall be
non-transferable, except by will or the laws of descent and distribution or except as otherwise determined by the Committee with respect to a Nonqualified Stock Option.

	(b)
	Exercise
Price. Each Agreement with respect to an Option shall set forth the amount per share (the "option exercise price") payable by the Participant to the Company upon exercise of
the Option; provided, however, in no event shall the option exercise price be less than the Fair Market Value of a share of Stock as of the date of grant of such Option.

	(c)
	Term
and Exercise of Options.

	(i)
	Each
Option shall become exercisable at the time determined by the Committee and set forth in the applicable Agreement. At the time of grant of an Option, the Committee
may impose such restrictions or conditions to the exercisability of the Option as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals
based on one or more Business Criteria. Subject to Section 8(d) hereof, the Committee shall determine the expiration date of each Option, which shall be no later than the tenth anniversary of
the date of grant of the Option.

	(ii)
	An
Option shall be exercised by delivering the form of notice of exercise provided by the Company. Payment for shares of Company Stock purchased upon the exercise of an
Option shall be made on the effective date of such exercise by one or a combination of the following means: (A) in cash or by personal check, certified check, bank cashier's check or wire
transfer; (B) in shares of Company Stock valued at their Fair Market Value on the effective date of such exercise; or (C) by any such other methods (including cashless exercise) as the
Committee may from time to time authorize; provided, however, that in each case, the method of making such payment shall be in compliance with applicable law.

	(d)
	Provisions
Relating to Incentive Stock Options. Incentive Stock Options may only be granted to employees of the Company and its subsidiaries (as defined in Section 424(f) of
the Code), in accordance with the provisions of Section 422 of the Code. The option exercise price for each Incentive Stock Option shall be equal to or greater than the Fair Market Value of a
share of Company Stock on the date of grant. To the extent that the aggregate Fair Market Value of shares of Company Stock with respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year under the Plan and any other stock option plan of the Company or a subsidiary corporation of the Company (as such term is defined in
Section 424(f) of the Code) shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of this Section 8(d), Fair Market Value shall be determined
as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed
to own under the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company unless (A) the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of a share of Company Stock at the time such Incentive Stock Option is granted and 

7

 

(B) such
Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted. 

9.    Stock Appreciation Rights. 

	(a)
	A
Stock Appreciation Right may be granted in connection with an Option, either at the time of grant or, with respect to a Nonqualified Stock Option, at any time thereafter during the
term of the Option, or may be granted unrelated to an Option. At the time of grant of a Stock Appreciation Right, the Committee may impose such restrictions or conditions to the exercisability of the
Stock Appreciation Right as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria. The term of a
Stock Appreciation Right granted without relationship to an Option shall not exceed ten years from the date of grant.

	(b)
	A
Stock Appreciation Right related to an Option shall require the holder, upon exercise, to surrender such Option with respect to the number of shares as to which such Stock
Appreciation Right is exercised, in order to receive payment of any amount computed pursuant to Section 9(d). Such Option will, to the extent surrendered, then cease to be exercisable.

	(c)
	Subject
to such rules and restrictions as the Committee may impose, a Stock Appreciation Right granted in connection with an Option will be exercisable at such time or times, and only
to the extent that a related Option is exercisable, and will not be transferable except to the extent that such related Option may be transferable.

	(d)
	Upon
the exercise of a Stock Appreciation Right related to an Option, the holder will be entitled to receive payment of an amount determined by multiplying:

	(i)
	the
excess of the Fair Market Value of a share of Company Stock on the date of exercise of such Stock Appreciation Right over the option exercise price specified in the
related Option, by

	(ii)
	the
number of shares as to which such Stock Appreciation Right is exercised.

	

	As
provided by the Committee in the Award Agreement, the payment upon exercise of a Stock Appreciation Right granted with a relationship to an
Option may be in shares which have an aggregate Fair Market Value (as of the date of exercise of the Stock Appreciation Right) equal to the amount of the payment, as set forth in the Award Agreement.

	(e)
	A
Stock Appreciation Right granted without relationship to an Option will entitle the holder, upon exercise of the Stock Appreciation Right, to receive payment of an amount determined
by multiplying:

	(i)
	the
excess of (1) the Fair Market Value of a share of Company Stock on the date of exercise of such Stock Appreciation Right over (2) the greater of the
Fair Market Value of a share of Company Stock on the date the Stock Appreciation Right was granted or such greater amount as may be set forth in the applicable Agreement, by

	(ii)
	the
number of shares as to which such Stock Appreciation Right is exercised.

	

	As
provided by the Committee in the Award Agreement, the payment upon exercise of a Stock Appreciation Right granted without a relationship to
an Option may be in shares which have an aggregate Fair Market Value (as of the date of exercise of the Stock Appreciation Right) equal to the amount of the payment, as set forth in the Award
Agreement. As provided by the Committee in the Award Agreement, the payment upon exercise of a Stock Appreciation Right granted without a relationship to an Option may alternatively be in cash;
provided, however, that such Stock Appreciation Right is structured in a manner that the cash payment complies with Section 409A of the Code. 

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   10.    Restricted Stock. 

	(a)
	Price.
At the time of the grant of shares of Restricted Stock, the Committee shall determine the price, if any, to be paid by the Participant for each share of Restricted Stock
subject to the Award.

	(b)
	Vesting
Date. At the time of the grant of shares of Restricted Stock, the Committee shall establish a vesting date or vesting dates with respect to such shares. The Committee may
divide such shares into classes and assign a different vesting date for each class. Provided that all conditions to the vesting of a share of Restricted Stock are satisfied, upon the occurrence of the
vesting date with respect to a share of Restricted Stock, such share shall vest and the restrictions of Section 10(d) shall lapse.

	(c)
	Conditions
to Vesting. At the time of the grant of shares of Restricted Stock, the Committee may impose such restrictions or conditions to the vesting of such shares as it, in its
absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria. The Committee may also provide that the vesting or
forfeiture of shares of Restricted Stock may be based upon the achievement of, or failure to achieve, certain levels of performance and may provide for partial vesting of Restricted Stock in the event
that the maximum level of performance is not met if the minimum level of performance has been equaled or exceeded.

	(d)
	Restrictions
on Transfer Prior to Vesting. Prior to the vesting of a share of Restricted Stock, such Restricted Stock may not be transferred, assigned or otherwise disposed of, and no
transfer of a Participant's rights with respect to such Restricted Stock, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Immediately upon any attempt to
transfer such rights, such shares, and all of the rights related thereto, shall be forfeited by the Participant.

	(e)
	Dividends
on Restricted Stock. The Committee in its discretion may require that any dividends paid on shares of Restricted Stock be held in escrow until all restrictions on such
shares have lapsed.

	(f)
	Issuance
of Certificates. The Committee may, upon such terms and conditions as it determines, provide that (1) a certificate or certificates representing the shares underlying
a Restricted Stock award shall be registered in the Participant's name and bear an appropriate legend specifying that such shares are not transferable and are subject to the provisions of the Plan and
the restrictions, terms and conditions set forth in the applicable Agreement, (2) such certificate or certificates shall be held in escrow by the Company on behalf of the Participant until such
shares become vested or are forfeited or (3) subject to applicable law, the Participant's ownership of the Restricted Stock shall be registered by the Company in book entry form.

	(g)
	Consequences
of Vesting. Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions of Section 10(d) shall lapse with respect to such share. 

11.    Restricted Stock Units. 

	(a)
	Conditions
to Vesting. At the time of the grant of Restricted Stock Units, the Committee may impose such restrictions or conditions to the vesting of such Awards as it, in its
absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria.

	(b)
	Benefit
Upon Vesting. Unless otherwise provided in an Agreement, upon the vesting of a Restricted Stock Unit, the Participant shall be paid, within 30 days of the date on which
such 

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Award
vests, an amount, in cash and/or shares of Company Stock, as determined by the Committee, equal to the Fair Market Value of a share of Company Stock on the date on which such Restricted Stock
Unit vests. 

12.    Stock Bonuses. 

        In
the event that the Committee grants a Stock Bonus, a certificate for the shares of Company Stock constituting such Stock Bonus shall be issued in the name of the Participant to whom
such grant was made and delivered to such Participant, in a manner determined by the Committee (including via book entry), as soon as practicable after the date on which such Stock Bonus is payable. 

13.    Dividend Equivalents. 

	(a)
	Conditions
to Vesting. The Committee may grant Dividend Equivalents subject to such restrictions or conditions to the vesting of such Awards as it, in its absolute discretion, deems
appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria.

	(b)
	Benefit
Upon Vesting. Upon vesting of an award of Dividend Equivalents, such Award shall be paid to the Participant pursuant to the terms of the applicable Agreement. 

14.    Other Awards. 

        Other
forms of Awards ("Other Awards") valued in whole or in part by reference to, or otherwise based on, Company Stock may be granted either alone or in addition to other Awards under
the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Awards shall be
granted, the number of shares of Company Stock to be granted pursuant to such Other Awards, or the conditions to the vesting and/or payment of such Other Awards (which may include, but not be limited
to, achievement of performance goals based on one or more Business Criteria) and all other terms and conditions of such Other Awards. 

15.    Special Provisions Regarding Certain Awards. 

        Following
the expiration of the Section 162(m) Grandfathering Period, the Committee may make Awards hereunder to Covered Employees (or to individuals whom the Committee believes
may become Covered Employees) that are intended to qualify as performance-based compensation under Section 162(m) of the Code. The exercisability and/or payment of such Awards may be subject to
the achievement of performance goals based upon one or more Business Criteria and to certification of such achievement in writing by the Committee. Such performance goals shall be established in
writing by the Committee not later than the time period prescribed under Section 162(m) of the Code and the regulations thereunder. All provisions of such Awards which are intended to qualify
as performance-based compensation shall be construed in a manner to so comply. 

16.    Change in Control. 

        Except
as otherwise provided by the Committee or in an Award Agreement, if a Change of Control occurs, then: 

	(a)
	the
Participant's Restricted Stock that were forfeitable shall thereupon become nonforfeitable; and

	(b)
	any
unexercised Option or Stock Appreciation Right, whether or not exercisable on the date of such Change of Control, shall thereupon be fully exercisable and may be exercised, in
whole or in part. 

10

 

        Each
other Award granted pursuant to the Plan shall be treated as set forth by the Committee, in the Participant's Agreement or otherwise. 

17.    Rights as a Stockholder. 

        No
person shall have any rights as a stockholder with respect to any shares of Company Stock covered by or relating to any Award until the date of issuance of a stock certificate with
respect to such shares. Except for adjustments provided in Section 3(c) hereof, no adjustment to any Award shall be made for dividends or other rights for which the record date occurs prior to
the date such stock certificate is issued. 

18.    No Employment Rights; No Right to Award. 

        Nothing
contained in the Plan or any Agreement shall confer upon any Participant any right with respect to the continuation of employment by or provision of services to the Company or
interfere in any way with the right of the Company, subject to the terms of any separate agreement to the contrary, at any time to terminate such employment or service or to increase or decrease the
compensation of the Participant. No person shall have any claim or right to receive an Award hereunder. The Committee's granting of an Award to a Participant at any time shall neither require the
Committee to grant any other Award to such Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other person. 

19.    Securities Matters. 

	(a)
	Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing shares of Company Stock pursuant to
the Plan unless and until the Company is advised by its counsel (which may be the Company's in-house counsel) that the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Company Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company Stock pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such
certificates bear such legends, as the Committee, in its sole discretion, deems necessary or advisable.

	(b)
	The
transfer of any shares of Company Stock hereunder shall be effective only at such time as counsel to the Company (which may be the Company's in-house counsel) shall
have determined that the issuance and delivery of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which
shares of Company Stock are traded. The Committee may, in its sole discretion, defer the effectiveness of any transfer of shares of Company Stock hereunder in order to allow the issuance of such
shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the
Participant in writing of its decision to defer the effectiveness of a transfer. During the period of such deferral in connection with the exercise of an Option, the Participant may, by written
notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 

20.    Withholding Taxes. 

        Whenever
cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax
requirements related thereto. Whenever shares of Company Stock are to be delivered pursuant to an Award, the 

11

 

Company
shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With
the approval of the Committee, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Company Stock having a value equal to the amount of
minimum tax required to be withheld, as determined by the Committee. Such shares shall be valued at their Fair Market Value on the date of which the amount of tax to be withheld is determined.
Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award. 

21.    Notification of Election Under Section 83(b) of the Code. 

        If
any Participant shall, in connection with the acquisition of shares of Company Stock under the Plan, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service. 

22.    Amendment or Termination of the Plan. 

        The
Board may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, that stockholder approval shall be required for any such
amendment if and to the extent such approval is required in order to comply with applicable law (including, but not limited to, the incentive stock options regulations and any amendments thereto), or
stock exchange listing requirement. Nothing herein shall restrict the Committee's ability to exercise its discretionary authority pursuant to Sections 3, 4, and 32 which discretion may be exercised
without amendment to the Plan. Except as set forth in Sections 3, 4, and 32, no action hereunder may, without the consent of a Participant, reduce the Participant's rights under any outstanding Award. 

23.    Nontransferability of Awards. 

	(a)
	Except
as provided below, each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant's lifetime, or, if permissible under
applicable law, by the Participant's guardian or legal representative.

	(b)
	Except
as provided below, no Award, and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other
than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the
Company or any Affiliate; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale,
transfer or encumbrance.

	(c)
	To
the extent and in the manner permitted by the Committee, and subject to such terms, conditions, restrictions or limitations that may be prescribed by the Committee, a Participant
may transfer an Award (other than an Incentive Stock Option) to (i) a spouse, sibling, parent, child (including an adopted child) or grandchild (any of which, an "Immediate Family Member") of
the Participant; (ii) a trust, the primary beneficiaries of which consist exclusively of the Participant or Immediate Family Members of the Participant; or (iii) a corporation,
partnership or similar entity, the owners of which consist exclusively of the Participant or Immediate Family Members of the Participant. 

24.    Leaves of Absence. 

        In
the case of any Participant on an approved leave of absence, the Committee may make such provisions respecting the continuance of Awards while such Participant is in the employ or
service of 

12

 

the
Company as it may deem equitable, except that in no event may any Option or Stock Appreciation Right be exercised after the expiration of its term. 

25.    Effective Date and Term of Plan. 

        The
Plan shall be subject to the requisite approval of the stockholders of the Company in accordance with the requirements of Rule 4350 of the National Association of Securities
Dealers Manual and Section 162(m) of the Code, but in no case will shareholder approval be requested later than the first meeting of shareholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in which the Effective Date occurs. In the absence of such approval, any Awards shall be null and void. Unless earlier
terminated by the Board, the right to grant Awards under the Plan shall terminate on the tenth anniversary of the Effective Date. Awards outstanding at Plan termination shall remain in effect
according to their terms and the provisions of the Plan. 

26.    Applicable Law. 

        Except
to the extent preempted by any applicable federal law, the Plan shall be construed and administered in accordance with the laws of the State of New York without reference to its
principles of conflicts of law. 

27.    Participant Rights. 

        No
Participant shall have any claim to be granted any award under the Plan, and there is no obligation for uniformity of treatment for Participants. 

28.    Unfunded Status of Awards. 

        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 Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company. 

29.    No Fractional Shares. 

        No
fractional shares of Company Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 

30.    Beneficiary. 

        A
Participant may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant's estate shall be deemed to be the Participant's beneficiary. 

31.    Severability. 

        If
any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable
provision had not been included in the Plan. 

13

 

32.    409A Compliance. 

        Notwithstanding
anything to the contrary contained in the Plan or in any Agreement, to the extent that the Committee determines that the Plan or any Award is subject to
Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Committee reserves the right to amend or terminate the Plan and/or amend, restructure,
terminate or replace the Award in order to cause the Award to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section. 

14

QuickLinks

EAGLE BULK SHIPPING INC. 2005 STOCK INCENTIVE PLANExhibit 10.5

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made
this 1st day of March, 2005, by and among Eagle Shipping International (USA)
LLC, a Marshall Islands limited liability company (the “Company”), Sophocles
Zoullas (the “Executive”), and, solely for purposes of Section 3.5 and
3.6, Eagle Ventures, LLC, a Marshall Islands limited liability company (“Eagle
Ventures”).  All capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms in the LLC Agreement (as defined below).

 

Background

 

WHEREAS, certain affiliates
of Kelso & Co., the Executive and certain other parties have entered
into a limited liability company agreement, dated as of the date hereof,
to form Eagle Ventures (the “LLC
Agreement”);

 

WHEREAS, in connection with
the transactions contemplated in the LLC Agreement, the Company and the
Executive desire to enter into an agreement relating to the employment of the
Executive by the Company, which employment shall commence as of the date
hereof;

 

WHEREAS, the Company wishes
to employ Executive upon the terms hereinafter set forth; and

 

WHEREAS, Executive wishes to
be so employed by the Company;

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements herein
contained, the Company and the Executive agree as follows:

 

Terms

 

1.                                       Employment.  The Company hereby employs the
Executive, and the Executive hereby accepts employment, as Chief Executive
Officer (“CEO”) of the Company upon the terms and conditions set forth in this
Agreement.  In performance of his duties,
the Executive shall comply with the policies of the Company as in effect from
time to time.  Subject to and in
accordance with the applicable terms of the LLC Agreement, the Executive shall
be responsible for the day to day operations of the Company, and the Executive
agrees to devote his full business time, energy, skills and best efforts to
such employment during the Term.  The
Executive shall be responsible for all employee and employment related
decisions at the Company, including, without limitation, decisions relating to
hiring, firing, and compensation.  The
Executive may appoint other executive officers of the Company, subject to the
prior approval of the Board (such approval not to be unreasonably
withheld).  The Executive shall not
during the Term, directly or indirectly, alone or as a member of a partnership,
or as an officer, director, employee or agent of any other person, firm or
business organization, without the Board’s consent, engage in any other
business activities or pursuits requiring his personal service that materially
conflict with his duties hereunder or the diligent performance of such
duties.  The Executive shall perform his
duties and responsibilities at the Company’s regular place of business in New
York, New York, except for required travel on Company business.

 

 

2.                                       Term.  The term of this Agreement
shall commence as of the date hereof and shall continue until the third
anniversary of the date hereof, unless otherwise terminated in accordance with
the terms hereof (such period, or such shorter period if this Agreement or the
Executive’s employment with the Company is terminated earlier in accordance
with the terms hereof, shall be referred to as the “Term”).  The Company and the Executive may
extend the Term of this Agreement by mutual written agreement.

 

3.                                       Compensation.

 

3.1                                 Salary.  During the Term, the Executive
shall be paid a minimum base salary per year in the amount of $675,000, subject
to increase by the Board, payable in accordance with the Company’s normal
payroll practice (such base salary, as adjusted from time to time, is referred
to herein as “Base Salary”).

 

3.2                                 Bonus.  During the Term, the Executive
shall be eligible to participate in a performance bonus pool for senior
executives (the “Bonus Pool”). The size of the Bonus Pool shall be based upon
Eagle Ventures EBITDA as well as discretionary amounts as may be determined by
the Compensation Committee of Eagle Ventures. 
The Bonus Pool shall be distributed to the senior executives, including
the Executive, in a manner determined by the Executive, subject to approval of
the Compensation Committee.

 

3.3                                 Benefits.  During the Term, the Company
shall provide the Executive with participation in such benefit plans and fringe
benefits as it provides generally to similarly situated senior executives, all
in accordance with the eligibility provisions of such plans and benefits.

 

3.4                                 Expense Reimbursement. 
During the Term, the Executive shall, upon submission of adequate
documentary evidence reasonably satisfactory to the Company, be entitled to
reimbursement of reasonable and necessary out-of-pocket expenses incurred in
the performance of his duties hereunder on behalf of the Company, subject to,
and consistent with, the Company’s policies for expense payment and
reimbursement, in effect from time to time.

 

3.5                                 Management Incentive Plan/Participation.

 

(a)                                  During the Term, the Executive shall
participate in an incentive plan to be established and administered by the
Compensation Committee (the “Plan”)(the terms and conditions of which are as
set forth in the LLC Agreement) for the benefit of certain members of senior
management designated by the Board or the Compensation Committee as “Management
Members.”  As a participant in the Plan,
the Executive shall be awarded profits interests in Eagle Ventures (such
interests to include both Performance Points and Service Points, collectively,
the “Points”) designed to allow participation in profits realized in a
sale or other exit event, in accordance with, and subject to, the terms and
conditions of the Plan set forth in the LLC Agreement.  Except as set forth in this Section 3.5,
the terms of the Points allocated to the Executive shall be governed by the
provisions of the LLC Agreement

 

2

 

(b)                                 In
no event shall the Executive receive less than 75 percent of the Points granted
under the Plan, unless otherwise consented to by the Executive.

 

(c)                                  Notwithstanding anything in the LLC Agreement
to the contrary, Service Points allocated to the Executive shall not be subject
to an expiration date, but shall be subject to the other applicable forfeiture
provisions set forth in this Agreement and the LLC Agreement.

 

(d)                                 Treatment of Points Upon Termination of
Employment.  Notwithstanding anything in
the LLC Agreement to the contrary:

 

(i)             In the event the Executive’s employment is
terminated for Cause prior to the expiration of the Term, the number of Points
allocated to the Executive shall be reduced to zero.

 

(ii)          If, prior to the expiration of the Term, the Executive’s employment (x)
is terminated by the Company without Cause or (y) terminates as a result of (I)
death or Disability, or (II) the Executive’s resignation for Good Reason, all
of the Service Points allocated to the Executive shall vest and one-half of the
Performance Points allocated to the Executive shall vest (in each case, subject
to the terms and conditions of this Agreement, the Plan and the LLC Agreement).

 

(iii) In
the event the Executive exercises the Put Right described in Section 13.5
of the LLC Agreement and Eagle Ventures purchases all the Interests held by the
Executive and Family for cash, the number of Performance Points allocated to
the Executive shall be reduced to zero.

 

(e)                                  The provisions of this Section 3.5 shall
survive termination of this Agreement.

 

3.6                                 Consultation
Rights.  For so long as the Executive
is the CEO of the Company (and a Member of Eagle Ventures), the Board shall
take into account any recommendation made by the Executive as CEO prior to
taking any of the following actions with respect to Eagle Ventures or any of
its Subsidiaries (including the Company): (i) incurring indebtedness in
excess of $250,000, (ii) authorizing capital expenditures in excess of
$250,000, and (iii) declaring any dividends or other distributions to or
from Eagle Ventures or any of its Subsidiaries (to the extent any such
distribution may effect the liquidity required for the operation of the
business of Eagle Ventures and its Subsidiaries). Nothing in this Section 3.7
shall in any way limit the ability of the Board to take such actions or refrain
from taking such actions that are necessary to operate the business of Eagle
Ventures and its Subsidiaries.

 

3

 

4.                                       Termination of Employment.

 

4.1                                 By Company or Executive. 
Either the Executive or the Company may terminate this Agreement and the
employment relationship for any reason whatsoever, without Cause, by written
prior notice of termination to the other. 
Such termination shall become effective 30 days after the date of such
written notice or as otherwise agreed upon in writing by the parties.

 

(a)                                  In the event the Executive terminates his
employment with the Company for other than Good Reason, the Company shall (i) pay
to the Executive his Base Salary earned but unpaid up to the date of
termination, (ii) reimburse the Executive for any expenses for which the
Executive was due reimbursement under Section 3.4 above, (iii) pay to
the Executive any bonus actually earned for a completed year but unpaid as of
the date of termination, and (iv) provide the Executive with such
benefits that the Executive is then entitled to receive under benefit plans of
the Company ((i), (ii), (iii) and
(iv), the “Accrued Benefits”) and all other obligations of the Company to the
Executive under this Agreement shall cease at the effective date of
termination.

 

(b)                                 In the event the Company terminates the
Executive’s employment with the Company without Cause, then in addition to the
Accrued Benefits described in the paragraph above, the Executive shall receive
continuation of his Base Salary (the “Severance Payments”) for a period of one
year following the effective date of such termination in accordance with Section 3.1
above or the remaining Term of this Agreement, whichever is longer (the “Severance
Period”); provided, however, that the Executive immediately waives any right or
entitlement to Severance Payments in the event that the Executive materially
breaches any term or provision of this Agreement and such breach is not cured
within 30 days after receipt of written notice from the Company.  In addition, the Company shall
continue the Executive’s health insurance (for him and his dependents) during
the Severance Period, at the Company’s expense (provided that the Executive
shall be responsible for all costs associated with such benefits, including all
co-payments and deductibles), to the extent permitted under the benefit plans
and in accordance with applicable law. 
The Severance Payment and such continuation of such benefits are
referred to herein as the “Severance Benefits.”

 

4.2                                 Cause.  The Company may terminate the
Executive’s employment at any time for “Cause.” 
As used herein, “Cause” shall mean any of the following, provided such
event is not cured within 30 days after receipt of written notice from the
Company:  (i) the Executive’s refusal
or neglect to perform substantially his employment-related duties, (ii) dishonesty,
incompetence, willful misconduct or breach of fiduciary duty, (iii) indictment
for, conviction of, or entering a plea of guilty or nolo contedere to, a crime constituting a felony or his or
her willful violation of any law, rule, or regulation (other than a traffic
violation or other offense or violation outside of the course of employment
which in no way adversely affects the Company or its reputation or the ability
of the Executive to perform his employment-related duties or to represent the
Company or (iv) material breach of any written covenant or agreement with
the Company not to disclose any information pertaining to the Company or not to
compete or interfere with the

 

4

 

Company.  In the event that the Executive’s
employment with the Company is terminated by the Company for Cause, then, the
Company shall provide the Executive with the Accrued Benefits and all other
obligations of the Company to the Executive under this Agreement shall cease at
the effective date of termination.

 

4.3                                 Good Reason.  The Executive may terminate
his employment with the Company at any time for “Good Reason.”  As used herein, “Good Reason” shall mean any
of the following:  (a) without the
Executive’s prior written consent, a reduction by the Company of his current
salary, other than any such reduction which is part of a general salary
reduction or other concessionary arrangement affecting all employees or
affecting the group of employees of which the Executive is a member (after
receipt by the Company of written notice from such Executive and a 20-day
cure period); (b) without the Executive’s prior written consent, a
material reduction in the Executive’s duties or responsibilities (after receipt
by the Company of written notice from such Executive and a 20-day cure
period); or (c) the taking of any action by the Company that would
materially diminish the aggregate value of the benefits provided Executive
under the Company’s accident, disability, life insurance and any other employee
benefit plans in which he or she was participating on the date of his or her
execution of this Agreement, other than any such reduction which is (i) required
by law, (ii) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of employees of
which the Executive is a member, (iii) generally applicable to all
beneficiaries of such plans (after receipt by the Company of written notice and
a 20-day cure period) or (iv) in accordance with the terms of any
such plan.  In the event that the
Executive terminates his employment for Good Reason, he shall receive
the Accrued Benefits and the Severance Benefits during the Severance Period.

 

4.4                                 Death.  If the Executive shall die
while employed by the Company, all of the Executive’s rights under this
Agreement shall terminate except that the Company shall pay the Executive his
Accrued Benefits.

 

4.5                                 Disability.  The Executive’s employment
hereunder may be terminated by the Company for Disability.  In such event, all of the Executive’s rights
under this Agreement shall terminate except that the Company shall pay the
Executive his Accrued Benefits.  For
purposes of this Agreement, “Disability” means that, as a result of the
Executive’s incapacity due to reasonably documented physical or mental illness (a) the
Executive shall have been absent from his duties on a substantially full-time
basis for six consecutive months, and (b) within 30 days after the Company
notifies the Executive in writing that it intends to replace him, the Executive
shall not have returned to the performance of his duties as an officer of the
Company on a full-time basis.

 

5.                                       Restrictive Covenants.  In
order to induce the Company to enter into this Agreement, as a material
condition of his employment by the Company, the Executive agrees as follows:

 

5.1                                 Solicitation. 
During the Restricted Period, the Executive, on his own behalf or on
behalf of any other person, partnership, corporation or other entity, will not,

 

5

 

directly or indirectly, (a) intentionally
solicit or induce or attempt to solicit or induce any employee, agent or
consultant to terminate his or her relationship with the Company, or (b) intentionally
take any action to interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Company or any of its
affiliates and any customer, supplier, lessor, lessee, broker or employee or
any other person or entity which has a business relationship with the Company
or any such affiliate.

 

5.2                                 Property of the Company.

 

(a)           All right, title and interest
in and to Proprietary Information will be and shall remain the sole and
exclusive property of the Company.  The
Executive will not remove from the Company’s offices or premises any documents,
records, notebooks, files, correspondence, reports, memoranda or similar
materials of or containing Proprietary Information, or other materials or
property of any kind belonging to the Company unless necessary or appropriate
in the performance of his duties to the Company.  If the Executive removes such materials or
property in the performance of his duties, the Executive will return such
materials or property to their proper files or places of safekeeping as
promptly as possible after the removal has served its specific purpose.  The Executive will not make, retain, remove
and/or distribute any copies of any such materials or property, or divulge to
any third person the nature of and/or contents of such materials or property or
any other oral or written information to which he may have access or become
familiar in the course of his employment, except to the extent necessary in the
performance of his duties.  Upon
termination of the Executive’s employment with the Company for whatever reason
and whether voluntary or involuntary, or at any time at the request of the
Company, he will leave with the Company or promptly return to the Company all
originals and copies of such materials or property then in his possession and
shall not retain any copies or other reproductions or extracts thereof except
for historical financial or corporate information reasonably required to be
retained for tax or related purposes. 
The foregoing restrictions and obligations under this Section 5.2
shall not apply to: (i) any Proprietary Information that is or becomes
generally available to the public other than as a result of a disclosure by the
Executive, (ii) any information obtained by the Executive from a third
party which the Executive has no reason to believe is violating any obligation
of confidentiality to the Company, or (iii) any information the Executive
is required by law to disclose.  In the
event that the Executive is requested in any proceeding to disclose any
Proprietary Information, the Executive agrees to give the Company prompt
written notice of such request and the documents requested thereby so that the
Company may seek an appropriate protective order.  It is further agreed that if, in the absence
of a protective order, the Executive is nonetheless, in the written opinion of
his counsel, compelled to disclose Proprietary Information to any tribunal or
else stand liable for contempt or suffer other censure or penalty, the
Executive may disclose such information to such tribunal without liability
hereunder; provided, however, that the Executive must give the Company written
notice of the information to be disclosed (including copies of the relevant
portions of the relevant documents) as far in advance of its disclosure as is
practicable, use all reasonable efforts to limit any such disclosure to the
precise terms of such requirement and use all reasonable efforts to

 

6

 

obtain an order or other reliable assurance that
confidential treatment will be accorded to such information.

 

(b)                                 The
Executive agrees that all Intellectual Property will be considered “works made for hire” as that term is
defined in Section 101 of the Copyright Act (17 U.S.C. § 101) and
that all right, title and interest in such Intellectual Property will be the
sole and exclusive property of the Company. 
To the extent that any of the Intellectual Property may not by law be
considered a work made for hire, or to the extent that, notwithstanding the
foregoing, the Executive retains any interest in the Intellectual Property, the
Executive hereby irrevocably assigns and transfers to the Company any and all
right, title or interest that the Executive may now or in the future have in
the Intellectual Property under patent, copyright, trade secret, trademark or
other law, in perpetuity or for the longest period otherwise permitted by law,
without the necessity of further consideration. 
The Company will be entitled to obtain and hold in its own name all
copyrights, patents, trade secrets, trademarks and other similar registrations
with respect to such Intellectual Property. 
The Executive further agrees to execute any and all documents and
provide any further cooperation or assistance reasonably required by the Company
to perfect, maintain or otherwise protect its rights in the Intellectual
Property.  If the Company is unable after
reasonable efforts to secure the Executive’s signature, cooperation or
assistance in accordance with the preceding sentence, whether because of the
Executive’s incapacity or any other reason whatsoever, the Executive hereby
designates and appoints the Company or its designee as the Executive’s agent
and attorney-in-fact, to act on her behalf, to execute and file documents and
to do all other lawfully permitted acts necessary or desirable to perfect,
maintain or otherwise protect the Company’s rights in the Intellectual
Property.  The Executive acknowledges and
agrees that such appointment is coupled with an interest and is therefore
irrevocable.

 

(c)           For
purposes of this Agreement, the following terms have the meanings defined
below:

 

(i)                                     “Intellectual
Property” means (A) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereto, and all
patents and patent applications claiming such inventions, (B) all
trademarks, service marks, trade dress, logos, trade names, fictitious names,
brand names, brand marks and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (C) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (D) all
mask works and all applications, registrations, and renewals in connection
therewith, (E) all trade secrets (including research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, methodologies, technical data, designs, drawings and
specifications), (F) all computer software (including data, source and
object codes and related documentation), (G) all other proprietary rights,
and (H) all copies and tangible embodiments thereof (in whatever form or
medium), or similar intangible personal property which have been or are
developed or created in whole or in part

 

7

 

by the Executive (1) at any time and at any place
while the Executive is employed by Company and which, in the case of any or all
of the foregoing, are related to or used in connection with the business of the
Company, or (2) as a result of tasks assigned to the Executive by the
Company.

 

(ii)                                  “Proprietary
Information” means any and all information of the Company or of any subsidiary
or affiliate of the Company.   Such
Proprietary Information shall include, but shall not be limited to, the
following items and information relating to the following items: (A) all
intellectual property and proprietary rights of the Company (including without
limitation Intellectual Property) (B) computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer processing systems and
techniques, all computer inputs and outputs (regardless of the media on which
stored or located), hardware and software configurations, designs, architecture
and interfaces, (C) business research, studies, procedures and costs, (D) financial
data, (E) distribution methods, (F) marketing data, methods, plans
and efforts, (G) the terms of contracts and agreements with customers,
contractors and suppliers, (H) the needs and requirements of, and the
Company’s course of dealing with, actual or prospective customers, contractors
and suppliers, (I) personnel information, (J) customer and vendor credit
information, and (K) any information received from third parties subject to
obligations of non-disclosure or non-use. 
Failure by the Company to mark any of the Proprietary Information as
confidential or proprietary shall not affect its status as Proprietary
Information under the terms of this Agreement.

 

5.3                                 Restrictions on Transfer of Ownership. 
Notwithstanding anything in the LLC Agreement to the contrary, Executive
agrees that he shall not Transfer any Interests (including without
limitation to any other Member (including Family), or by gift, or by operation
of law or otherwise) if, following such Transfer, Executive and his Permitted
Transferees (as defined below), taken together, would own less than 50% of the
aggregate Interests issued to such Executive in exchange for all Capital
Contributions made by such Executive to Eagle Ventures through the date of such
proposed Transfer; provided, that the foregoing restriction shall not
prohibit any Transfer by Executive for
estate-planning purposes of Executive, authorized by the prior written approval
(such approval not to be unreasonably withheld) of the Board (excluding such
Executive and other members of the Board who are designees of such Executive),
to (A) a trust under which the distribution of the Interests may be made
only to beneficiaries who are Executive, his spouse, or his or her lineal
descendants, (B) a charitable remainder trust, the income from which will
be paid to Executive during his life, (C) a corporation, the members or
shareholders of which are only Executive, his spouse, or his or her lineal
descendants or (D) a partnership or limited liability company, the
partners or members of which are only Executive, his or her spouse, or his or
her lineal descendants (each of the entities described in clauses (A) through
(D), a “Permitted Transferee”). 
For avoidance of doubt, nothing in this Agreement shall be deemed to
permit any Transfer by Executive otherwise prohibited by the LLC Agreement.

 

8

 

5.4                                 Interpretation; Severability.  The
Executive has carefully considered the possible effects on the Executive of the
confidentiality provisions and the other obligations contained in this
Agreement and the Executive recognizes that the limitations are reasonable and
necessary to protect the legitimate business interests, developing new
Proprietary Information and Intellectual Property and developing goodwill of
the Company and its affiliates.  The
parties hereto agree that if any portion of the above restrictive covenants are
held to be unreasonable, arbitrary, against public policy, or for any other
reason unenforceable, the covenants herein shall be considered diminishable
both as to time and geographic area; each month for the specified period shall
be deemed a separate period of time, and the restrictive covenants shall remain
effective so long as the same is not unreasonable, arbitrary or against public
policy, but in no event longer than the Restricted Period.  The parties hereto agree that in the event
any court determines the specified time period or the specified geographic area
to be unreasonable, arbitrary or against public policy, a lesser period or
geographic area which is determined to be reasonable, nonarbitrary and not
against public policy having an effect as close as permitted by applicable law
to the provision declared unenforceable shall be enforced against the
Executive.

 

5.5                                 Calculation of Time.  The
time period covered by the restrictive covenants contained in this Section 5
shall not include any period(s) of violation of any restrictive covenant.

 

5.6                                 Definitions.  As used in this Section 5,

 

(a)                                  The “Restricted Period” commences on the date
of this Agreement and terminates twelve (12) months following the termination
of the Executive’s employment with the Company for any reason.

 

(b)                                 “Company” shall include the Company and its
affiliates.

 

5.7                                 Independent Covenants.  The
covenants set forth in this Section 5 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
potential or alleged claim or cause of action of the Executive against the
Company or the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants contained herein.  An alleged
or actual breach of this Agreement by the Company shall not be a defense to
enforcement of the provisions of this Section 5.  It is acknowledged and agreed that the
provisions of this Section 5 shall survive the termination of this
Agreement.

 

5.8                                 Injunction; Specific Performance.  The
Executive acknowledges that if he were to breach any of the provisions of this Section 5,
it would result in an immediate and irreparable injury to the legitimate
business interests of the Company for which monetary damages alone might not be
an adequate remedy and that the amount of such damages may be difficult to
determine.  Therefore, the Executive
agrees that if any such breach shall occur, if the Company so elects, and in
addition to all other remedies that the Company may have, the Company shall be
entitled to seek injunctive relief, specific

 

9

 

performance, or any other
form of equitable relief to remedy a breach or threatened breach of this
Agreement.  The existence of this right
shall not preclude or otherwise limit the applicability or exercise of any
other rights or remedies which the Company may have at law or in equity.  If any action is brought by the Company
pursuant to this Section 5, the prevailing party shall be entitled to
recover costs and reasonable attorneys’ fees incurred in such action, the
amount of such reasonable attorneys’ fees to be determined by the court and not
a jury.

 

6.                                       Representation of the Executive.  The
Executive represents and warrants to the Company that the Executive is not
party to or bound by any employment agreement, noncompetition agreement or
confidentiality agreement with any person or entity other than the Company and
its affiliates.

 

7.                                       Life Insurance.  The
Company shall provide the Executive with a life insurance policy during
the Term of this Agreement, subject to availability and pricing reasonably
acceptable to the Company.  The amount
and terms of such life insurance policy shall be determined by mutual agreement
of the Company and the Executive.

 

8.                                       No Third-party Beneficiaries.  This
Agreement shall not confer any rights or remedies upon any person other than
the parties hereto and their respective successors and permitted assigns.

 

9.                                       Entire Agreement.  This
Agreement and the LLC Agreement constitute the entire agreement between the
parties hereto and supersede any prior understandings, agreements, or
representations by or between the parties hereto, written or oral, to the
extent they relate in any way to the subject matter hereof.

 

10.                                 Succession and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.  The Executive may not assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the Company.

 

11.                                 Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.

 

12.                                 Headings.  The section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

13.                                 Notices.  All notices, requests,
demands, claims, and other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if it is sent by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:

 

10

 

	
  If to the Executive:

  	
   

  	
  Copy to:

  
	
   

  	
   

  	
   

  
	
  Blair C. Fensterstock, Esq.

  	
   

  	
  Sophocles Zoullas

  
	
  Fensterstock &
  Partners LLP

  	
   

  	
  c/o Eagle Shipping
  International (USA) LLC

  
	
  30 Wall Street

  	
   

  	
  29 Broadway, Suite 1610

  
	
  New York, New York 10005

  	
   

  	
  New York, NY 10006

  
	
  Fax: 212-785-4040

  	
   

  	
  Fax: 212-742-1735

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  Copy to:

  
	
   

  	
   

  	
   

  
	
  Eagle Shipping
  International (USA) LLC

  	
   

  	
  Kelso & Company,
  L.P.

  
	
  29 Broadway, Suite 1610

  	
   

  	
  320 Park Avenue, 24th
  Floor

  
	
  New York, NY 10006

  	
   

  	
  New York, NY 10022

  
	
  Attention: Sophocles
  Zoullas

  	
   

  	
  Attention: James J.
  Connors, II

  
	
  Fax: 212-742-1735

  	
   

  	
  Fax: 212-223-2379

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Eagle Ventures:

  	
   

  	
  Copy to:

  
	
   

  	
   

  	
   

  
	
  Eagle Ventures LLC

  	
   

  	
  Kelso & Company,
  L.P.

  
	
  29 Broadway, Suite 1610

  	
   

  	
  320 Park Avenue, 24th
  Floor

  
	
  New York, NY 10006

  	
   

  	
  New York, NY 10022

  
	
  Attention: Sophocles
  Zoullas

  	
   

  	
  Attention: James J.
  Connors, II

  
	
  Fax: 212-742-1735

  	
   

  	
  Fax: 212-223-2379

  

 

Any party hereto may send
any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, facsimile
transmission, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient; provided, however, that if notice is sent by U.S. mail it shall be
deemed received on the fifth business day after it is sent.  Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to
be delivered by giving the other party notice in the manner herein set forth.

 

14.                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.

 

15.                                 Amendments and Waivers.  No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all parties hereto.  No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder,

 

11

 

whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

 

16.                                 Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.

 

17.                                 Construction.  The
parties hereto have participated jointly in the negotiation and drafting of
this Agreement.  If an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. 
For the avoidance of doubt, to the extent that any conflict exists
between the express terms and conditions of this Agreement and the LLC
Agreement, the terms and conditions of this Agreement relating to the Executive
shall govern the rights and obligations of the parties hereto.

 

18.                                 Withholding.  All amounts otherwise payable hereunder or
under any benefit plans of the Company shall be subject to applicable
withholding for income taxes, FICA, Medicare and other customary withholding
taxes.

 

19.                                 Attorneys’ Fees.  If
litigation shall be brought to seek injunctive or other equitable relief as
specified in this Agreement, the non-prevailing party shall indemnify the
prevailing party for reasonable attorney’s fees (including those for
negotiations, trial and appeals) and disbursements incurred by the prevailing
party in such litigation.

 

20.                                 KNOWING WAIVER OF JURY TRIAL.  THE
COMPANY AND THE EXECUTIVE EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE COMPANY’S EMPLOYMENT OF THE EXECUTIVE, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR COMPANY’S EMPLOYMENT OF THE EXECUTIVE AND ENTERING INTO THIS
AGREEMENT.

 

*  * 
*  *  *  *

 

12

 

This Agreement has been
executed by the parties as of the date first above written.

 

	
   

  	
  Company:

  
	
   

  	
   

  
	
   

  	
  Eagle Shipping
  International (USA) LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Eagle
  Ventures (solely with respect to

  Sections 3.5 and 3.6):

  
	
   

  	
   

  
	
   

  	
  Eagle Ventures, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Executive:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sophocles Zoullas

  
						

 

 

[Signature Page to
Zoullas Employment Agreement]

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