Document:

EXHIBIT
      10.14

     

     

    EUROSEAS
      LTD.

    2006
      STOCK INCENTIVE PLAN

     

    ARTICLE
      I.

    General

     

    1.1 Purpose

     

    The
      Euroseas Ltd. 2006 Stock Incentive Plan (the “Plan”) is designed to provide
      certain key persons, on whose initiative and efforts the successful conduct
      of
      the business of Euroseas Ltd. (the “Company”) depends, with incentives to (a)
      enter into and remain in the service of the Company, (b) acquire a proprietary
      interest in the success of the Company, (c) maximize their performance, and
      (d)
      enhance the long-term performance of the Company.

     

    1.2 Administration

     

    (a) Administration
      by Board of Directors.
      The
      Plan shall be administered by the Company’s Board of Directors (the
“Administrator”), which shall act at all times so as to
      avoid
      inclusion of any amount in gross income pursuant to Section 409A of the
      Code.
      The
      Administrator shall have the authority
      (i) to
      exercise all of the powers granted to it under the Plan, (ii) to construe,
      interpret and implement the Plan and any Award Agreements executed pursuant
      to
      Section 2.1 in its sole discretion with all such determinations being final,
      binding and conclusive, (iii) to prescribe, amend and rescind rules and
regulations
      relating to the Plan, including rules governing its own operations,
      (iv) to
      make all determinations necessary or advisable in administering the Plan, and
      (v) to correct any defect, supply any omission and reconcile any inconsistency
      in the Plan.

     

    (b) Administrator
      Action.
      Actions
      of the Administrator shall be taken by
      the vote
      of a majority of its members. Any action may be taken by a written instrument
      signed by a majority of the Administrator members, and action so taken shall
      be
      fully as effective as if it had been taken by a vote at a meeting. Except to
      the
      extent prohibited by applicable law or the applicable rules of a stock exchange,
      the Administrator may allocate all or any portion of its responsibilities and
      powers to any one or more of its members and may delegate all
      or
      any part of its responsibilities to any person or persons selected by
      it,
      and may
      revoke any such allocation or delegation at any time. 

     

    1.3 Persons
      Eligible for Awards

     

    The
      persons eligible to receive awards under the Plan are those officers,
      directors, and executive, managerial, administrative
      and
      professional employees of the Company, (collectively,
      “key persons”) as the Administrator in its sole discretion
      shall
      select, taking into account the duties of the key persons, their present and
      potential contributions to the success of the Company, and such other factors
      as
      the Administrator shall deem relevant in connection with accomplishing the
      purpose of the Plan. The Administrator may from time to time, in its sole
      discretion, determine that any key person shall be ineligible to receive awards
      under the Plan.

     

    
      
        
        

      

      
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    1.4 Types
      of Awards Under Plan

     

    Awards
      may be made under the Plan in the form of (a) incentive stock options, (b)
      non-qualified stock options, (c) stock appreciation rights, (d) dividend
      equivalent rights, (e) restricted stock, (f) unrestricted stock, (g)
      restricted stock units, and (h) performance shares, all as more fully set forth
      in Article II. The term “award”
      means any of the foregoing. No incentive stock option may be granted
      to
      a person
      who is not an employee of the Company on the date of grant. Notwithstanding
      any
      provision of the Plan, to the extent any award would be subject to Section
      409A
      of the Code, no such award may be granted if it would fail to comply with the
      requirements set forth in Section 409A of the Code.

     

    1.5 Shares
      Available for Awards

     

    (a) Aggregate
      Number Available.
      Subject
      to the provisions of this Section 1.5, the aggregate number of shares of common
      stock of the Company (“Common Stock”) with respect to which options or
      restricted shares may at any time be granted under the Plan are 1,800,000 shares
      of Common Stock.

     

    (b) Shares
      Issued; Certificate Legends.
      Shares
      issued pursuant to the Plan may be authorized but unissued Common Stock. The
      Administrator may direct that any stock certificate evidencing shares issued
      pursuant to the Plan shall bear a legend setting forth such restrictions on
      transferability as may apply to such shares.

     

    (c) Adjustment
      Upon Changes in Common Stock.
      Upon
      certain changes in Common Stock, the number of shares of Common Stock available
      for issuance with respect to awards that may be granted under the Plan pursuant
      to Section 1.5(a), shall be adjusted pursuant to Section 3.7.

     

    (d) Certain
      Shares to Become Available Again.
      The
      following shares
      of
      Common Stock shall again become available for awards under the Plan: any shares
      that are subject to an award under the Plan and that remain unissued upon the
      cancellation or termination of such award for any reason whatsoever; any shares
      of restricted stock forfeited pursuant to Section 2.7(e), provided that any
      dividends paid on such shares are also forfeited pursuant to such Section
      2.7(e); and any shares in respect of which a stock appreciation right or
      performance share award is settled for cash.

     

    (e) Individual
      Limit.
      Except
      for the limits set forth in this Section 1.5(e) and 2.2(i), no provision of
      this
      Plan shall be deemed to limit the number or value of shares with respect to
      which the Administrator may make
      awards to any eligible person. Subject to adjustment as provided in
      Section
      3.7, the
      total number of shares of Common Stock with respect to which awards may
      be
      granted to any one employee of the Company during any one
      calendar
      year shall not exceed 600,000 shares. Stock options and stock appreciation
      rights granted and subsequently canceled or deemed to be canceled in a calendar
      year count against this limit even after their cancellation. The provisions
      of
      this Section 1.5(e) shall not apply in any circumstance with respect to which
      the Administrator determines that compliance with Section 162(m) of the Code
      is
      not necessary.

     

    1.6 Definitions
      of Certain Terms

     

    (a) The
“Fair
      Market Value” of a share of Common Stock on any day shall be the closing price
      on the Nasdaq National Market (or the Over the Counter Bulletin Board, if not
      trading on the Nasdaq National Market) as reported for such day in The Wall
      Street Journal or, if no such price is reported for such day, the average of
      the
      high bid and low asked price of Common Stock as reported for such day. If no
      quotation is made for the applicable day, the Fair Market Value of a share
      of
      Common Stock on such day shall be determined in the manner set forth in the
      preceding sentence using quotations for the next preceding day for which there
      were quotations, provided that such quotations shall have been made within
      the ten (10) business days preceding the applicable day.
      Notwithstanding
      the
      foregoing, if deemed necessary or appropriate by the Administrator, the Fair
      Market Value of a share of Common Stock on any day shall be determined by the
      Administrator
      based on independent pricing sources. In no event shall the Fair Market Value
      of
      any share of Common Stock
      be less
      than its par value.

     

    
      
        
        

      

      
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    (b) The
      term
“incentive stock option” means an option that is intended to
      qualify for special federal income tax treatment pursuant to sections 421
      and
      422 of
      the Code as now constituted or subsequently amended, or pursuant to a successor
      provision of the Code, and which is so designated in the applicable Award
      Agreement. Any option that is not specifically designated as an incentive stock
      option shall under no circumstances be considered an incentive stock option.
      Any
      option that is not an incentive stock option is referred to herein as a
“non-qualified stock option.”

     

    (c) The
      term
“cause” in connection with a termination of employment or Board membership by
      reason of a dismissal for cause shall mean:

     

    (i) to
      the
      extent that there is an employment, severance or other agreement governing
      the
      relationship between the grantee and the Company, a Company subsidiary or a
      Company joint venture, which agreement contains a definition of “cause,” cause
      shall consist of those acts or omissions that would constitute “cause” under
      such agreement; and otherwise,

     

    (ii) the
      grantee’s termination of employment or Board membership by the Company or an
      affiliate on account of any one or more of the following:

     

    (A) any
      failure by the grantee substantially to perform the grantee’s employment or
      Board membership duties;

     

    (B) any
      excessive unauthorized absenteeism by the grantee;

     

    (C) any
      refusal by the grantee to obey the lawful orders of the Board or any other
      person or Administrator to whom the grantee reports;

     

    (D) any
      act
      or omission by the grantee that is or may be injurious to the Company,
      monetarily or otherwise;

     

    (E) any
      act
      by the grantee that is inconsistent with the best interests of the
      Company;

     

    (F) the
      grantee’s material violation of any of the Company’s policies, including,
      without limitation, those policies relating to discrimination or sexual
      harassment;

     

    (G) the
      grantee’s unauthorized (a) removal from the premises of the Company or an
      affiliate of any document (in any medium or form) relating to the Company or
      an
      affiliate or the customers or clients of the
      Company or an affiliate or (b) disclosure to any person or entity of
      any of
      the Company’s, or its affiliates’ confidential or proprietary
      information;

     

    (H) the
      grantee’s commission of any felony, or any other crime involving moral
      turpitude; and

     

    (I) the
      grantee’s commission of any act involving dishonesty or fraud.

     

    
      
        
        

      

      
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    Any
      rights the Company may have hereunder in respect of the events giving rise
      to
      cause shall be in addition to the rights the Company may have under any other
      agreement with a grantee or at law or in equity. Any determination of whether
      a
      grantee’s employment or Board membership is (or is deemed to have been)
      terminated for cause shall be made by the Administrator in its discretion,
      which
      determination shall be final, binding and conclusive on all parties. If,
      subsequent to a grantee’s voluntary termination of employment or involuntary
      termination of employment without cause, it is discovered that the grantee’s
      employment could have been terminated for cause, the Administrator may deem
      such
      grantee’s employment or Board membership to have been terminated for cause. A
      grantee’s termination of employment or Board membership for cause shall be
      effective as of the date of the occurrence of the
      event
      giving rise to cause, regardless of when the determination of cause
      is
      made.

     

    (d) The
      term
“Code” means the Internal Revenue Code of 1986, as amended.

     

    ARTICLE
      II.

    Awards
      Under The Plan

     

    2.1 Agreements
      Evidencing Awards

     

    Each
      award granted under the Plan (except an award of unrestricted stock)
      shall be evidenced by a written certificate (“Award Agreement”)
      which shall
      contain such provisions as the Administrator may, in its sole discretion,
      deem
      necessary or desirable. By executing an Award Agreement pursuant to the Plan,
      a
      grantee thereby agrees that the award shall be subject to all of the terms
      and
      provisions of the Plan and the applicable Award Agreement.

     

    2.2 Grant
      of Stock Options, Stock Appreciation Rights, Restricted Stock Units and
      Dividend
      Equivalent Rights

     

    (a) Stock
      Option Grants.
      The
      Administrator may grant incentive stock options and non-qualified stock options
      (“options”) to purchase shares of Common Stock from the Company, to such key
      persons, and in such amounts and subject to such vesting and forfeiture
      provisions and other terms and
      conditions, as the Administrator shall determine, in its sole discretion,
      subject
      to the
      provisions of the Plan. The Administrator may not grant incentive stock options
      to non-employee directors. 

     

    (b) Stock
      Appreciation Right Grants; Types of Stock Appreciation Rights.
      The
      Administrator may grant stock appreciation rights to such key persons, and
      in
      such amounts and subject to such vesting and forfeiture provisions and other
      terms and conditions, as the Administrator shall determine, in its sole
      discretion, subject to the provisions of the Plan. The terms of a stock
      appreciation right may provide that it shall be automatically exercised for
      a
      cash payment upon the happening of a specified event that is outside the control
      of the grantee, and that it shall not be otherwise exercisable. Stock
      appreciation rights
      may be granted in connection with all or any part of, or independently of,
      any
      option granted under the Plan. A stock appreciation right granted in
connection
      with an option may be granted at or after the time
      of grant
      of such option.

     

    (c) Nature
      of Stock Appreciation Rights.
      The
      grantee of a stock appreciation right shall have the right, subject to the
      terms
      of the Plan and the
      applicable Award Agreement, to receive from the Company an amount equal
      to
      (i) the
      excess of the Fair Market Value of a share of Common Stock on the date of
      exercise of the stock appreciation right over the Fair Market Value of a
share
      of
      Common Stock on the date of grant (or over the option exercise price
      if
      the
      stock appreciation right is granted in connection with an option), multiplied
      by
      (ii) the number of shares with respect to which the stock appreciation right
      is
      exercised. Payment upon exercise of a stock appreciation right
      shall be in cash or in shares of Common Stock (valued at their Fair
      Market
      Value on
      the date of exercise of the stock appreciation right) or both, all as the
      Administrator shall determine in its sole discretion; provided, however, that
      a
      stock appreciation right settled in cash shall be exercisable only to the extent
      that such exercise complies with Section 409A of the Code. Upon the exercise
      of
      a stock appreciation right granted in connection with an option, the number
      of
      shares subject to the option shall be reduced by the number of shares with
      respect
      to which the stock appreciation right is exercised. Upon the exercise
      of
      an
      option in connection with which a stock appreciation right has been granted,
      the
      number of shares subject to the stock appreciation right shall be reduced
      by
      the
      number of shares with respect to which the option is exercised.

     

    
      
        
        

      

      
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    (d) Option
      Exercise Price.
      Each
      Award Agreement with respect to an option shall set forth the amount (the
“option exercise price”) payable by the grantee to the Company upon exercise of
      the option evidenced thereby. The option
      exercise price per share shall be determined by the Administrator in its
      sole
      discretion and in accordance with the requirements of Section 409A of the Code;
      provided, however, that the option exercise price of an incentive stock option
      shall be at least 100% of the Fair Market Value of a share of Common Stock
      on
      the date the option is granted, and provided further that in no event shall
      the
      option exercise price be less than the par value of a share of Common
      Stock.

     

    (e) Exercise
      Period.
      Each
      Award Agreement with respect to an option or stock appreciation right shall
      set
      forth the periods during which the award evidenced thereby shall be exercisable,
      whether in whole or in part. Such periods shall be determined by the
      Administrator in its sole discretion; provided, however, that no option or
      a
      stock appreciation right shall be exercisable more than 10 years after the
      date
      of grant, and provided further that, except as and to the extent
      that the Administrator may otherwise provide pursuant to Sections 2.5, 3.7
      or
      3.8, no
      option or stock appreciation right shall be exercisable prior to the first
      anniversary of the date of grant. (See the default exercise period provided
      for
      under Sections 2.3(a) and (b).) 

     

    (f) Reload
      Options.
      The
      Administrator may, in its sole discretion, include in any Award Agreement with
      respect to an option (the “original option”) a provision that an additional
      option (the “reload option”) shall be granted to any grantee who, pursuant to
      Section 2.3(e)(ii), delivers shares of Common Stock in partial or full payment
      of the exercise price of the original option. The reload option shall be for
      a
      number of shares of Common Stock equal to the number thus delivered, shall
      have
      an exercise price equal to the Fair Market Value of a share of Common Stock
      on
      the date of exercise of the original option, and shall have an expiration date
      no later than the expiration date of the original option. In the event that
      an
      Award Agreement provides for the grant of a reload option, such Agreement shall
      also provide that the exercise price
      of
      the original option be no less than the Fair Market Value of a share
      of
      Common
      Stock on its date of grant, and that any shares that are delivered pursuant
      to
      Section 2.3(e)(ii) in payment of such exercise price shall have been held for
      at
      least six months.

     

    (g) Dividend
      Equivalent Rights.
      The
      Administrator may, in its sole discretion and subject to the requirements of
      Section 409A of the Code, include in any Award Agreement with respect to an
      option, stock appreciation right or performance shares, a dividend equivalent
      right entitling the grantee to receive amounts equal to the ordinary dividends
      that would be paid, during the time such award is outstanding and unexercised,
      on the shares of Common Stock covered by such award if such shares were then
      outstanding. In the event such a provision is included in an Award Agreement,
      the Administrator shall determine whether such payments shall be made in cash
      or
      in shares of Common Stock, whether they shall be conditioned upon the exercise
      of the award to which they relate, the time or times at which they shall be
      made, and such other vesting and forfeiture provisions and other terms and
      conditions as the Administrator shall deem appropriate.

     

    (h) Restricted
      Stock Units.
      The
      Administrator may, in its sole discretion, grant restricted stock units to
      such
      key persons, and in such amounts and subject to such vesting and forfeiture
      provisions and other terms and conditions, as the Administrator shall determine,
      in its sole discretion, subject to the provisions of the Plan. A restricted
      stock unit granted under the Plan shall confer upon the grantee a right to
      receive from the Company, upon the occurrence of an event specified in the
      Award
      Agreement, such grantee’s vested restricted stock units multiplied by the Fair
      Market Value of a share of Common Stock. Restricted stock units
      may be
      granted in connection with all or any part of, or independently of, any award
      granted under the Plan. A restricted stock unit granted in connection
      with another award may be granted at or after the time
      of grant
      of such award.

     

    
      
        
        

      

      
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    (i) Incentive
      Stock Option Limitation: Exercisability.
      To the
      extent that the aggregate Fair Market Value (determined as of the time the
      option is granted) of the stock with respect to which incentive stock options
      are first exercisable by any employee during any calendar year shall exceed
      $100,000, or such higher amount as may be permitted from time to time under
      section 422 of the Code, such options shall be treated as non-qualified stock
      options.

     

    (j) Incentive
      Stock Option Limitation; 10% Owners.
      Notwithstanding the
      provisions of paragraphs (d) and (e) of this Section 2.2, an incentive
      stock
      option
      may not be granted under the Plan to an individual who, at the time the option
      is granted, owns stock possessing more than 10% of the total combined voting
      power of all classes of stock of his employer corporation or of its parent
      or
      subsidiary corporations (as such ownership may be determined for purposes of
      section 422(b)(6) of the Code) unless (i) at the time such incentive stock
      option is granted the option exercise price is at least 110% of the
      Fair
      Market Value of the shares subject thereto and (ii) the incentive
      stock
      option
      by its terms is not exercisable after the expiration of 5 years from the date
      it
      is granted.

     

    2.3 Exercise
      of Options, Stock Appreciation Rights and Restricted Stock
      Units

     

    Subject
      to the other provisions of this Article II, each option, stock appreciation
      right and restricted stock unit granted under the Plan shall be exercisable
      as
      follows:

     

    (a) Timing
      and Extent of Exercise.
      Options, stock appreciation rights and restricted stock units shall be
      exercisable at such times and under such conditions as set forth in the
      corresponding Award Agreement, but in no event shall any such award be
      exercisable prior to the first anniversary or subsequent to the tenth
      anniversary of the date on which such award was granted. Unless the applicable
      Award Agreement otherwise provides, an option, stock appreciation right or
      restricted stock unit may be exercised from time to time as to all or part
      of
      the shares or units as to which such award
      is
      then exercisable. A stock appreciation right granted in connection
      with
      an
      option may be exercised at any time when, and to the same extent that, the
      related option may be exercised.

     

    (b) Notice
      of Exercise.
      An
      option, stock appreciation right or restricted stock unit shall be exercised
      by
      the filing of a written notice with the Company or the Company’s
      designated exchange agent (the “exchange agent”), on such form and
      in
      such
      manner as the Administrator shall in its sole discretion prescribe.

     

    (c) Payment
      of Exercise Price.
      Any
      written notice of exercise of an option shall be accompanied by payment for
      the
      shares being purchased. Such payment shall be made: (i) by certified or official
      bank check (or the equivalent
      thereof acceptable to the Company or its exchange agent) for the
      full option
      exercise price; or (ii) with the consent of the Administrator, by delivery
      of shares
      of
      Common Stock having a Fair Market Value (determined as of the
      exercise
      date)
      equal to all or part of the option
      exercise price and a certified or official bank check (or the
      equivalent
      thereof
      acceptable to the Company or its exchange agent) for any remaining portion
      of
      the full option exercise price; or (iii) at the discretion of the Administrator
      and to the extent permitted by law, by such other provision, consistent with
      the
      terms of the Plan, as the Administrator may from time to time prescribe (whether
      directly or indirectly through the exchange agent).

     

    
      
        
        

      

      
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    (d) Delivery
      of Certificates Upon Exercise.
      Subject
      to the provision of section 2.3(e), promptly after receiving payment of the
      full
      option exercise price, or after receiving notice of the exercise of a stock
      appreciation right for which payment will be made partly or entirely in shares,
      the Company or its exchange agent shall, subject to
      the
      provisions of Section 3.2, deliver to the grantee or to such other
      person as
      may
      then have the right to exercise the award, a certificate or
      certificates
      for the
      shares of Common Stock for which the award has been exercised. If the method
      of
      payment employed upon option exercise so requires, and if applicable law
      permits, an optionee may direct the Company or its exchange agent, as the case
      may be, to deliver the stock certificate(s) to the optionee’s stockbroker.

     

    (e) Investment
      Purpose and Legal Requirements.
      Notwithstanding the foregoing, at the time of the exercise of any option, the
      Company may, if it shall deem it necessary or advisable for any reason, require
      the holder of such option (i) to represent in writing to the Company that
      it is the optionee’s then intention to acquire the Shares with respect to which
      the option is to be exercised for investment and not with a view to the
      distribution thereof, or (ii) to postpone the date of exercise until such time
      as the Company has available for delivery to the optionee a prospectus meeting
      the requirements of all applicable securities laws; and no shares shall
      be
      issued or transferred upon the exercise of any option unless and until all
      legal
      requirements applicable to the issuance or transfer of such Shares have been
      complied with to the satisfaction of the Company. The Company shall have the
      right to condition any issuance of shares to any optionee hereunder on such
      optionee’s undertaking in writing to comply with such restrictions on the
      subsequent transfer of such shares as the Company shall deem necessary or
      advisable as a result of any applicable law, regulation or official
      interpretation thereof, and certificates representing such shares may contain
      a
      legend to reflect any such restrictions. 

     

    (f) No
      Shareholder Rights.
      No
      grantee of an option, stock appreciation right or restricted stock unit (or
      other person having the right to exercise such award) shall have any of the
      rights of a shareholder of the Company with respect to shares subject to such
      award until the issuance of a stock certificate to such person for such shares.
      Except as otherwise provided in Section 1.5, no adjustment shall be made for
      dividends, distributions or other rights (whether ordinary or extraordinary,
      and
      whether in cash, securities or other property) for
      which
      the record date is prior to the date such stock certificate is
      issued.

     

    2.4 Compensation
      in Lieu of Exercise of an Option

     

    Upon
      written application of the grantee of an option, the Administrator may
in
      its
      sole discretion determine to substitute, for the exercise of such
      option,
      compensation to the grantee not in excess of the difference between the option
      exercise price and the Fair Market Value of the shares covered by such written
      application on the date of such application. Such compensation may be in cash,
      in shares of Common Stock, or both, and the payment thereof may be subject
      to
conditions,
      all as the Administrator shall determine in its sole discretion. In
      the event
      compensation is substituted pursuant to this Section 2.4 for the
      exercise,
      in whole
      or in part, of an option, the number of shares subject to the option shall
      be
      reduced by the number of shares for which such compensation is
      substituted.

     

    2.5 Termination
      of Employment

     

    (a) General
      Rule.
      Except
      to the extent otherwise provided in paragraphs (b), (c), (d) or (e) of this
      Section 2.5 or Section 3.8(b)(iii), a grantee who incurs a termination of
      employment may exercise any outstanding option or stock appreciation right
      on
      the following terms and conditions: (i) exercise may be made only to the extent
      that the grantee was entitled to exercise
      the award on the termination of employment date; and (ii) exercise
      must
      occur
      within three months after termination of employment but in no event after the
      original expiration date of the award.

     

    
      
        
        

      

      
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    (b) Dismissal
      for Cause; Resignation.
      If a
      grantee incurs a termination
      of employment as the result of a dismissal for cause or resignation
      without
      the Company’s prior consent, as applicable, all options and stock appreciation
      rights not theretofore exercised shall terminate upon the grantee’s termination
      of employment.

     

    (c) Retirement.
      If
      a
      grantee incurs a termination of employment as
      the
      result of his retirement, then any outstanding option, stock appreciation right
      or restricted stock unit shall be exercisable pursuant to its terms. For this
      purpose “retirement” shall mean
      a
      grantee’s termination of employment, under circumstances other than
      those
      described in paragraph (b) above, on or after: (x) his 65th birthday, (y) the
      date on which he has attained age 60 and completed at least five years of
      service with the Company, as applicable, (using any method
      of
      calculation the Administrator deems appropriate) or (z) if approved by
      the
      Administrator, on or after he has completed at least 20 years of
      service.

     

    (d) Disability.
      If
      a
      grantee incurs a termination of employment by
      reason
      of a disability (as defined below), then any outstanding option, stock
      appreciation right or restricted stock unit shall be exercisable pursuant to
      its
      terms. For this purpose “disability” shall mean, except in connection with any
      physical or mental condition that would qualify a grantee for a disability
      benefit under the long-term disability plan maintained by the Company, if there
      is no such plan, a physical or mental condition that prevents the grantee from
      performing the essential functions of the grantee’s position (with or without
      reasonable accommodation) for a period of six consecutive months. The existence
      of a disability shall be determined by the Administrator in its sole and
      absolute discretion.

     

    (e) Death.

     

    (i) Termination
      of Employment as a Result of Grantee’s Death.
      If a
      grantee incurs a termination of employment as the result of his death,
then
      any
      outstanding option, stock appreciation right or restricted stock unit shall
      be
      exercisable
      pursuant
      to its terms.

     

    (ii) Restrictions
      on Exercise Following Death.
      Any
      such
      exercise
      of an
      award following a grantee’s death shall be made only by the grantee’s executor
      or administrator or other duly appointed representative reasonably acceptable
      to the Administrator, unless the grantee’s will specifically
      disposes
      of such
      award, in which case such exercise shall be made only by the recipient of such
      specific disposition. If a grantee’s personal representative or the recipient of
      a specific disposition under the grantee’s will shall be entitled to exercise
      any award pursuant to the preceding sentence, such representative or recipient
      shall be bound by all the terms and conditions of the Plan and the applicable
      Award Agreement which would have applied to the grantee including, without
      limitation, the provisions of Sections 3.2 and 3.5 hereof.

     

    (f) Special
      Rules for Incentive Stock Options.
      No
      option that remains exercisable for more than three months following a grantee’s
      termination of employment for any reason other than death or disability, or
      for
      more than one year following a grantee’s termination of employment as the result
      of his becoming disabled, may be treated as an incentive stock
      option.

     

    (g) Administrator
      Discretion.
      The
      Administrator, in the applicable Award Agreement, may waive or modify the
      application of the foregoing provisions of this Section 2.5 to the extent such
      waiver or modification is consistent with favorable tax treatment of amounts
      payable hereunder.

     

    
      
        
        

      

      
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    2.6 Transferability
      of Options, Stock Appreciation Rights and Restricted Stock
      Units

     

    Except
      as
      otherwise provided in an applicable Award Agreement evidencing an option, stock
      appreciation right or restricted stock unit, during the lifetime of a grantee,
      each such award granted to a grantee shall be exercisable
      only by the grantee and no such award shall
      be
      assignable or transferable otherwise than by will or by the laws of descent
      and
      distribution. The Administrator
      may, in any applicable Award Agreement evidencing an option (other than an
      incentive stock option to the extent inconsistent with the requirements of
      section 422 of the Code applicable to incentive stock options), permit a grantee
      to transfer all or some of the options to (A) the grantee’s spouse, children or
      grandchildren (“Immediate Family Members”), (B) a trust or trusts for the
      exclusive benefit of such Immediate Family Members, or (C) other parties
      approved by the Administrator in its sole and absolute discretion. Following
      any
      such transfer, any transferred options shall continue to be subject to the
      same
      terms and conditions as were applicable immediately prior to the
      transfer.

     

    2.7 Grant
      of Restricted Stock

     

    (a) Restricted
      Stock Grants.
      The
      Administrator may grant restricted shares of Common Stock to such key persons,
      in such amounts, and subject to such vesting and forfeiture provisions and
      other
      terms and conditions as the Administrator shall determine in its sole
      discretion, subject to the provisions of the Plan. Restricted stock awards
      may
      be made independently of or in connection with
      any
      other award under the Plan. A grantee of a restricted stock award
      shall
      have no
      rights with respect to such award unless such grantee accepts the award within
      such period as the Administrator shall specify by accepting delivery of a
restricted
      stock agreement in such form as the Administrator shall determine and,
      in
      the
      event the restricted shares are newly issued by the Company, makes payment
      to
      the
      Company its exchange agent by certified or official bank check (or
      the equivalent
      thereof acceptable to the Company) in an amount at least equal to
      the
      par
      value of the shares covered by the award.

     

    (b) Issuance
      of Stock Certificate(s).
      Promptly after a grantee accepts
      a
      restricted stock award, the Company or its exchange agent shall
      issue
      to the
      grantee a stock certificate or stock certificates for the shares of Common
      Stock
      covered by the award or shall establish an account evidencing ownership of
      the
      stock in uncertificated form. Upon the issuance of such stock certificate(s),
      or
      establishment of such account, the grantee shall have the rights of a
      shareholder with respect to the restricted stock, subject to: (i) the
      nontransferability restrictions and forfeiture provision described in
paragraphs
      (d) and (e) of this Section 2.7; (ii) in the Administrator’s
      discretion, to
      a
      requirement that any dividends paid on such shares shall be held in
      escrow
      until
      all restrictions on such shares have lapsed; and (iii) any other restrictions
      and conditions contained in the applicable restricted stock
      agreement.

     

    (c) Custody
      of Stock Certificate(s).
      Unless
      the Administrator shall otherwise determine, any stock certificates issued
      evidencing shares of restricted
      stock shall remain in the possession of the Company until such
      shares
      are free
      of any restrictions specified in the applicable restricted stock agreement.
      The Administrator may direct that such stock certificate(s) bear a
      legend
      setting
      forth the applicable restrictions on transferability.

     

    (d) Nontransferability.
      Shares
      of restricted stock may not be sold, assigned, transferred, pledged or otherwise
      encumbered or disposed of except as otherwise specifically provided in this
      Plan
      or the applicable restricted
      stock agreement. The Administrator at the time of grant shall specify
      the
      date or
      dates (which may depend upon or be related to the attainment of performance
      goals and other conditions) on which the nontransferability of the restricted
      stock shall lapse.

     

    (e) Consequence
      of Termination of Employment.
      A
      grantee’s termination of employment for any reason (including death) shall cause
      the immediate forfeiture of all shares of restricted stock that have not yet
      vested as of the date of such termination of employment. All dividends paid
      on
      such shares
      also shall be forfeited, whether by termination of any escrow
      arrangement
      under
      which such dividends are held, by the grantee’s repayment of dividends he
      received directly, or otherwise.

     

    
      
        
        

      

      
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    2.8 Grant
      of Unrestricted Stock

     

    The
      Administrator may grant (or sell at a purchase price at least equal to par
      value) shares of Common Stock free of restrictions under the Plan, to such
      key
      persons and in such amounts and subject to such forfeiture provisions as
      the
      Administrator shall determine in its sole discretion. Shares may be thus granted
      or sold in respect of past services or other valid consideration.

     

    2.9 Grant
      of Performance Shares 

     

    (a) Performance
      Share Grants.
      The
      Administrator may grant performance share awards to such key persons, and in
      such amounts and subject to such vesting and forfeiture provisions and other
      terms and conditions, as the Administrator shall in its sole discretion
      determine, subject to the provisions of the Plan. Such an award shall entitle
      the grantee to acquire shares of Common Stock, or to be paid the value thereof
      in cash, as the Administrator shall determine, if specified performance goals
      are met. Performance shares may be awarded
      independently of, or in connection with, any other award under the
      Plan.
      A
      grantee shall have no rights with respect to a performance share award unless
      such grantee accepts the award by accepting delivery of an Award Agreement
      at
      such time and in such form as the Administrator shall determine.

     

    (b) Shareholder
      Rights.
      The
      grantee of a performance share award
      will
      have the rights of a shareholder only as to shares for which a stock certificate
      has been issued pursuant to the award and not with respect to any other shares
      subject to the award.

     

    (c) Consequence
      of Termination of Employment.
      Except
      as may otherwise be provided by the Administrator at any time prior to a
      grantee’s termination
      of employment, the rights of a grantee of a performance share award
      shall
      automatically terminate upon the grantee’s termination of employment by the
      Company or its subsidiaries for any reason (including death).

     

    (d) Exercise
      Procedures; Automatic Exercise.
      At the
      discretion of the
      Administrator, the applicable Award Agreement may set out the procedures to
      be
      followed
      in exercising a performance share award or it may provide that such exercise
      shall be made automatically after satisfaction of the applicable performance
      goals.

     

    (e) Tandem
      Grants; Effect on Exercise.
      Except
      as otherwise specified
      by the Administrator, (i) a performance share award granted in tandem
      with
      an
      option may be exercised only while the option is exercisable, (ii) the exercise
      of a performance share award granted in tandem with any other award shall reduce
      the number of shares subject to such other award in the manner specified in
      the
      applicable Award Agreement, and (iii) the exercise of any award granted in
      tandem with a performance share award shall reduce the number of shares subject
      to the latter in the manner specified in the applicable Award
      Agreement.

     

    (f) Nontransferability.
      Performance shares may not be sold, assigned,
      transferred, pledged or otherwise encumbered or disposed of except
      as
      otherwise specifically provided in this Plan or the applicable Award
      Agreement.
      The
      Administrator at the time of grant shall specify the date or dates (which
      may depend upon or be related to the attainment of performance goals
      and
      other
      conditions) on which the nontransferability of the performance shares shall
      lapse.

     

    
      
        
        

      

      
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    ARTICLE
      III.

    Miscellaneous

     

    3.1 Amendment
      of the Plan; Modification of Awards

     

    (a) Amendment
      of the Plan.
      The
      Board may from time to time suspend,
      discontinue, revise or amend the Plan in any respect whatsoever,
      except that
      no
      such amendment shall materially impair any rights or materially
      increase
      any
      obligations under any award theretofore made under the Plan without the consent
      of the grantee (or, upon the grantee’s death, the person having the right to
      exercise the award). For purposes of this Section 3.1, any action of the Board
      or the Administrator that in any way alters or affects the tax treatment of
      any
      award shall not be considered to materially impair any rights of any
      grantee.

     

    (b) Shareholder
      Approval Requirement.
      Shareholder approval shall be required with respect to any amendment to the
      Plan
      that (i) increases the aggregate number of shares that may be issued pursuant
      to
      incentive stock options or changes the class of employees eligible to receive
      such options; or (ii) materially increases the benefits under the Plan to
      persons whose transactions in Common Stock are subject to section 16(b) of
      the
      Securities Exchange Act of 1934, as amended, or increases the benefits under
      the
      Plan to such person, or materially increases the number of shares which may
      be
      issued to such persons, or materially modifies the eligibility requirements
      affecting such persons.

     

    (c) Modification
      of Awards.
      The
      Administrator may cancel any award under the Plan. Subject to the requirements
      of Section 409A of the Code, the Administrator also may amend any outstanding
      Award Agreement, including, without limitation, by amendment which would:
      (i) accelerate the time or times at which the award becomes unrestricted or
      may be exercised, provided that, except as and to the extent that the
      Administrator may otherwise provide pursuant to Section 2.5, 3.7 or 3.8, no
      option, stock appreciation right or restricted stock unit shall be exercisable
      prior to the first anniversary of its date of grant; (ii) waive or amend any
      goals, restrictions or conditions set forth in the Agreement; or (iii) waive
      or
      amend the operation of Section 2.5 with respect to the termination of the award
      upon termination of employment. However, any such cancellation or amendment
      (other than an amendment pursuant to Sections 3.7 or 3.8(b)) that
      materially impairs the rights or materially increases the obligations of a
      grantee under an outstanding award shall be made only with the consent of the
      grantee (or, upon the grantee’s death, the person having the right to exercise
      the award).

     

    3.2 Consent
      Requirement

     

    (a) No
      Plan Action Without Required Consent.
      If the
      Administrator shall at any time determine that any Consent (as hereinafter
      defined) is necessary
      or desirable as a condition of, or in connection with, the granting
      of
      any
      award under the Plan, the issuance or purchase of shares or other rights
thereunder,
      or the taking of any other action thereunder (each such action being
      hereinafter referred to as a “Plan Action”), then such Plan Action shall not be
      taken, in whole or in part, unless and until such Consent shall have been
      effected or obtained to the full satisfaction of the Administrator.

     

    (b) Consent
      Defined.
      The
      term “Consent” as used herein with respect to any Plan Action means (i) any and
      all listings, registrations or qualifications in respect thereof upon any
      securities exchange or under any federal, state or local law, rule or
      regulation, (ii) any and all written agreements
      and representations by the grantee with respect to the disposition
      of
      shares,
      or with respect to any other matter, which the Administrator shall deem
      necessary or desirable to comply with the terms of any such listing,
      registration or qualification or to obtain an exemption from the requirement
      that any such listing, qualification or registration be made and (iii) any
      and
      all consents, clearances and approvals in respect of a Plan Action by any
      governmental or other regulatory bodies.

     

    
      
        
        

      

      
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    3.3 Nonassignability

     

    Except
      as
      provided in Sections 2.5(e), 2.6, 2.7(d) and 2.9(f): (a) no
      award or right granted to any person under the Plan or under any Award Agreement
      shall be assignable or transferable other than by will or by the laws of descent
      and distribution; and (b) all rights granted under the Plan or any
      Award
      Agreement shall be exercisable during the life of the grantee only
      by the
      grantee or the grantee’s legal representative.

     

    3.4 Requirement
      of Notification of Election Under Section 83(b) of
      the Code

     

    If
      any
      grantee shall, in connection with the acquisition of shares of Common
      Stock under the Plan, make the election permitted under section 83(b)
      of
      the Code
      (i.e., an election to include in gross income in the year of transfer the
      amounts specified in section 83(b)), such grantee shall notify the Company
      of
      such election within 10 days of filing notice of the election with the Internal
      Revenue Service,
      in addition to any filing and notification required pursuant to
      regulations issued under the authority of Code section 83(b).

     

    3.5 Requirement
      of Notification Upon Disqualifying Disposition Under
      Section 421(b) of the Code

     

    Each
      Award Agreement with respect to an incentive stock option shall require
      the grantee to notify the Company of any disposition of shares of Common
      Stock
      issued
      pursuant to the exercise of such option under the circumstances described in
      section 421(b) of the Code (relating to certain disqualifying dispositions),
      within 10 days of such disposition.

     

    3.6 Withholding
      Taxes

     

    (a) With
      Respect to Cash Payments.
      Whenever cash is to be paid pursuant to an award under the Plan, the Company
      shall be entitled to deduct therefrom
      an amount sufficient in its opinion to satisfy all federal, state
      and
      other
      governmental tax withholding requirements related to such payment.

     

    (b) With
      Respect to Delivery of Common Stock.
      Whenever shares of Common Stock are to be delivered pursuant to an award under
      the Plan, the Company
      shall be entitled to require as a condition of delivery that the
      grantee
      remit to
      the Company an amount sufficient in the opinion of the Company to satisfy all
      federal, state and other governmental tax withholding requirements related
      thereto. With the approval of the Administrator, which the Administrator shall
      have sole discretion whether or not to give, the grantee may satisfy the
      foregoing condition by electing to have the Company withhold from delivery
      shares having a value equal to the amount of tax to be withheld. Such shares
      shall
      be
      valued at their Fair Market Value as of the date on which the amount
      of
      tax to
      be withheld is determined. Fractional share amounts shall be settled in
cash.
      Such a withholding election may be made with respect to all or any
      portion
      of the
      shares to be delivered pursuant to an award.

     

    3.7 Adjustment
      Upon Changes in Common Stock

     

    (a) Shares
      Available for Grants.
      In
      the
      event of any change in the
      number
      of shares of Common Stock outstanding by reason of any stock dividend or
split,
      reverse stock split, recapitalization, merger, consolidation,
      combination
      or
      exchange of shares or similar corporate change, the maximum number of shares
      of
      Common Stock with respect to which the Administrator may grant awards under
      Article II hereof, as described in Section 1.5(a), and the individual annual
      limit described in Section 1.5(e), shall be appropriately adjusted by the
      Administrator. In the event of any change in the number of shares of Common
      Stock outstanding by reason of any other event or transaction, the Administrator
      may, but need not, make such adjustments in the number and class of shares
      of
      Common Stock
      with
      respect to which awards: (i) may be granted under Article II hereof and
      (ii)
      granted to any one employee of the Company or a subsidiary during
      any
      one
      calendar year, in each case as the Administrator may deem
      appropriate.

     

    
      
        
        

      

      
        A-12

        
          

        

      

      
        
        

      

    

    (b) Outstanding
      Restricted Stock and Performance Shares.
      Unless
the
      Administrator in its sole and absolute discretion otherwise determines, any
      securities or
      other
      property (including dividends paid in cash) received by a grantee with respect
      to a share of restricted stock, the issue date with respect to which occurs
      prior to such event, but which has not vested as of the date of such event,
      as a
      result of any dividend, stock split, reverse stock split, recapitalization,
      merger, consolidation, combination, exchange of shares or otherwise
      will not vest until such share of restricted stock vests, and shall
      be
      promptly
      deposited with the Company or other custodian designated pursuant to Section
      2.7(c) hereof.

     

    The
      Administrator may, in its absolute discretion, adjust any grant of shares of
      restricted stock, the issue date with respect to which has not occurred
      as of the date of the occurrence of any of the following events, or
      any grant
      of
      performance shares, to reflect any dividend, stock split, reverse
      stock split,
      recapitalization, merger, consolidation, combination, exchange of
      shares
      or
      similar corporate change
      as
      the Administrator may deem appropriate to prevent the enlargement or
      dilution
      of rights of grantees.

     

    (c) Outstanding
      Options, Stock Appreciation Rights and Dividend Equivalent
      Rights—Increase or Decrease in Issued Shares Without Consideration.
Subject
      to any required action by the shareholders of the Company, in the event
      of
      any increase or decrease in the number of issued shares of Common
      Stock
      resulting from a subdivision or consolidation of shares of Common Stock or
      the
      payment of a stock dividend (but only on the shares of Common Stock), or any
      other
      increase or decrease in the number of such shares effected without
      receipt
      of
      consideration by the Company, the Administrator shall proportionally adjust
      the
      number of shares of Common Stock subject to each outstanding option and stock
      appreciation right, and the exercise price-per-share of Common Stock of each
      such
      option and stock appreciation right and the number of any related
      dividend
      equivalent rights.

     

    (d) Outstanding
      Options, Stock Appreciation Rights, Restricted Stock Units and Dividend
      Equivalent Rights—Certain Mergers.
      Subject
      to any required action by the shareholders of the Company, in the event that
      the
      Company shall be the surviving corporation in any merger or consolidation
      (except a merger or consolidation
      as a result of which the holders of shares of Common Stock receive
      securities of another corporation), each option, stock appreciation right and
      dividend equivalent right outstanding on the date of such merger or consolidation
      shall pertain to and apply to the securities which a holder of the
      number
      of shares of Common Stock subject to such option, stock appreciation right,
      restricted stock unit or dividend equivalent right would have received in such
      merger or consolidation.

     

    (e) Outstanding
      Options, Stock Appreciation Rights, Restricted Stock Units and Dividend
      Equivalent Rights—Certain Other Transactions. In the event of (i) a
      dissolution or liquidation of the Company, (ii) a sale of all or substantially
      all of the Company’s assets, (iii) a merger or consolidation involving the
      Company in which the Company is not the surviving corporation or (iv) a merger
      or consolidation involving the Company in which the Company is the surviving
      corporation but the holders of shares of Common Stock receive securities of
      another
      corporation and/or other property, including cash, the Administrator
      shall,
      in its
      absolute discretion, have the power to:

     

    (i) cancel,
      effective immediately prior to the occurrence of such event, each option, stock
      appreciation right and restricted stock unit (including each dividend equivalent
      right related thereto) outstanding immediately prior to such event (whether
      or
      not then exercisable), and, in full consideration of such cancellation, pay
      to
      the grantee to whom such option or stock appreciation right was granted an
      amount in cash, for each share of Common Stock subject to such option or stock
      appreciation right, respectively, equal to the excess of (x) the value, as
      determined by the Administrator in its absolute discretion applied in accordance
      with Section 409A of the Code, of the property (including cash) received by
      the
      holder of a share of Common Stock as a result of such event over (y) the
      exercise price of such option or stock appreciation right; or

     

    
      
        
        

      

      
        A-13

        
          

        

      

      
        
        

      

    

    (ii) provide
      for the exchange of each option, stock appreciation right and restricted stock
      unit (including any related dividend equivalent right) outstanding immediately
      prior to such event (whether or not then exercisable) for an option on, stock
      appreciation right, restricted stock unit and dividend equivalent right with
      respect to, as appropriate, some or all of the property which a holder of the
      number of shares of Common Stock subject to such option, stock appreciation
      right or restricted stock unit would have received and, incident thereto, make
      an equitable adjustment as determined by the Administrator in its absolute
      discretion applied in accordance with Section 409A of the Code in the exercise
      price of the option, stock appreciation right or restricted stock unit, or
      the
      number of shares or amount of property subject to the option, stock appreciation
      right, restricted stock unit or dividend equivalent right or, if appropriate,
      provide for a cash payment to the grantee to whom such option, stock
      appreciation right or restricted stock unit was granted in partial consideration
      for the exchange of the option, stock appreciation right or restricted stock
      unit.

     

    (f) Outstanding
      Options, Stock Appreciation Rights, Restricted Stock Units and Dividend
      Equivalent Rights—Other Changes.
      In
      the
      event of any change in the
      capitalization of the Company or a corporate change other than those
      specifically referred to in Sections 3.7(c), (d) or (e) hereof, the
      Administrator may, in its absolute discretion exercised in accordance with
      Section 409A of the Code, make such adjustments in the number and class of
      shares subject to options, stock appreciation rights, restricted stock units
      and
      dividend equivalent
      rights outstanding on the date on which such change occurs and in
      the per-share
      exercise price of each such option, stock appreciation right and restricted
      stock unit
      as
      the Administrator
      may consider appropriate to prevent dilution or enlargement of
      rights.
      In
      addition, if and to the extent the Administrator determines it is appropriate,
      the Administrator may elect to cancel each option, stock appreciation right
      and
      restricted stock unit (including each dividend equivalent right related thereto)
      outstanding immediately prior to such event (whether or not then exercisable),
      and, in full consideration of such cancellation, pay to the grantee to whom
      such
      option, stock
      appreciation right or restricted stock unit was granted an amount in cash,
      for
      each share of Common Stock subject to such option, stock appreciation right
      or
      restricted stock unit, respectively, equal to
      the
      excess of (i) the Fair Market Value of Common Stock on the date of such
      cancellation over (ii) the exercise price of such option, stock appreciation
      right or restricted stock unit.

     

    (g) No
      Other Rights.
      Except
      as
      expressly provided in the Plan, no
      grantee
      shall have any rights by reason of any subdivision or consolidation of shares
      of
      stock of any class, the payment of any dividend, any increase or decrease in
      the
      number of shares of stock of any class or any dissolution, liquidation, merger
      or consolidation of the Company or any other corporation. Except
      as
      expressly provided in the Plan, no issuance by the Company of shares
      of stock
      of any class, or securities convertible into shares of stock of any class,
      shall
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number of shares of Common Stock subject to an award or the exercise price
      of
      any option or stock appreciation right. 

     

    
      
        
        

      

      
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    3.8 Change
      in Control

     

    (a) Change
      in Control Defined.
      For
      purposes of this Section 3.8, “Change in Control” shall mean the occurrence of
      any of the following:

     

    (i) any
      person or “group” (within the meaning of Section 13(d)(3) of the 1934 Act),
      other than entities which the President of the Company directly or indirectly
      controls (as defined in Rule 12b-2 under the 1934 Act), acquiring “beneficial
      ownership” (as defined in Rule 13d-3 under the 1934 Act), directly or
      indirectly, of fifty percent (50%) or more of the aggregate voting power of
      the
      capital stock ordinarily entitled to elect directors of the
      Company;

     

    (ii) the
      sale
      of all or substantially all of the Company’s assets in one or more related
      transactions to a person other than such a sale to a subsidiary of the Company
      which does not involve a change in the equity holdings of the Company or to
      an
      entity which the President directly or indirectly controls; or

     

    (iii) any
      merger, consolidation, reorganization or similar event of the Company or any
      of
      its subsidiaries, as a result of which the holders of the voting stock of the
      Company immediately prior to such merger, consolidation, reorganization or
      similar event do not directly or indirectly hold at least fifty-one percent
      (51%) of the aggregate voting power of the capital stock of the surviving
      entity.

     

    Notwithstanding
      the foregoing, for each award subject to Section 409A of the Code, a Change
      in
      Control shall be deemed to occur under this Plan with respect to such Award
      only
      if a change in the ownership or effective control of the Company or a change
      in
      the ownership of a substantial portion of the assets of the Company shall also
      be deemed to have occurred under Section 409A of the Code.

     

    (b) Effect
      of a Change in Control.
      Unless
      the Administrator provides otherwise in an Award Agreement, upon the occurrence
      of a Change in Control:

     

    (i) notwithstanding
      any other provision of this Plan, any award then
      outstanding shall become fully vested and any award in the form of
      an
      option,
      stock appreciation right or restricted stock unit shall be immediately
      exercisable;

     

    (ii) to
      the
      extent permitted by law, the Administrator may, in its sole discretion, amend
      any Award Agreement in such manner as it deems appropriate;

     

    (iii) a
      grantee
      who incurs a termination of employment for any reason,
      other than a dismissal for cause, concurrent with or within one year following
      the Change in Control may exercise any outstanding option, stock
      appreciation right or restricted stock unit, but only to the extent that the
      grantee was entitled to exercise the award on his termination of employment
      date, until the earlier of (A) the original expiration date of the award and
      (B)
      the later of (x) the date provided for under the terms of Section 2.5 without
      reference to this Section 3.8(b)(iii) and (y) the first anniversary of the
      grantee’s termination
      of employment.

     

    (c) Miscellaneous.
      Whenever deemed appropriate by the Administrator, any
      action
      referred to in paragraph (b)(ii) of this Section 3.8 may be made
      conditional upon the consummation of the applicable Change in Control
      transaction.

     

    
      
        
        

      

      
        A-15

        
          

        

      

      
        
        

      

    

    3.9 Right
      of Discharge Reserved

     

    Nothing
      in the Plan or in any Award Agreement shall confer upon any grantee
      the right to continue his employment with the Company or affect any right that
      the
      Company
      may have to terminate such employment.

     

    3.10 Non-Uniform
      Determinations

     

    The
      Administrator’s determinations under the Plan need not be uniform and may be
      made by it selectively among persons who receive, or who are eligible to
      receive, awards under the Plan (whether or not such persons are similarly
situated).
      Without limiting the generality of the foregoing, the Administrator
      shall
      be
      entitled, among other things, to make non-uniform and selective determinations,
      and to enter into non-uniform and selective Award Agreements, as to (a) the
      persons to receive awards under the Plan, and (b) the terms and provisions
      of
      awards under the Plan. 

     

    3.11 Other
      Payments or Awards

     

    Nothing
      contained in the Plan shall be deemed in any way to limit or restrict the
      Company from making any award or payment to any person under any other
      plan, arrangement or understanding, whether now existing or hereafter
      in
      effect.

     

    3.12 Headings

     

    Any
      section, subsection, paragraph or other subdivision headings contained
      herein are for the purpose of convenience only and are not intended
      to
      expand,
      limit or otherwise define the contents of such subdivisions.

     

    3.13 Effective
      Date and Term of Plan

     

    (a) Shareholder
      Approval.
      The
      Plan shall be subject to the requisite approval of the shareholders of the
      Company in accordance with the requirements of Rule 4350 of the National
      Association of Securities Dealers Manual and Section 162(m) of the Code. In
      the absence of such approval, any Awards shall be null and void. 

     

    (b) Termination
      of Plan.
      Unless
      sooner terminated by the Board or pursuant
      to paragraph (a) above, the provisions of the Plan respecting the
      grant
      of
      incentive stock options shall terminate on the tenth anniversary of the adoption
      of the Plan by the Board, and no incentive stock option awards shall thereafter
      be made under the Plan. All such awards made under the Plan prior to
its
      termination shall remain in effect until such awards have been satisfied
      or
      terminated in accordance with the terms and provisions of the Plan and the
      applicable Award Agreements.

     

    3.14 Restriction
      on Issuance of Stock Pursuant to Awards

     

    The
      Company shall not permit any shares of Common Stock to be issued pursuant
      to Awards granted under the Plan unless such shares of Common Stock
      are
      fully
      paid and non-assessable under applicable law.

     

    3.15 Governing
      Law

     

    Except
      to
      the extent preempted by any applicable federal law, the Plan will
      be
      construed and administered in accordance with the laws of the State
      of
      New
      York, without giving effect to principles of conflict of laws.

     

    
      
        
        

      

      
        A-16

        
          

        

      

      
        
        

      

    

    3.16 Compliance
      with Section 409A of the Code

     

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

     

    

    

    
      
        
        

      

      
        A-17EXHIBIT
      10.15

     

     

    LOAN
      AGREEMENT

    
 

    Dated  November
      14, 2006

    
 

    BETWEEN

    
 

    XINGANG
      SHIPPING LTD

    

    -
      the
      Borrower -

    

     

    DIANA
      TRADING LTD

    

    EUROSEAS
      LTD

    

    -
      the
      Corporate Guarantors -

    

    

    -
      and
      -

    

     

    HSBC
      BANK PLC

    

    -
      the
      Bank -

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
LOAN
      AGREEMENT

     

    Dated  November
      14, 2006

    

    

    BETWEEN

    

    1.
      XINGANG SHIPPING LTD,
      a
      company incorporated under the laws of the Republic of Liberia, whose registered
      office is at 80 Broad Street, Monrovia, Liberia (the "Borrower")

    2.
      DIANA TRADING LTD

    3.
      EUROSEAS LTD

    both
      companies incorporated under the laws of the Republic of the Marshall Islands,
      whose registered offices are at Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, Marshall Islands MH96960 (together called "the Corporate
      Guarantors" and independently "the Corporate Guarantor")

    

    and

    

    HSBC
      BANK PLC, a
      company
      incorporated under the laws of England, having its registered office at 8,
      Canada Square, London E14 5HQ, acting for the purposes of this Agreement through
      its branch at 93 Akti Miaouli, Piraeus, Greece (the "Bank").

     

    
      	1.  	
              PURPOSE
                AND DEFINITIONS

            

    

    

    1.01
      This
      Agreement sets out the terms and conditions upon which HSBC BANK PLC will make
      available to the Borrower a loan up to U.S. Dollars twenty million (U.S. $
      20.000.000) for a period of seven (7) years from the Drawdown Date of the
      facility, for the purpose of financing part of the acquisition cost of the
      vessel "YM XINGANG I" which flies the flag of Liberia because of her
      registration in the Liberian Bareboat Registry and is also registered in the
      Hamburg Registry of Ships in Germany, which upon delivery to the Borrower will
      be registered in its ownership under Liberian flag in the same
      name.

    

    
      	1.02  	
              In
                this Agreement, unless the context otherwise
                requires:

            

    

    

    "Accounts
      Pledge(s)"
      means
      the declaration of pledge containing, inter alia, a charge in respect of the
      Retention Account to be executed by the holder of such account in favour of
      the
      Bank in such form as the Bank shall require as the same may from time to time
      be
      supplemented and/or amended.

    

    "Agreed
      Rate" means
      a
      rate agreed between the Bank and the Borrower on the basis of which (instead
      of
      LIBOR) the interest rate is determined pursuant to Clause 3.01.

    

    "Assignment(s)"
      means
      the deed(s) of assignment of Insurances, Earnings and Requisition Compensation
      of the Vessels in favour of the Bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    "Bank"
      means
      HSBC BANK PLC acting through its branch at 93 Akti Miaouli, Piraeus, Greece,
      and
      includes its successors and assignees.

    

    "Banking
      Day"
      means a
      day on which, in each country or place in or at which any act is required to
      be
      done under this Agreement, banks and the relevant foreign exchange markets
      are
      open for the transaction of business of the nature concerned.

    

    "Commitment"
      means
      the total sum of U.S. $ 20.000.000 to be made available by the Bank to the
      Borrower in one advance, in accordance with Clause 2, subject to the terms
      and
      conditions of this Agreement.

    

    "Corporate
      Guarantee(s)" means
      the
      irrevocable and unconditional guarantees of the Corporate Guarantors in favour
      of the Bank contained in Clause 15 hereof.

    

    "Corporate
      Obligors"
      means
      the Borrower and the Corporate Guarantors.

    

    "Dollars"
      and
"$"
      means
      the
      lawful currency of the United States of America.

    

    "Drawdown
      Date"
      means
      the date on which the Loan is advanced to the Borrower hereunder pursuant to
      Clause 2.

    

    "Drawdown
      Notice"
      means a
      notice substantially in the terms of Schedule 1.

    

    "Drawdown
      Period"
      means
      the period from the date of this Agreement and ending at 11.00 a.m. (London
      time) on 15th
      December
 2006
      or,
      if earlier, (i) the date on which the Loan is advanced by the Bank to the
      Borrower, or (ii) the date on which the obligation of the Bank to make the
      Commitment available is terminated or ceases according to Clauses 10.02 or
      12.

    

    "Earnings"
      in
      relation to the Vessels, means all hires, freights, pool income and other sums
      payable to or for the account of the Owner in respect of these Vessels including
      (without limitation) all remuneration for salvage and towage services, demurrage
      and detention moneys, contributions in general average, compensation in respect
      of any requisition for hire and damages (whether awarded by any court or
      arbitral tribunal or by agreement or otherwise) for breach or termination of
      any
      contract for the operation, employment or use of these Vessels.

    

    "Earnings
      Account" means
      a
      bank account to be opened with the Bank in the name of the Borrower or other
      person nominated by the Borrower and designated "EARNINGS ACCOUNT" or with
      such
      other designation as the Bank shall approve or require, to which (inter alia)
      all Earnings of the Vessels are to be paid.

    

     "Encumbrance"
      means
      any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
      assignment, security interest, or other encumbrance securing any obligation
      of
      any person.

    

    "Environmental
      Affiliate"
      means an
      agent, employee, independent contractor, sub-contractor or other person in
      a
      contractual relationship with the Corporate Obligors relating to the Vessels
      or
      their carriage of cargo or their operation whose acts or omissions would have
      a
      Material Adverse Effect.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    "Environmental
      Approvals"
      means
      any permit, licence, approval ruling, variance, exemption or other authorisation
      required under applicable Environmental Laws.

    

    "Environmental
      Claim"
      means
      any and all enforcement, clean-up, removal or other governmental or regulatory
      actions or orders instituted or completed pursuant to any Environmental Laws
      or
      Environmental Approval together with claims made by any third party relating
      to
      damage, contribution, loss or injury, resulting from any Release of Materials
      of
      Environmental Concern.

    

    "Environmental
      Laws"
      means
      all local, state, provincial, national and international laws, regulations,
      treaties and conventions (including any amendments and/or protocols thereto)
      for
      the time being in force pertaining to the pollution or protection of human
      health or the environment (including ambient air, surface water, ground water,
      land surface or subsurface strata and all or any part of national and
      international waters (howsoever called), including laws, regulations, treaties
      and conventions (including any amendments and/or protocols thereto) for the
      time
      being in force relating to the Release (or threatened release) of Materials
      of
      Environmental Concern.

    

    "Event
      of Default" means
      any
      of the events or circumstances described in Clause 10.01.

    

    "Final
      Maturity Date" means
      the
      date falling seven (7) years after the Drawdown Date of the Loan.

    

    "Guarantee(s)"
      means
      the
      Corporate Guarantees incorporated in Clause 15 of this Agreement and the
      Personal Guarantee and in the singular means any of them.

    

    "Guarantor(s)"
      means
      any
      or all of the Corporate Guarantors and the Personal Guarantor.

    

    "Indebtedness"
      means
      any obligation for the payment or repayment of money, whether present or future,
      actual or contingent.

    

    "Interest
      Payment Date"
      means
      the last day of an Interest Period and, in respect of any Interest Period of
      more than three (3) months duration, the day falling at successive three (3)
      monthly intervals after the commencement of such Interest Period.

    

    "Interest
      Period"
      means
      each period for the calculation of interest in respect of the Loan ascertained
      in accordance with Clauses 3.02 and 3.03.

    

    "Law"
      means
      any
      law, statute, treaty, convention, regulation, instrument or other subordinate
      legislation or other legislative or quasi-legislative rule or measure, including
      the ISM CODE, or any order or decree of any government, judicial or public
      or
      other body or authority.

    

    "LIBOR"
      means,
      in
      relation to a particular period and a particular amount, the rate per cent
      per
      annum at which the Bank is able in accordance with its normal practices to
      acquire dollar deposits in amounts comparable with this amount for that period
      in the London Interbank Eurocurrency Market at or about 11.00 a.m. (London
      time)
      on the second Banking Day before the beginning of that period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    "Loan"
      means
      the aggregate principal amount owing to the Bank under this Agreement at any
      relevant time.

    

    "Manager"
      means
      the company EUROBULK LTD.

    

    "Margin"
      means
      zero point nine hundred thirty five per cent (0.935%) per annum which shall
      be
      reduced to zero point nine per cent (0.9%) per annum if the Borrower effects
      the
      prepayment of U.S. $ 7.000.000 within the first year following the Drawdown
      Date.

    

    "Material
      Adverse Effect"
      means a
      material adverse effect on the Corporate Obligors’ ability to meet their
      obligations to the Bank under this Agreement and the other Security Documents.
      

    

    "Material
      of Environmental Concern"
      means
      and includes all pollutants, contaminants, toxic substances, oil and hazardous
      substances as may be defined in any applicable local, state, provincial,
      national and international laws, regulations, treaties and conventions
      (including any amendments and/or protocols thereto) for the time being in
      force.

    

    "Month"
      or
"Months"
      means a
      period of the required number of calendar months but ending, subject to the
      exceptions below, on the day numerically corresponding to the day of the
      calendar month on which it started and "monthly" shall be construed accordingly.
      The exceptions are that (i) if the period started on the last Banking Day in
      a
      calendar month or if there is no such numerically corresponding day, it shall
      end on the last Banking Day in the relevant calendar month, and (ii) if such
      numerically corresponding day is not a Banking Day, the period shall end on
      the
      next Banking Day in the same calendar month but if there is no such Banking
      Day
      it shall end on the preceding Banking Day.

    

    "Mortgage(s)"
      means
      the First Preferred Liberian Mortgage on the Vessel "YM XINGANG I" and the
      Third
      Preferred Marshall Islands’ Mortgage on the Vessel "IRINI" and in singular means
      either of them.

    

    "Obligors"
      means
      the Corporate Obligors and the Personal Guarantor.

    

    "Owner(s)"
      means
      the owner (whether Borrower or Guarantor) of the Vessels as specified in the
      definition of Vessel(s).

    

    "Permitted
      Encumbrance"
      means
      any encumbrance created pursuant to the Security Documents or permitted to
      exist
      pursuant to the terms of this Agreement or the Security Documents.

    

    "Personal
      Guarantee"
      means
      the irrevocable and unconditional guarantee to be executed by the Personal
      Guarantor in favour of the Bank in form and substance satisfactory to the
      Bank.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    "Personal
      Guarantor"
      means
      the person nominated by the Borrower and accepted by the Bank who will execute
      the Personal Guarantee.

    

    "Release"
      means
      an
      emission, spill, release or discharge into or upon the air, surface water,
      groundwater, or soils of any Material of Environmental Concern for which the
      Obligors have any liability under Environmental Law, except in accordance with
      a
      valid Environmental Approval.

    

    "Repayment
      Dates"
      means
      each of the dates specified in Clause 4.01 on which the Repayment Installments
      shall be payable by the Borrower to the Bank.

    

    "Repayment
      Instalment" means
      each instalment of the Loan which becomes due for repayment by the Borrower
      to
      the Bank on a Repayment Date pursuant to Clause 4.01.

    

    "Requisition
      Compensation"
      in
      relation to a Vessel, means all compensation or other money which may from
      time
      to time be payable to the Owner as result of that Vessel being requisitioned
      for
      title or in any other way compulsorily acquired (other than by way of
      requisition for hire).

    

    "Retention
      Account"
      means a
      bank account to be opened in the joint names of the Borrower and the first
      Corporate Guarantor with the Bank and designated "  and
      others - Retention Account".

    

    "Security
      Documents"
      means
      this Agreement, the ISDA Master Agreement, the Guarantees, the Mortgages, the
      Assignments, the Specific Assignment and any such other documents as may have
      been or shall hereafter be executed to secure all, or any of the sums of money
      from time to time owing (whether the same shall be due and payable or not)
      by
      the Borrower hereunder.

    

    "Taxes"
      means
      all levies, imposts, duties, fees or charges deductions and withholdings
      (including any related interest and penalties) and any restrictions or
      conditions resulting in any charge, other than taxes on the overall net income
      of the Bank, and "Tax"
      and
"Taxation"
      shall
      be
      interpreted accordingly.

    

    "Total
      Loss" in
      relation to a Vessel means (a) an actual, constructive, arranged, agreed or
      compromised total loss of that Vessel or (b) the requisition for title or
      compulsory acquisition of that Vessel by or on behalf of any government or
      other
      authority (other than by way of requisition for hire) or (c) capture, seizure,
      arrest, detention or confiscation of that Vessel by any government or by any
      person acting or purporting to act on behalf of any government, unless that
      Vessel is released within sixty (60) days thereafter.

    

    "Vessel"
      means
      m/v "YM XINGANG I" to be owned by the Borrower and registered under Liberian
      flag and m/v "IRINI" owned by the first Corporate Guarantor and "the Vessel"
      means either of them.

    

    1.03
      Clause headings are inserted for convenience of reference only and shall be
      ignored in the interpretation of this Agreement. In this Agreement, unless
      the
      context otherwise requires, references to Clauses and Schedules are to be
      construed as references to clauses of, and schedules to, this Agreement;
      references to (or to any specified provision of) this Agreement or any other
      document shall be construed as references to this Agreement, that provision
      or
      that document as amended with the agreement of the relevant parties and the
      prior written consent of the Bank and in force at any relevant time; words
      importing the plural shall include the singular and vice-versa and references
      to
      a person shall be construed as references to an individual, firm, company,
      corporation, unincorporated body of persons or any state or any agency
      thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    2. THE
      LOAN

    

    2.01
      The
      Bank, relying upon each of the representations and warranties in Clause 7 agrees
      to lend to the Borrower upon and subject to the terms of this Agreement, the
      principal sum of up to U.S. $ 20.000.000.

    

    2.02
      Subject to the terms and conditions of this Agreement, the Loan shall be
      advanced in full to the Borrower by the Bank upon receipt by the Bank from
      the
      Borrower of a Drawdown Notice not later than 12.00 noon (Greek time) on the
      third Banking Day before the proposed Drawdown Date of the Loan. 

    

    2.03 (a)
      The
      Loan shall not be advanced on any day which is not a Banking Day or after the
      end of the Drawdown Period.

    

    (b)
      A
      Drawdown Notice shall be effective on actual receipt by the Bank and, once
      given, shall, subject as provided in Clause 12, be irrevocable.

    

    2.04
      Upon
      receipt of a Drawdown Notice complying with the terms of this Agreement the
      Bank
      shall, subject to the provisions of Clause 9, on the relevant date make the
      amount of the Commitment available to the Borrower.

    

    2.05
      If
      the Loan is not drawn down by the end of the Drawdown Period, the Commitment
      shall be automatically cancelled.

     

    3. INTEREST
      AND INTEREST PERIODS

    

    3.01
      The
      Borrower shall pay interest on the Loan or (as the case may be, each portion
      thereof to which a different Interest Period relates) in respect of each
      Interest Period (or part thereof) each Interest Payment Date. The interest
      rate
      for the calculation of interest shall be the rate per annum determined by the
      Bank to be the aggregate of (i) the Margin and (ii) LIBOR, unless there is
      an
      Agreed Rate in which case the interest rate for the calculation of interest
      shall be the rate per annum determined by the Bank to be the aggregate of (i)
      the Margin and (ii) the Agreed Rate.

    

    3.02
      The
      Borrower may by notice received by the Bank not later than 12.00 noon (Greek
      time) on the second Banking Day before the beginning of each Interest Period
      specify whether that Interest Period shall have a duration of 1, 2, 3, 6, 9
      or
      12 months or any other Period which the Bank may agree.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.03
      Every Interest Period shall be subject to market availability to be conclusively
      determined by the Bank of the duration specified by the Borrower pursuant to
      Clause 3.02 but so that:

    

    (a)
      the
      initial Interest Period shall end on the date falling 1, 2, 3, 6, 9 or 12 (as
      specified by the Borrower pursuant to Clause 3.02) months after the Drawdown
      Date.

    

    (b)
      each
      subsequent Interest Period in respect of the Loan will commence forthwith upon
      the expiry of the previous Interest Period relative thereto.

    

    (c)
      if
      any Interest Period would otherwise overrun a Repayment Date, then, in the
      case
      of the last Repayment Date, that Interest Period shall end on such Repayment
      Date, and in the case of any other Repayment Date, the Loan shall be divided
      into two parts, one in the amount of the repayment instalment falling due on
      such Repayment Date and having a separate Interest Period expiring on the
      relevant Repayment Date and the other in the amount of the balance of the Loan
      having an Interest Period ascertained in accordance with Clause 3.02 and the
      other provisions of this Clause 3.03; and

    

    (d)
      if
      the Borrower fails to specify the duration of an Interest Period in accordance
      with the provisions of Clause 3.02 and 3.03, that Interest Period shall have
      a
      duration of 3 months or other period complying with this Clause
      3.03.

    

    3.04
      If
      the Borrower fails to pay any sum on its due date for payment under this
      Agreement, the Borrower shall pay interest on such sum on demand from that
      date
      up to the date of actual payment (as well after as before judgment) and
      compounded at the end of each of the periods determined by the Bank under this
      Clause 3.04. Such interest shall be calculated at a rate determined by the
      Bank
      to be two per cent (2%) per annum above the aggregate of the Margin and the
      LIBOR for such period not exceeding 3 months as the Bank may determine from
      time
      to time in amounts comparable with the sum not paid. Such interest shall be
      due
      and payable on the last day of each such period as determined by the Bank and
      each such day shall for the purposes of this Agreement, be treated as an
      Interest Payment Date, provided that if such unpaid sum is of principal which
      became due and payable on a date other than an Interest Payment Date relating
      thereto, the first such period selected by the Bank shall be of a duration
      equal
      to the period between the due date of such principal sum and such Interest
      Payment Date and interest shall be payable on such principal sum during such
      period at a rate two per cent (2%) above the rate applicable thereto immediately
      before it fell due.

    

    If,
      for
      the reasons specified in Clause 12.03, the Bank is unable to determine a rate
      in
      accordance with the foregoing provisions of this Clause 3.04, interest shall
      be
      calculated at a rate determined by the Bank to be two per cent (2%) per annum
      above the aggregate of the Margin and costs of funds to the Bank as conclusively
      determined by the Bank, save for manifest error.

    

    3.05
      The
      Bank shall notify the Borrower promptly of the duration of each Interest Period
      and of each rate of interest determined by it under this Clause 3.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.06
      All
      payments of interest in respect of the Loan shall be made in U.S. Dollars.
      All
      interest and other payments of an annual nature under this Agreement shall
      accrue from day to day and be calculated on the basis of actual days elapsed
      and
      a 360 day year. The certificate of the Bank as to any rate of interest or any
      rate of exchange determined by it pursuant to this Agreement shall be conclusive
      in the absence of manifest error.

     

    4. REPAYMENTS
      AND PREPAYMENTS

    

    4.01
      The
      Borrower shall repay the Loan by twenty eight (28) consecutive, quarterly
      Repayment Instalments, the first eight (8) of an amount of U.S. Dollars one
      million ($ 1.000.000) each, the next four (4) of an amount of U.S. Dollars
      seven
      hundred fifty thousand ($ 750.000) each and the remaining sixteen (16) of an
      amount of U.S. Dollars two hundred fifty thousand ($ 250.000) each, to be repaid
      on each of the Repayment Dates so that the first be repaid three (3) months
      after the Drawdown Date and each of the subsequent ones consecutively on each
      of
      the dates falling three (3) months after the immediately preceding Repayment
      Date, and (ii) one (1) Balloon Instalment equal to U.S. Dollars five million
      ($
      5.000.000) which shall be repaid together with the last Repayment Instalment,
      provided that (a) if the last Repayment Instalment would otherwise fall after
      the Final Maturity Date, the final Repayment Instalment shall be the Final
      Maturity Date and (b) there shall be no Repayment Dates after the Final Maturity
      Date. In the event that the Commitment is not drawn in full, the Loan shall
      be
      repaid in such proportionate lesser amounts as shall suffice to repay the Loan
      over the same period.

    

    4.02
      The
      Borrower shall have the right, upon giving the Bank not less than ten (10)
      Banking Days' notice in writing to prepay without penalty part or all of the
      Loan in each case together with all unpaid interest accrued thereon and all
      other sums of money whatsoever due and owing from the Borrower to the Bank
      hereunder or pursuant to the other Security Documents and all interest accrued
      thereon, provided that:

    

    (a)
      The
      giving of such notice by the Borrower will irrevocably commit the Borrower
      to
      prepay such amount as stated in such notice;

    

    (b)
      Such
      prepayment may take place only on the last day of an Interest Period relating
      to
      the whole of the Loan provided, however, that if the Borrower shall request
      consent to make such prepayment on another day and the Bank shall accede to
      such
      request (it being in the sole discretion of the Bank to decide whether or not
      to
      do so) the Borrower will pay in addition to the amount to be prepaid, any such
      sum as may be payable to the Bank pursuant to Clause 11.01;

    

    (c)
      Each
      partial prepayment shall be equal to U.S. Dollars two
      hundred fifty thousand ($ 250.000) or
      a
      multiple thereof or the balance of the Loan;

    

    (d)
      Any
      prepayment of less than the whole of the Loan will be applied towards Repayment
      Instalments in inverse order of their due dates of payment;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (e)
      Every
      notice of prepayment shall be effective only on actual receipt by the Bank,
      shall be irrevocable and shall oblige the Borrower to make such prepayment
      on
      the date specified;

    

    (f)
      No
      amount prepaid may be re-borrowed; and

    

    (g)
      The
      Borrower may not prepay the Loan or any part thereof save as expressly provided
      in this Agreement.

    

    The
      Borrower shall have the option to effect a U.S. Dollars seven million ($
      7.000.000) prepayment during the first year following the Drawdown Date. In
      such
      case, the remaining Repayment Instalments due in the first three (3) years
      may
      be reduced by a maximum of 35% each, with the balance of the prepayment amount
      to be set-off against the Balloon Instalment.

    

    4.03
      Unless the Bank agrees to accept substitute security in form and substance
      satisfactory to the Bank, the Borrower shall, within one hundred and twenty
      (120) days of either of the Vessels becoming a Total Loss, prepay the Loan
      together with accrued interest to the date of prepayment and all other sums
      payable by the Borrower to the Bank pursuant to this Agreement and the other
      Security Documents (and if any portion of the Commitment has not been drawn
      yet,
      the Commitment shall be reduced to zero), provided that:

     

    (a)
      an
      actual total loss of a Vessel shall be deemed to have occurred at the actual
      date and time such Vessel was lost but, in the event of the date of the loss
      being unknown, then the actual total loss shall be deemed to have occurred
      on
      the date on which such Vessel was last reported.

    

    (b)
      a
      constructive total loss shall be deemed to have occurred at the date and time
      notice of abandonment of a Vessel is given to the insurers of such Vessel for
      the time being. If the insurers of the Vessel will not admit the claim for
      total
      loss, the Borrower shall prepay the Loan within 180 days from the time of notice
      of abandonment is given to the insurers. 

    

    (c)
      a
      compromised or arranged total loss shall be deemed to have occurred on the
      date
      on which a binding agreement as to such compromised or arranged total loss
      has
      been entered into by the insurers of a Vessel.

    

    (d)
      requisition for title or other compulsory acquisition of a Vessel shall be
      deemed to have occurred on the date upon which the relevant requisition for
      title or other compulsory acquisition occurs.

    

    (e)
      capture, seizure, detention, arrest or confiscation of a Vessel by any
      government or by any person acting or purporting to act on behalf of any
      government, which deprives the owner of the relevant vessel of the use of the
      Vessel for more than ninety (90) days shall be deemed to occur upon the expiry
      of the period of ninety (90) days after the date upon which the relevant
      capture, seizure, detention, arrest or confiscation occurred.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    4.04
      If
      subject to the provisions of Clause 8.02 (viii) any of the Vessels is sold,
      the
      Borrower shall prepay to the Bank the Loan together with the accrued
      interest.

     

    5. FEES
      AND EXPENSES

    

    The
      Obligors shall pay to the Bank on demand all expenses (including legal, printing
      and out-of-pocket expenses) inclusive of Value Added Tax if any, incurred by
      the
      Bank in connection with the negotiation, preparation and execution of this
      Agreement and the Security Documents and of any amendment or extension thereof
      and all reasonable expenses (including legal and out-of-pocket expenses)
      inclusive of Value Added Tax if any, incurred by the Bank in contemplation
      of or
      otherwise in connection with the enforcement of, or preservation of any rights
      under, any of this Agreement and the Security Documents, or otherwise in respect
      of the monies owing under any of this Agreement and the Security
      Documents.

     

    6. PAYMENTS
      AND ACCOUNTS

    

    6.01
      All
      payments to be made by the Obligors under or in respect of any Security Document
      shall be made in full in the currency in which the same is due, without any
      set-off or counterclaim whatsoever and, subject as provided in Clause 6.03,
      free
      and clear of any deductions or withholdings, by not later than 10.00 a.m. (local
      time in the place of payment) on the due date in immediately available funds
      to
      the account of the Bank at HSBC BANK U.S.A. New York (Account Number
      000-04779-1) or at such other bank in such other place as the Bank may have
      notified to the Borrower. All interest and any other payments hereunder of
      an
      annual nature shall accrue from day to day and be calculated on the basis of
      360
      day year.

    

    6.02
      When
      any payment would otherwise be due under this Agreement on a day which is not
      a
      Banking Day, the due date for payment shall be extended to the next following
      Banking Day unless such Banking Day falls in the next calendar month in which
      case payment shall be made on the immediately preceding Banking
      Day.

    

    6.03
      If
      at any time any applicable law, regulation or regulatory requirement or any
      governmental authority, monetary agency or central bank requires the Obligors
      to
      make any deduction or withholding in respect of Taxes from any payment due
      under
      this Agreement, the sum due from the Obligors in respect of such payment shall
      be increased to the extent necessary to ensure that, after the making of such
      deduction or withholding, the Bank receives a net sum equal to the sum which
      it
      would have received had no such deduction or withholding been required to be
      made and the Obligors shall indemnify the Bank against any losses or costs
      incurred by it by reason of any failure of the Obligors to make any such
      deduction or withholding. The Obligors shall promptly deliver to the Bank any
      receipts, certificates or other proof evidencing the amounts (if any) paid
      or
      payable in respect of any deduction or withholding as aforesaid.

    

    6.04
      If
      it shall at any time become unlawful in any jurisdiction or impossible for
      the
      Obligors to make payment of any sum hereunder to the accounts referred to in
      Clause 6.01 or in the currency in which such sum is due (the "Currency of
      Obligation") the Obligors may agree with the Bank alternative arrangements
      for
      payment of such sum in the Currency of Obligation or in another freely
      transferable and convertible currency. If it shall be agreed that payment may
      be
      made in a currency other than the Currency of Obligation such payment shall
      only
      satisfy the obligations of the Obligors to the Bank hereunder to the extent
      of
      the amount in the Currency of Obligation which can be purchased with the sum
      so
      paid at the spot buying rate of the Bank in the London Foreign Exchange market
      for the Currency of Obligation with the currency in which payment was made,
      and
      the Obligors shall be liable to pay to the Bank the balance of the sum in the
      Currency of Obligation which the Bank would have received if payment had been
      made in accordance with the other provisions of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.05
      All
      sums advanced by the Bank to the Borrower under this Agreement and all interest
      accrued thereon and all other amounts due under this Agreement from time to
      time
      and all repayments and/or payments thereof shall be debited and credited
      respectively to a separate loan account maintained by the Bank in the name
      of
      the Borrower. The Bank may, however, in accordance with its usual practices
      or
      for its accounting needs, maintain more than one accounts, consolidate or
      separate them but all such accounts shall be considered parts of one single
      loan
      account maintained under this Agreement. In case that a ship mortgage in the
      form of Account Current is granted as security under this Agreement, the
      account(s) referred to in this Clause shall be the Account Current referred
      to
      in the mortgage.

     

    7. REPRESENTATIONS
      AND WARRANTIES

    

    7.01
      Each
      of the Obligors hereby represents and warrants to the Bank as at the date hereof
      that:

    

    (a)
      each
      Corporate Obligor is duly incorporated and validly existing in good standing
      under the laws of its country of incorporation as a limited liability company,
      has power to carry on its business as it is now being conducted and to own
      its
      property and other assets;

    

    (b)
      each
      Corporate Obligor has power to execute, deliver and perform its obligations
      under this Agreement and the other Security Documents; all necessary corporate,
      shareholder and other action has been taken to authorise the execution, delivery
      and performance of the same and no limitation on the powers of the Borrower
      to
      borrow will be exceeded as a result of borrowings hereunder;

    

    (c)
      this
      Agreement constitutes and the Security Documents as and when they are
      respectively executed by the Obligors will constitute valid and legally binding
      obligations of the Obligors;

    

    (d)
      the
      execution and delivery of, the performance of their obligations under, and
      compliance with the provisions of, this Agreement and the Security Documents
      by
      the Obligors will not (i) contravene any existing applicable law, statute,
      rule
      or regulation or any judgment, decree or permit to which the Obligors are
      subject, (ii) conflict with, or result in any breach of any of the terms of,
      or
      constitute a default under, any agreement or other instrument to which the
      Obligors are parties or are subject or by which they or any of their property
      is
      bound except for the loans of the first Corporate Guarantor dated 16th
      October
      2002 and 9th
      May
      2005, (iii) contravene or conflict with any provision of the Corporate Obligors’
By-Laws or (iv) result in the creation or imposition of or oblige the Obligors
      to create any encumbrance (other than a Permitted Encumbrance) on any of the
      Obligors' assets, rights or revenues;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (e)
      no
      litigation, arbitration or administrative proceeding is taking place, pending
      or, to the knowledge of the officers of the Corporate Obligors, threatened
      against the Obligors which would have a material adverse effect on the business,
      assets or financial condition of the Obligors;

    

    (f)
      the
      accounts and the financial statements of the Obligors which have been delivered
      to the Bank prior to the signing of this Agreement are true and accurate in
      every material respect and represent fairly the financial condition of each
      of
      them as at the date such accounts and financial statements were prepared and
      since that date there has been no material adverse change in such financial
      condition, and

    

    (g)
      no
      event or circumstance which constitutes or which with the giving of notice
      or
      lapse of time or both would constitute an Event of Default has occurred and
      is
      continuing.

    

    7.02
      The
      Obligors further represent and warrant to the Bank that:

    

    (a)
      every
      consent, authorisation, licence or approval of or registration with or
      declaration to governmental or public bodies or authorities or courts required
      by the Obligors to authorise, or required by the Obligors in connection with,
      the execution, delivery, validity or enforceability of this Agreement and each
      of the Security Documents or the performance by the Obligors of their
      obligations hereunder or thereunder has been obtained or made;

    

    (b)
      the
      obligations of the Obligors under this Agreement are direct, general and
      unconditional obligations of the Obligors and rank at least pari passu with
      all
      other present and future unsecured and unsubordinated obligations (including
      contingent obligations) of the Obligors (with the exemption of such obligations
      as are mandatorily preferred by law and not by contract);

    

    (c)
      the
      Obligors are not (nor with the giving of notice or lapse of time or both) in
      breach of or in default under any agreement relating to Indebtedness to which
      they are parties or by which they may be bound;

    

    (d)
      the
      information, exhibits and reports furnished by the Obligors to the Bank in
      connection with the negotiation and preparation of this Agreement and each
      of
      the Security Documents are true and accurate in all material respects and not
      misleading, do not omit material facts and all reasonable enquiries have been
      made to verify the facts contained therein; there are no other facts the
      omission of which would make any fact or statement therein misleading in any
      material respect;

    

    (e)
      no
      Taxes are imposed by withholding or otherwise on any payment to be made by
      the
      Obligors under this Agreement or are imposed on or by virtue of the execution
      or
      delivery by the Obligors of this Agreement or any document or instrument to
      be
      executed or delivered hereunder;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (f)
      the
      choice by the Obligors of English law to govern this Agreement and the
      submission by the Obligors to the non-exclusive jurisdiction of the courts
      of
      England are valid and binding;

    

    (g)
      it is
      not necessary to ensure the legality, validity, enforceability or admissibility
      in evidence of this Agreement that it or any other instrument be filed,
      recorded, registered or enrolled in any court, public office or elsewhere in
      England or Greece. This Agreement is in proper form for its enforcement in
      the
      courts of England or Greece.

    

    7.03
      The
      representations and warranties in Clause 7 shall be deemed to be repeated by
      the
      Obligors on and as of the date of the Drawdown Notice, and of each Interest
      Payment Date as if made with reference to the facts and circumstances existing
      at such date.

     

    8. UNDERTAKINGS

    

    8.01
      Each
      of the Obligors undertakes with the Bank that, from the date of this Agreement
      and so long as any monies are owing under this Agreement, it will:

    

    (a)
      promptly inform the Bank of any occurrence of which it becomes aware which
      might
      materially adversely affect its ability to perform its obligations under this
      Agreement and/or any of the Security Documents and, without limiting the
      generality of the foregoing, will inform the Bank of any Event of Default or
      any
      event which with the giving of notice or lapse of time or both would constitute
      an Event of Default forthwith upon becoming aware thereof;

    

    (b)
      without prejudice to Clause 7.02 and 9, obtain or cause to be obtained, maintain
      in full force and effect and comply in all material respects with the conditions
      and restrictions (if any) imposed in connection with, every consent,
      authorisation, licence or approval of governmental or public bodies or
      authorities and do, or cause to be done, all other acts and things, which may
      from time to time be necessary or desirable under applicable law for the
      continued due performance of all its obligations under this Agreement and each
      of the Security Documents;

    

    (c)
      use
      the Loan exclusively for the purpose specified in Clause 1.01;

    

    (d)
      ensure that its obligations under this Agreement shall, subject to the operation
      of Clause 8.02, at all times rank at least pari passu with all its other present
      and future unsecured and unsubordinated obligations (including contingent
      obligations);

    

    (e)
      cause
      to be prepared in each financial year, financial statements in a form consistent
      with generally accepted accounting principles and practices in Greece
      consistently applied;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (f)
      send
      to the Bank as many copies as the Bank may reasonably require of the annual
      balance sheets and income statements and every balance sheet, profit and loss
      account, report, notice or like document issued by it to its shareholders within
      150 days of the close of its fiscal year;

    

    (g)
      provide the Bank with such financial information concerning the Obligors and
      related companies and their affairs, commitments and operations, as the Bank
      may
      from time to time reasonably require;

    

    (h)
      duly
      and punctually perform each of its obligations under the Security
      Documents.

    

    8.02
      Each
      of the Obligors undertakes with the Bank that, from the date of this Agreement
      and so long as any monies are owing under this Agreement, it will not, without
      the prior written consent (such consent not to be unreasonably withheld) of
      the
      Bank permit:

    

    (i)
      any
      encumbrance other than Permitted Encumbrances by the Obligors to subsist, arise
      or be created or extended to secure any present or future Indebtedness of the
      Obligors or any other person;

    

    (ii)
      any
      Indebtedness of the Obligors to be guaranteed or otherwise assured against
      financial loss by any person other than the Obligors;

    

    (iii)
      the
      Indebtedness of the Obligors to be subordinated in priority of payment to any
      other present or future Indebtedness of the Obligors; 

    

    (iv)
      to
      conduct any business or activity other than the ownership, chartering, operation
      and management of vessels;

    

    (v)
      the
      Obligors to declare or pay any dividend or make any other distribution of their
      assets or profits to any stockholder;

    

    (vi)
      to
      incur or agree to incur any Indebtedness or material liability (whether by
      way
      of loan, credit facilities or otherwise) nor make any commitments other than
      those occurring in the ordinary course of the trading of the
      Vessel;

    

    (vii)
      to
      issue or agree to issue any guarantee in favour of any persons or legal entities
      other than in connection with the ordinary trading and operation of the
      Vessel;

    

    (viii)
      to
      sell, assign, transfer or otherwise dispose of or abandon the
      Vessel.

    

    8.03
      The
      Obligors undertake that none of the documents defining their constitution shall
      be altered in any manner whatsoever and will not change their beneficial
      ownership and control from that advised to the Bank or the nature, organisation
      and conduct of their business as Owners of the Vessel(s) or as manager of the
      Vessels, as the case may be and will not change the Manager of the Vessels
      or
      substantially change the terms and conditions of the management of the Vessels
      (including the management fees) without prior consultation with the Bank and
      then only if such terms and conditions as the Bank shall approve in writing,
      such approval not to be unreasonably withheld.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    8.04
      The
      Obligors will not operate, or permit the operation of the Vessels in any manner
      (i) which would violate the laws of the flag of the Vessels, the laws of the
      owning company or the laws of the nationality of the officers and crew of the
      Vessels or any other applicable jurisdiction, or (ii) which would render the
      Loan or the Bank's security in the Vessels, its insurances and earnings illegal
      under the laws of any applicable jurisdiction.

    

    8.05
      The
      Obligors undertake that:

    

    (i)
      if at
      any time the market value of the Vessels (as determined in accordance with
      sub-clause (ii) below) together with the value of any additional security for
      the Loan constituted pursuant to the provisions of this Clause 8.05 all as
      certified by the Bank (whose certificate in that respect shall be binding upon
      the Obligors) such sum as so certified by the Bank being for the purposes of
      this Clause 8.05 referred to as "the Security Value" shall be less than one
      hundred and twenty five per cent (125%) of the outstanding amount of the loan
      (such 125% of outstanding amount of the loan being for the purposes of this
      Clause 8.05 referred to as "the Specified Amount") then the Obligors shall
      either:

     

    (1)
      prepay within sixty days of the date of receipt by the Borrower of the Bank's
      said certificate, or on the next Interest Payment Date if the same shall occur
      within such sixty day period, such sum in Dollars as is equal to the amount
      by
      which the Specified Amount exceeds the Security Value, and in the event that
      any
      such prepayment of part of the Loan shall be made otherwise than on the expiry
      of an Interest Period in respect of the Loan, the Borrower shall be obliged
      forthwith to pay to the Bank such amount (if any) that shall be determined
      by
      the Bank to be necessary to compensate the Bank for any loss (including loss
      of
      profits) incurred by it in liquidating or re-employing fixed deposits from
      third
      parties acquired to effect or maintain the Loan or any part thereof until the
      expiry of the then current Interest Periods in respect of the Loan. Any
      prepayment made pursuant to this Clause 8.05(i)(1) shall be applied in reducing
      the remaining repayment instalments as provided in Clause 4.01;

    

    (2)
      within 21 days of the date of receipt by the Borrower of the Bank's said
      certificate constitute to the satisfaction of the Bank such additional security
      for the Loan, as shall be acceptable to the Bank having a value for security
      purposes (as determined by the Bank in its absolute discretion) at the date
      upon
      which such additional security shall be constituted which when added to the
      Security Value so certified by the Bank shall not be less than the Specified
      Amount. Such additional security shall be constituted by:

    

    (a)
      Pledged cash deposits in favour of the Bank in an amount equal to such shortfall
      with the Bank and in an account and manner to be determined by the Bank,
      and/or

    

    (b)
      any
      other security acceptable to the Bank to be provided in a manner determined
      by
      the Bank.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (ii)
      The
      said market value of the Vessels shall be determined for the purposes of
      sub-clause (i) above and when the Bank shall require, by two shipbrokers
      appointed by the Bank who shall value the Vessels on the basis of a sale between
      a willing buyer and a willing seller free of any charter. The average of the
      two
      valuations of such Shipbrokers shall constitute the market value of the Vessels
      for the purposes of sub-clause (i) above and shall be binding upon the parties
      hereto.

    

    (iii)
      All
      reasonable costs in connection with the Bank obtaining any valuation of the
      Vessels referred to in sub-clause (ii) above and any valuation either of any
      additional security for the purposes of ascertaining the Security Value at
      any
      time or necessitated by the Borrower electing to constitute additional security
      pursuant to sub-clause (i) (2) above (including without prejudice to the
      generality of the foregoing costs of the shipbrokers appointed to value the
      Vessels) shall be borne by the Borrower.

    

    8.06
      The
      Corporate Obligors shall establish with the Bank the Earnings Account of the
      Vessels. All payments related to the operation of the Vessels shall be made
      through this account.

    

    8.07
      The
      Obligors shall permit any surveyors or other persons appointed by the Bank
      to
      board the Vessels at all reasonable times for the purpose of inspecting the
      condition of the Vessels or for the purpose of satisfying themselves in regard
      to proposed or executed repairs recommended by the Vessels' Classification
      Society and to afford all proper facilities for such inspection. The Obligors
      shall pay the costs and expenses of the Bank and its surveyors for one yearly
      inspection, if made.

    

    8.08
      The
      Obligors undertake that, in respect of the Vessel "YM XINGANG I" from the date
      of its delivery to the Borrower and in respect of the Vessel "IRINI" from the
      date of this Agreement and as long as any money is due and/or outstanding under
      this Agreement or any other Security Documents, the Obligors shall:

    

    (a)
      at
      all times comply and be responsible for compliance by themselves and the Vessels
      and the Manager, with the ISM Code;

    

    (b)
      at
      all times ensure that:

    

    (i)
      the
      Vessels have a valid Safety Management Certificate,

    

    (ii)
      the
      Vessels are subject to a safety management system which complies with the ISM
      Code; and

    

    (iii)
      the
      Manager of the Vessels has a valid Document of Compliance

    

    (c)
      promptly notify the Bank of any actual or threatened withdrawal of an applicable
      Safety Management Certificate or Document of Compliance;

    

    (d)
      promptly notify the Bank of the identity of the person ashore designated for
      the
      purpose of paragraph 4 of the ISM Code and of any change in the identity of
      that
      person; and

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (e)
      promptly upon becoming aware of the same, notify the Bank of the occurrence
      of
      any accident or major non-conformity requiring action under the ISM
      Code.

    

    8.09
      (a)
      The Obligors
      undertake
      that, in respect of the Vessel "YM XINGANG I" from the date of its delivery
      to
      the Borrower and in respect of the Vessel "IRINI" from the date of this
      Agreement and as long as any money is due and/or outstanding under this
      Agreement or any other Security Document:

    

    (i)
      the
Obligors
      and
      (to
      the best of the Obligors’
      knowledge) their Environmental Affiliates will comply with the provisions of
      applicable Environmental Laws, except where non-compliance will not have a
      Material Adverse Effect;

    

    (ii)
      the
Obligors
      and
      (to
      the best of the Obligors’
      knowledge) their Environmental Affiliates will obtain all requisite
      Environmental Approvals and will comply with such Environmental Approvals,
      except where the failure to obtain or comply with any such Environmental
      Approvals will not have a Material Adverse
      Effect;

    

    (iii)
      neither the Obligors
      nor
      (to
      the best of the Obligors’
      knowledge) any of their Environmental Affiliates will have received notice
      of
      any Environmental Claim which alleges that the Obligors
      are
      not in
      compliance with applicable Environmental Laws or Environmental Approvals, where
      such non-compliance will have a Material Adverse Effect;

    

    (iv)
      there will be no Environmental Claim pending or, to the best of the Obligors’
      knowledge, threatened which will have a Material Adverse Effect;
      and

    

    (v)
      to
      the best of the Obligors’
      knowledge, there will be no Release of Material of Environmental Concern except
      where such event will not have a Material Adverse Effect.

    

    (b)
      The
Obligors
      covenant
      with the Bank that, in respect of the Vessel "YM XINGANG I" from the date of
      its
      delivery to the Borrower and in respect of the Vessel "IRINI" from the date
      of
      this Agreement and as long as any money is due and/or outstanding under this
      Agreement or any other Security Document:

    

    (i)
      they
      shall not trade within any area if the Obligors cannot or do not comply with
      all
      Environmental Laws applicable in that area, and that they shall require that
      none of their Environmental Affiliates trade within any area if the
      Environmental Affiliate cannot or does not comply with all Environmental Laws
      applicable in that area which relate to the Vessel or its operation or its
      carriage of cargo, except where such non compliance would not have a Material
      Adverse Effect;

    

    (ii)
      they
      shall, upon the request of the Bank, conduct and complete all reasonably
      necessary investigations, studies, sampling, audits and testings required in
      connection with any known (or threatened) Release of Materials of Environmental
      Concern which would have a Material Adverse Effect; and

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)
      they shall, promptly upon the occurrence of any of the following events, provide
      to the Bank a certificate of an officer of the Obligors or of the Obligors’
agents specifying in detail the nature of such event and the proposed response
      of the Obligors or Environmental Affiliate concerned:

    

    (A)
      the
      receipt by the Obligors or any Environmental Affiliate (where the Obligors
      have
      knowledge of such receipt) of any Environmental Claim which would have a
      Material Adverse Effect; or

    

    (B)
      any
      (or any threatened) Release of Materials of Environmental Concern which would
      have a Material Adverse Effect,

    

    and
      upon
      the written request by the Bank, the Obligors shall submit to the Bank at
      reasonable intervals a report updating the status of any occurrence of an
      Environmental Claim or a Release of Materials of Environmental Concern, which
      would have a Material Adverse Effect.

    

    8.10
      The
      Borrower undertakes that the family of the Personal Guarantor will maintain
      majority shareholding.

    

    8.11
      The
      Borrower undertakes that the cross default with regard to the Borrower’s other
      obligations and/or those of the Corporate Guarantors will be for over U.S.
      Dollars one million ($ 1.000.000).

    

    8.12
      The
      Borrower undertakes to maintain Maximum leverage (long term debt inclusive
      of
      Curr. Portion divided by total market adjusted assets) at 75% and minimum
“market adjusted” Net Worth of U.S. Dollars fifteen million ($
      15.000.000).

     

    9. CONDITIONS

    

    9.01
      The
      obligation of the Bank to make the Commitment available shall be subject to
      the
      condition that the Bank, or its duly authorised representative, shall have
      received before the day on which the Loan is intended to be advanced, the
      documents and evidence specified in Part 1 of Schedule 2 in form and substance
      satisfactory to the Bank.

    

    9.02
      The
      obligation of the Bank to advance the Loan shall be subject to the condition
      that the Bank, or its duly authorised representative, shall have received on
      or
      prior to the Drawdown Date the documents and evidence specified in Part 2 of
      Schedule 2 in form and substance satisfactory to the Bank.

    

    9.03
      The
      obligation of the Bank to advance the Loan is subject to the further conditions
      that at the time of the giving of the Drawdown Notice for, and at the time
      of
      the advance of the Loan:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (a)
      the
      representations and warranties set out in Clause 7 are true and correct on
      and
      as of each such time as if each was made with respect to the facts and
      circumstances existing at such time;

    

    (b)
      no
      event or circumstance which constitutes or which with the giving of notice
      or
      lapse of time or both would constitute an Event of Default shall have occurred
      and be continuing or would result from the advancing of the Loan;
      and

    

    (c)
      the
      Bank shall be satisfied that there is no a material adverse change in the
      financial condition and operation of the Borrower and/or the Guarantors or
      a
      material adverse change of circumstances.

     

    10. EVENTS
      OF DEFAULT

    

    10.01
      There shall be an Event of Default if:

    

    (a)
      any
      of the Obligors fails to pay any sum payable by them under this Agreement and/or
      any of the Security Documents when due; or

    

    (b)
      any
      of the Obligors commits any breach of or omits to observe any of its obligations
      or undertakings under this Agreement and/or any of the Security Documents (other
      than failure to pay any sum when due) and, in respect of any such breach or
      omission which in the opinion of the Bank is capable of remedy, such action
      as
      the Bank may require shall not have been taken within (14) days of the Bank
      notifying the Obligors of such default and of such required action;
      or

    

    (c)
      any
      representation or warranty made or deemed to be made or repeated by or in
      respect of the Obligors or any other party (other than the Bank) in or pursuant
      to this Agreement and/or any of the Security Documents or in any notice,
      certificate or statement referred to in or delivered under this Agreement and/or
      any of the Security Documents is or proves to have been incorrect in any
      material respect; or

    

    (d)
      any
      Indebtedness of the Obligors is not paid when due or by reason of breach or
      default under the terms of any instrument evidencing or guaranteeing the same
      on
      the part of the Obligors becomes due (or capable of being declared due) prior
      to
      the date when it would otherwise have become due or any guarantee or indemnity
      given by the Obligors in respect of Indebtedness is not honoured when due and
      called upon; or

    

    (e)
      any
      consent, authorisation, licence or approval of or registration with or
      declaration to governmental or public bodies or authorities or courts required
      by the Obligors or any other party (other than the Bank) to authorise, or
      required by the Obligors or any other party (other than the Bank) in connection
      with the execution, delivery, validity or enforceability of this Agreement
      and/or any of the Security Documents or the performance by the Obligors or
      any
      such party of its obligations hereunder or thereunder is modified in a manner
      unacceptable to the Bank or is not granted or is revoked or terminated or
      expires and is not renewed or otherwise ceases to be in full force and effect;
      or 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (f)
      an
      encumbrancer takes possession or a receiver or similar officer is appointed
      of
      the whole or any part of the assets, rights or revenues of any of the Obligors
      or a distress, execution, sequestration or other process is levied or enforced
      upon or sued out against any of the assets, rights or revenues of any of the
      Obligors and is not discharged within thirty days; or

    

    (g)
      any
      of the Obligors suspends payment of its debts or is unable to or admits
      inability to pay its debts as they fall due or proposes or enters into any
      composition or other arrangement for the benefit of its creditors generally
      or
      proceedings are commenced in relation to the Obligors under any law, regulation
      or procedure relating to reconstruction or readjustment of debts;
      or

    

    (h)
      any
      of the Obligors is adjudicated or found bankrupt or insolvent or any order
      is
      made by any competent court or resolution passed by any Corporate Obligor for
      the winding-up or dissolution of such Corporate Obligor or for the appointment
      of a liquidator, trustee or conservator of the whole or any part of its assets,
      rights or revenues; or

    

    (i)
      any
      event occurs or proceeding is taken with respect to the Obligors in any
      jurisdiction to which they are subject which has an effect equivalent or similar
      to any of the events mentioned in Clause 10.01 (f), (g) or (h); or

    

    (j)
      any
      of the Obligors suspends or ceases or threatens to suspend or ceases to carry
      on
      its business; or

    

    (k)
      all
      or a material part of the assets, rights or revenues of any of the Obligors
      are
      seized, nationalised, expropriated or compulsorily acquired by or under the
      authority of any government; or

    

    (1)
      there
      shall occur, in the reasonable opinion of the Bank, a material adverse change
      in
      the financial condition of the Obligors by reference to the financial statements
      referred to in Clause 7.01 (f); or

    

    (m)
      any
      other event occurs or circumstances arise which, in the reasonable opinion
      of
      the Bank, is likely materially and adversely to affect the ability of the
      Obligors or any other party (other than the Bank) to perform all or any of
      their
      obligations under or otherwise to comply with the terms of this Agreement and/or
      of the Security Documents.

    

    10.02
      The
      Bank may, without prejudice to any other rights of the Bank, at any time after
      the happening of an Event of Default (so long as the same is continuing) by
      notice to the Obligors declare that:

    

    (a)
      the
      obligation of the Bank to make the Commitment or any part of the Commitment
      available shall be terminated, whereupon the Commitment shall be terminated
      forthwith; and/or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)
      the
      Loan and all interest and commitment commission accrued and all other sums
      payable under this Agreement have become due and payable, whereupon the same
      shall immediately or in accordance with such notice, become due and
      payable.

     

    11. INDEMNITIES
      AND EXPENSES

    

    11.01
      The
      Obligors shall indemnify the Bank, without prejudice to any of the Bank's other
      rights hereunder, against any loss or expense which the Bank shall certify
      as
      sustained or incurred by it as a consequence of (i) any default in payment
      by
      the Obligors of any sum under this Agreement when due, (ii) any Event of
      Default, (iii) any prepayment of the Loan or part thereof being made under
      Clauses 4.02, 4.03, 12.01, 12.02 or 12.03 otherwise than on an Interest Payment
      Date or (iv) the Loan not being made for any reason (including failure to
      fulfill any of the conditions precedent set out in Schedule 2 but excluding
      any
      default by the Bank) after a Drawdown Notice has been given, including, in
      any
      such case, but not limited to, any loss or expenses sustained or incurred in
      maintaining or funding the Commitment or any part thereof or in liquidating
      or
      re-employing deposits from third parties acquired to effect or maintain the
      Loan
      or any part thereof.

    

    11.02
      No
      payment to the Bank under this Agreement pursuant to any judgment or order
      of
      any court or otherwise shall operate to discharge the obligations of the
      Obligors in respect of which it was made unless and until payment in full shall
      have been received in the currency in which the relevant sum is payable
      hereunder ("the Relevant Currency") and to the extent that the amount of any
      such payment shall on actual conversion into the Relevant Currency fall short
      of
      the amount of the relevant obligation expressed in the Relevant Currency the
      Bank shall have a further separate cause of action against the Obligors for
      the
      recovery of such sum as shall after conversion into the Relevant Currency be
      equal to the amount of the shortfall.

    

    11.03
      The
      Obligors shall pay all stamp, documentary, registration or other like duties
      (including any duties payable by the Bank) imposed on or in connection with
      this
      Agreement and/or any of the Security Documents or the Loan and shall indemnify
      the Bank against any liability arising by reason of any delay or omission by
      the
      Obligors to pay such duties.

    

    11.04
      The
      obligation of the Obligors to pay any amount pursuant to this Clause 11 shall
      constitute a separate and independent obligation of the Obligors from their
      other obligations hereunder and shall not be affected by any indulgence granted
      by the Bank or by judgment being obtained for any other sums due under this
      Agreement and/or any of the Security Documents, and no proof or evidence of
      any
      actual loss shall be required by the Obligors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    12. FORCE
      MAJEURE, UNLAWFULNESS, INCREASED COSTS,

    ALTERNATIVE
      INTEREST RATES

    

    12.01
      The
      Bank shall not be liable for any failure to perform the whole or any part of
      this Agreement and/or any of the Security Documents resulting directly or
      indirectly from the action or inaction of any governmental or local authority
      or
      any strike, lock-out, boycott or blockade effected by or upon the Bank or its
      employees, or from any act of God or war, whether declared or not.

    

    12.02
      If
      any law, regulation or regulatory requirement or any judgment, order or
      direction of any court, tribunal or authority binding upon the Bank in the
      jurisdiction in which it is formed or has its principal office or in which
      any
      action is required to be performed for the purposes of this Agreement, renders
      it unlawful for the Bank to advance, maintain or fund the Loan, the Bank shall
      promptly inform the Obligors. If it shall so be unlawful for the Bank to
      maintain or fund the Loan the Bank shall give notice to the Obligors requiring
      the Obligors to prepay the Loan either (i) forthwith or (ii) on a future
      specified date and the Obligors will prepay the Loan in accordance with and
      subject to such notice and the provisions of Clause 12.04 and 12.05. Without
      prejudice to the obligation of the Obligors to make such prepayment, the
      Obligors and the Bank shall negotiate for a period not exceeding 30 days with
      a
      view to the Bank making available its Commitment and/or maintaining the Loan
      in
      whole or part in a manner which is not unlawful.

    

    12.03
      If
      any law, regulation or any directive, request or requirement (whether or not
      having the force of law) of any central bank, government, fiscal or other
      authority, or any judgment, order or direction of any court, tribunal or
      authority binding upon the Bank in the jurisdiction in which it is formed or
      has
      its principal office or in which any action is required to be performed for
      the
      purposes of this Agreement taking effect after the date of this Agreement or
      if
      compliance by the Bank with any direction, request or requirement (whether
      or
      not having the force of law) of any competent governmental or other authority
      shall:

    

    (a)
      subject the Bank to Taxes or change the basis of Taxation of the Bank with
      respect to any payment under this Agreement (other than Taxes or Taxation on
      the
      overall net income of the Bank imposed in the jurisdiction in which its
      principal office or lending office hereunder is located); or

    

    (b)
      impose, modify or deem applicable any reserve requirements (including any type
      of liquidity, stock or capital adequacy controls or other banking or monetary
      controls or requirements which affect the manner in which the Bank allocates
      capital resources to its obligations hereunder) or require the making of any
      special deposits against or in respect of any assets or liabilities of, deposits
      with or for the account of, or loans by, the Bank; or

    

    (c)
      impose on the Bank any other condition with respect to this Agreement or its
      obligations hereunder, and, as a result of any of the foregoing, the cost to
      the
      Bank of making or keeping the Commitment available for advance or maintaining
      or
      funding the Loan is increased or the amount payable or the effective return
      to
      the Bank under this Agreement is reduced or the Bank makes a payment or forgoes
      a return on or calculated by reference to any amount payable to it under this
      Agreement, then and in each such case:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (i)
      on
      demand, the Obligors shall pay to the Bank the amount which the Bank specifies
      (in a certificate setting forth the basis of the computation of such amount,
      which certificate, save for manifest error, shall be conclusive and binding
      on
      the Obligors) to be required to compensate the Bank for such increased cost,
      reduction, payment or forgone return; and

    

    (ii)
      the
      Obligors may, at any time after receipt of such demand and certificate notify
      the Bank that they will prepay all (but not part only) of the Loan whereupon
      the
      Obligors shall prepay the Loan to the Bank in accordance with and subject to
      the
      provisions of Clause 12.05

    

    Any
      demand under Clause 12.03 (i) may be made at any time before or within 12 months
      after the end of any Interest Period to which such demand relates whether or
      not
      the Loan has been repaid.

    

    12.04
      (a)
      If and whenever, at any time prior to the commencement of any Interest Period
      the Bank shall have determined (which determination shall, in the absence of
      manifest error, be conclusive) that:

    

    (1)
      adequate and fair means do not exist for ascertaining the rate of interest
      during such Interest Period pursuant to Clause 3.01; or

    

    (2)
      deposits in Dollars are not available to the Bank in the London Interbank
      Eurocurrency market in sufficient amounts in the ordinary course of business
      for
      such Interest Period; or

    

    (3)
      by
      reason of circumstances affecting the London Interbank Eurocurrency market
      generally it is impracticable for the Bank to fund or continue to fund the
      Loan
      during such Interest Period;

    

    the
      Bank
      shall forthwith give notice of such determination to the Obligors.

    

    (b)
      During the period of 14 days after any notice has been given by the Bank under
      Clause 12.04 (a), the Bank shall certify (having consulted with the Obligors)
      an
      alternative basis (the "Substitute Basis") for the continuance of the Loan.
      The
      Substitute Basis may (without limitation) include alternative interest periods,
      alternative currencies or alternative rates of interest but shall include a
      margin above the cost of funds to the Bank or equivalent to the Margin. The
      Substitute Basis shall be binding upon the Obligors and shall be retroactive
      to
      and take effect in accordance with its terms from the date specified in the
      notice given by the Bank. During the period when a Substitute Basis is in force
      the Obligors and the Bank shall consult not less frequently than once every
      30
      days with a view to reverting to the normal provisions of this Agreement as
      soon
      as practicable.

    

    (c)
      If
      the Obligors determine within 14 days of receipt of such certificate that they
      do not wish to continue to borrow the Loan they shall forthwith notify the
      Bank
      whereupon the Obligors shall forthwith prepay the Loan in accordance with and
      subject to the provisions of Clauses 12.04 and 12.05 together with accrued
      interest to the date of prepayment, calculated from the date specified in the
      notice given by the Bank at a rate per annum equal to the rate certified by
      the
      Bank to be an interest rate equivalent to the cost to the Bank of funding the
      Loan during the period commencing on the date specified in the notice given
      by
      the Bank and ending on the date of prepayment plus the Margin.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    12.05
      When the Loan is to be prepaid by the Obligors pursuant to this Clause 12,
      the
      Obligors shall, at the time of such prepayment, pay to the Bank accrued interest
      thereon to the date of actual payment, any additional amount payable under
      Clause 12.03 and all other sums payable by the Obligors to the Bank pursuant
      to
      this Agreement, including, without limitation, any amounts payable under Clause
      11.

     

    13. SET-OFF
      SECURITY

    

    13.01
      Each Corporate Obligor shall procure that all monies payable to it in respect
      of
      the Earnings (as that expression is defined in the Earnings Assignment in
      respect of the relevant Vessel) of its relevant Vessel shall be paid to the
      Earnings Account with the Bank.

    

    13.02 (a)
      Upon
      the Bank’s request and for so long as any moneys are owing under this Agreement,
      the Corporate Obligors hereby jointly and severally undertake to pay to the
      Bank
      for credit to the Retention Account, at monthly intervals (each such day being
      hereinafter called "Monthly Retention Date") such sum (each sum being
      hereinafter called "Monthly Retention Amount") as shall be the aggregate
      of:

    

    i.
      one
      third (1/3rd) of the amount of the Repayment Instalment next falling due for
      payment pursuant to Clause 4.01;

    

    ii.
      the
      Applicable Fraction (as hereinafter defined) of the amount of interest falling
      due for payment in respect of each part of the Loan at the end of each of the
      Interest Periods current at the time of the relevant Monthly Retention Date
      and,
      for the purpose of this Clause, the expression "Applicable Fraction" in relation
      to each Interest Period shall mean a fraction having a numerator of one and
      a
      denominator equal to the number of Monthly Retention Dates falling within the
      relevant Interest Period.

    

    (b)
      Unless and until there shall occur an Event of Default (whereupon the provisions
      of Clause 13.02(c) shall be applicable) all Monthly Retention Amounts credited
      to the Retention Account together with interest from time to time accruing
      or at
      any time accrued thereon shall be set-off and applied by the Bank (and each
      of
      the Corporate Obligors hereby irrevocably authorise the Bank so to set-off
      and
      apply the same and release the Bank to the extent of such set-off and
      application) upon each Interest Payment Date in or towards payment of the
      Repayment Instalment then falling due and/or (as the case may be) the amount
      of
      interest then due. Each such set-off application by the Bank shall constitute
      a
      payment in or towards satisfaction of the Corporate Obligors' corresponding
      payment obligations under this Agreement but shall be strictly without prejudice
      to the obligations of the Corporate Obligors to make any such payment to the
      extent that the aforesaid set-off application by the Bank is insufficient to
      meet the same.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c)
      Upon
      the occurrence of an Event of Default or at any time thereafter, the Bank shall
      be entitled to set-off and apply all sums standing to the credit of the
      Retention Account and accrued interest (if any) without notice to any of the
      Corporate Obligors in the manner specified in Clause 12.03 (and each of the
      Corporate Obligors hereby irrevocably authorises the Bank so to set-off and
      apply the same and releases the Bank to the extent of such set-off and
      application).

    

    (d)
      Any
      amount for the time being standing to the credit of the Retention Account shall
      bear interest (which shall be credited to the Retention Account) at the rate
      normally offered by the Bank for similar accounts (unless otherwise agreed
      between the Bank and the Corporate Obligors).

    

    (e)
      Each
      of the Corporate Obligors hereby undertakes to pledge to the Bank the Retention
      Account and agrees not to assign, transfer or suffer any Encumbrance to arise
      over the whole or any part of the Retention Account.

    

    (f)
      Each
      of the Corporate Obligors agrees and confirms that none of the Corporate
      Obligors shall be entitled to draw from the Retention Account. (And the Bank
      shall have no obligation to pay to any Corporate Obligor any sums from time
      to
      time standing to the credit of the Retention Account or any interest
      thereon).

    

    13.03
      All
      monies received by the Bank under or pursuant to any of the Security Documents
      and expressed to be applicable in accordance with the provisions of this Clause
      13.01 shall be applied by the Bank in the following manner:

    

    (a)
      first
      in or towards payment of all sums other than principal or interest which may
      be
      owing to the Bank under this Agreement and the Security Documents or any of
      them.

    

    (b)
      secondly in or towards any arrears of interest owing in respect of the Loan
      or
      any part thereof.

    

    (c)
      thirdly in or towards repayment of the Loan.

    

    (d)
      fourthly the surplus (if any) shall be paid to the Obligors or to whomsoever
      else may be entitled to receive such surplus.

    

    13.04
      The
      Obligors hereby authorise the Bank without prejudice to any of the Bank's rights
      at law, in equity or otherwise, at any time in the Event of Default and without
      notice to the Obligors:

    

    (a)
      to
      apply any credit balance standing upon any account of the Obligors with any
      branch of the Bank and in whatever currency in or towards satisfaction of any
      sum due to the Bank under this Agreement and/or any of the Security
      Documents;

    

    (b)
      in
      the name of the Obligors and/or the Bank to do all such acts and execute all
      such documents as may be necessary or expedient to effect such application;
      and

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c)
      to
      combine and/or consolidate all or any accounts in the name of the Obligors
      with
      the Bank.

    

    13.05
      The
      Obligors hereby covenant and undertake that the Security Documents shall both
      at
      the date of execution and delivery thereof and so long as any monies are owing
      under this Agreement or thereunder be valid and binding obligations of the
      respective parties thereto and rights of the Bank enforceable in accordance
      with
      their respective terms and that they will, at their expense, execute, perfect
      and do any and every such further assurance, document, act or thing as in the
      reasonable opinion of the Bank may be necessary or desirable for perfecting
      the
      security contemplated or constituted by the Security Documents.

     

    14. ASSIGNMENT
      AND LENDING OFFICES

    

    14.01
      This Agreement shall be binding upon, and enure for the benefit of, the Bank
      and
      the Obligors and their respective successors.

    

    14.02
      The
      Obligors may not assign or transfer any of their rights or obligations under
      this Agreement.

    

    14.03
      The
      Bank may assign or transfer all or any part of its rights, benefits or
      obligations under this Agreement to any one or more banks or other financial
      institutions (each of which is called an "Assignee" for the purposes of this
      Clause 14).

    

    Provided
      that any assignment or transfer of all or part of the Bank's rights or benefits
      under this Agreement shall not cause the Obligors to be required to pay any
      additional amounts under the provisions of Clause 6.03 as at the date of such
      assignment or transfer except where any such payment had already, or would
      already have, become due to the Bank under such provisions as at such
      date.

    

    Any
      assignment or transfer of all or part of the Bank's rights or benefits under
      this Agreement may only be effected with the prior written consent of the
      Obligors such consent not to be unreasonably withheld unless the assignee or
      the
      transferee shall be a subsidiary or the holding company of the Bank or a
      subsidiary of such holding company in which case no such consent shall be
      required but written notice of such assignment or transfer shall be given to
      the
      Obligors.

    

    14.04
      If
      the Bank assigns or transfers its rights, benefits or obligations as provided
      in
      Clause 14.03 all relevant references in this Agreement to the Bank shall
      thereafter be construed as a reference to the Bank and/or its assignee(s) and/or
      its transferee(s)to the extent of their respective interests and, in the case
      of
      an assignment or transfer of all or part of the Bank's obligations, the Obligors
      shall thereafter look only to the assignee or transferee in respect of that
      proportion of the Bank's obligations hereunder as corresponds to the obligations
      assumed by such assignee or transferee.

    

    14.05
      The
      Bank shall lend initially through its office at Piraeus and subsequently through
      any other office of the Bank selected from time to time by it through which
      the
      Bank wishes to lend for the purposes of this Agreement. If the office through
      which the Bank is lending is changed pursuant to this Clause 14.05, the Bank
      shall notify the Obligors promptly of such change.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    14.06
      The
      Bank may disclose to a potential assignee, transferee or to any other person
      who
      may propose entering into contractual relations with the Bank in relation to
      this Agreement such information about the Obligors as the Bank shall consider
      appropriate, such information to be treated as confidential.

     

    
      15.  GUARANTEE

    

     

    15.
      01
Guarantee

    

    In
      consideration of the Bank making or continuing the Loan to the Borrower and
      for
      other sufficient consideration (receipt whereof each Guarantor hereby
      acknowledges), each Guarantor hereby irrevocably and
      unconditionally:

    

    (a)
      guarantees to the Bank, as principal obligor and not merely as surety, and
      waiving all rights and objections granted by the Law to each Guarantor, due
      and
      prompt performance by the Borrower of all its obligations under this Agreement
      and the Security Documents and the payment of all sums payable now or in the
      future to the Bank by the Borrower thereunder or in connection therewith when
      and as the same shall become due, and

    

    (b)
      undertakes with the Bank that if and whenever the Borrower shall be in default
      in the payment of any sum whatsoever under the Security Documents or in
      connection therewith, such Guarantor will on demand pay such sum as if such
      Guarantor instead of the Borrower were expressed to be the primary obligor,
      together with interest thereon at the rate per annum from time to time payable
      by the Borrower on such sum from the date when such sum becomes payable by
      such
      Guarantor hereunder until payment of such sum in full.

     

    
      15.02 Continuing
        guarantee

    

    

    This
      guarantee is a continuing guarantee and shall extend to the ultimate balance
      of
      all sums payable by the Borrower under the Security Documents.

     

    
      15.03 Reinstatement

    

    

    Where
      any
      discharge (whether in respect of the obligations of the Borrower or any security
      therefor or otherwise) is made in whole or in part or any arrangement is made
      on
      the faith of any payment, security or other disposition which is avoided or
      must
      be repaid on bankruptcy, liquidation or otherwise without limitation, the
      liability of the Guarantors under this guarantee shall continue as if there
      had
      been no such discharge or arrangement. The Bank shall be entitled to concede
      or
      compromise any claim that any such payment, security or other disposition is
      liable to avoidance or repayment.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      15.04 Waiver
        of defences

    

    

    The
      obligations of each Guarantor hereunder shall not be affected by any act,
      omission, matter or thing which but for this provision might operate to release
      or otherwise exonerate such Guarantor from its obligations hereunder in whole
      or
      in part, including without limitation and whether or not known to such Guarantor
      or the Bank:

    

    (a)
      any
      time or waiver granted to or composition with the Borrower, another Guarantor
      or
      any other person.

    

    (b)
      the
      taking, variation, compromise, renewal or release of or refusal or neglect
      to
      perfect or enforce any rights, remedies or securities against the Borrower
      another Guarantor or any other person.

    

    (c)
      any
      legal limitation, disability incapacity or other circumstances relating to
      the
      Borrower, another Guarantor or any other person.

    

    (d)
      any
      variation or any Security Document or any other document or security so that
      references to these conditions in this guarantee shall include each such
      variation.

    

    (e)
      any
      unenforceability, invalidity or frustration of any obligation of the Borrower
      or
      any other person under the Security Documents or any other document or security,
      to the intent that the Guarantors' obligations hereunder shall remain in full
      force and this guarantee be construed accordingly as if there were no such
      unenforceability, invalidity or frustration.

     

    
      15.05 Immediate
        recourse

    

    

    Each
      Guarantor waives any right it may have of first requiring the Bank to proceed
      against or enforce any other rights or security of or claim payment from
      Borrower or any other person before claiming from a Guarantor
      hereunder.

     

    
      15.06 Non-competition

    

    

    Until
      all
      amounts which may be or become payable by the Borrower under this Agreement
      and
      the Security Documents or in connection therewith have been irrevocably paid
      in
      full, the Guarantors shall not, in any event of default:

    

    (a)
      be
      subrogated to any rights, security or moneys held, received or receivable by
      the
      Bank or be entitled to any right of contribution in respect of any payment
      made
      or moneys received on account of the Guarantors' liability
      hereunder.

    

    (b)
      be
      entitled and shall not claim to rank as creditor against the estate or in the
      bankrupcy or liquidation of the Borrower in competition with the
      Bank.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)
      receive, claim or have the benefit of any payment, distribution or security
      from
      or on account of the Borrower or exercise any right of set-off as against the
      Borrower.

    

    The
      Guarantors shall forthwith pay to the Bank an amount equal to any such set-off
      in fact exercised by it and shall hold in trust for and forthwith pay or
      transfer, as the case may be, to the Bank any such payment or distribution
      or
      benefit of security in fact received by it.

     

    15.07 Confirmation

    

    Each
      Guarantor confirms that the giving of this guarantee by such Guarantor is to
      the
      commercial benefit of such Guarantor in that such Guarantor has close financial
      cooperation and mutual assistance with the Borrower.

     

    15.08
      Additional
      security

    

    This
      guarantee shall be in addition to and shall not in any way be prejudiced by
      any
      other security now or hereafter held by the Bank as security for the obligations
      of the Borrower.

     

    15.09
      Certificate

    

    A
      certificate of the Bank as to any amount owing from the Borrower under the
      Security Documents shall be conclusive evidence (save of manifest error) of
      such
      amount as against the Guarantors.

     

    16. NOTICES
      AND OTHER MATTERS

    

    16.01
      Every notice, request, demand or other communication under this Agreement shall
      be in writing delivered personally or by registered letter, fax or telex
      (confirmed in the case of a telex by registered letter sent within twenty four
      hours of its despatch). Every notice, request, demand or communication shall,
      subject as otherwise provided in this Agreement, be deemed to have been
      received, in the case of a fax or telex at the time of despatch thereof
      (provided that if the date of despatch is not a Business Day in the country
      of
      the addressee it shall be deemed to have been received at the opening of
      business on the next such Business Day) and in the case of a letter when
      delivered personally or 3 days after it has been put in to the
      post.

     

    16.02
      Every notice, request, demand or other communication shall be sent:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	 	
                (1)

              	
                to
                  the Obligors at:

              
	 	 	
                c/o
                  Eurobulk Ltd

              
	 	 	
                Aethrion
                  Center

              
	 	 	
                40,
                  Ag. Konstantinou Ave.

              
	 	 	
                151
                  24 Maroussi, Greece

              
	 	 	
                Fax:
                  (+30) 211 180 4097

              
	 	 	
                Tel.:

              
	 	 	 
	 	
                (2)

              	
                to
                  the Bank at:

              
	 	 	
                93
                  Akti Miaouli

              
	 	 	
                185
                  38 Piraeus, Greece

              
	 	 	
                Attention:
                  the Manager

              
	 	 	
                Telephone:
                  (+30) 210 6960 000

              
	 	 	
                Fax:
                  (+30) 210 4290 506

              

      

    

     

    or
      such
      other address or telex number as is notified by one party to the other party
      hereunder.

    

    16.03
      Process Agent.

    Mr.
      Patrick Hawkins of Messrs. Hill Taylor Dickinson, of 2, Defteras Merarchias,
      185
      35 Piraeus, Greece, is hereby appointed by the Obligors as agent to accept
      service (hereinafter "Process Agent") upon whom any judicial process may be
      served and any notice, request, demand or other communication under this
      Agreement or any of the Security Documents. In the event that the Process Agent
      (or any substitute process agent notified to the Bank in accordance with the
      foregoing) cannot be found at the address specified above (or, as the case
      may
      be notified to the Bank), which will be conclusively proved by a deed of a
      process server to the effect that the Process Agent was not found to that
      address, any process notice, request, demand or other communication to be sent
      to any Security Party may be validly effected upon the District Attorney of
      the
      First Instance Court of Piraeus.

    

    16.04
      No
      failure or delay on the part of the Bank to exercise any power, right or remedy
      under this Agreement and/or any of the Security Documents shall operate as
      a
      waiver thereof, nor shall any single or partial exercise by the Bank of any
      power, right or remedy preclude any other or further exercise thereof or the
      exercise of any other power, right or remedy. The remedies provided herein
      and
      in the Security Documents are cumulative and are not exclusive of any remedies
      provided by law.

    

    16.05
      All
      certificates, instruments and other documents to be delivered under or supplied
      in connection with this Agreement shall be in the English language or shall
      attach a certified English translation thereof, which translation shall be
      the
      governing version.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    16.06
      Any
      provision of this Agreement prohibited by or unlawful or unenforceable under
      any
      applicable law actually applied by any court of competent jurisdiction shall,
      to
      the extent required by such law, be severed from this Agreement and rendered
      ineffective so far as is possible without modifying the remaining provisions
      of
      this Agreement. Where however the provisions of any such applicable law may
      be
      waived, they are hereby waived by the parties hereto to the full extent
      permitted by such law to the end that this Agreement shall be a valid and
      binding agreement enforceable in accordance with its terms.

    

    16.07
      Money Laundering

    Any
      borrowing by the Borrower and the performance of its obligations hereunder
      and
      under the other Security Documents to which it is a party will be for its own
      account and will not involve any breach by it of any law or regulatory measure
      relating to money laundering as defined in Article 1 of the Directive
      (91/308/EEC) of the Council of the European Communities or any equivalent law
      or
      regulatory measure in any other jurisdiction.

     

    17. LAW
      AND JURISDICTION

    

    17.01
      This Agreement shall be governed by and construed in accordance with the laws
      of
      England.

    

    17.02
      For
      the exclusive benefit of the Bank, each of the Obligors hereby irrevocably
      submits to the non-exclusive jurisdiction of the High Court of Justice in
      London, England. Further, the Obligors agree that any summons, writ or other
      legal process issued against them in England shall be served upon Messrs. HILL
      TAYLOR DICKINSON, currently located at Irongate House, Duke’s Place, London EC3A
      7LP, United Kingdom (tel.: 0044207-2839033, fax: 0044207- 2831144) or their
      successors, who are hereby authorised to accept such service which shall be
      deemed to be good service on the Obligors.

    

    17.03
      The
      Obligors further irrevocably agree that the Courts of Piraeus, Greece, shall
      have jurisdiction over any proceedings arising hereunder and each Obligor hereby
      irrevocably submits to the jurisdiction of such courts for such
      purpose.

    

    17.04
      Nothing herein shall limit the right of the Bank to take proceedings against
      the
      Obligors in any other court of competent jurisdiction, whether concurrently
      or
      not.

    

    17.05
      To
      the extent that each Obligor or any of its property may in any jurisdiction
      enjoy or be entitled to exemption or immunity from any legal process (including
      without limitation any relief or execution) each Obligor hereby irrevocably
      agrees not to claim or invoke and hereby irrevocably waives such exemption
      or
      immunity to the full extent permitted by the law of such
      jurisdiction.

     

    18. JOINT
      AND SEVERAL LIABILITY

    

    Each
      of
      the Obligors' obligations under this Agreement are joint and several. No
      Obligors' obligations shall in any way be avoided, discharged or released or
      otherwise adversely affected if for any reason whatsoever (i) any other Obligor
      does not become a party to this Agreement or any Security Document or is at
      any
      time not effectively bound by the terms of this Agreement or any Security
      Document or (ii) this Agreement or any Security Document or the liabilities
      of
      any other Obligor are at any time in any way or to any extent avoided
      invalidated discharged released or otherwise adversely affected. For the purpose
      of this Agreement and the Security Documents the Agreement by one Obligor with
      the Bank to any matter or thing shall be deemed to be Agreement of all the
      Obligors who shall be bound accordingly.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    IN
      WITNESS WHEREOF
      the
      parties hereto have caused this Agreement to be duly executed the day and year
      first above written.

    

    

    Signed
      by

    

    for
      and
      on behalf of

    XINGANG
      SHIPPING LTD

    in
      the
      presence of:

    
 

    Signed
      by

    

    for
      and
      on behalf of

    DIANA
      TRADING LTD

    in
      the
      presence of:

    

     

    Signed
      by

    

    for
      and
      on behalf of

    EUROSEAS
      LTD

    in
      the
      presence of:

    

    

    

    

    Signed
      by

    

    for
      and
      on behalf of

    HSBC
      BANK PLC

    in
      the
      presence of:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      1

    

    

    Form
      of Drawdown Notice

    (referred
      to in Clause 2.02)

     

    To
      HSBC
      BANK PLC

    

    

    

    U.S.
      $
      20.000.000 Floating Rate Loan

    Loan
      Agreement dated November
      14, 2006

    

     

    We
      refer
      to the above Loan Agreement and hereby:

     

    (1)
      give
      you notice that we wish you to advance of U.S. $ 20.000.000 to us on
and
      select a first Interest Period in respect thereof of months,
      the first Interest Period to expire on   .

    

    The
      above
      amount to be credited to the Account: 

     

    (2)
      confirm that:

     

    (i)
      no
      event or circumstance has occurred and is continuing which constitutes or which
      with the giving of notice or lapse of time or both would constitute an Event
      of
      Default under the Loan Agreement.

     

    (ii)
      the
      representations and warranties contained in Clause 7 of the Loan Agreement
      are
      true and correct at the date hereof as if made with respect to the facts and
      circumstances existing at such date.

     

    (iii)
      the
      borrowing to be effected by such advance will be within our corporate powers,
      has been validly authorized by appropriate corporate action and will not cause
      any limit on our borrowings (whether imposed by statute, regulation, agreement
      or otherwise) to be exceeded.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (iv)
      there has been no material adverse change in our financial
      position.

    
 

    SIGNED
      by

    for
      and
      on behalf of

    

    

    

    ___________________________

    XINGANG
      SHIPPING LTD 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      2

    

    

    Documents
      and evidence required

    as
      conditions precedent

    
 

    Part
      1

    

    (a)
      copy
      of all documents which contain or establish or relate to the constitution of
      the
      Corporate Obligors including transfer of shares and election of Board of
      Directors.

    

    (b)
      Resolutions duly passed at meeting(s) of the Board of Directors and Shareholders
      of the Corporate Obligors duly convened and held approving the Loan Agreement
      and the Security Documents and authorising their signature, delivery and
      performance.

    

    (c)
      an
      opinion of the Law Office of Roger Constantinides special legal advisers in
      Greece to the Bank and an opinion of the Obligors' Lawyer.

    

    (d)
      there
      has been no material adverse change in the financial conditions and/or
      operations of the Borrower and/or the Corporate Guarantors.

    
 

    Part
      2

    

    
      (a) evidence
        that each Vessel:

    

    

    (i)
      is
      registered in the name of the relevant Borrower or the Corporate Guarantor
      free
      of encumbrances other than Permitted Encumbrances

    

    (ii)
      is
      classed highest with its respective Classification Society, such Classification
      Society to be acceptable to the Bank

    

    (iii)
      is
      insured in accordance with the provisions of the Mortgage and the Assignment
      and
      all requirements of the Mortgage and the Assignment in respect of such
      Insurances have been complied with.

    

    

    (b)
      the
      following security Documents duly executed:

    

    (i)
      Personal Guarantee duly executed by the Personal Guarantor

    

    (ii)
      First Preferred Liberian Mortgage on the Vessel "YM XINGANG I"

    

    (iii)
      Deed of Assignment of Insurances, Earnings and any Requisition Compensation
      of
      the Vessel "YM XINGANG I"

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (iv)
      Third Preferred Marshall Islands Mortgage on the Vessel "IRINI"

    

    (v)
      Deed
      of Assignment of Insurances, Earnings and any Requisition Compensation of the
      Vessel "IRINI"

    

    (vi)
      Specific Assignment of the Vessel’s "YM XINGANG I" time charter to "Yangming
      (UK) Ltd" of London, a 100% subsidiary company of "Yangming Marine Transport
      Corp., Keelung"

     

    (c)
      evidence that each Mortgage has been registered against each
      Vessel.

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