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                                                                     Exhibit 4.2

                          SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this "Agreement") is dated as of August
25, 2005, among Euroseas Ltd., a Marshall Islands corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

     WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:

          "Action" shall have the meaning ascribed to such term in Section
     3.1(j).

          "Affiliate" means any Person that, directly or indirectly through one
     or more intermediaries, controls or is controlled by or is under common
     control with a Person as such terms are used in and construed under Rule
     144 under the Securities Act. With respect to a Purchaser, any investment
     fund or managed account that is managed on a discretionary basis by the
     same investment manager as such Purchaser will be deemed to be an Affiliate
     of such Purchaser.

          "Closing" means the closing of the purchase and sale of the Securities
     pursuant to Section 2.1.

          "Closing Date" means the Trading Day when all of the Transaction
     Documents have been executed and delivered by the applicable parties
     thereto, and all conditions precedent to (i) the Purchasers' obligations to
     pay the Subscription Amount and (ii) the Company's obligations to deliver
     the Securities have been satisfied or waived.

          "Closing Price" means on any particular date (a) the last reported
     closing bid price per share of Common Stock on such date on the Trading
     Market (as reported by Bloomberg L.P. at 4:15 PM (New York time)), or (b)
     if there is no such price on such date, then the closing bid price on the
     Trading Market on the date nearest preceding such date (as reported by
     Bloomberg L.P. at 4:15 PM (New York time)), or (c) if the Common Stock is
     not then listed or quoted on the Trading Market and if prices for the
     Common

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     Stock are then reported in the "pink sheets" published by the National
     Quotation Bureau Incorporated (or a similar organization or agency
     succeeding to its functions of reporting prices), the most recent bid price
     per share of the Common Stock so reported, or (d) if the shares of Common
     Stock are not then publicly traded the fair market value of a share of
     Common Stock as determined by an appraiser selected in good faith by the
     Purchasers of a majority in interest of the Shares then outstanding.

          "Commission" means the Securities and Exchange Commission.

          "Common Stock" means the common stock of the Company, par value $0.01
     per share, and any other class of securities into which such securities may
     hereafter have been reclassified or changed into.

          "Common Stock Equivalents" means any securities of the Company or the
     Subsidiaries which would entitle the holder thereof to acquire at any time
     Common Stock, including, without limitation, any debt, preferred stock,
     rights, options, warrants or other instrument that is at any time
     convertible into or exercisable or exchangeable for, or otherwise entitles
     the holder thereof to receive, Common Stock.

          "Company Counsel" means Seward & Kissel LLP.

          "Disclosure Schedules" means the Disclosure Schedules of the Company
     delivered concurrently herewith.

          "Effective Date" means the date that the Registration Statement filed
     by the Company pursuant to the Registration Rights Agreement is first
     declared effective by the Commission.

          "Escrow Agent" shall mean Wells Fargo Bank, N.A.

          "Escrow Agreement" means the Escrow Agreement in substantially the
     form of Exhibit C hereto executed and delivered contemporaneously with this
     Agreement.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
     and the rules and regulations promulgated thereunder.

          "Exempt Issuance" means the issuance of (a) shares of Common Stock or
     options to employees, officers or directors of the Company pursuant to any
     stock or option plan duly adopted by a majority of the non-employee members
     of the Board of Directors of the Company or a majority of the members of a
     committee of non-employee directors established for such purpose, (b)
     securities issued upon the exercise or exchange of or conversion of any
     Securities issued hereunder and/or securities exercisable or exchangeable
     for or convertible into shares of Common Stock issued and outstanding on
     the date of this Agreement, provided that such securities have not been
     amended since the date of this Agreement to increase the number of such
     securities or to decrease the exercise, exchange or conversion price of any
     such securities, and (c) securities issued pursuant to acquisitions or
     strategic transactions, provided any such issuance shall only be to a
     Person which is, itself or through its subsidiaries, an operating company
     in a

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     business synergistic with the business of the Company and in which the
     Company receives benefits in addition to the investment of funds, but shall
     not include a transaction in which the Company is issuing securities
     primarily for the purpose of raising capital or to an entity whose primary
     business is investing in securities.

          "FW" means Feldman Weinstein LLP with offices located at 420 Lexington
     Avenue, Suite 2620, New York, New York 10170-0002.

          "GAAP" shall have the meaning ascribed to such term in Section 3.1(h).

          "Intellectual Property Rights" shall have the meaning ascribed to such
     term in Section 3.1(o).

          "Legend Removal Date" shall have the meaning ascribed to such term in
     Section 4.1(c).

          "Liens" means a lien, charge, security interest, encumbrance, right of
     first refusal, preemptive right or other restriction.

          "Material Adverse Effect" shall have the meaning assigned to such term
     in Section 3.1(b).

          "Material Permits" shall have the meaning ascribed to such term in
     Section 3.1(m).

          "Per Share Purchase Price" equals $3.00, subject to adjustment for
     reverse and forward stock splits, stock dividends, stock combinations and
     other similar transactions of the Common Stock that occur after the date of
     this Agreement and prior to the Closing Date.

          "Person" means an individual or corporation, partnership, trust,
     incorporated or unincorporated association, joint venture, limited
     liability company, joint stock company, government (or an agency or
     subdivision thereof) or other entity of any kind.

          "Proceeding" means an action, claim, suit, investigation or proceeding
     (including, without limitation, an investigation or partial proceeding,
     such as a deposition), whether commenced or threatened.

          "Purchaser Party" shall have the meaning ascribed to such term in
     Section 4.9.

          "Registration Rights Agreement" means the Registration Rights
     Agreement, dated the date hereof, among the Company and the Purchasers, in
     the form of Exhibit A attached hereto.

          "Registration Statement" means a registration statement meeting the
     requirements set forth in the Registration Rights Agreement and covering
     the resale by the Purchasers of the Shares and the Warrant Shares.

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          "Required Approvals" shall have the meaning ascribed to such term in
     Section 3.1(e).

          "Roll-Up Transactions" means those certain transactions whereby the
     prior owners of all of the shares in each of the Subsidiaries exchanged all
     of their shares (the "Sub Shares") for shares in Friends Investment Company
     Inc., a Marshall Islands company ("Friends"), thus becoming the owners of
     Friends and whereby Friends then exchanged all of the Sub Shares for shares
     in the Company, thus becoming the sole owner of the Company.

          "Rule 144" means Rule 144 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same effect as such Rule.

          "Securities" means the Shares, the Warrants and the Warrant Shares.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Shares" means the shares of Common Stock issued or issuable to each
     Purchaser pursuant to this Agreement.

          "Short Sales" shall include all "short sales" as defined in Rule 200
     of Regulation SHO under the Exchange Act.

          "Subscription Amount" means, as to each Purchaser, the aggregate
     amount to be paid for Shares and Warrants purchased hereunder as specified
     below such Purchaser's name on the signature page of this Agreement and
     next to the heading "Subscription Amount", in United States Dollars and in
     immediately available funds.

          "Subsidiary" means Diana Trading Ltd., a company organized under the
     laws of the Republic of the Marshall Islands, Alterwall Business Inc., a
     company organized under the laws of the Republic of Panama, Allendale
     Investments S.A., a company organized under the laws of the Republic of
     Panama, Alcinoe Shipping Limited, a company organized under the laws of the
     Republic of Cyprus, Searoute Maritime Limited, a company organized under
     the laws of the Republic of Cyprus, OceanPride Shipping Limited, a company
     organized under the laws of the Republic of Cyprus and OceanOpera Shipping
     Limited, a company organized under the laws of the Republic of Cyprus.

          "Trading Day" means a day on which any Trading Market is open.

          "Trading Market" means the following markets or exchanges on which the
     Common Stock is listed or quoted for trading on the date in question: the
     Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock
     Exchange, the Nasdaq National Market or the OTC Bulletin Board.

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          "Transaction Documents" means this Agreement, the Registration Rights
     Agreement, the Escrow Agreement and any other documents or agreements
     executed in connection with the transactions contemplated hereunder.

          "Warrants" means collectively the Common Stock purchase warrants, in
     the form of Exhibit D delivered to the Purchasers at the Closing in
     accordance with Section 2.2(a) hereof, which Warrants shall be exercisable
     immediately and have a term of exercise equal to 5 years.

          "Warrant Shares" means the shares of Common Stock issuable upon
     exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

     2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to
$50,000,000 of Shares and Warrants. Each Purchaser shall deliver to the Escrow
Agent via wire transfer or a certified check immediately available funds equal
to their Subscription Amount and the Company shall deliver to each Purchaser
their respective Shares and Warrants as determined pursuant to Section 2.2(a)
and the other items set forth in Section 2.2 issuable at the Closing. Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of FW, or such other location as the parties shall
mutually agree.

     2.2 Deliveries.

          (a) On the Closing Date, the Company shall deliver or cause to be
     delivered to each Purchaser (as applicable) and FW the following:

               (i) this Agreement duly executed by the Company;

               (ii) a legal opinion of Company Counsel, in the form of Exhibit B
          attached hereto;

               (iii) as to each Purchaser, a stock certificate evidencing a
          number of Shares equal to such Purchaser's Subscription Amount divided
          by the Per Share Purchase Price, registered in the name of such
          Purchaser;

               (iv) a Warrant registered in the name of such Purchaser to
          purchase up to a number of shares of Common Stock equal to 25% of the
          Shares purchased by such Purchaser hereunder, with an exercise price
          equal to 120% of the Per Share Purchase Price, subject to adjustment
          therein;

               (v) the Escrow Agreement duly executed by the Company;

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               (vi) a lock-up agreement, in the form attached hereto as Exhibit
          E, pursuant to which Friends shall agree not to dispose of any Common
          Stock or Common Stock Equivalents until the six month anniversary of
          the Effective Date; and

               (vii) the Registration Rights Agreement duly executed by the
          Company.

          (b) On the Closing Date, each Purchaser shall deliver or cause to be
     delivered to the Company (except as noted) the following:

               (i) this Agreement duly executed by such Purchaser;

               (ii) the Escrow Agreement duly executed by such Purchaser;

               (iii) such Purchaser's Subscription Amount by wire transfer to
          the Escrow Agent to the account specified in the Escrow Agreement; and

               (iv) the Registration Rights Agreement duly executed by such
          Purchaser.

     2.3 Closing Conditions.

          (a) The obligations of the Company hereunder in connection with the
     Closing are subject to the following conditions being met:

               (i) the accuracy in all material respects when made and on the
          Closing Date of the representations and warranties of the Purchasers
          contained herein;

               (ii) all obligations, covenants and agreements of the Purchasers
          required to be performed at or prior to the Closing Date shall have
          been performed; and

               (iii) the delivery by the Purchasers of the items set forth in
          Section 2.2(b) of this Agreement.

          (b) The respective obligations of the Purchasers hereunder in
     connection with the Closing are subject to the following conditions being
     met:

               (i) the accuracy in all material respects on the Closing Date of
          the representations and warranties of the Company contained herein;

               (ii) all obligations, covenants and agreements of the Company
          required to be performed at or prior to the Closing Date shall have
          been performed;

               (iii) the delivery by the Company of the items set forth in
          Section 2.2(a) of this Agreement;

               (iv) the Company, [Shellco, Inc.] ("Shellco") and all other
          parties thereto shall have entered into and delivered that certain
          Agreement and Plan of

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          Merger of even date herewith pursuant to which Shellco will merge with
          and into a subsidiary of the Company (the "Merger") which agreement
          (the "Merger Agreement") shall be subject to no conditions to closing
          other than customary closing conditions, other than the need for
          Commission approval of a Form F-1 or F-4, obtaining a listing of the
          Common Stock on the relevant Trading Market, the related shareholder
          vote of Shellco approving the Merger, and the execution of a stock
          pledge by certain holders of Shellco stock pledging a portion of such
          stock as security for, inter alia, any breaches of representations and
          warranties of the principal stockholders of Shellco under the Merger
          Agreement, which agreement shall not include any fully discretionary
          right to terminate or due diligence or similar conditions with respect
          to any party to the Merger, but may include a closing condition that
          there shall have been no material adverse change in the Company or
          Shellco, as applicable, from the date of signing such agreement until
          the closing of the Merger;

               (v) the Company shall have acquired the capital stock of each
          Subsidiary, free and clear of all Liens (except that each such company
          and/or the vessel it owns is subject to, among other things, one or
          more of the following: mortgage; assignment of earnings; assignment of
          insurances; assignment of requisition compensation; charter party
          assignment; accounts pledge; pledge of capital stock (collectively,
          "Permitted Liens")) and all conditions to the acquisitions thereof
          shall have been satisfied;

               (vi) there shall have been no Material Adverse Effect with
          respect to the Company since the date hereof;

               (vii) all consents from each of the lenders to each Subsidiary in
          connection with the Roll Up Transactions shall have been obtained; and

               (viii) Fortis Bank (Nederland) N.V., EFG Eurobank Ergasias and
          HSBC Bank, PLC shall have executed and delivered consents and waivers,
          in form and substance satisfactory to the Purchasers, consenting to
          the Company's payment of future dividends and waiving any provision
          under their agreements with the Company and its Subsidiaries that
          would prohibit the payment of dividends on the Common Stock, subject
          to the terms and conditions of such consents and waivers, copies of
          which are attached hereto as Schedule 2.3(b)(viii);

               (ix) there shall be no agreement between the Company (or any of
          its Subsidiaries) and any third party that prohibits the payment of
          dividends on the Common Stock other than agreements with the banks
          that have delivered consents and waivers attached hereto as Schedule
          2.3(b)(viii); and

               (x) at any time prior to the Closing Date, trading in securities
          generally as reported by Bloomberg Financial Markets shall not have
          been suspended or limited, or minimum prices shall not have been
          established on securities whose trades are reported by such service,
          or on any Trading Market, nor shall a banking moratorium have been
          declared either by the United States of America or New

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          York State authorities nor shall there have occurred any material
          outbreak or escalation of hostilities or other national or
          international calamity of such magnitude in its effect on, or any
          material adverse change in, any financial market which, in each case,
          in the reasonable judgment of each Purchaser, makes it impracticable
          or inadvisable to purchase the Shares at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser:

          (a) Subsidiaries. The Subsidiaries constitute all of the direct and
     indirect subsidiaries of the Company and are set forth on Schedule 3.1(a).
     The Company owns, directly or indirectly, all of the capital stock or other
     equity interests of each Subsidiary free and clear of any Liens (other than
     Permitted Liens), and all the issued and outstanding shares of capital
     stock of each Subsidiary are validly issued and are fully paid,
     non-assessable and free of preemptive and similar rights to subscribe for
     or purchase securities. If the Company has no subsidiaries, then references
     in the Transaction Documents to the Subsidiaries will be disregarded.

          (b) Organization and Qualification. The Company and each of the
     Subsidiaries is an entity duly incorporated or otherwise organized, validly
     existing and in good standing under the laws of the jurisdiction of its
     incorporation or organization (as applicable), with the requisite power and
     authority to own and use its properties and assets and to carry on its
     business as currently conducted. Neither the Company nor any Subsidiary is
     in violation or default of any of the provisions of its respective
     certificate or articles of incorporation, bylaws or other organizational or
     charter documents. Each of the Company and the Subsidiaries is duly
     qualified to conduct business and is in good standing as a foreign
     corporation or other entity in each jurisdiction in which the nature of the
     business conducted or property owned by it makes such qualification
     necessary, except where the failure to be so qualified or in good standing,
     as the case may be, could not have or reasonably be expected to result in
     (i) a material adverse effect on the legality, validity or enforceability
     of any Transaction Document, (ii) a material adverse effect on the results
     of operations, assets, business, prospects or condition (financial or
     otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii)
     a material adverse effect on the Company's ability to perform in any
     material respect on a timely basis its obligations under any Transaction
     Document (any of (i), (ii) or (iii), a "Material Adverse Effect") and no
     Proceeding has been instituted in any such jurisdiction revoking, limiting
     or curtailing or seeking to revoke, limit or curtail such power and
     authority or qualification.

          (c) Authorization; Enforcement. The Company has the requisite
     corporate power and authority to enter into and to consummate the
     transactions contemplated by each of the Transaction Documents and
     otherwise to carry out its obligations hereunder

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     and thereunder. The execution and delivery of each of the Transaction
     Documents by the Company and the consummation by it of the transactions
     contemplated thereby have been duly authorized by all necessary action on
     the part of the Company and no further action is required by the Company,
     its board of directors or its stockholders in connection therewith other
     than in connection with the Required Approvals. Each Transaction Document
     has been (or upon delivery will have been) duly executed by the Company
     and, when delivered in accordance with the terms hereof and thereof, will
     constitute the valid and binding obligation of the Company enforceable
     against the Company in accordance with its terms except (i) as limited by
     applicable bankruptcy, insolvency, reorganization, moratorium and other
     laws of general application affecting enforcement of creditors' rights
     generally and (ii) as limited by laws relating to the availability of
     specific performance, injunctive relief or other equitable remedies.

          (d) No Conflicts. The execution, delivery and performance of the
     Transaction Documents by the Company, the issuance and sale of the
     Securities and the consummation by the Company of the other transactions
     contemplated hereby and thereby do not and will not (i) conflict with or
     violate any provision of the Company's or any Subsidiary's certificate or
     articles of incorporation, bylaws or other organizational or charter
     documents, or (ii) conflict with, or constitute a default (or an event that
     with notice or lapse of time or both would become a default) under, result
     in the creation of any Lien upon any of the properties or assets of the
     Company or any Subsidiary, or give to others any rights of termination,
     amendment, acceleration or cancellation (with or without notice, lapse of
     time or both) of, any agreement, credit facility, debt or other instrument
     (evidencing a Company or Subsidiary debt or otherwise) or other
     understanding to which the Company or any Subsidiary is a party or by which
     any property or asset of the Company or any Subsidiary is bound or
     affected, or (iii) subject to the Required Approvals, conflict with or
     result in a violation of any law, rule, regulation, order, judgment,
     injunction, decree or other restriction of any court or governmental
     authority to which the Company or a Subsidiary is subject (including
     foreign, federal and state securities laws and regulations), or by which
     any property or asset of the Company or a Subsidiary is bound or affected;
     except in the case of each of clauses (ii) and (iii), such as could not
     have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to
     obtain any consent, waiver, authorization or order of, give any notice to,
     or make any filing or registration with, any court or other foreign,
     federal, state, local or other governmental authority or other Person in
     connection with the execution, delivery and performance by the Company of
     the Transaction Documents, other than (i) filings required pursuant to
     Section 4.4 of this Agreement, (ii) the filing with the Commission of the
     Registration Statement, (iii) application(s) to each applicable Trading
     Market for the listing of the Shares and Warrant Shares for trading thereon
     in the time and manner required thereby, and (iv) the filing of Form D with
     the Commission and such filings as are required to be made under applicable
     state securities laws (collectively, the "Required Approvals").

          (f) Issuance of the Securities. The Securities are duly authorized
     and, when issued and paid for in accordance with the applicable Transaction
     Documents, will be

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     duly and validly issued, fully paid and nonassessable, free and clear of
     all Liens imposed by the Company other than restrictions on transfer
     provided for in the Transaction Documents. The Warrant Shares, when issued
     in accordance with the terms of the Transaction Documents, will be validly
     issued, fully paid and nonassessable, free and clear of all Liens imposed
     by the Company. The Company has reserved from its duly authorized capital
     stock the maximum number of shares of Common Stock issuable pursuant to
     this Agreement and the Warrants.

          (g) Capitalization. The authorized and outstanding capitalization of
     the Company is as set forth on Schedule 3.1(g). The Company has not issued
     any capital stock or Common Stock Equivalents except as set forth on
     Schedule 3.1(g). No Person has any right of first refusal, preemptive
     right, right of participation, or any similar right to participate in the
     transactions contemplated by the Transaction Documents. Except as a result
     of the purchase and sale of the Securities, there are no outstanding
     options, warrants, script rights to subscribe to, calls or commitments of
     any character whatsoever relating to, or securities, rights or obligations
     convertible into or exercisable or exchangeable for, or giving any Person
     any right to subscribe for or acquire, any shares of Common Stock, or
     contracts, commitments, understandings or arrangements by which the Company
     or any Subsidiary is or may become bound to issue additional shares of
     Common Stock or Common Stock Equivalents. The issuance and sale of the
     Securities will not obligate the Company to issue shares of Common Stock or
     other securities to any Person (other than the Purchasers) and will not
     result in a right of any holder of Company securities to adjust the
     exercise, conversion, exchange or reset price under such securities. All of
     the outstanding shares of capital stock of the Company are validly issued,
     fully paid and nonassessable, have been issued in compliance with all
     foreign, federal and state securities laws, and none of such outstanding
     shares was issued in violation of any preemptive rights or similar rights
     to subscribe for or purchase securities. No further approval or
     authorization of any stockholder, the Board of Directors of the Company or
     others is required for the issuance and sale of the Securities. There are
     no stockholders agreements, voting agreements or other similar agreements
     with respect to the Company's capital stock to which the Company is a party
     or, to the knowledge of the Company, between or among any of the Company's
     stockholders.

          (h) Financial Statements. The audited financial statements of the
     Company and its Subsidiaries for their last two fiscal years and unaudited
     statements for the most recent fiscal quarter have been delivered to each
     Purchaser. Such financial statements have been prepared in accordance with
     United States generally accepted accounting principles applied on a
     consistent basis during the periods involved ("GAAP"), except as may be
     otherwise specified in such financial statements or the notes thereto and
     except that unaudited financial statements may not contain all footnotes
     required by GAAP, and fairly present in all material respects the financial
     condition of the Company and its consolidated Subsidiaries as of and for
     the dates thereof and the results of operations and cash flows for the
     periods then ended, subject, in the case of unaudited statements, to
     normal, immaterial, year-end audit adjustments.

          (i) Material Changes. Since the date of the Company's latest audited
     financial statements (i) there has been no event, occurrence or development
     that has had

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     or that could reasonably be expected to result in a Material Adverse
     Effect, (ii) the Company has not incurred any liabilities (contingent or
     otherwise) other than (A) trade payables and accrued expenses incurred in
     the ordinary course of business consistent with past practice and (B)
     liabilities not required to be reflected in the Company's financial
     statements pursuant to GAAP or required to be disclosed in filings made
     with the Commission, (iii) the Company has not altered its method of
     accounting, (iv) the Company has not declared or made any dividend or
     distribution of cash or other property to its stockholders other than as
     set forth on Schedule 3.1(i) or purchased, redeemed or made any agreements
     to purchase or redeem any shares of its capital stock and (v) the Company
     has not issued any equity securities to any officer, director or Affiliate,
     except pursuant to existing Company stock option plans. The Company does
     not have pending before the Commission any request for confidential
     treatment of information.

          (j) Litigation. There is no action, suit, inquiry, notice of
     violation, proceeding or investigation pending or, to the knowledge of the
     Company, threatened against or affecting the Company, any Subsidiary or any
     of their respective properties before or by any court, arbitrator,
     governmental or administrative agency or regulatory authority (federal,
     state, county, local or foreign) (collectively, an "Action") which (i)
     adversely affects or challenges the legality, validity or enforceability of
     any of the Transaction Documents or the Securities or (ii) could, if there
     were an unfavorable decision, have or reasonably be expected to result in a
     Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
     director or officer thereof, is or has been the subject of any Action
     involving a claim of violation of or liability under foreign, federal or
     state securities laws or a claim of breach of fiduciary duty. There has not
     been, and to the knowledge of the Company, there is not pending or
     contemplated, any investigation by the Commission involving the Company or
     any current or former director or officer of the Company.

          (k) Labor Relations. No material labor dispute exists or, to the
     knowledge of the Company, is imminent with respect to any of the employees
     of the Company which could reasonably be expected to result in a Material
     Adverse Effect.

          (l) Compliance. Neither the Company nor any Subsidiary (i) is in
     default under or in violation of (and no event has occurred that has not
     been waived that, with notice or lapse of time or both, would result in a
     default by the Company or any Subsidiary under), nor has the Company or any
     Subsidiary received notice of a claim that it is in default under or that
     it is in violation of, any indenture, loan or credit agreement or any other
     agreement or instrument to which it is a party or by which it or any of its
     properties is bound (whether or not such default or violation has been
     waived), (ii) is in violation of any order of any court, arbitrator or
     governmental body, or (iii) is or has been in violation of any statute,
     rule or regulation of any governmental authority, including without
     limitation all foreign, federal, state and local laws applicable to its
     business except in each case as could not have a Material Adverse Effect.

          (m) Regulatory Permits. The Company and the Subsidiaries possess all
     certificates, authorizations and permits issued by the appropriate federal,
     state, local or foreign regulatory authorities necessary to conduct their
     respective businesses as

                                       11

<PAGE>

     presently conducted and contemplated to be conducted in the near future,
     except where the failure to possess such permits could not have or
     reasonably be expected to result in a Material Adverse Effect ("Material
     Permits"), and neither the Company nor any Subsidiary has received any
     notice of proceedings relating to the revocation or modification of any
     Material Permit.

          (n) Title to Assets. The Company and the Subsidiaries have good and
     marketable title in fee simple to all real property owned by them that is
     material to the business of the Company and the Subsidiaries and good and
     marketable title in all personal property owned by them that is material to
     the business of the Company and the Subsidiaries, in each case free and
     clear of all Liens, except for Liens as do not materially affect the value
     of such property and do not materially interfere with the use made and
     proposed to be made of such property by the Company and the Subsidiaries
     and Liens for the payment of foreign, federal, state or other taxes, the
     payment of which is neither delinquent nor subject to penalties. Any real
     property and facilities held under lease by the Company and the
     Subsidiaries are held by them under valid, subsisting and enforceable
     leases with which the Company and the Subsidiaries are in compliance.

          (o) Patents and Trademarks. The Company and the Subsidiaries have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications, service marks, trade names, copyrights, licenses and other
     similar rights necessary or material for use in connection with their
     respective businesses and which the failure to so have could have a
     Material Adverse Effect (collectively, the "Intellectual Property Rights").
     Neither the Company nor any Subsidiary has received a written notice that
     the Intellectual Property Rights used by the Company or any Subsidiary
     violates or infringes upon the rights of any Person. To the knowledge of
     the Company, all such Intellectual Property Rights are enforceable and
     there is no existing infringement by another Person of any of the
     Intellectual Property Rights of the Company or any of the Subsidiaries.

          (p) Insurance. The Company and the Subsidiaries are insured by
     insurers of recognized financial responsibility against such losses and
     risks and in such amounts as are prudent and customary in the businesses in
     which the Company and the Subsidiaries are engaged. To the best knowledge
     of the Company, such insurance contracts and policies are accurate and
     complete. Neither the Company nor any 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 without a significant
     increase in cost.

          (q) Transactions With Affiliates and Employees. Other than as set
     forth on Schedule 3.1(q), none of the officers or directors of the Company
     and, to the knowledge of the Company, none of the employees of the Company
     is presently a party to any transaction with the Company or any Subsidiary
     (other than for services as employees, officers and directors), including
     any contract, agreement or other arrangement providing for the furnishing
     of services to or by, providing for rental of real or personal property to
     or from, or otherwise requiring payments to or from any officer, director
     or such employee or, to the knowledge of the Company, any entity in which
     any officer, director, or any such employee has a substantial interest or
     is an officer, director, trustee or

                                       12

<PAGE>

     partner, in each case in excess of $60,000 other than (i) for payment of
     salary or consulting fees for services rendered, (ii) reimbursement for
     expenses incurred on behalf of the Company and (iii) for other employee
     benefits, including stock option agreements under any stock option plan of
     the Company.

          (r) Internal Accounting Controls. The Company and the Subsidiaries
     maintain a system of internal accounting controls sufficient to provide
     reasonable assurance that (i) transactions are executed in accordance with
     management's general or specific authorizations, (ii) transactions are
     recorded as necessary to permit preparation of financial statements in
     conformity with GAAP and to maintain asset accountability, (iii) access to
     assets is permitted only in accordance with management's general or
     specific authorization, and (iv) the recorded accountability for assets is
     compared with the existing assets at reasonable intervals and appropriate
     action is taken with respect to any differences.

          (s) Certain Fees. Except with respect to Roth Capital LLC and Poseidon
     Capital Corp., no brokerage or finder's fees or commissions are or will be
     payable by the Company to any broker, financial advisor or consultant,
     finder, placement agent, investment banker, bank or other Person with
     respect to the transactions contemplated by the Transaction Documents. The
     Purchasers shall have no obligation with respect to any fees or with
     respect to any claims made by or on behalf of other Persons for fees of a
     type contemplated in this Section that may be due in connection with the
     transactions contemplated by the Transaction Documents.

          (t) Private Placement. Assuming the accuracy of the Purchasers
     representations and warranties set forth in Section 3.2, no registration
     under the Securities Act is required for the offer and sale of the
     Securities by the Company to the Purchasers as contemplated hereby.

          (u) Investment Company. The Company is not, and is not an Affiliate
     of, and immediately after receipt of payment for the Securities, will not
     be or be an Affiliate of, an "investment company" within the meaning of the
     Investment Company Act of 1940, as amended. The Company shall conduct its
     business in a manner so that it will not become subject to the Investment
     Company Act.

          (v) Registration Rights. Other than each of the Purchasers, no Person
     has any right to cause the Company to effect the registration under the
     Securities Act of any securities of the Company.

          (w) Application of Takeover Protections. The Company and its Board of
     Directors have taken all necessary action, if any, in order to render
     inapplicable any control share acquisition, business combination, poison
     pill (including any distribution under a rights agreement) or other similar
     anti-takeover provision under the Company's Certificate of Incorporation
     (or similar charter documents) or the laws of its state of incorporation
     that is or could become applicable to the Purchasers as a result of the
     Purchasers and the Company fulfilling their obligations or exercising their
     rights under

                                       13

<PAGE>

     the Transaction Documents, including without limitation as a result of the
     Company's issuance of the Securities and the Purchasers' ownership of the
     Securities.

          (x) Disclosure. All disclosure provided to the Purchasers regarding
     the Company, its business and the transactions contemplated hereby,
     including the Disclosure Schedules to this Agreement, furnished by or on
     behalf of the Company with respect to the representations and warranties
     made herein are true and correct in all material respects with respect to
     such representations and warranties and do not contain any untrue statement
     of a material fact or omit to state any material fact necessary in order to
     make the statements made therein, in light of the circumstances under which
     they were made, not misleading. The Company acknowledges and agrees that no
     Purchaser makes or has made any representations or warranties with respect
     to the transactions contemplated hereby other than those specifically set
     forth in Section 3.2 hereof.

          (y) No Integrated Offering. Assuming the accuracy of the Purchasers'
     representations and warranties set forth in Section 3.2, neither the
     Company, nor any of its affiliates, nor any Person acting on its or their
     behalf has, directly or indirectly, made any offers or sales of any
     security or solicited any offers to buy any security, under circumstances
     that would cause this offering of the Securities to be integrated with
     prior offerings by the Company for purposes of the Securities Act.

          (z) Solvency. Based on the financial condition of the Company as of
     the Closing Date after giving effect to the receipt by the Company of the
     proceeds from the sale of the Securities hereunder, (i) the Company's fair
     saleable value of its assets exceeds the amount that will be required to be
     paid on or in respect of the Company's existing debts and other liabilities
     (including known contingent liabilities) as they mature; (ii) the Company's
     assets do not constitute unreasonably small capital to carry on its
     business for the current fiscal year as now conducted and as proposed to be
     conducted including its capital needs taking into account the particular
     capital requirements of the business conducted by the Company, and
     projected capital requirements and capital availability thereof; and (iii)
     the current cash flow of the Company, together with the proceeds the
     Company would receive, were it to liquidate all of its assets, after taking
     into account all anticipated uses of the cash, would be sufficient to pay
     all amounts on or in respect of its debt when such amounts are required to
     be paid. The Company does not intend to incur debts beyond its ability to
     pay such debts as they mature (taking into account the timing and amounts
     of cash to be payable on or in respect of its debt). The Company has no
     knowledge of any facts or circumstances which lead it to believe that it
     will file for reorganization or liquidation under the bankruptcy or
     reorganization laws of any jurisdiction within one year from the Closing
     Date. The financial statements delivered to the Purchasers set forth as of
     the dates thereof all outstanding secured and unsecured Indebtedness of the
     Company or any Subsidiary, or for which the Company or any Subsidiary has
     commitments. For the purposes of this Agreement, "Indebtedness" shall mean
     (a) any liabilities for borrowed money or amounts owed in excess of $50,000
     (other than trade accounts payable incurred in the ordinary course of
     business), (b) all guaranties, endorsements and other contingent
     obligations in respect of Indebtedness of others, whether or not the same
     are or should be reflected in the Company's balance sheet (or the notes
     thereto), except guaranties by endorsement of negotiable instruments for

                                       14

<PAGE>

     deposit or collection or similar transactions in the ordinary course of
     business; and (c) the present value of any lease payments in excess of
     $50,000 due under leases required to be capitalized in accordance with
     GAAP. Neither the Company nor any Subsidiary is in default with respect to
     any Indebtedness.

          (aa) Tax Status. Except for matters that would not, individually or in
     the aggregate, have or reasonably be expected to result in a Material
     Adverse Effect, the Company and each Subsidiary has filed all necessary
     federal, state and foreign income and franchise tax returns and has paid or
     accrued all taxes shown as due thereon, and the Company has no knowledge of
     a tax deficiency which has been asserted or threatened against the Company
     or any Subsidiary.

          (bb) No General Solicitation. Neither the Company nor any person
     acting on behalf of the Company has offered or sold any of the Securities
     by any form of general solicitation or general advertising. The Company has
     offered the Securities for sale only to the Purchasers and certain other
     "accredited investors" within the meaning of Rule 501 under the Securities
     Act.

          (cc) Foreign Corrupt Practices. Neither the Company, nor to the
     knowledge of the Company, any agent or other person acting on behalf of the
     Company, has (i) directly or indirectly, used any funds for unlawful
     contributions, gifts, entertainment or other unlawful expenses related to
     foreign or domestic political activity, (ii) made any unlawful payment to
     foreign or domestic government officials or employees or to any foreign or
     domestic political parties or campaigns from corporate funds, (iii) failed
     to disclose fully any contribution made by the Company (or made by any
     person acting on its behalf of which the Company is aware) which is in
     violation of law, or (iv) violated in any material respect any provision of
     the Foreign Corrupt Practices Act of 1977, as amended.

          (dd) Accountants. The Company's accountants are Deloitte & Touche. To
     the knowledge of the Company, such accountants, who the Company expects
     will express their opinion with respect to the financial statements to be
     included in the Company's registration statement on Form F-1 or F-4 to be
     filed in connection with the Merger, are a registered public accounting
     firm as required by the Securities Act.

          (ee) Acknowledgment Regarding Purchasers' Purchase of Securities. The
     Company acknowledges and agrees that each of the Purchasers is acting
     solely in the capacity of an arm's length purchaser with respect to the
     Transaction Documents and the transactions contemplated hereby. The Company
     further acknowledges that no Purchaser is acting as a financial advisor or
     fiduciary of the Company (or in any similar capacity) with respect to this
     Agreement and the transactions contemplated hereby and any advice given by
     any Purchaser or any of their respective representatives or agents in
     connection with this Agreement and the transactions contemplated hereby is
     merely incidental to the Purchasers' purchase of the Securities. The
     Company further represents to each Purchaser that the Company's decision to
     enter into this Agreement has been based solely on the independent
     evaluation of the transactions contemplated hereby by the Company and its
     representatives.

                                       15

<PAGE>

          (ff) Acknowledgement Regarding Purchasers' Trading Activity. Anything
     in this Agreement or elsewhere herein to the contrary notwithstanding
     (except for Section 4.14 hereof), it is understood and agreed by the
     Company (i) that none of the Purchasers have been asked to agree, nor has
     any Purchaser agreed, to desist from purchasing or selling, long and/or
     short, securities of the Company, or "derivative" securities based on
     securities issued by the Company or to hold the Securities for any
     specified term; (ii) that future open market or other transactions by any
     Purchaser, including Short Sales, and specifically including, without
     limitation, Short Sales or "derivative" transactions, after the closing of
     this or future private placement transactions, may negatively impact the
     market price of the Company's publicly-traded securities; (iii) that any
     Purchaser, and counter parties in "derivative" transactions to which any
     such Purchaser is a party, directly or indirectly, may create a "short"
     position in the Common Stock, and (iv) that each Purchaser shall not be
     deemed to have any affiliation with or control over any arm's length
     counter-party in any "derivative" transaction. The Company further
     understands and acknowledges that (a) one or more Purchasers may engage in
     hedging activities at various times during the period that the Securities
     are outstanding and (b) such hedging activities (if any) could reduce the
     value of the existing stockholders' equity interests in the Company at and
     after the time that the hedging activities are being conducted. The Company
     acknowledges that such aforementioned hedging activities do not constitute
     a breach of any of the Transaction Documents.

     3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

          (a) Organization; Authority. Such Purchaser is an entity duly
     organized, validly existing and in good standing under the laws of the
     jurisdiction of its organization with full right, corporate or partnership
     power and authority to enter into and to consummate the transactions
     contemplated by the Transaction Documents and otherwise to carry out its
     obligations hereunder and thereunder. The execution, delivery and
     performance by such Purchaser of the transactions contemplated by this
     Agreement have been duly authorized by all necessary corporate or similar
     action on the part of such Purchaser. Each Transaction Document to which it
     is a party has been duly executed by such Purchaser, and when delivered by
     such Purchaser in accordance with the terms hereof, will constitute the
     valid and legally binding obligation of such Purchaser, enforceable against
     it in accordance with its terms, except (i) as limited by general equitable
     principles and applicable bankruptcy, insolvency, reorganization,
     moratorium and other laws of general application affecting enforcement of
     creditors' rights generally, (ii) as limited by laws relating to the
     availability of specific performance, injunctive relief or other equitable
     remedies and (iii) insofar as indemnification and contribution provisions
     may be limited by applicable law.

          (b) Own Account. Such Purchaser understands that the Securities are
     "restricted securities" and have not been registered under the Securities
     Act or any applicable state securities law and is acquiring the Securities
     as principal for its own account and not with a view to or for distributing
     or reselling such Securities or any part thereof in violation of the
     Securities Act or any applicable state securities law, has no

                                       16

<PAGE>

     present intention of distributing any of such Securities in violation of
     the Securities Act or any applicable state securities law and has no
     arrangement or understanding with any other Persons regarding the
     distribution of such Securities (this representation and warranty not
     limiting such Purchaser's right to sell the Securities pursuant to the
     Registration Statement or otherwise in compliance with applicable foreign,
     federal and state securities laws) in violation of the Securities Act or
     any applicable state securities law. Such Purchaser is acquiring the
     Securities hereunder in the ordinary course of its business. Such Purchaser
     does not have any agreement or understanding, directly or indirectly, with
     any Person to distribute any of the Securities.

          (c) Purchaser Status. At the time such Purchaser was offered the
     Securities, it was, and at the date hereof it is, and on each date on which
     it exercises any Warrants, it will be either: (i) an "accredited investor"
     as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
     Securities Act or (ii) a "qualified institutional buyer" as defined in Rule
     144A(a) under the Securities Act. Such Purchaser is not required to be
     registered as a broker-dealer under Section 15 of the Exchange Act.

          (d) Experience of Such Purchaser. Such Purchaser, either alone or
     together with its representatives, has such knowledge, sophistication and
     experience in business and financial matters so as to be capable of
     evaluating the merits and risks of the prospective investment in the
     Securities, and has so evaluated the merits and risks of such investment.
     Such Purchaser is able to bear the economic risk of an investment in the
     Securities and, at the present time, is able to afford a complete loss of
     such investment.

          (e) General Solicitation. Such Purchaser is not purchasing the
     Securities as a result of any advertisement, article, notice or other
     communication regarding the Securities published in any newspaper, magazine
     or similar media or broadcast over television or radio or presented at any
     seminar or any other general solicitation or general advertisement.

          (f) Certain Trading Activities. Such Purchaser has not directly or
     indirectly, nor has any Person acting on behalf of or pursuant to any
     understanding with such Purchaser, engaged in any transactions in the
     securities of the Company or Shellco (collectively for purposes hereof, the
     "Company") (including, without limitations, any Short Sales involving the
     Company's securities) since the time that such Purchaser was first
     contacted by the Company, Roth Capital Partners, LLC or any other Person
     regarding an investment in the Company (as to each Purchaser, the "Contact
     Date"). Such Purchaser covenants that neither it nor any Person acting on
     its behalf or pursuant to any understanding with it will engage in any
     transactions in the securities of the Company (including Short Sales) prior
     to the time that the transactions contemplated by this Agreement are
     publicly disclosed by the Company. Such Purchaser has maintained, and
     covenants that until such time as the transactions contemplated by this
     Agreement are publicly disclosed by the Company such Purchaser will
     maintain, the confidentiality of all disclosures made to it in connection
     with this transaction (including the existence and terms of this
     transaction). Notwithstanding the foregoing, in the case of a Purchaser
     that is a multi-managed investment vehicle whereby separate portfolio
     managers manage separate portions of such Purchaser's assets and the
     portfolio managers have no direct

                                       17

<PAGE>

     knowledge of the investment decisions made by the portfolio managers
     managing other portions of such Purchaser's assets, the representation set
     forth above shall only apply with respect to the portion of assets managed
     by the portfolio manager that made the investment decision to purchase the
     Securities covered by this Agreement. Other than to other Persons party to
     this Agreement, such Purchaser has maintained the confidentiality of all
     disclosures made to it in connection with this transaction (including the
     existence and terms of this transaction).

     The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) The Securities may only be disposed of in compliance with state
     and federal securities laws. In connection with any transfer of Securities
     other than pursuant to an effective registration statement or Rule 144, to
     the Company or to an affiliate of a Purchaser or in connection with a
     pledge as contemplated in Section 4.1(b), the Company may require the
     transferor thereof to provide to the Company an opinion of counsel selected
     by the transferor and reasonably acceptable to the Company, the form and
     substance of which opinion shall be reasonably satisfactory to the Company,
     to the effect that such transfer does not require registration of such
     transferred Securities under the Securities Act. As a condition of
     transfer, any such transferee shall agree in writing to be bound by the
     terms of this Agreement and shall have the rights of a Purchaser under this
     Agreement and the Registration Rights Agreement.

          (b) The Purchasers agree to the imprinting, so long as is required by
     this Section 4.1(b), of a legend on any of the Securities in the following
     form:

          THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
          EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
          RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
          BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
          STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
          EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
          STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
          THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
          REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED
          IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT

                                       18

<PAGE>

          WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
          INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)
          UNDER THE SECURITIES ACT.

          The Company acknowledges and agrees that a Purchaser may from time to
     time pledge pursuant to a bona fide margin agreement with a registered
     broker-dealer or grant a security interest in some or all of the Securities
     to a financial institution that is an "accredited investor" as defined in
     Rule 501(a) under the Securities Act and who agrees to be bound by the
     provisions of this Agreement and the Registration Rights Agreement and, if
     required under the terms of such arrangement, such Purchaser may transfer
     pledged or secured Securities to the pledgees or secured parties. Such a
     pledge or transfer would not be subject to approval of the Company and no
     legal opinion of legal counsel of the pledgee, secured party or pledgor
     shall be required in connection therewith. Further, no notice shall be
     required of such pledge. At the appropriate Purchaser's expense, the
     Company will execute and deliver such reasonable documentation as a pledgee
     or secured party of Securities may reasonably request in connection with a
     pledge or transfer of the Securities, including, if the Securities are
     subject to registration pursuant to the Registration Rights Agreement, the
     preparation and filing of any required prospectus supplement under Rule
     424(b)(3) under the Securities Act or other applicable provision of the
     Securities Act to appropriately amend the list of Selling Stockholders
     thereunder.

          (c) Certificates evidencing the Shares and the Warrant Shares shall
     not contain any legend (including the legend set forth in Section 4.1(b)),
     (i) while a registration statement (including the Registration Statement)
     covering the resale of such security is effective under the Securities Act,
     or (ii) following any sale of such Shares or Warrant Shares pursuant to
     Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale
     under Rule 144(k), or (iv) if such legend is not required under applicable
     requirements of the Securities Act (including judicial interpretations and
     pronouncements issued by the staff of the Commission). The Company shall
     cause its counsel to issue a legal opinion to the Company's transfer agent
     promptly after the Effective Date if required by the Company's transfer
     agent to effect the removal of the legend hereunder. If all or any portion
     of a Warrant is exercised at a time when there is an effective registration
     statement to cover the resale of the Warrant Shares, such Warrant Shares
     shall be issued free of all legends. The Company agrees that following the
     Effective Date or at such time as such legend is no longer required under
     this Section 4.1(c), it will, no later than three Trading Days following
     the delivery by a Purchaser to the Company or the Company's transfer agent
     of a certificate representing Shares or Warrant Shares, as the case may be,
     issued with a restrictive legend (such third Trading Day, the "Legend
     Removal Date"), deliver or cause to be delivered to such Purchaser a
     certificate representing such shares that is free from all restrictive and
     other legends. The Company may not make any notation on its records or give
     instructions to any transfer agent of the Company that enlarge the
     restrictions on transfer set forth in this Section. Certificates for
     Securities subject to legend removal hereunder shall be transmitted by the
     transfer agent of the Company to the Purchasers by crediting the account of
     the Purchaser's prime broker with the Depository Trust Company System.

                                       19

<PAGE>

          (d) In addition to such Purchaser's other available remedies, the
     Company shall pay to a Purchaser, in cash, as partial liquidated damages
     and not as a penalty, for each $1,000 of Shares or Warrant Shares (based on
     the Closing Price of the Common Stock on the date such Securities are
     submitted to the Company's transfer agent) delivered for removal of the
     restrictive legend and subject to Section 4.1(c), $10 per Trading Day
     (increasing to $20 per Trading Day five (5) Trading Days after such damages
     have begun to accrue) for each Trading Day after the Legend Removal Date
     until such certificate is delivered without a legend. Nothing herein shall
     limit such Purchaser's right to pursue actual damages for the Company's
     failure to deliver certificates representing any Securities as required by
     the Transaction Documents, and such Purchaser shall have the right to
     pursue all remedies available to it at law or in equity including, without
     limitation, a decree of specific performance and/or injunctive relief.

          (e) Each Purchaser, severally and not jointly with the other
     Purchasers, agrees that the removal of the restrictive legend from
     certificates representing Securities as set forth in this Section 4.1 is
     predicated upon the Company's reliance that the Purchaser will sell any
     Securities pursuant to either the registration requirements of the
     Securities Act, including any applicable prospectus delivery requirements,
     or an exemption therefrom.

     4.2 Furnishing of Information/Exchange Act Registration. The Company hereby
agrees to file a registration statement on Form 8-A registering its Common Stock
under the Exchange Act contemporaneously with its filing of a request with the
Commission to accelerate effectiveness of its registration statement on Form F-1
or F-4. As long as any Purchaser owns Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to the Purchasers and make publicly
available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

     4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

     4.4 Securities Laws Disclosure; Publicity. The Company shall use its
commercially reasonable efforts to cause Shellco, within four Trading Days
following the date of execution of the Merger Agreement, to issue a Current
Report on Form 8-K disclosing the material terms of

                                       20

<PAGE>

the transactions contemplated hereby and attaching the Transaction Documents and
the merger agreement and all other material documents executed and delivered in
connection with the Merger thereto. The Company and FW shall consult with each
other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or
without the prior consent of FW, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under subclause
(i) or (ii).

     4.5 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

     4.6 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information after the date hereof, unless prior thereto such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information (it being expressly acknowledged and agreed by the
Company that no Purchaser shall have any material non-public information
regarding the Company or any of its Subsidiaries immediately after the first
public disclosure (as described in Section 4.4) of the transactions contemplated
by this Agreement). The Company understands and confirms that each Purchaser
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.

     4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto
with respect to the payment of debt on vessels owned by the Subsidiaries, the
Company shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade payables in the ordinary course of
the Company's business and prior practices), to redeem any Common Stock or
Common Stock Equivalents or to settle any outstanding litigation.

     4.8 Reimbursement. If any Purchaser becomes involved in any capacity in any
Proceeding by or against any Person who is a stockholder of the Company (except
as a result of sales, pledges, margin sales and similar transactions by such
Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this

                                       21

<PAGE>

Agreement, the Company will reimburse such Purchaser for its reasonable legal
and other expenses (including the cost of any investigation preparation and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of any
of the Purchasers who are actually named in such Proceeding, and partners,
directors, managers, members, agents, employees and controlling Persons (if
any), as the case may be, of the Purchasers and any such Affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchasers and any such Affiliate
and any such Person. The Company also agrees that neither the Purchasers nor any
such Affiliates, partners, directors, managers, members, agents, employees or
controlling Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.

     4.9 Indemnification of Purchasers. Subject to the provisions of this
Section 4.9, the Company will indemnify and hold the Purchasers and their
respective directors, officers, shareholders, managers, members, partners,
employees and agents (each, a "Purchaser Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser, or any of them or their respective Affiliates,
by any stockholder of the Company who is not an Affiliate of such Purchaser,
with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser's
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser may have with any such stockholder
or any violations by the Purchaser of foreign, state or federal securities laws
or any conduct by such Purchaser which constitutes fraud, gross negligence,
willful misconduct or malfeasance). The foregoing indemnities shall not apply to
any Purchaser who is a principal of Shellco. If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.

                                       22

<PAGE>

     4.10 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

     4.11 Listing of Common Stock. The Company hereby agrees to file an
application for the listing of the Common Stock on either the New York Stock
Exchange or the Nasdaq National Market within 15 days following the date that it
files the Registration Statement and to use its commercially reasonable efforts
to obtain a listing of the Common Stock thereon. The Company further agrees to
use best efforts to obtain and maintain the listing of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Closing (but
not later than the first anniversary of the Closing Date) to list all of the
Shares and Warrant Shares on such Trading Market. The Company further agrees, if
the Company applies to have the Common Stock traded on any other Trading Market,
it will include in such application all of the Shares and Warrant Shares, and
will take such other action as is necessary to cause all of the Shares and
Warrant Shares to be listed on such other Trading Market as promptly as
possible. The Company will take all action reasonably necessary to obtain and
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

     4.12 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended for the Company to treat the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

     4.13 Subsequent Equity Sales.

          (a) From the date hereof until two years from the Closing Date, the
     Company shall be prohibited from effecting or entering into an agreement to
     effect any financing by the Company or any of its Subsidiaries of Common
     Stock or Common Stock Equivalents involving a "Variable Rate Transaction".
     The term "Variable Rate Transaction" shall mean a transaction in which the
     Company issues or sells (i) any debt or equity securities that are
     convertible into, exchangeable or exercisable for, or include the right to
     receive additional shares of Common Stock either (A) at a conversion,
     exercise or exchange rate or other price that is based upon and/or varies
     with the trading prices of or quotations for the shares of Common Stock at
     any time after the initial issuance of such debt or equity securities, or
     (B) with a conversion, exercise or exchange price that is subject to being
     reset at some future date after the initial issuance of such debt or equity
     security or upon the occurrence of specified or contingent events directly
     or indirectly related to the business of the Company or the market for the
     Common Stock or (ii) enters into any agreement, including, but not limited
     to, an equity line of credit, whereby the Company may sell securities at a
     future determined price. Any Purchaser shall be entitled to obtain

                                       23

<PAGE>

     injunctive relief against the Company to preclude any such issuance, which
     remedy shall be in addition to any right to collect damages.

          (b) Notwithstanding the foregoing, this Section 4.13 shall not apply
     in respect of an Exempt Issuance, except that no Variable Rate Transaction
     shall be an Exempt Issuance.

     4.14 Short Sales and Confidentiality after the date Hereof. Each Purchaser
severally and not jointly with the other Purchasers covenants that neither it
nor any Affiliates acting on its behalf or pursuant to any understanding with it
will execute any Short Sales during the period commencing from the Contact Date
and ending at the time that the transactions contemplated by this Agreement are
first publicly announced as described in Section 4.4. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.4, such Purchaser will maintain, the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser, that the Commission currently takes the position that coverage of
short sales of shares of the Common Stock "against the box" prior to the
Effective Date of the Registration Statement with the Securities is a violation
of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance. Notwithstanding the foregoing, no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced as described in Section 4.4.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

     4.15 Delivery of Securities After Closing. The Company shall deliver, or
cause to be delivered, the respective Securities purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

                                   ARTICLE V.
                                  MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before
August 15, 2005; provided, however, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

                                       24

<PAGE>

     5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse
Bonanza Master Fund Ltd. ("Bonanza") the non-accountable sum of $20,000, for its
actual, reasonable, out-of-pocket legal fees and expenses. Accordingly, in lieu
of the foregoing payments, the aggregate amount that Bonanza is to pay for the
Securities at the Closing shall be reduced by $20,000 in lieu thereof. The
Company shall deliver, prior to the Closing, a completed and executed copy of
the Closing Statement, attached hereto as Annex A. Except as expressly set forth
in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance and delivery of any Securities except for
transfer taxes in connection with the transfer of the Securities to any Person
other than the Purchasers hereto.

     5.3 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via confirmed facsimile at the
facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the
signature pages attached hereto.

     5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

     5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

                                       25

<PAGE>

     5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".

     5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

     5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. Without limiting any other provision of this
Agreement, if either party shall commence an action or proceeding to enforce any
provisions of the Transaction Documents, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its reasonable
attorneys' fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

     5.10 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Shares and Warrant Shares for a
period equal to the applicable statute of limitations.

     5.11 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it

                                       26

<PAGE>

being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.

     5.12 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

     5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

     5.14 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

     5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

     5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

                                       27

<PAGE>

     5.17 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only Bonanza. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.

     5.18 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

     5.19 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Pages Follow)

                                       28

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

EUROSEAS LTD.                                Address for Notice:

By:
    ------------------------------------
    Name:
    Title:

With a copy to (which shall not constitute notice):

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       29

<PAGE>

      [PURCHASER SIGNATURE PAGES TO EUROSEAS SECURITIES PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of Purchaser: _____________________________________________________________
Signature of Authorized Signatory of Purchaser: ________________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Purchaser: ____________________________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount:
Shares:
Warrant Shares:
EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       30

<PAGE>

                                                                         ANNEX A

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $50,000,000 of Common Stock from
Euroseas Ltd. (the "Company"). All funds will be wired into an escrow account
maintained by Wells Fargo Bank, N.A.. All funds will be disbursed in accordance
with this Closing Statement.

DISBURSEMENT DATE: August ___, 2005

I. PURCHASE PRICE

                    GROSS PROCEEDS TO BE RECEIVED IN ESCROW   $

II. DISBURSEMENTS

                                                              $
                                                              $
                                                              $
                                                              $
                                                              $

TOTAL AMOUNT DISBURSED:                                       $

WIRE INSTRUCTIONS:

To: _____________________________________

To: _____________________________________

                                       31<PAGE>

                                                                     Exhibit 4.3

                          REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this "Agreement") is made and
entered into as of August [___, 2005, among Euroseas Ltd., a Marshall Islands
corporation (the "Company"), and the purchasers signatory hereto (each such
purchaser is a "Purchaser" and collectively, the "Purchasers").

          This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").

          The Company and the Purchasers hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

          "Advice" shall have the meaning set forth in Section 6(d).

          "Effectiveness Date" means, with respect to the Registration Statement
     required to be filed hereunder, the 130th calendar day following the date
     hereof; provided, however, in the event the Company is notified by the
     Commission that the Registration Statement will not be reviewed or is no
     longer subject to further review and comments, the Effectiveness Date as to
     the Registration Statement shall be the fifth Trading Day following the
     date on which the Company is so notified if such date precedes the date
     required above.

          "Effectiveness Period" shall have the meaning set forth in Section
     2(a).

          "Event" shall have the meaning set forth in Section 2(b).

          "Event Date" shall have the meaning set forth in Section 2(b).

          "Filing Date" means, with respect to the Registration Statement
     required hereunder, the 60th calendar day following the date hereof.

          "Holder" or "Holders" means the holder or holders, as the case may be,
     from time to time of Registrable Securities.

          "Indemnified Party" shall have the meaning set forth in Section 5(c).

          "Indemnifying Party" shall have the meaning set forth in Section 5(c).

          "Losses" shall have the meaning set forth in Section 5(a).

          "Plan of Distribution" shall have the meaning set forth in Section
     2(a).

                                        1

<PAGE>

          "Proceeding" means an action, claim, suit, investigation or proceeding
     (including, without limitation, an investigation or partial proceeding,
     such as a deposition), whether commenced or threatened.

          "Prospectus" means the prospectus included in the Registration
     Statement (including, without limitation, a prospectus that includes any
     information previously omitted from a prospectus filed as part of an
     effective registration statement in reliance upon Rule 430A promulgated
     under the Securities Act), as amended or supplemented by any prospectus
     supplement, with respect to the terms of the offering of any portion of the
     Registrable Securities covered by the Registration Statement, and all other
     amendments and supplements to the Prospectus, including post-effective
     amendments, and all material incorporated by reference or deemed to be
     incorporated by reference in such Prospectus.

          "Registrable Securities" means all of (i) the Shares, (ii) the Warrant
     Shares issuable and (iii) any shares of Common Stock issued or issuable
     upon any stock split, dividend or other distribution, recapitalization or
     similar event with respect to the foregoing.

          "Registration Statement" means the registration statement required to
     be filed hereunder, including the Prospectus, amendments and supplements to
     such registration statement or Prospectus, including pre- and
     post-effective amendments, all exhibits thereto, and all material
     incorporated by reference or deemed to be incorporated by reference in such
     registration statement.

          "Rule 415" means Rule 415 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same purpose and effect as such Rule.

          "Rule 424" means Rule 424 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same purpose and effect as such Rule.

          "Selling Shareholder Questionnaire" shall have the meaning set forth
     in Section 3(a).

     2. Registration.

          (a) On or prior to the Filing Date, the Company shall prepare and file
     with the Commission the Registration Statement covering the resale of all
     of the Registrable Securities on such Filing Date for an offering to be
     made on a continuous basis pursuant to Rule 415. The Registration Statement
     shall be on Form F-1 (except if the Company is not then eligible to
     register for resale the Registrable Securities on Form F-1, in which case
     such registration shall be on another appropriate form in accordance
     herewith) and shall contain (unless otherwise directed by the Holders)
     substantially the "Plan of Distribution" attached hereto as Annex A.
     Subject to the terms of this Agreement, the Company shall use its best
     efforts to cause the Registration Statement to be declared

                                        2

<PAGE>

     effective under the Securities Act as promptly as possible after the filing
     thereof, but in any event prior to the Effectiveness Date, and shall use
     its best efforts to keep the Registration Statement continuously effective
     under the Securities Act until the earlier of (i) two years following the
     Effectiveness Date and (ii) such time as all Registrable Securities covered
     by the Registration Statement have been sold or may be sold without volume
     restrictions pursuant to Rule 144(k) as determined by the counsel to the
     Company pursuant to a written opinion letter to such effect, addressed and
     acceptable to the Company's transfer agent and the affected Holders (the
     "Effectiveness Period"). The Company shall immediately notify the Holders
     via facsimile or email of the effectiveness of the Registration Statement
     on the same Trading Day that the Company confirms effectiveness with the
     Commission. The Company shall, by 9:30 am Eastern Time on the Trading Day
     after the Effective Date (as defined in the Purchase Agreement), file a
     Form 424(b)(5) with the Commission. Failure to so notify the Holder within
     1 Trading Day of such notification shall be deemed an Event under Section
     2(b).

          (b) If: (i) the Registration Statement is not filed on or prior to the
     Filing Date (if the Company files the Registration Statement without
     affording the Holders the opportunity to review and comment on the same as
     required by Section 3(a), the Company shall not be deemed to have satisfied
     this clause (i)), or (ii) the Company fails to file with the Commission a
     request for acceleration in accordance with Rule 461 promulgated under the
     Securities Act, within five Trading Days of the date that the Company is
     notified (orally or in writing, whichever is earlier) by the Commission
     that the Registration Statement will not be "reviewed," or not subject to
     further review, or (iii) prior to the Effectiveness Date, the Company fails
     to file a pre-effective amendment and otherwise respond in writing to
     comments made by the Commission in respect of the Registration Statement
     within 30 calendar days after the receipt of comments by or notice from the
     Commission that such amendment is required in order for the Registration
     Statement to be declared effective, or (iv) the Registration Statement
     filed or required to be filed hereunder is not declared effective by the
     Commission by the Effectiveness Date, or (v) after the Effectiveness Date,
     the Registration Statement ceases for any reason to remain continuously
     effective as to all Registrable Securities for which it is required to be
     effective, or the Holders are not permitted to utilize the Prospectus
     therein to resell such Registrable Securities for 20 consecutive calendar
     days but no more than an aggregate of 30 calendar days during any 12-month
     period (which need not be consecutive Trading Days) (any such failure or
     breach being referred to as an "Event", and for purposes of clause (i) or
     (iv) the date on which such Event occurs, or for purposes of clause (ii)
     the date on which such five Trading Day period is exceeded, or for purposes
     of clause (iii) the date which such 30 calendar day period is exceeded, or
     for purposes of clause (v) the date on which such 20 or 30 calendar day
     period, as applicable, is exceeded being referred to as "Event Date"), then
     in addition to any other rights the Holders may have hereunder or under
     applicable law, on each such Event Date and on each monthly anniversary of
     each such Event Date (if the applicable Event shall not have been cured by
     such date) until the applicable Event is cured, the Company shall pay to
     each Holder an amount in cash, as partial liquidated damages and not as a
     penalty, equal to 1.5% of the aggregate purchase price paid by such Holder
     pursuant to the Purchase Agreement for any Registrable Securities then held
     by such Holder. If the Company fails to pay any partial liquidated damages
     pursuant to this Section in full within seven days after the date

                                        3

<PAGE>

     payable, the Company will pay interest thereon at a rate of 18% per annum
     (or such lesser maximum amount that is permitted to be paid by applicable
     law) to the Holder, accruing daily from the date such partial liquidated
     damages are due until such amounts, plus all such interest thereon, are
     paid in full. The partial liquidated damages pursuant to the terms hereof
     shall apply on a daily pro-rata basis for any portion of a month prior to
     the cure of an Event.

     3. Registration Procedures

          In connection with the Company's registration obligations hereunder,
the Company shall:

          (a) Not less than five Trading Days prior to the filing of the
     Registration Statement or any related Prospectus or any amendment or
     supplement thereto (including any document that would be incorporated or
     deemed to be incorporated therein by reference), the Company shall, (i)
     furnish to each Holder copies of all such documents proposed to be filed,
     which documents (other than those incorporated or deemed to be incorporated
     by reference) will be subject to the review of such Holders, and (ii) cause
     its officers and directors, counsel and independent certified public
     accountants to respond to such inquiries as shall be necessary, in the
     reasonable opinion of respective counsel to conduct a reasonable
     investigation within the meaning of the Securities Act. The Company shall
     not file the Registration Statement or any such Prospectus or any
     amendments or supplements thereto to which the Holders of a majority of the
     Registrable Securities shall reasonably object in good faith, provided
     that, the Company is notified of such objection in writing no later than 5
     Trading Days after the Holders have been so furnished copies of such
     documents. Each Holder agrees to furnish to the Company a completed
     Questionnaire in the form attached to this Agreement as Annex B (a "Selling
     Shareholder Questionnaire") not less than two Trading Days prior to the
     Filing Date or by the end of the fourth Trading Day following the date on
     which such Holder receives draft materials in accordance with this Section.

          (b) (i) Prepare and file with the Commission such amendments,
     including post-effective amendments, to the Registration Statement and the
     Prospectus or, if necessary, a new Registration Statement, used in
     connection therewith as may be necessary to keep the Registration Statement
     continuously effective as to the applicable Registrable Securities for the
     Effectiveness Period and prepare and file with the Commission such
     additional Registration Statements in order to register for resale under
     the Securities Act all of the Registrable Securities; (ii) cause the
     related Prospectus to be amended or supplemented by any required Prospectus
     supplement (subject to the terms of this Agreement), and as so supplemented
     or amended to be filed pursuant to Rule 424; (iii) respond as promptly as
     reasonably possible to any comments received from the Commission with
     respect to the Registration Statement or any amendment thereto and as
     promptly as reasonably possible provide the Holders true and complete
     copies of all correspondence from and to the Commission relating to the
     Registration Statement; and (iv) comply in all material respects with the
     provisions of the Securities Act and the Exchange Act with respect to the
     disposition of all Registrable Securities covered by a Registration
     Statement during the applicable period in accordance (subject to the terms
     of

                                        4

<PAGE>

     this Agreement) with the intended methods of disposition by the Holders
     thereof set forth in such Registration Statement as so amended or in such
     Prospectus as so supplemented.

          (c) [RESERVED].

          (d) Notify the Holders of Registrable Securities to be sold (which
     notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied
     by an instruction to suspend the use of the Prospectus until the requisite
     changes have been made) as promptly as reasonably possible (and, in the
     case of (i)(A) below, not less than five Trading Days prior to such filing)
     and (if requested by any such Person) confirm such notice in writing no
     later than one Trading Day following the day (i)(A) when a Prospectus or
     any Prospectus supplement or post-effective amendment to the Registration
     Statement is proposed to be filed; (B) when the Commission notifies the
     Company whether there will be a "review" of the Registration Statement and
     whenever the Commission comments in writing on the Registration Statement
     (the Company shall provide true and complete copies thereof and all written
     responses thereto to each of the Holders); and (C) with respect to the
     Registration Statement or any post-effective amendment, when the same has
     become effective; (ii) of any request by the Commission or any other
     Federal or state governmental authority for amendments or supplements to
     the Registration Statement or Prospectus or for additional information;
     (iii) of the issuance by the Commission or any other federal or state
     governmental authority of any stop order suspending the effectiveness of
     the Registration Statement covering any or all of the Registrable
     Securities or the initiation of any Proceedings for that purpose; (iv) of
     the receipt by the Company of any notification with respect to the
     suspension of the qualification or exemption from qualification of any of
     the Registrable Securities for sale in any jurisdiction, or the initiation
     or threatening of any Proceeding for such purpose; (v) of the occurrence of
     any event or passage of time that makes the financial statements included
     in the Registration Statement ineligible for inclusion therein or any
     statement made in the Registration Statement or Prospectus or any document
     incorporated or deemed to be incorporated therein by reference untrue in
     any material respect or that requires any revisions to the Registration
     Statement, Prospectus or other documents so that, in the case of the
     Registration Statement or the Prospectus, as the case may be, it will not
     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, in light of the circumstances under which they were
     made, not misleading; and (vi) the occurrence or existence of any pending
     corporate development with respect to the Company that the Company believes
     in good faith may be material and that, in the good faith determination of
     the Company, makes it not in the best interest of the Company to allow
     continued availability of the Registration Statement or Prospectus;
     provided that any and all of such information shall remain confidential to
     each Holder until such information otherwise becomes public, unless
     disclosure by a Holder is required by law; provided, further,
     notwithstanding each Holder's agreement to keep such information
     confidential, the Holders make no acknowledgement that any such information
     is material, non-public information.

          (e) Use its best efforts to avoid the issuance of, or, if issued,
     obtain the withdrawal of (i) any order suspending the effectiveness of the
     Registration Statement, or

                                        5

<PAGE>

     (ii) any suspension of the qualification (or exemption from qualification)
     of any of the Registrable Securities for sale in any jurisdiction, at the
     earliest practicable moment.

          (f) Furnish to each Holder, without charge, at least one conformed
     copy of each such Registration Statement and each amendment thereto,
     including financial statements and schedules, all documents incorporated or
     deemed to be incorporated therein by reference to the extent requested by
     such Person, and all exhibits to the extent requested by such Person
     (including those previously furnished or incorporated by reference)
     promptly after the filing of such documents with the Commission.

          (g) Promptly deliver to each Holder, without charge, as many copies of
     the Prospectus or Prospectuses (including each form of prospectus) and each
     amendment or supplement thereto as such Persons may reasonably request in
     connection with resales by the Holder of Registrable Securities. Subject to
     the terms of this Agreement, the Company hereby consents to the use of such
     Prospectus and each amendment or supplement thereto by each of the selling
     Holders in connection with the offering and sale of the Registrable
     Securities covered by such Prospectus and any amendment or supplement
     thereto, except after the giving of any notice pursuant to Section 3(d).

          (h) If NASDR Rule 2710 requires any broker-dealer to make a filing
     prior to executing a sale by a Holder, the Company shall (i) make an Issuer
     Filing with the NASDR, Inc. Corporate Financing Department pursuant to
     NASDR Rule 2710(b)(10)(A)(i), (ii) respond within five Trading Days to any
     comments received from NASDR in connection therewith and (iii) pay the
     filing fee required in connection therewith.

          (i) Prior to any resale of Registrable Securities by a Holder, use its
     commercially reasonable efforts to register or qualify or cooperate with
     the selling Holders in connection with the registration or qualification
     (or exemption from the Registration or qualification) of such Registrable
     Securities for the resale by the Holder under the securities or Blue Sky
     laws of such jurisdictions within the United States of America as any
     Holder reasonably requests in writing, to keep each registration or
     qualification (or exemption therefrom) effective during the Effectiveness
     Period and to do any and all other acts or things reasonably necessary to
     enable the disposition in such jurisdictions of the Registrable Securities
     covered by the Registration Statement; provided, that the Company shall not
     be required to qualify generally to do business in any jurisdiction where
     it is not then so qualified, subject the Company to any material tax in any
     such jurisdiction where it is not then so subject or file a general consent
     to service of process in any such jurisdiction.

          (j) If requested by the Holders, cooperate with the Holders to
     facilitate the timely preparation and delivery of certificates representing
     Registrable Securities to be delivered to a transferee pursuant to the
     Registration Statement, which certificates shall be free, to the extent
     permitted by the Purchase Agreement, of all restrictive legends, and to
     enable such Registrable Securities to be in such denominations and
     registered in such names as any such Holders may request.

                                        6

<PAGE>

          (k) Upon the occurrence of any event contemplated by this Section 3,
     as promptly as reasonably possible under the circumstances taking into
     account the Company's good faith assessment of any adverse consequences to
     the Company and its stockholders of the premature disclosure of such event,
     prepare a supplement or amendment, including a post-effective amendment, to
     the Registration Statement or a supplement to the related Prospectus or any
     document incorporated or deemed to be incorporated therein by reference,
     and file any other required document so that, as thereafter delivered,
     neither the Registration Statement nor such Prospectus will 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 light of the circumstances under which they were made, not misleading.
     If the Company notifies the Holders in accordance with clauses (ii) through
     (vi) of Section 3(d) above to suspend the use of any Prospectus until the
     requisite changes to such Prospectus have been made, then the Holders shall
     suspend use of such Prospectus. The Company will use its best efforts to
     ensure that the use of the Prospectus may be resumed as promptly as is
     practicable. The Company shall be entitled to exercise its right under this
     Section 3(k) to suspend the availability of the Registration Statement and
     Prospectus, subject to the payment of partial liquidated damages pursuant
     to Section 2(b), for a period not to exceed 60 days (which need not be
     consecutive days) in any 12 month period.

          (l) Comply with all applicable rules and regulations of the
     Commission.

          (m) The Company may require each selling Holder to furnish to the
     Company a certified statement as to the number of shares of Common Stock
     beneficially owned by such Holder and, if required by the Commission, the
     person thereof that has voting and dispositive control over such shares.
     During any periods that the Company is unable to meet its obligations
     hereunder with respect to the registration of the Registrable Securities
     solely because any Holder fails to furnish such information within three
     Trading Days of the Company's request, any liquidated damages that are
     accruing pursuant to Section 2(b) hereof at such time as to such Holder
     only shall be tolled and any Event that may otherwise occur solely because
     of such delay shall be suspended as to such Holder only, until such
     information is delivered to the Company.

     4. Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, (B) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving

                                        7

<PAGE>

no more than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.

     5. Indemnification

          (a) Indemnification by the Company. The Company shall, notwithstanding
     any termination of this Agreement, indemnify and hold harmless each Holder,
     the officers, directors, managers, members, agents, brokers (including
     brokers who offer and sell Registrable Securities as principal as a result
     of a pledge or any failure to perform under a margin call of Common Stock),
     investment advisors and employees of each of them, each Person who controls
     any such Holder (within the meaning of Section 15 of the Securities Act or
     Section 20 of the Exchange Act) and the officers, directors, managers,
     members, agents and employees of each such controlling Person, to the
     fullest extent permitted by applicable law, from and against any and all
     losses, claims, damages, liabilities, costs (including, without limitation,
     reasonable attorneys' fees) and expenses (collectively, "Losses"), as
     incurred, arising out of or relating to any untrue or alleged untrue
     statement of a material fact contained in the Registration Statement, any
     Prospectus or any form of prospectus or in any amendment or supplement
     thereto or in any preliminary prospectus, or arising out of or relating to
     any omission or alleged omission of a material fact required to be stated
     therein or necessary to make the statements therein (in the case of any
     Prospectus or form of prospectus or supplement thereto, in light of the
     circumstances under which they were made) not misleading, except to the
     extent, but only to the extent, that (i) such untrue statements or
     omissions are based solely upon information regarding such Holder furnished
     in writing to the Company by such Holder expressly for use therein, or to
     the extent that such information relates to such Holder or such Holder's
     proposed method of distribution of Registrable Securities and was reviewed
     and expressly approved in writing by such Holder expressly for use in the
     Registration Statement, such Prospectus or such form of Prospectus or in
     any amendment or supplement thereto (it being understood that the Holder
     has approved Annex A hereto for this purpose) or (ii) in the case of an
     occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the
     use by such Holder of an outdated or defective Prospectus after the Company
     has notified such Holder in writing that the Prospectus is outdated or
     defective and prior to the receipt by such Holder of the Advice
     contemplated in Section 6(d). The Company shall notify the Holders promptly
     of the institution, threat

                                        8

<PAGE>

     or assertion of any Proceeding arising from or in connection with the
     transactions contemplated by this Agreement of which the Company is aware.

          (b) Indemnification by Holders. Each Holder shall, severally and not
     jointly, indemnify and hold harmless the Company, its directors, officers,
     agents and employees, each Person who controls the Company (within the
     meaning of Section 15 of the Securities Act and Section 20 of the Exchange
     Act), and the directors, officers, agents or employees of such controlling
     Persons, to the fullest extent permitted by applicable law, from and
     against all Losses, as incurred, to the extent, but only to the extent,
     arising out of or based solely upon: (x) such Holder's failure to comply
     with the prospectus delivery requirements of the Securities Act or (y) any
     untrue or alleged untrue statement of a material fact contained in any
     Registration Statement, any Prospectus, or any form of prospectus, or in
     any amendment or supplement thereto or in any preliminary prospectus, or
     arising out of or relating to any omission or alleged omission of a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading (i) to the extent, but only to the
     extent, that such untrue statement or omission is contained in any
     information so furnished in writing by such Holder to the Company
     specifically for inclusion in the Registration Statement or such Prospectus
     or (ii) to the extent, but only to the extent, (1) that such untrue
     statements or omissions are based solely upon information regarding such
     Holder furnished in writing to the Company by such Holder expressly for use
     therein, or to the extent that such information relates to such Holder or
     such Holder's proposed method of distribution of Registrable Securities and
     was reviewed and expressly approved in writing by such Holder expressly for
     use in the Registration Statement (it being understood that the Holder has
     approved Annex A hereto for this purpose), such Prospectus or such form of
     Prospectus or in any amendment or supplement thereto or (2) in the case of
     an occurrence of an event of the type specified in Section 3(d)(ii)-(vi),
     of the use by such Holder of an outdated or defective Prospectus after the
     Company has notified such Holder in writing that the Prospectus is outdated
     or defective and prior to the receipt by such Holder of the Advice
     contemplated in Section 6(d). In no event shall the liability of any
     selling Holder hereunder be greater in amount than the dollar amount of the
     net proceeds received by such Holder upon the sale of the Registrable
     Securities giving rise to such indemnification obligation.

          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
     brought or asserted against any Person entitled to indemnity hereunder (an
     "Indemnified Party"), such Indemnified Party shall promptly notify the
     Person from whom indemnity is sought (the "Indemnifying Party") in writing,
     and the Indemnifying Party shall have the right to assume the defense
     thereof, including the employment of counsel reasonably satisfactory to the
     Indemnified Party and the payment of all fees and expenses incurred in
     connection with defense thereof; provided, that the failure of any
     Indemnified Party to give such notice shall not relieve the Indemnifying
     Party of its obligations or liabilities pursuant to this Agreement, except
     (and only) to the extent that it shall be finally determined by a court of
     competent jurisdiction (which determination is not subject to appeal or
     further review) that such failure shall have prejudiced the Indemnifying
     Party.

                                        9

<PAGE>

          An Indemnified Party shall have the right to employ separate counsel
     in any such Proceeding and to participate in the defense thereof, but the
     fees and expenses of such counsel shall be at the expense of such
     Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
     in writing to pay such fees and expenses; (2) the Indemnifying Party shall
     have failed promptly to assume the defense of such Proceeding and to employ
     counsel reasonably satisfactory to such Indemnified Party in any such
     Proceeding; or (3) the named parties to any such Proceeding (including any
     impleaded parties) include both such Indemnified Party and the Indemnifying
     Party, and legal counsel for such Indemnified Party shall reasonably
     believe that a material conflict of interest is likely to exist if the same
     counsel were to represent such Indemnified Party and the Indemnifying Party
     (in which case, if such Indemnified Party notifies the Indemnifying Party
     in writing that it elects to employ separate counsel at the expense of the
     Indemnifying Party, the Indemnifying Party shall not have the right to
     assume the defense thereof and the reasonable fees and expenses of one
     separate counsel shall be at the expense of the Indemnifying Party). The
     Indemnifying Party shall not be liable for any settlement of any such
     Proceeding effected without its written consent, which consent shall not be
     unreasonably withheld, conditioned or delayed. No Indemnifying Party shall,
     without the prior written consent of the Indemnified Party, effect any
     settlement of any pending Proceeding in respect of which any Indemnified
     Party is a party, unless such settlement includes an unconditional release
     of such Indemnified Party from all liability on claims that are the subject
     matter of such Proceeding.

          Subject to the terms of this Agreement, all reasonable fees and
     expenses of the Indemnified Party (including reasonable fees and expenses
     to the extent incurred in connection with investigating or preparing to
     defend such Proceeding in a manner not inconsistent with this Section)
     shall be paid to the Indemnified Party, as incurred, within ten Trading
     Days of written notice thereof to the Indemnifying Party; provided, that
     the Indemnified Party shall promptly reimburse the Indemnifying Party for
     that portion of such fees and expenses applicable to such actions for which
     such Indemnified Party is not entitled to indemnification hereunder,
     determined based upon the relative faults of the parties.

          (d) Contribution. If the indemnification under Section 5(a) or 5(b) is
     unavailable to an Indemnified Party or insufficient to hold an Indemnified
     Party harmless for any Losses, then each Indemnifying Party shall
     contribute to the amount paid or payable by such Indemnified Party as a
     result of such Losses, in such proportion as is appropriate to reflect the
     relative fault of the Indemnifying Party and Indemnified Party in
     connection with the actions, statements or omissions that resulted in such
     Losses as well as any other relevant equitable considerations. The relative
     fault of such Indemnifying Party and Indemnified Party shall be determined
     by reference to, among other things, whether any action in question,
     including any untrue or alleged untrue statement of a material fact or
     omission or alleged omission of a material fact, has been taken or made by,
     or relates to information supplied by, such Indemnifying Party or
     Indemnified Party, and the parties' relative intent, knowledge, access to
     information and opportunity to correct or prevent such action, statement or
     omission. The amount paid or payable by a party as a result of any Losses
     shall be deemed to include, subject to the limitations set forth in this
     Agreement, any reasonable attorneys' or other reasonable fees

                                       10

<PAGE>

     or expenses incurred by such party in connection with any Proceeding to the
     extent such party would have been indemnified for such fees or expenses if
     the indemnification provided for in this Section was available to such
     party in accordance with its terms.

          The parties hereto agree that it would not be just and equitable if
     contribution pursuant to this Section 5(d) were determined by pro rata
     allocation or by any other method of allocation that does not take into
     account the equitable considerations referred to in the immediately
     preceding paragraph. Notwithstanding the provisions of this Section 5(d),
     no Holder shall be required to contribute, in the aggregate, any amount in
     excess of the amount by which the proceeds actually received by such Holder
     from the sale of the Registrable Securities subject to the Proceeding
     exceeds the amount of any damages that such Holder has otherwise been
     required to pay by reason of such untrue or alleged untrue statement or
     omission or alleged omission, except in the case of fraud by such Holder.

          The indemnity and contribution agreements contained in this Section
     are in addition to any liability that the Indemnifying Parties may have to
     the Indemnified Parties.

     6. Miscellaneous

          (a) Remedies. In the event of a breach by the Company or by a Holder,
     of any of their obligations under this Agreement, each Holder or the
     Company, as the case may be, in addition to being entitled to exercise all
     rights granted by law and under this Agreement, including recovery of
     damages, will be entitled to specific performance of its rights under this
     Agreement. The Company and each Holder agree that monetary damages would
     not provide adequate compensation for any losses incurred by reason of a
     breach by it of any of the provisions of this Agreement and hereby further
     agrees that, in the event of any action for specific performance in respect
     of such breach, it shall waive the defense that a remedy at law would be
     adequate.

          (b) No Piggyback on Registrations. Except as set forth on Schedule
     6(b) attached hereto, neither the Company nor any of its security holders
     (other than the Holders in such capacity pursuant hereto) may include
     securities of the Company in the Registration Statement other than the
     Registrable Securities. Other than the Holders, no Person has any right to
     cause the Company to effect the registration under the Securities Act of
     any securities of the Company. The Company shall not file any other
     registration statements until the Registration Statement required hereunder
     is declared effective by the Commission, provided that this Section 6(b)
     shall not prohibit the Company from filing any registration statement on
     Form F-1 or F-4 in connection with the merger between the Company and
     Shellco or amendments to registration statements already filed.

          (c) Compliance. Each Holder covenants and agrees that it will comply
     with the prospectus delivery requirements of the Securities Act as
     applicable to it in connection with sales of Registrable Securities
     pursuant to the Registration Statement.

                                       11

<PAGE>

          (d) Discontinued Disposition. Each Holder agrees by its acquisition of
     such Registrable Securities that, upon receipt of a notice from the Company
     of the occurrence of any event of the kind described in Section 3(d), such
     Holder will forthwith discontinue disposition of such Registrable
     Securities under the Registration Statement until such Holder's receipt of
     the copies of the supplemented Prospectus and/or amended Registration
     Statement or until it is advised in writing (the "Advice") by the Company
     that the use of the applicable Prospectus may be resumed, and, in either
     case, has received copies of any additional or supplemental filings that
     are incorporated or deemed to be incorporated by reference in such
     Prospectus or Registration Statement. The Company will use its best efforts
     to ensure that the use of the Prospectus may be resumed as promptly as it
     practicable. The Company agrees and acknowledges that any periods during
     which the Holder is required to discontinue the disposition of the
     Registrable Securities hereunder shall be subject to the provisions of
     Section 2(b).

          (e) Piggy-Back Registrations. If at any time during the Effectiveness
     Period there is not an effective Registration Statement covering all of the
     Registrable Securities and the Company shall determine to prepare and file
     with the Commission a registration statement relating to an offering for
     its own account or the account of others under the Securities Act of any of
     its equity securities, other than on Form F-4 or Form S-8 (each as
     promulgated under the Securities Act) or their then equivalents relating to
     equity securities to be issued solely in connection with any acquisition of
     any entity or business or equity securities issuable in connection with the
     stock option or other employee benefit plans, then the Company shall send
     to each Holder a written notice of such determination and, if within
     fifteen days after the date of such notice, any such Holder shall so
     request in writing, the Company shall include in such registration
     statement all or any part of such Registrable Securities such Holder
     requests to be registered; provided, however, that, the Company shall not
     be required to register any Registrable Securities pursuant to this Section
     6(e) that are eligible for resale pursuant to Rule 144(k) promulgated under
     the Securities Act or that are the subject of a then effective Registration
     Statement.

          (f) Amendments and Waivers. The provisions of this Agreement,
     including the provisions of this sentence, may not be amended, modified or
     supplemented, and waivers or consents to departures from the provisions
     hereof may not be given, unless the same shall be in writing and signed by
     the Company and each Holder of the then outstanding Registrable Securities.
     Notwithstanding the foregoing, a waiver or consent to depart from the
     provisions hereof with respect to a matter that relates exclusively to the
     rights of Holders and that does not directly or indirectly affect the
     rights of other Holders may be given by Holders of all of the Registrable
     Securities to which such waiver or consent relates; provided, however, that
     the provisions of this sentence may not be amended, modified, or
     supplemented except in accordance with the provisions of the immediately
     preceding sentence.

          (g) Notices. Any and all notices or other communications or deliveries
     required or permitted to be provided hereunder shall be delivered as set
     forth in the Purchase Agreement.

                                       12

<PAGE>

          (h) Successors and Assigns. This Agreement shall inure to the benefit
     of and be binding upon the successors and permitted assigns of each of the
     parties and shall inure to the benefit of each Holder. The Company may not
     assign its rights or obligations hereunder without the prior written
     consent of all of the Holders of the then-outstanding Registrable
     Securities. Each Holder may assign their respective rights hereunder in the
     manner and to the Persons as permitted under the Purchase Agreement.

          (i) No Inconsistent Agreements. Neither the Company nor any of its
     subsidiaries has entered, as of the date hereof, nor shall the Company or
     any of its subsidiaries, on or after the date of this Agreement, enter into
     any agreement with respect to its securities, that would have the effect of
     impairing the rights granted to the Holders in this Agreement or otherwise
     conflicts with the provisions hereof. Except as set forth on Schedule 6(i),
     neither the Company nor any of its subsidiaries has previously entered into
     any agreement granting any registration rights with respect to any of its
     securities to any Person that have not been satisfied in full.

          (j) Execution and Counterparts. This Agreement may be executed in any
     number of counterparts, each of which when so executed shall be deemed to
     be an original, and all of which taken together shall constitute one and
     the same Agreement. In the event that any signature is delivered by
     facsimile transmission, such signature shall create a valid binding
     obligation of the party executing (or on whose behalf such signature is
     executed) the same with the same force and effect as if such facsimile
     signature were the original thereof.

          (k) Governing Law. All questions concerning the construction,
     validity, enforcement and interpretation of this Agreement shall be
     determined with the provisions of the Purchase Agreement.

          (l) Cumulative Remedies. The remedies provided herein are cumulative
     and not exclusive of any remedies provided by law.

          (m) Severability. If any term, provision, covenant or restriction of
     this Agreement is held by a court of competent jurisdiction to be invalid,
     illegal, void or unenforceable, the remainder of the terms, provisions,
     covenants and restrictions set forth herein shall remain in full force and
     effect and shall in no way be affected, impaired or invalidated, and the
     parties hereto shall use their commercially reasonable efforts to find and
     employ an alternative means to achieve the same or substantially the same
     result as that contemplated by such term, provision, covenant or
     restriction. It is hereby stipulated and declared to be the intention of
     the parties that they would have executed the remaining terms, provisions,
     covenants and restrictions without including any of such that may be
     hereafter declared invalid, illegal, void or unenforceable.

          (n) Headings. The headings in this Agreement are for convenience of
     reference only and shall not limit or otherwise affect the meaning hereof.

          (o) Independent Nature of Holders' Obligations and Rights. The
     obligations of each Holder hereunder are several and not joint with the
     obligations of any other

                                       13

<PAGE>

     Holder hereunder, and no Holder shall be responsible in any way for the
     performance of the obligations of any other Holder hereunder. Nothing
     contained herein or in any other agreement or document delivered at any
     closing, and no action taken by any Holder pursuant hereto or thereto,
     shall be deemed to constitute the Holders as a partnership, an association,
     a joint venture or any other kind of entity, or create a presumption that
     the Holders are in any way acting in concert with respect to such
     obligations or the transactions contemplated by this Agreement. Each Holder
     shall be entitled to protect and enforce its rights, including without
     limitation the rights arising out of this Agreement, and it shall not be
     necessary for any other Holder to be joined as an additional party in any
     proceeding for such purpose.

                            *************************

                                       14

<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                        EUROSEAS LTD.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

<PAGE>

                   [SIGNATURE PAGE OF HOLDERS TO EUROSEAS RRA]

Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       16

<PAGE>

                                     ANNEX A

                              Plan of Distribution

     Each Selling Stockholder (the "Selling Stockholders") of the common stock
("Common Stock") of Euroseas Ltd., a Marshall Islands corporation (the
"Company") and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on the
Trading Market or any other stock exchange, market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:

          -    ordinary brokerage transactions and transactions in which the
               broker-dealer solicits purchasers;

          -    block trades in which the broker-dealer will attempt to sell the
               shares as agent but may position and resell a portion of the
               block as principal to facilitate the transaction;

          -    purchases by a broker-dealer as principal and resale by the
               broker-dealer for its account;

          -    an exchange distribution in accordance with the rules of the
               applicable exchange;

          -    privately negotiated transactions;

          -    settlement of short sales entered into after the effective date
               of the registration statement of which this prospectus is a part;

          -    broker-dealers may agree with the Selling Stockholders to sell a
               specified number of such shares at a stipulated price per share;

          -    a combination of any such methods of sale;

          -    through the writing or settlement of options or other hedging
               transactions, whether through an options exchange or otherwise;
               or

          -    any other method permitted pursuant to applicable law.

     The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

     Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage

                                       17

<PAGE>

commission in compliance with NASDR Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASDR IM-2440.

     In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

     The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

     The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by a
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under a prospectus. Each Selling
Stockholder has advised us that it has not entered into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the Common Stock. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the Common Stock by the
Selling Stockholders.

     We agree to keep a prospectus effective until the earlier of (i) the date
on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The Common Stock will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the Common
Stock may not be sold unless it has been registered or

                                       18

<PAGE>

qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not simultaneously engage in
market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of the Common Stock by the
Selling Stockholders or any other person. We will make copies of any prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of a prospectus to each purchaser at or prior to the time of the
sale.

                                       19

<PAGE>

                                                                         ANNEX B

                                  EUROSEAS LTD.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

     The undersigned beneficial owner of common stock, par value $.01 per share
(the "Common Stock"), of Euroseas Ltd., a Marshall Islands corporation (the
"Company"), (the "Registrable Securities") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form F-1 (the "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
August [____, 2005 (the "Registration Rights Agreement"), among the Company and
the Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                     NOTICE

     The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

                                       20

<PAGE>

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1. NAME.

     (a)  Full Legal Name of Selling Securityholder

          ______________________________________________________________________

     (b)  Full Legal Name of Registered Holder (if not the same as (a) above)
          through which Registrable Securities Listed in Item 3 below are held:

          ______________________________________________________________________

     (c)  Full Legal Name of Natural Control Person (which means a natural
          person who directly or indirectly alone or with others has power to
          vote or dispose of the securities covered by the questionnaire):

          ______________________________________________________________________

2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

   Telephone:___________________________________________________________________
   Fax:_________________________________________________________________________
   Contact Person:______________________________________________________________

3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

     (a)  Type and Number of Registrable Securities beneficially owned:

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

                                       21

<PAGE>

4. BROKER-DEALER STATUS:

     (a)  Are you a broker-dealer?

                                 Yes [ ]   No [ ]

     (b)  If "yes" to Section 4(a), did you receive your Registrable Securities
          as compensation for investment banking services to the Company.

                                 Yes [ ]   No [ ]

     Note: If no, the Commission's staff has indicated that you should be
          identified as an underwriter in the Registration Statement.

     (c)  Are you an affiliate of a broker-dealer?

                                 Yes [ ]   No [ ]

     (d)  If you are an affiliate of a broker-dealer, do you certify that you
          bought the Registrable Securities in the ordinary course of business,
          and at the time of the purchase of the Registrable Securities to be
          resold, you had no agreements or understandings, directly or
          indirectly, with any person to distribute the Registrable Securities?

                                 Yes [ ]   No [ ]

     Note: If no, the Commission's staff has indicated that you should be
          identified as an underwriter in the Registration Statement.

5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
SECURITYHOLDER.

     Except as set forth below in this Item 5, the undersigned is not the
     beneficial or registered owner of any securities of the Company other than
     the Registrable Securities listed above in Item 3.

     (a)  Type and Amount of Other Securities beneficially owned by the Selling
          Securityholder:

          ______________________________________________________________________
          ______________________________________________________________________

                                       22

<PAGE>

6. RELATIONSHIPS WITH THE COMPANY:

     Except as set forth below, neither the undersigned nor any of its
     affiliates, officers, directors or principal equity holders (owners of 5%
     of more of the equity securities of the undersigned) has held any position
     or office or has had any other material relationship with the Company (or
     its predecessors or affiliates) during the past three years.

     State any exceptions here:

     ___________________________________________________________________________
     ___________________________________________________________________________

     The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.

     By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.

     IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:________________________          Beneficial Owner:_______________________

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       23

<PAGE>

                                  Schedule 6(b)

Friends and Shellco stockholders

                                       24

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