20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 20-F

_________________

(Mark One)
☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the transition period from _________________ to _________________
OR
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report
	Commission file number 001-33283

EUROSEAS LTD.

(Exact name of Registrant as specified in its charter)

Not applicable

(Translation of Registrant’s name into English)

Republic of the Marshall Islands

(Jurisdiction of incorporation or organization)

4 Messogiou & Evropis Street, 151 24 Maroussi Greece

(Address of principal executive offices)

Tasos Aslidis, Tel: (908) 301-9091, euroseas@euroseas.gr, Euroseas Ltd. c/o Tasos Aslidis,11 Canterbury Lane, Watchung, NJ 07069

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, $0.03 par value	ESEA	Nasdaq Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report
	7,294,541 common shares, $0.03 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

☐   Yes       ☒   No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐   Yes       ☒   No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   

☒   Yes       ☐   No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☒   Yes       ☐   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or an emerging growth company.  See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒
		Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☒	U.S. GAAP
☐	International Financial Reporting Standards as issued by the International Accounting Standards Board.
☐	Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow  

☐   Item 17       ☐   Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐  Yes        ☒   No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐  Yes        ☐  No

TABLE OF CONTENTS

		Page
Forward-Looking Statements		1
Part I
Item 1.	Identity of Directors, Senior Management and Advisers	3
Item 2.	Offer Statistics and Expected Timetable	3
Item 3.	Key Information	3
Item 4.	Information on the Company	37
Item 4A.	Unresolved Staff Comments	56
Item 5.	Operating and Financial Review and Prospects	56
Item 6.	Directors, Senior Management and Employees	71
Item 7.	Major Shareholders and Related Party Transactions	76
Item 8.	Financial Information	79
Item 9.	The Offer and Listing	81
Item 10.	Additional Information	81
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	92
Item 12.	Description of Securities Other than Equity Securities	93
Part II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	93
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	93
Item 15.	Controls and Procedures	93
Item 16A.	Audit Committee Financial Expert	95
Item 16B.	Code of Ethics	95
Item 16C.	Principal Accountant Fees and Services	95
Item 16D.	Exemptions from the Listing Standards for Audit Committees	95
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	95
Item 16F.	Change in Registrant’s Certifying Accountant	95
Item 16G.	Corporate Governance	95
Item 16H.	Mine Safety Disclosure	96
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	96
Part III
Item 17.	Financial Statements	96
Item 18.	Financial Statements	96
Item 19.	Exhibits	96

FORWARD-LOOKING STATEMENTS

Euroseas Ltd. and its wholly owned subsidiaries, or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This annual report contains forward-looking statements. These forward-looking statements include information about possible or assumed future results of our operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding:

● our future operating or financial results;

● future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating expenses;

● container shipping industry trends, including charter rates and factors affecting vessel supply and demand;

● fluctuations in our stock price as a result of volatility in securities markets;

● the impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies;

● our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;

● availability of crew, number of off-hire days, drydocking requirements and insurance costs;

● our expectations about the availability of vessels to purchase or the useful lives of our vessels;

● our expectations relating to dividend payments and our ability to make such payments;

● our ability to leverage to our advantage our Manager’s relationships and reputations in the container shipping industry;

● changes in seaborne and other transportation patterns;

● changes in governmental rules and regulations or actions taken by regulatory authorities;

● potential liability from future litigation;

● global and regional political conditions;

● acts of terrorism and other hostilities, including piracy;

● the severity and duration of natural disasters or public health emergencies, including the spread of coronavirus (“COVID-19”), including possible delays due to the quarantine of vessels and crew, as well as government-imposed shutdowns; and

● other factors discussed in the section titled “Risk Factors.”

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WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNUAL REPORT, EXCEPT AS REQUIRED BY LAW, OR THE DOCUMENTS TO WHICH WE REFER YOU IN THIS ANNUAL REPORT, TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH RESPECT TO SUCH STATEMENTS OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY STATEMENT IS BASED.  

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

Please note:  Throughout this report, all references to "we," "our," "us" and the "Company" refer to Euroseas Ltd. and its subsidiaries. We use the term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. We use the term twenty-foot equivalent unit, or teu, in describing the size of our containerships in addition to dwt. Teu, expressed in number of containers, refers to the maximum number of twenty-foot long containers that can be placed on board. Unless otherwise indicated, all references to "dollars" and "$" in this report are to, and amounts are presented in, U.S. dollars.  All share and per share amounts have been adjusted to account for the 1-for-8 reverse stock split, effective at the close of trading on December 18, 2019.

A. [Reserved]

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

Any investment in our common stock involves a high degree of risk. You should consider carefully the following factors, as well as the other information set forth in this annual report, before making an investment in our common stock. Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate to the securities market for, and ownership of, our common stock. Any of the described risks could significantly and negatively affect our business, financial condition, operating results and common stock price. The following risk factors describe the material risks that are presently known to us.

Risk Factors Summary

● The uncertainties in global and regional demand for chartering containerships;

● The volatile container shipping market and difficulty finding profitable charters for our vessels;

● Fluctuations in our stock price as a result of volatility in securities markets;

● The impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including possible delays due to the quarantine of vessels and crew, as well as government-imposed shutdowns;

● Our ability to comply with various financial and collateral covenants in our credit facilities;

● Uncertainties related to the market value of our vessels;

● Uncertainties related to the supply and demand of containership vessels;

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● The impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our ESG policies;

● Disruption of world trade due to rising protectionism or the breakdown of multilateral trade agreements;

● Disruptions in global financial markets relating to terrorist attacks or geopolitical risk and the recent conflict between Russia and Ukraine;

● Uncertainties related to conducting business in China;

● Our dependence on a limited number of customers operating in a consolidating industry;

● Our ability to enter into time charters with existing and new customers, and to re-charter our vessels upon the expiry of existing charters;

● Uncertainties related to our counterparties’ ability to meet their obligations, which could adversely affect our business;

● Our ability to obtain additional debt financing for future acquisitions of vessels or to refinance our existing debt;

● Uncertainties related to availability of new or secondhand vessels to acquire;

● Uncertainties related to the price of fuel, and our reliance on suppliers;

● Our ability to attract and retain qualified, skilled crew at reasonable cost;

● A potential increase in operating costs associated with the aging of our fleet;

● Our ability to leverage to our advantage our Manager’s relationships and reputation within the container shipping industry;

● Volatility in, and related to the discontinuance of the London Interbank Offered Rate, (“LIBOR”);

● Our ability to hedge against fluctuations in exchange rates and interest rates;

● The expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as requirements imposed by classification societies and standards demanded by our charterers;

● The expected cost of, and our ability to comply with, changing environmental and operational safety laws;

● Potential cyber-attacks which may disrupt our business operations;

● Potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists and armed conflicts;

● Potential conflicts of interest between us, our principal officers and our Manager;

● Uncertainties related to compliance with sanctions and embargo laws;

● Uncertainties in the interpretation of corporate law in the Marshall Islands;

● Uncertainties over our ability to pay dividends;

● The expected costs associated with complying with public company regulations; and

● The effect of issuance of preferred stock on the voting power of our shareholders.

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Industry Risk Factors

Our future profitability will be dependent on the level of charter rates in the international container shipping industry.

We are an independent shipping company that operates in the container shipping industry. Our profitability is dependent upon the charter rates we are able to charge for our ships. The supply of, and demand for, shipping capacity strongly influences charter rates. The demand for shipping capacity is determined primarily by the demand for containerized goods trade and the distance that those goods must be moved by sea. The demand for trade is affected by, among other things, world and regional economic and political conditions (including developments in international trade, economic slowdowns caused by public health events such as the COVID-19 pandemic, fluctuations in industrial and agricultural production and armed conflicts), environmental concerns, weather patterns, and changes in seaborne and other transportation costs. The size of the existing fleet in a particular market, the number of new vessel deliveries, the scrapping of older vessels and the number of vessels out of active service (i.e., laid-up, drydocked, awaiting repairs or otherwise not available for hire) determine the supply of shipping capacity, which is measured by the amount of suitable tonnage available to carry cargo.

In addition to the prevailing and anticipated charter rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of the existing fleet in the market and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions. Some of these factors may have a negative impact on our revenues and net income.

The cyclical nature of the shipping industry may lead to volatile changes in charter rates, which may reduce our revenues and negatively affect our results of operations.

Containership rates have experienced volatility in the past five years. Beginning in early 2017, containership rates started a slow recovery from 2016’s declining trend that had been underway for a few years. In the second half of 2017, rates initially stabilized and then slightly eased. In 2018 rates initially increased through May to levels last seen in the second half of 2015, but still remained below their historical average. Thereafter, a decline began that erased the entirety of the gains by year end. Containership rates started in a depressed state in 2019 but by March had gradually strengthened to levels that, although were below those achieved in the first quarter of 2018, were noticeably higher than the low rates seen in 2016. The remainder of the year saw one of the slowest growth rates in the containerized trade, as global economic growth weakened and continued fears of a U.S.-China ‘trade war’ escalated. In January 2020, freight rates rose initially, only to decrease significantly as a result of the COVID-19 pandemic, which resulted in disruptions to industrial production and supply chains and caused uncertainty in the short-term outlook for the sector. However, during the final quarter of 2020, containership rates increased across all segments, drawing a more positive picture for the future. That sentiment continued throughout 2021, with containership rates surpassing the last ten-year historical medians. In addition, employment rates have been increasing across all segments in the first months of 2022, reaching all-time highs.   

Rates in the containership market are influenced by the balance of demand for and supply of vessels and may decline again in the future.  Because the factors affecting the supply of and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are unpredictable, and as a result so are the rates at which we can charter our vessels.  In addition, we may not be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends to our shareholders.

Some of the factors that influence demand for vessel capacity include:

● supply of, and demand for, containerized cargo;

● changes in the production of semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade;

● global and regional economic and political conditions, armed conflicts and terrorist activities;

● pandemics, such as the outbreak of COVID-19;

● embargoes and strikes;

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● the location of regional and global manufacturing facilities;

● availability of credit to finance international trade;

● the location of consuming regions for semi-finished and finished consumer and industrial products;

● the distance containerized commodities are to be moved by sea;

● environmental and other regulatory developments;

● currency exchange rates;

● changes in global production and manufacturing distribution patterns of finished goods that utilize containerized commodities;

● changes in seaborne and other transportation patterns; and

● weather and other natural phenomena.

Some of the factors that influence the supply of vessel capacity include:

● the number of newbuilding orders and deliveries including slippage in deliveries;

● the scrapping rate of older vessels;

● the price of steel and other materials;

● port and canal congestion;

● changes in environmental and other regulations that may limit the useful life of vessels;

● the price of fuel;

● vessel casualties;

● the number of vessels that are out of service; and

● changes in global commodity production.

We anticipate that the future demand for our container vessels and the charter rates of the corresponding markets will be dependent upon economic recovery and growth in the United States, Europe, Japan, China and India and the overall world economy as well as seasonal and regional changes in demand and changes to the capacity of the world fleet. The capacity of the world fleet may increase and economic growth may not continue. Adverse economic, political, social or other developments could also have a material adverse effect on our business and results of operations.

The market value of our vessels can fluctuate significantly, which may adversely affect our financial condition, cause us to breach financial covenants, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels.

The value of our vessels may fluctuate, adversely affecting our earnings and liquidity and causing us to breach our secured credit agreements.

The fair market values of our vessels are related to prevailing charter rates. While the fair market value of vessels and the freight charter market have a very close relationship as the charter market moves from trough to peak, the time lag between the effect of charter rates on market values of ships can vary. A decrease in the market values of our vessels could limit the amount of funds that we can borrow or trigger certain financial covenants under our current or future credit facilities, and we may incur a loss if we sell vessels following a decline in their market value.  Furthermore, a decrease in the market value of our vessels could require us to raise additional capital in order to remain compliant with our loan covenants, and could result in the foreclosure of our vessels and adversely affect our earnings and financial condition.

The market value of our vessels may increase or decrease depending on the following factors:

● general economic and market conditions affecting the shipping industry;

● supply of container vessels, including newbuildings;

● demand for container vessels;

● types and sizes of vessels in our fleet;

● scrap values;

● other modes of transportation;

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● cost of newbuildings;

● technological advances;

● new regulatory requirements from governments or self-regulated organizations;

● competition from other shipping companies; and

●  prevailing level of charter rates.

As vessels grow older, they generally decline in value. Due to the cyclical nature of the container shipping industry, if for any reason we sell vessels at a time when prices have fallen, we could incur a loss and our business, results of operations, cash flow, financial condition and ability to pay dividends could be adversely affected.

In addition, we periodically re-evaluate the carrying amount and period over which vessels are depreciated to determine if events have occurred that would require modification to such assets’ carrying values or their useful lives. A determination that a vessel's estimated remaining useful life or fair value has declined below its carrying amount could result in an impairment charge against our earnings and a reduction in our shareholders' equity.

Our secured loan agreements, which are secured by mortgages on our vessels, contain various financial covenants. Any change in the assessed market value of any of our vessels might also cause a violation of the covenants of each secured credit agreement, which, in turn, might restrict our cash and affect our liquidity. Among those covenants are requirements that relate to our net worth, operating performance and liquidity. For example, there is a maximum fleet leverage covenant that is based, in part, upon the market value of the vessels securing the loans, as well as requirements to maintain a minimum ratio of the market value of our vessels mortgaged thereunder to our aggregate outstanding balance under each respective loan agreement. If the assessed market value of our vessels declines below certain thresholds, we may violate these covenants and may incur penalties for breach of our credit agreements. For example, these penalties could require us to prepay the shortfall between the assessed market value of our vessels and the value of such vessels required to be maintained pursuant to the secured credit agreement, or to provide additional security acceptable to the lenders in an amount at least equal to the amount of any shortfall. If we are unable to pledge additional collateral, our lenders could accelerate our debt and foreclose on our fleet. Furthermore, we may enter into future loans, which may include various other covenants, in addition to the vessel-related ones, that may ultimately depend on the assessed values of our vessels. Such covenants could include, but are not limited to, maximum fleet leverage covenants and minimum fair net worth covenants.

An over-supply of containership capacity may lead to a reduction in charter rates and profitability and may require us to raise additional capital in order to remain compliant with our loan covenants and affect our ability to pay dividends in the future.

The market supply of containerships was highly elevated at the beginning of last decade, with the number of containerships on order reaching historic highs. The orderbook gradually declined and by the end of 2020 neared its lowest level of the last twenty years. As reported by industry sources, the containership fleet increased by 5.6% in 2018, 4.0% in 2019, 2.9% in 2020 and 4.5% in 2021. As of March 31, 2022, containership volumes have increased by 3.6%. Specifically, as reported by industry sources, the capacity of the fully cellular worldwide container vessel fleet, as of March 31, 2022, was approximately 24.89 million teu with approximately another 6.6 million teu, or about 26.4% of the fleet capacity on order. Growth of the fleet is also affected by the scrapping rate. If the number of new ships delivered exceeds the number of vessels being scrapped and lost, vessel capacity will increase. An over-supply of containership capacity may result in a reduction of charter rates. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline.

If a rate decline occurs upon the expiration or termination of our current charters, we may only be able to re-charter those vessels at reduced rates or we may not be able to charter these vessels at all. Many containership charters we renewed or concluded during 2016 and 2017 were at unprofitable rates and were entered into because they resulted in lower losses than would have resulted had we put the vessels in lay-up. Charter rates have improved since and reached marginally profitable levels during 2018 and into 2019, but remained volatile and fluctuated during 2018, which continued into 2019. During 2020, the disruption in trade flows and markets caused by the COVID-19 pandemic caused volatility in charter rates. By the end of the year, the market was amongst the best performing across all containership segments, with charter markets celebrating new highs. Charters renewed or entered into around the end of 2020 and during 2021 were at rates that were profitable, but could decrease again, depending on changes of demand for and supply of shipping capacity. Any inability to enter into more profitable charters may require us to raise additional capital in order to remain compliant with our loan covenants and may also affect our ability to pay dividends in the future.

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Adverse economic conditions, especially in the Asia Pacific region, the European Union or the United States and the current Ukraine Russia conflict, could harm our business, results of operations and financial condition.

Because a significant number of the port calls made by our vessels involves the loading or discharging of containerships in ports in the Asia Pacific region, economic turmoil in that region may exacerbate the effect of any economic slowdown on us. China has been one of the world’s fastest growing economies and a major manufacturing hub for the production and export of finished goods which are predominantly shipped in containerships. However, even prior to the COVID-19 pandemic, China’s high rate of real GDP growth had already reached a plateau, posting a 0.5 percentage points decline, year on year, in 2019, followed by a tremendous decline to 2.3 percentage points in 2020 as a result of the COVID-19 pandemic. With a global economic recovery under way in 2021, China’s GDP increased by 5.8 percent, to stand at 8.1 percentage points, with further growth projected for 2022 and 2023, albeit at a slower pace. In addition, the United States, a major trading partner of China, has imposed tariffs on certain goods and has indicated that it may seek to implement more protectionist trade measures, in order to protect its domestic economy, which might further affect the growth rate of the Chinese economy, in particular, and the Asia Pacific region in general. Additionally, the European Union, or the EU, and certain of its member states are facing significant economic and political challenges, including a risk of increased protectionist policies. The recent trade and financial sanctions imposed on Russia have also directly impacted prices and economic activity. Our business, results of operations and financial condition will likely be harmed by any significant economic downturn and economic instability in the Asia Pacific region, including China, or in the EU or the United States.

The continuing COVID-19 pandemic and the spread of new variants may have negative effects on the global economy and our business, including our ability to rotate our crew and provide technical support from in-house teams to our vessels which would affect our operations and financial results.

The outbreak of the COVID-19 virus has led a number of countries, ports and organizations to take measures against its spread, such as quarantines and restrictions on travel. Such measures were taken initially in China, including Chinese ports, where we conduct a significant amount of our operations, and have since expanded to other countries globally covering most ports where we conduct business. These measures have and will likely continue to cause severe trade disruptions due to, among other things, the unavailability of personnel, supply chain disruption, interruptions of production and closure of businesses and facilities and reduced consumer demand. While many of these measures have since been relaxed, we cannot predict whether and to what degree such measures will be reinstituted in the event of any resurgence in the COVID-19 virus or any variants thereof. Even though international travel has been less constrained, any disruptions could impact the cost of rotating our crew, and our ability to maintain a full crew synthesis onboard all our vessels at any given time. It may also be difficult for our in-house technical teams to travel to ship yards to observe vessel maintenance, and we may need to hire local experts to conduct work we ordinarily address in-house, as happened for a period of time in the last two years. These local experts may vary in skill and are difficult to supervise remotely.

The ongoing spread of COVID-19 and emergence of new variants may negatively affect our business and operations, as well as our financial position and prospects. Any prolonged shutdown in the global economy may negatively impact the worldwide demand for container shipping, adversely affect the liquidity and financial position of our charterers and may decrease employment rates for our vessels. This could result in reductions in our revenue and the market value of our vessels, which could materially adversely affect our business and results of operations.

Eurozone’s potential inability to deal with the sovereign debt issues of some of its members could have a material adverse effect on the profitability of our business, financial condition and results of operations.

Despite the efforts of the European Council since 2011 to implement a structured financial support mechanism for Eurozone countries experiencing financial difficulties, questions remain about the capability of a number of member countries to refinance their sovereign debt and meet their debt obligations, especially, as the COVID-19 pandemic resulted in lower economic growth in almost all countries. In March 2011, the European Council agreed on the need for Eurozone countries to establish a permanent stability mechanism, the European Stability Mechanism (or “the ESM”), which will be activated by mutual agreement to provide external financial assistance to Eurozone countries. Despite these measures, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the euro.  An extended period of adverse development in the outlook for Eurozone countries could reduce the overall demand for our services. These potential developments, or market perceptions concerning these and related issues, could have a material adverse effect on our financial position, results of operations and cash flow.

Effects and events related to the Greek sovereign debt and economic crisis may adversely affect our operating results.

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Greece has experienced a macroeconomic downturn in recent years, from which it has been slowly recovering, partially as a result of the sovereign debt crisis and the related austerity measures implemented by the Greek government. Eurobulk Ltd.’s (“Eurobulk,” our affiliated ship management company or “Manager”) operations in Greece may be subjected to new regulations or regulatory action that may require us to incur new or additional compliance or other administrative costs and may require that we or Eurobulk pay to the Greek government new taxes or other fees. We and Eurobulk also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt our and Eurobulk's shore-side operations located in Greece. The Greek government's taxation authorities have increased their scrutiny of individuals and companies to secure tax law compliance. If economic and financial market conditions remain uncertain, persist or deteriorate further, the Greek government may impose further changes to tax and other laws to which we and Eurobulk may be subject or change the ways they are enforced, which may adversely affect our business, operating results, and financial condition.

Liner companies, which comprise the largest contingent of charterers of containerships, have been placed under significant financial pressure, thereby increasing our charter counterparty risk which may have a material adverse effect on our business, financial condition and results of operations.

The decline in global trade after the financial crisis of 2008 and the subsequent economic slowdown resulted in a significant decline in demand for the seaborne transportation of products in containers, including for exports from China to Europe and the United States. Consequently, the cargo volumes and, especially, freight rates (i.e., the rates that liner companies charge to their clients) achieved by liner companies, which charter containerships from ship owners like us, declined sharply in the second half of 2011. They stabilized toward the end of 2012, remained at similar levels in 2013, but declined in 2014 and 2016 also due to a growing oversupply of containerships despite a short-lived recovery in the middle of 2015. In 2017, a rate recovery began, which was maintained throughout the year and the first half of 2018. The second half of 2018 and the beginning of 2019 saw a decline in containership charter rates mainly due to measured demand for goods because of the uncertainty surrounding the possibility of increased protectionist policies by governments worldwide. Rates made progress throughout 2019, although improvements were mostly weighted towards the larger size container segments. The COVID-19 pandemic has also had a major impact on containership rates, causing prolonged uncertainty in the markets through most of 2020. However, by the end of the year, rates reached ten-year highs. 2021 was a strong year for the containership markets, with rates exceeding average and median levels for the last 20 years. So far in 2022, containership rates have registered even greater all-time highs due in large part to logistical disruptions and a firm trade demand in containership products. Nevertheless, the financial challenges faced by liner companies in the past may return once logistical disruptions ease and demand for containership trade wanes, which may reduce demand for containership charters and may increase the likelihood of our customers being unable or unwilling to pay us contracted charter rates. The combination of the current surplus of containership capacity and the expected increase in the size of the world containership fleet over the next several years may make it difficult to secure substitute employment for our containerships if our counterparties fail to perform their obligations under the currently arranged time charters, and any new charter arrangements we are able to secure may be at lower rates.

The containership industry is highly competitive, and we may be unable to compete successfully for charters with established companies or new entrants that may have greater resources and access to capital, which may have a material adverse effect on our business, prospects, financial condition, liquidity and results of operations.

The containership industry is highly competitive and capital intensive. Competition arises primarily from other vessel owners, some of whom may have greater resources and access to capital than we have. Competition among vessel owners for the seaborne transportation of semi-finished and finished consumer and industrial products can be intense and depends on the charter rate, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, many of our competitors with greater resources and access to capital than we have could operate larger fleets than we may operate and thus be able to offer lower charter rates or higher quality vessels than we are able to offer. If this were to occur, we may be unable to retain or attract new charterers on attractive terms or at all, which may have a material adverse effect on our business, prospects, financial condition, liquidity and results of operations.

Changes in the economic and political environment in China and policies adopted by the Chinese government to regulate China’s economy may have a material adverse effect on our business, financial condition and results of operations.

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The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, (or “OECD”), in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a "market economy" and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. The Chinese government may not continue to pursue a policy of economic reform. The level of imports to and exports from China could be adversely affected by the nature of the economic reforms pursued by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect our business, operating results, financial condition and cash flows.

We conduct business in China, where the legal system is not fully developed and has inherent uncertainties that could limit the legal protections available to us.

Some of our vessels may be chartered to Chinese customers and from time to time on our charterers' instructions, our vessels may call on Chinese ports. Such charters and voyages may be subject to regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinese government new taxes or other fees. Applicable laws and regulations in China may not be well publicized and may not be known to us or to our charterers in advance of us or our charterers becoming subject to them, and the implementation of such laws and regulations may be inconsistent. Changes in Chinese laws and regulations, including with regards to tax matters, or changes in their implementation by local authorities could affect our vessels if chartered to Chinese customers as well as our vessels calling to Chinese ports and could have a material adverse impact on our business, financial condition and results of operations.

We may have difficulty securing profitable employment for our vessels if their charters expire in a depressed market.

All sixteen of our vessels are employed on time charter contracts. Two of our vessels are under time charters scheduled to expire during 2022, four are scheduled to expire in 2023, five in 2024, four in 2025, and one in 2026. As of March 31, 2022, the containership charter rates for vessels like ours are above historical averages. When the current charters of our vessels are due for renewal, we may be unable to re-charter these vessels at similar or better rates or we might not be able to charter them at all. Although we do not receive any revenues from our vessels while not employed, we are required to pay expenses necessary to maintain the vessels in proper operating condition, insure them and service any indebtedness secured by such vessels. If we cannot re-charter our vessels on time charters or trade them in the spot market profitably, our results of operations and operating cash flow will be adversely affected. Despite the fact that all our vessels are employed, we may be forced to lay up vessels if rates drop to levels below daily running expenses or if we are unable to find employment for the vessels for prolonged periods of time.

We will not be able to take advantage of potentially favorable opportunities in the current market with respect to vessels employed on time charters.

As of March 31, 2022, all of our vessels are employed under time charters with remaining terms ranging from 6 months to 48 months based on the minimum duration of the charter contracts, with options to extend for an additional 12 months. The percentage of our fleet that is under time charter contracts represents approximately 95% of our vessel capacity for the remainder of 2022, a 71% of our capacity in 2023, and a 53% of our capacity for 2024. Although time charters provide relatively steady streams of revenue, vessels committed to time charters may not be available for chartering during periods of increasing charter rates. If we cannot re-charter these vessels on time charters or trade them profitably, our results of operations and operating cash flow may suffer. We may not be able to secure charter rates in the future that will enable us to operate our vessels profitably.

The current state of global financial markets and current economic conditions may adversely impact our ability to obtain additional financing on acceptable terms or at all, which may hinder or prevent us from expanding our business.

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Global financial markets and economic conditions have been, and continue to be, volatile. Beginning in February 2020, partially due to fears associated with the spread of COVID-19, global financial markets, and starting in late February, financial markets in the U.S., experienced even greater relative volatility and a steep and abrupt downturn, which volatility and downturn continued as COVID-19 continued to spread. On March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic. In response to the outbreak, governments around the world closed non-essential businesses, restricted travel, and put in place other measures which resulted in a dramatic decrease of economic activity, including a reduction of goods imported and exported worldwide. While some economies have begun re-opening in limited capacities, the continuous “waves” of COVID-19 infections have forced and might continue to cause governments to impose further restrictions of economic activity. Such measures have and will likely continue to cause severe trade disruptions. This continuing volatility may negatively affect the general willingness of banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been and may continue to be negatively affected by this decline in lending. In addition, the current state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all.

Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Due to these factors, we cannot be certain that additional financing will be available, if needed, and to the extent required, on acceptable terms or at all. If additional financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise.

Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor, lender or other market participant expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make further investments in us. If we do not meet these standards, our business and/or our ability to access capital could be harmed.

Additionally, certain investors and lenders may exclude shipping companies, such as us, from their investing portfolios altogether due to environmental, social and governance factors. These limitations in both the debt and equity capital markets may affect our ability to develop as our plans for growth may include accessing the equity and debt capital markets. If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor, report and comply with wide ranging ESG requirements. The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition.

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We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the International Convention for the Prevention of Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as MARPOL, including the designation of emission control areas, ECAs, thereunder, the International Convention on Load Lines of 1966, or the LL Convention, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976, 1984 and 1992, and amended in 2000, and generally referred to as the CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or Bunker Convention, the International Convention for the Safety of Life at Sea of 1974, or SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, the International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, the U.S. Oil Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Clean Water Act, or the CWA, the U.S. Clean Air Act, or the CAA, the U.S. Outer Continental Shelf Lands Act, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, and European Union regulations. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels.

Furthermore, events like the explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes. Thus, we may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.

Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale price or useful life of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. There can be no assurance that any such insurance we have arranged to cover certain environmental risks will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends. We currently maintain, for each of our vessels, pollution liability coverage insurance of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, it would severely and adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends.

Environmental requirements can also require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports.  Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including clean up obligations and natural resource damages in the event that there is a release of bunkers or hazardous substances from our vessels or otherwise in connection with our operations.  We could also become subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic operations.  Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of our vessels.

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We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the ISM Code set forth in Chapter IX of SOLAS. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. We rely upon the safety management system that we and our technical managers have developed for compliance with the ISM Code. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.  Currently, each of our vessels and Eurobulk, are ISM Code-certified, but we may not be able to maintain such certification indefinitely.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the United Nations’ International Maritime Organization (the “IMO”). The document of compliance (the “DOC”) and the safety management certificate (the “SMC”) are renewed as required.

In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance.

The operation of our vessels is also affected by other government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we may not be able to predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to our operations. See Item 4: “Information on the Company – Business Overview – Environmental and Other Regulations in the Shipping Industry” for more information.

Regulations relating to ballast water discharge may adversely affect our revenues and profitability.

The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast water.  Depending on the date of the  International Oil Pollution Prevention (“IOPP”) renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019.  For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. Ships constructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017. We currently have 7 vessels that will be fitted to comply with the updated guideline between 2022 and 2024. Four of these vessels will have the equipment installed within 2022 during their respective dry dock, while the rest of the vessels will have the equipment installed in 2023 and 2024 during their respective dry dock. Costs of compliance may be substantial and adversely affect our revenues and profitability.

Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (“VGP”) program and U.S. National Invasive Species Act (“NISA”) are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, requires that the U.S. Environmental Protection Agency (“EPA”) develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for Vessel Incidental Discharge National Standards of Performance under VIDA. Within two years after the EPA publishes its final Vessel Incidental Discharge National Standards of Performance, the U.S. Coast Guard must develop corresponding implementation, compliance and enforcement regulations regarding ballast water. The new regulations could require the installation of new equipment, which may cause us to incur substantial cost. 

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Regulations relating to low sulfur emissions that came into effect on January 1, 2020 may adversely affect our revenues and profitability.

Under maritime regulations that came into effect on January 1, 2020, ships will have to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content which is more expensive than standard marine fuel.  We do not currently intend to install scrubbers on our fleet. Our fuel costs and fuel inventories have increased as a result of these sulfur emission regulations, but the effect is limited by the fact that our vessels are under time charter agreements and these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the amount of time charter hire and, therefore, fuel costs also indirectly affect time charter rates. Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a result of increased demand, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.

Increased inspection procedures and tighter import and export controls and new security regulations could increase costs and disrupt our business.

International container shipping is subject to various security and customs inspection and related procedures in countries of origin and destination. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.

It is possible that changes to existing procedures will be proposed or implemented. Any such changes may affect the container shipping industry and have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to render the shipment of certain types of goods by container uneconomical or impractical. These additional costs could reduce the volume of goods shipped in containers, resulting in a decreased demand for container vessels. In addition, it is unclear what financial costs any new security procedures might create for container vessel owners, or whether companies responsible for the global traffic of containers at sea, referred to as container line operators, may seek to pass on certain of the costs associated with any new security procedures to vessel owners.

If our vessels fail to maintain their class certification and/or fail any annual survey, intermediate survey, drydocking or special survey, those vessels would be unable to carry cargo, thereby reducing our revenues and profitability and violating certain covenants in our loan agreements.

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Our vessels are currently classed with Det Norske Veritas (“DNV”), Bureau Veritas and Nippon Kaiji Kyokai. ISM and International Ship and Port Facilities Security (“ISPS”) certifications have been awarded to the vessels by Bureau Veritas or Liberian Flag Administration and to the Manager by Bureau Veritas.

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of such vessel.

If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable. That status could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society that is a member of the International Association of Classification Societies (“IACS”). All of our vessels that we have purchased, and may agree to purchase in the future, must be certified as being "in class" prior to their delivery under our standard purchase contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel. We have all of our vessels, and intend to have all vessels that we acquire in the future, classed by IACS members. See Item 4: “Information on the Company – Business Overview – Environmental and Other Regulations in the Shipping Industry” for more information.

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Rising fuel prices may adversely affect our results of operations and the marketability of our vessels.

Fuel (bunkers) is a significant, if not the largest, operating expense for many of our shipping operations when our vessels are under voyage charter. When a vessel is operating under a time charter, these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the amount of time charter hire and, therefore, fuel costs also indirectly affect time charter rates. Fuel prices are highly based on, and are highly correlated to, the price of oil. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, such as the recent conflicts between Russia and Ukraine, which remain ongoing as of the date of this annual report, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Fuel prices had been at historically high levels through mid-2014, but by the first quarter of 2016 fuel prices had fallen by more than 50%. Between 2018 and 2019, the price of fuel fluctuated throughout the years, to reach a low of $42.53/bbl (for West Texas Intermediate, “WTI”) on December 24, 2018 to $61.0/bbl in December 2019. By February 1, 2020 the price of oil dropped to $52.10/bbl, as concerns over the COVID-19 pandemic started emerging, and further dropped to $18.44/bbl by April 2020, after OPEC and Russia failed to agree on maintaining production cuts, and Saudi Arabia increased its own production. As the COVID-19 pandemic continued to spread around the world, oil prices dropped to historical lows during 2020 and closed the year at $43.52/bbl. Oil traded lower throughout the year, as rising COVID-19 infections and the new strain, sparked demand concerns. Prices edged slightly higher in December 2020, ranging around $48/bbl, upon the rolling out of the COVID-19 vaccines, coupled by Saudi Arabia’s announcement regarding a large output reduction for February and March 2021. In January 2021, oil traded at around $52/bbl. In February 2021, the average WTI stood at $59/bbl, the highest value since the start of the pandemic, with hopes of steady vaccination roll out and OPEC production limits having led to cautious optimism at global markets. Prices fluctuated throughout the year, with the annual average price reaching about $68/bbl; a significant increase compared to the 2020 average. Since then, we have seen a significant increase, after Western countries imposed sanctions on Russia, raising fears of supply disruptions from one of the largest producers of oil and gas. BP also announced it would be abandoning its stake in Russia’s state-run oil company, which rose prices to over $110/bbl by March 2022. Oil prices have remained volatile and well above their 10-year average of circa $69/bbl (for WTI). Any increases in the price of fuel, especially if exceeding its 10-year average, may adversely affect our operations, particularly if such increases are combined with lower containership rates.

Upon redelivery of vessels at the end of a period time or trip time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. We may also be obligated to value our bunkers, inventories, on board at the end of a period time or trip time charter, at a lower value than the acquisition value, if prevailing market prices are significantly lower at the time of the vessel redelivery from the charterer.

Rising crew costs may adversely affect our profits.

Crew costs are a significant expense for us under our charters. There is a limited supply of well-qualified crew. We generally bear crewing costs under our charters. An increase in the world vessel operating fleet will likely result in higher demand for crews which, in turn, might drive crew costs further up. Moreover, the COVID-19 pandemic has affected the rotation of our crew members due to quarantine restrictions placed on embarking and disembarking on our vessels. Any such disruptions could impact the cost of rotating our crew. Any increase in crew costs may adversely affect our profitability especially if such increase is combined with lower containership rates.

Maritime claimants could arrest or attach our vessels, which would interrupt our business or have a negative effect on our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arresting or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums to have the arrest or attachment lifted which would have a material adverse effect on our financial condition and results of operations.

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

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims, which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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

A government could requisition for title or seize one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition one or more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of the payment would be uncertain. Government requisition of one or more of our vessels could have a material adverse effect on our financial condition and results of operations.

World events outside our control may negatively affect our ability to operate, thereby reducing our revenues and results of operations or our ability to obtain additional financing, thereby restricting the implementation of our business strategy.

We operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the continued global trade war between the U.S. and China, current political instability in the Middle East, terrorist or other attacks, war or international hostilities. Terrorist attacks such as the attacks on the United States on September 11, 2001 and similar attacks that followed, the continuing response to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets and may affect our business, results of operations and financial condition. The continuing conflicts in Iraq, Iran, Afghanistan, Libya, Egypt, Ukraine, Syria, amongst other countries, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. More recently, the trade and financial sanctions imposed on Russia due to their invasion in Ukraine, have caused turbulence in the global markets. These uncertainties could also have a material adverse effect on our ability to obtain additional financing on terms acceptable to us or at all. Terrorist attacks on vessels may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility and turmoil of the financial markets in the United States of America and globally and could result in an economic recession in the United States of America or the world. Additionally, any escalations between the North Atlantic Treaty Organization countries and Russia could result in retaliation from Russia that could potentially affect the shipping industry. There may also be long-term adverse impacts from the COVID-19 pandemic that negatively affect industrial production. In addition, the continued global trade war between the U.S. and China, including the introduction by the U.S. of tariffs on selected imported goods, mainly from China, may provoke further retaliation measures from the affected countries which has the potential to impede trade. Any of these occurrences could have a material adverse impact on our financial condition, costs and operating cash flows.

Disruptions in world financial markets and the resulting governmental action could have a material adverse impact on our ability to obtain financing, our results of operations, financial condition and cash flows, and could cause the market price of our common stock to decline.

Europe, the United States and other parts of the world have exhibited weak economic conditions, are exhibiting volatile economic trends or have been in a recession. For example, during the 2008-2009 crisis, the credit markets in the United States experienced sudden and significant contraction, deleveraging and reduced liquidity, and the United States federal government and state governments have since implemented a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The Securities and Exchange Commission (“SEC”), other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws. A number of financial institutions and especially banks that traditionally provide debt to shipping companies like ours have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. As a result, access to credit markets around the world has been reduced. The extension of Quantitative Easing (“QE”) and more recently the reversal of it, high levels of Non-Performing Loans (“NPLs”) in Europe and stricter lending requirements may reduce bank lending capacity and/or make the terms of any lending more onerous.

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We face risks related to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the changes in market conditions and regulatory changes worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, including proposals to reform the financial system, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, and might cause the price of our common stock on the Nasdaq Capital Market to decline.

In addition, public health threats, such as the COVID-19 pandemic, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers.

Even though the containership industry has been on the rise, if there are further disruptions in world financial markets, we may require substantial additional financing to fund acquisitions of additional vessels and to implement our business plans. Sufficient financing may not be available on terms that are acceptable to us or at all. If we cannot raise the financing we need in a timely manner and on acceptable terms, we may not be able to acquire the vessels necessary to implement our business plans and consequently we may not be able to pay dividends.

We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.

We rely on information technology networks and systems to process, transmit and store electronic and financial information; to capture knowledge of our business; to coordinate our business across our operation bases; and to communicate internally and with customers, suppliers, partners and other third-parties. These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyberattacks, telecommunication failures, user errors or catastrophic events. Our information technology systems are becoming increasingly integrated, so damage, disruption or shutdown to the system could result in a more widespread impact. Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information or alteration of information in our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and results of operations. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted and our business could be negatively affected. In addition, cyber-attacks could lead to potential unauthorized access and disclosure of confidential information and data loss and corruption. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future. Further, as the methods of cyber-attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyber-attacks.

Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection with the recent conflicts between Russia and Ukraine. To the extent such attacks have collateral effects on global critical infrastructure or financial institutions, such developments could adversely affect our business, operating results and financial condition. At this time, it is difficult to assess the likelihood of such threat and any potential impact.

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The increased number of our shore personnel working remotely might increase our vulnerability to cyber-attacks and risk of cyber-security breaches which would affect our operations and financial results.

As a result of efforts to contain the spread of the COVID-19 pandemic, we and our Manager, have implemented, amongst other measures, government mandated restrictions on the number of people that can be present at our shore office at any point of time.  While adapting to new ways of operating, employees are encouraged and in certain cases required to operate remotely. When not working at our shore office location, our staff is working remotely, typically, from their private residences. While we have taken measures to ensure secure communications with our office information systems and systems on-board our vessels, we do not control all of the equipment and communication systems that each of our staff is using at their residence. Consequently, we may face an increased risk of cyber-security attacks and cyber-security breaches which could impede our ability to manage our operations and affect our financial results.

The withdrawal of the United Kingdom from the European Union could adversely affect us.

The United Kingdom ("U.K.") referendum on its membership in the EU resulted in the U.K. withdrawing from the EU on January 31, 2020 (“Brexit”). We have operations in the EU, and as a result, we face risks associated with the potential uncertainty and disruptions that may follow Brexit, including volatility in exchange rates and interest rates and potential material changes to the regulatory regime applicable to our business or global trading parties. The framework for the U.K. and Europe’s future relationship has been laid out in a Withdrawal Agreement, the final terms of which were agreed on December 24, 2020, and went into effect on January 1, 2021. While the trade agreement reached contemplates zero tariffs and quotas on goods, some aspects relating to financial services have not been agreed upon. Additionally, the end of free movement could significantly disrupt the exchange of people and services between the U.K. and the EU, resulting in the imposition of impediments to trade. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets generally and in the U.K., specifically. While we have limited exposure to the U.K. or the Pound sterling (“GBP”), any of these effects of Brexit, and others we cannot anticipate or that may evolve over time, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Seasonal fluctuations could affect our operating results and the amount of available cash with which we service our debt or could pay dividends.

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. To the extent we operate vessels in the spot market, this seasonality may result in quarter-to-quarter volatility in our operating results which could affect our ability to reinstate payment of dividends to our common shareholders. For example, the containership market is typically stronger in the spring and fall months following the celebration of Chinese New Year in the first quarter of each year and in anticipation of the increased demand during the year-end holiday season. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality has not materially affected our operating results and the amount of available cash with which we service our debt or could pay dividends, because our fleet is currently employed on period time charters, but this seasonality may materially affect our operating results if our vessels are employed in the spot market in the future.

Reliance on suppliers may limit our ability to obtain supplies and services when needed.

We rely on a significant number of third party suppliers of consumables, spare parts and equipment to operate, maintain, repair and upgrade our fleet of ships. Delays in delivery or unavailability or poor quality of supplies could result in off-hire days due to consequent delays in the repair and maintenance of our fleet or lead to our time charters being terminated. This would negatively impact our revenues and cash flows. Cost increases could also negatively impact our future operations.

The derivative contracts we enter into to hedge our exposure to fluctuations in interest rates can result in higher than market rates and reductions in our stockholders’ equity as well as charges against our income, while there is no assurance of the credit worthiness of our counterparties.

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We enter into interest rate swaps generally for purposes of managing our exposure to fluctuations in interest rates applicable to indebtedness under our credit facilities which were advanced at floating rates based on the London Interbank Offered Rate (“LIBOR”). Interest rates and currency hedging may result in us paying higher than market rates. As of December 31, 2019, all previous swap contracts had matured and the Company had no open position in interest rate swaps. In April 2020, we entered into a new interest rate swap agreement for a notional amount of $30.0 million. In October 2021, we entered into a new interest rate swap agreement for a notional amount of $10.0 million. As of December 31, 2021, the aggregate notional amount of interest rate swaps relating to our fleet was $40.0 million. There is no assurance that our interest rate swap contracts or any other derivative contract that we enter into in the future will provide adequate protection against adverse changes in interest rates or that our bank counterparties will be able to perform their obligations. In addition, as a result of the implementation of new regulation of the swaps markets in the United States, the European Union and elsewhere over the next few years, the cost of interest rate swaps may increase or suitable hedges may not be available. While we monitor the credit risks associated with our bank counterparties, there can be no assurance that these counterparties would be able to meet their commitments under our derivative contract or any future derivative contract. Our bank counterparties include financial institutions that are based in European Union countries that have faced and might face again financial stress. The potential for our bank counterparties to default on their obligations under our derivative contracts may be highest when we are most exposed to the fluctuations in interest and currency rates such contracts are designed to hedge, and several or all of our bank counterparties may simultaneously be unable to perform their obligations due to the same events or occurrences in global financial markets.

To the extent our existing interest rate swaps do not, and future derivative contracts may not, qualify for treatment as hedges for accounting purposes we would recognize fluctuations in the fair value of such contracts in our statement of operations. In addition, to the extent any future derivative contracts qualify for treatment as hedges for accounting purposes, changes in the fair value of our derivative contracts would be recognized in “Accumulated Other Comprehensive Loss” affecting our accumulated deficit, and may affect compliance with the net worth covenant requirements in our credit facilities. Changes in the fair value of our derivative contracts that do not qualify for treatment as hedges for accounting and financial reporting purposes affect, among other things, our net income and our earnings per share. For additional information see “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.

We may be involved in various litigation matters from time to time. These matters may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition and operating cash flows.

Company Risk Factors

We depend entirely on Eurobulk to manage and charter our fleet, which may adversely affect our operations if Eurobulk fails to perform its obligations.

We have no employees and we currently contract the commercial and technical management of our fleet, including crewing, maintenance and repair, to Eurobulk, our affiliated ship management company. We may lose the Manager’s services or the Manager may fail to perform its obligations to us which could have a material adverse effect on our financial condition and results of our operations. Although we may have rights against our Manager if it defaults on its obligations to us, you will have no recourse against our Manager. Further, we will need to seek approval from our lenders to change the Manager as our ship manager.

Because the Manager is a privately held company, there is little or no publicly available information about it and there may be very little advance warning of operational or financial problems experienced by the Manager that may adversely affect us.

The ability of the Manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair the Manager’s financial strength, and because the Manager is privately held it is unlikely that information about its financial strength would become public unless the Manager began to default on its obligations. As a result, there may be little advance warning of problems affecting the Manager, even though these problems could have a material adverse effect on us.

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We may have difficulty properly managing our growth through acquisitions of new or secondhand vessels and we may not realize expected benefits from these acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our stockholders.

We intend to grow our business by ordering newbuild vessels and through selective acquisitions of high-quality secondhand vessels to the extent that they are available. Our future growth will primarily depend on:

● the operations of the shipyards that build any newbuild vessels we may order;

● the availability of employment for our vessels;

● locating and identifying suitable high-quality secondhand vessels;

● obtaining newbuild contracts at acceptable prices;

● obtaining required financing on acceptable terms;

● consummating vessel acquisitions;

● enlarging our customer base;

● hiring additional shore-based employees and seafarers;

● continuing to meet technical and safety performance standards; and

● managing joint ventures or significant acquisitions and integrating the new ships into our fleet.

Ship values are correlated with charter rates. During periods in which charter rates are high, ship values are generally high as well, and it may be difficult to consummate ship acquisitions or enter into shipbuilding contracts at favorable prices. During periods in which charter rates are low and employment is scarce, ship values are low and any vessel acquired without an attached time charter will automatically incur additional expenses to operate, insure, maintain and finance the ship, thereby significantly increasing the acquisition cost. In addition, any vessel acquisition may not be profitable at or after the time of acquisition and may not generate cash flows sufficient to justify the investment. We may not be successful in executing any future growth plans and we cannot give any assurance that we will not incur significant expenses and losses in connection with such growth efforts. Other risks associated with vessel acquisitions that may harm our business, financial condition and operating results include the risks that we may:

● fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;

● be unable to hire, train or retain qualified shore-based and seafaring personnel to manage and operate our growing business and fleet;

● decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;

● significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;

● incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired; or

● incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

Furthermore, a delay in the delivery to us of any such vessel acquired, or the failure of the shipyard to deliver a vessel at all, could cause us to breach our obligations under a related charter and could adversely affect our earnings. In addition, the delivery of any of these vessels with substantial defects could have similar consequences.

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A shipyard could fail to deliver a newbuild on time or at all because of:

● work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard;

● quality or engineering problems;

● bankruptcy or other financial crisis of the shipyard;

● a backlog of orders at the shipyard;

● disputes between us and the shipyard regarding contractual obligations;

● weather interference or catastrophic events, such as major earthquakes or fires;

● our requests for changes to the original vessel specifications or disputes with the shipyard; or

● shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers.

If we fail to properly manage our growth through acquisitions of newbuild or secondhand vessels we may not realize the expected benefits from these acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our stockholders. Unlike newbuild vessels, secondhand vessels typically do not carry warranties as to their condition. While we generally inspect existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for secondhand vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flows, liquidity and our ability to pay dividends to our stockholders.

Our business depends upon certain members of our senior management who may not necessarily continue to work for us.

Our future success depends to a significant extent upon our Chairman and Chief Executive Officer (“CEO”), Aristides J. Pittas, certain members of our senior management and our Manager. Mr. Pittas has substantial experience in the container shipping industry and has worked with us and our Manager for many years. He, our Manager and certain members of our senior management team are crucial to the execution of our business strategies and to the growth and development of our business. If these individuals were no longer to be affiliated with us or our Manager, or if we were to otherwise cease to receive services from them, we may be unable to recruit other employees with equivalent talent and experience, which could have a material adverse effect on our financial condition and results of operations.

Certain of our shareholders hold shares of Euroseas in amounts to give them a significant percentage of the total outstanding voting power represented by our outstanding shares.

As of March 31, 2022, Friends Investment Company Inc., (or “Friends”), Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co., all affiliates of the Company controlled by the Pittas family and partly owned by our Chairman and CEO, Vice Chairman and people affiliated or working with Eurobulk amongst others, own approximately 54.7% of the outstanding shares of our common stock and unvested incentive award shares, representing 54.7% of total voting power. As a result of this share ownership and for as long as Friends owns a significant percentage of our outstanding common stock, Friends will be able to influence the outcome of any shareholder vote, including the election of directors, the adoption or amendment of provisions in our amended and restated articles of incorporation or bylaws, as amended, and possible mergers, corporate control contests and other significant corporate transactions.

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Our corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands, and as such we are entitled to exemption from certain Nasdaq corporate governance standards. As a result, you may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

Our Company's corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. Therefore, we are exempt from many of Nasdaq's corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. For a list of the practices followed by us in lieu of Nasdaq's corporate governance rules, we refer you to the section of this annual report entitled "Board Practices—Corporate Governance" under Item 6.C.

We and our principal officers have affiliations with the Manager that could create conflicts of interest detrimental to us.

Our principal officers are also principals, officers and employees of the Manager, which is our ship management company. These responsibilities and relationships could create conflicts of interest between us and the Manager. Conflicts may also arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus other vessels that are or may be managed in the future by the Manager. Circumstances in any of these instances may make one decision advantageous to us but detrimental to the Manager and vice versa. Further, it is possible that in the future Eurobulk may manage additional vessels which will not belong to Euroseas and in which the Pittas family may have non-controlling, little or even no power or participation, and Eurobulk may not be able to resolve all conflicts of interest in a manner beneficial to us and our shareholders.

Companies affiliated with Eurobulk or our officers and directors may acquire vessels that compete with our fleet.

Companies affiliated with Eurobulk or our officers and directors may acquire additional containership vessels in the future. These vessels could be in competition with our fleet and other companies affiliated with Eurobulk might be faced with conflicts of interest with respect to their own interests and their obligations to us. Eurobulk, Friends and Aristides J. Pittas, our Chairman and Chief Executive Officer, have granted us a right of first refusal to acquire any containership that any of them may consider for acquisition in the future. In addition, Aristides J. Pittas will use his best efforts to cause any entity with respect to which he directly or indirectly controls to grant us this right of first refusal. Were we, however, to decline any such opportunity offered to us or if we did not have the resources or desire to accept any such opportunity, Eurobulk, Friends and Aristides J. Pittas, and any of their respective affiliates, could acquire such vessels.

Our officers do not devote all of their time to our business.

Our officers are involved in other business activities that may result in their spending less time than is appropriate or necessary in order to manage our business successfully. Our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary are not employed directly by us, but rather their services are provided pursuant to our Master Management Agreement with Eurobulk. All our corporate officers hold similar positions with EuroDry Ltd. (“EuroDry”), a publicly listed company spun-off from Euroseas in May 2018, and our CEO is also President of Eurobulk and involved in the management of other affiliates and is a member of the board of other companies. Therefore, our officers may spend a material portion of their time providing services to other companies.  They may also spend a material portion of their time providing services to Eurobulk and its affiliates on matters unrelated to us.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or to make dividend payments.

We are a holding company and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments to you depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we may be unable or our Board of Directors may exercise its discretion not to pay dividends.

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We may not be able to pay dividends.

Our Board of Directors decided to suspend the quarterly dividend in the fourth quarter of 2013 in order to focus every resource available in exploiting investment opportunities in the market. Our last dividend of $0.15 per share was declared in August 2013 and was paid in September 2013. This was the thirty-second consecutive quarterly dividend declared and paid. We have not declared any dividends on our common stock since then, and we may not resume dividend payments as we may not earn sufficient revenues or we may incur expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Our loan agreements may also limit the amount of dividends we can pay under some circumstances based on certain covenants included in the loan agreements.

The declaration and payment of any dividends will be subject at all times to the discretion of our Board of Directors. The timing and amount of dividends will depend on our earnings, financial condition, cash requirements and availability, restrictions in our loan agreements, growth strategy, charter rates in the container shipping industry, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares), but, if there is no surplus, dividends may be declared out of the net profits (basically, the excess of our revenue over our expenses) for the fiscal year in which the dividend is declared or the preceding fiscal year. Marshall Islands law also prohibits the payment of dividends while a company is insolvent or if it would be rendered insolvent upon the payment of a dividend. As a result, we may not be able to pay dividends.

If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business and our ability to pay dividends.

In order to fund our capital expenditures, we may be required to incur borrowings or raise capital through the sale of debt or equity securities. Our ability to access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures would limit our ability to continue to operate some of our vessels and could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends. Even if we are successful in obtaining such funds through financings, the terms of such financings could further limit our ability to pay dividends.

Our existing loan agreements contain restrictive covenants that may limit our liquidity and corporate activities.

Our existing loan agreements impose operating and financial restrictions on us. These restrictions may limit our ability to:

● incur additional indebtedness;

● create liens on our assets;

● sell capital stock of our subsidiaries;

● make investments;

● engage in mergers or acquisitions;

● pay dividends;

● make capital expenditures;

● change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and

● sell our vessels.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. The lenders' interests may be different from our interests, and we may not be able to obtain the lenders' permission when needed. This may prevent us from taking actions that are in our best interest.

Servicing future debt would limit funds available for other purposes.

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To finance our fleet, we have incurred secured debt under loan agreements for our vessels. We also currently expect to incur additional secured debt to finance the acquisition of additional vessels we may decide to acquire in the future. We must dedicate a portion of our cash flow from operations to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital expenditures and other purposes. As of December 31, 2021, we had total bank debt of approximately $119.0 million. Our bank debt repayment schedule as of December 31, 2021 required us to repay $29.3 million of bank debt during 2022, $51.8 million of bank debt during 2023, another $18.4 million in the third year, and all remaining bank debt in the fourth year. As of March 31, 2022, we repaid $6.9 million of our total bank debt, decreasing our outstanding bank debt to $112.1 million. If we are unable to service our debt, it could have a material adverse effect on our financial condition, results of operations and cash flows.

A further rise in interest rates could cause an increase in our costs and have a material adverse effect on our financial condition and results of operations. To finance vessel purchases, we have borrowed, and may continue to borrow, under loan agreements that provide for periodic interest rate adjustments based on indices that fluctuate with changes in market interest rates. If interest rates increase significantly, it would increase our costs of financing our acquisition of vessels, which could have a material adverse effect on our financial condition and results of operations. Any increase in debt service would also reduce the funds available to us to purchase other vessels.

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

The actual or perceived credit quality of our charterers, and any defaults by them, may be one of the factors that materially affect our ability to obtain the additional debt financing that we will require to purchase additional vessels or may significantly increase our costs of obtaining such financing. We may be unable to obtain additional financing, or may be able to obtain additional financing only at a higher-than-anticipated cost, which may materially affect our results of operations, cash flows and our ability to implement our business strategy.

Credit market volatility may affect our ability to refinance our existing debt or incur additional debt.

The credit markets have recently experienced extreme volatility and disruption, which has limited credit capacity for certain issuers, and lenders have requested shorter terms and lower leverage ratios. The market for new debt financing is extremely limited and in some cases not available at all. If current levels of market disruption and volatility continue or worsen, we may not be able to refinance our existing debt or incur additional debt, which may require us to seek other funding sources to meet our liquidity needs or to fund planned expansion.

We are exposed to volatility in LIBOR, and have entered into and may selectively enter from time to time into derivative contracts, which can result in higher than market interest rates and charges against our income. Volatility in LIBOR, the cessation of LIBOR and replacement of the interest rate in our debt obligations could affect our profitability, earnings and cash flow.

Our indebtedness accrues interest based on LIBOR, which has been historically volatile. The publication of U.S. Dollar LIBOR for the one-week and two-month U.S. Dollar LIBOR tenors ceased on December 31, 2021, and the ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced the publication of all other U.S. Dollar LIBOR tenors will cease on June 30, 2023. The United States Federal Reserve concurrently issued a statement advising banks to cease issuing U.S. Dollar LIBOR instruments after 2021. As such, any new debt agreements we enter into will not use LIBOR as an interest rate, and we will need to transition our existing loan agreements from U.S. Dollar LIBOR to an alternative reference rate prior to June 2023. In response to the anticipated discontinuation of LIBOR, working groups are converging on alternative reference rates. The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate, or “SOFR”. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates. The impact of such a transition from LIBOR to SOFR or another alternative reference rate could be significant for us. In order to manage our exposure to interest rate fluctuations under LIBOR, SOFR or any other alternative rate, we have and may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position. Interest rate derivatives may also be impacted by the transition from LIBOR to SOFR.

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As we expand our business, we may need to upgrade our operations and financial systems, and add more staff and crew. If we cannot upgrade these systems or recruit suitable employees, our performance may be adversely affected.

Our Manager’s current operating and financial systems may not be adequate if we expand the size of our fleet, and our attempts to improve those systems may be ineffective. In addition, if we expand our fleet, we will have to rely on our Manager to recruit suitable additional seafarers and shore-side administrative and management personnel. Our Manager may not be able to continue to hire suitable employees as we expand our fleet. If our Manager’s affiliated crewing agent encounters business or financial difficulties, we can make satisfactory arrangements with unaffiliated crewing agents or else we may not be able to adequately staff our vessels. If we are unable to operate our financial and operations systems effectively or to recruit suitable employees, our performance may be materially adversely affected.

If we acquire additional ships, whether on the secondhand market or newbuildings, and those vessels are not delivered on time or are delivered with significant defects, our earnings and financial condition could be adversely affected.

We expect to acquire additional vessels in the future either from the secondhand markets or by placing newbuilding orders. The delivery of any vessels we might decide to acquire, whether newbuildings or secondhand vessels, could be delayed or certain events may arise which could result in us not taking delivery of a vessel, such as a total loss of a vessel, a constructive loss of a vessel, substantial damage to a vessel prior to delivery or construction not in accordance with agreed upon specification or with substantial defects. A delay in the delivery of any of these vessels to us or the failure of the contract counterparty to deliver a vessel at all could cause us to breach our obligations under a related time charter and could adversely affect our earnings, our financial condition and the amount of dividends, if any, that we pay in the future.

Labor interruptions could disrupt our business.

Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We or our Manager may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations.

Our success depends to a significant extent upon the abilities and efforts of our management team. Our success will depend upon our and our Manager’s ability to hire additional employees and to retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition and operating cash flows. Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not currently intend to maintain "key man" life insurance on any of our officers.

Risks involved with operating ocean-going vessels could affect our business and reputation, which may reduce our revenues.

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

● marine disaster;

● piracy;

● environmental accidents;

● grounding, fire, explosions and collisions;

● cargo and property losses or damage;

● business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes, adverse weather conditions, natural disasters or other disasters outside our control, such as the COVID-19 outbreak; and

● work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts.

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Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. Any of these circumstances or events could increase our costs or lower our revenues, which could result in reduction in the market price of our shares of common stock. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator.

The operation of containerships has certain unique operational risks which could affect our business, financial condition, results of operations and ability to pay dividends.

The operation of certain ship types, such as containerships, has certain unique risks. Containerships operate at higher speeds as compared to other ocean-going vessels in order to move cargoes around the world quickly and minimize delivery delays. These high speeds can result in greater impact in collisions and groundings resulting in more damage to the vessel when compared to vessels operating at lower speeds. In addition, due to the placement of the containers on a containership, there is a greater risk that containers carried on deck will be lost overboard if an accident does occur. Furthermore, with the highly varied cargo that can be carried on a single containership, there can be additional difficulties with any clean-up operation following an accident. Also, we may not be able to correctly control the contents and condition of cargoes within the containers which may give rise to events such as customer complaints, accidents on-board the ships or problems with authorities due to carriage of illegal cargoes. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and ability to pay dividends. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Our vessels may suffer damage and may face unexpected drydocking costs, which could affect our cash flows and financial condition.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover. The loss of earnings while these vessels are being repaired and reconditioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located.  We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located near our vessels’ positions.  The loss of earnings and any costs incurred while these vessels are forced to wait for space or to steam to more distant drydocking facilities would decrease our earnings.

Purchasing and operating previously owned vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings. The aging of our fleet may result in increased operating costs in the future, which could adversely affect our results of operations.

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

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of March 31, 2022, the vessels in our fleet had an average age of approximately 17.8 years. As our vessels age, they may become less fuel efficient and more costly to maintain and will not be as advanced as more recently constructed vessels due to improvements in design and engine technology. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

If we sell vessels, we are not certain that the price for which we sell them will equal their carrying amount at that time.

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Unless we set aside reserves for vessel replacement, at the end of a vessel's useful life, our revenue will decline, which would adversely affect our cash flows and income.

As of March 31, 2022, the vessels in our fleet had an average age of approximately 17.8 years. Unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimate the useful life of our vessels to be 25 years from the completion of their construction. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations may be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.

Technological innovation could reduce our charter income and the value of our vessels.

The charter rates and the value and operational life of a vessel are determined by a number of factors including the vessel's efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel's physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our available cash could be adversely affected.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

We enter into, among other things, charter-party agreements. Such agreements subject us to counterparty risks. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various expenses. In addition, in depressed market conditions, our charterers may no longer need a vessel that is currently under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their obligations under those contracts, especially when the contracted charter rates are significantly above market levels. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters may be at lower rates given currently decreased charter rate levels. As a result, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends in the future and compliance with covenants in our credit facilities.

A decrease in spot charter rates may provide an incentive for some charterers to default on their charters.

When we enter into a time charter, charter rates under that charter are fixed for the term of the charter. If the spot charter rates or short-term time charter rates in the containership shipping industry remain significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to operate our vessels profitably and may affect our ability to comply with covenants contained in our current or future credit facilities and financing agreements.

We may not have adequate insurance to compensate us adequately for damage to, or loss of, our vessels.

We procure insurance for our fleet against risks commonly insured by vessel owners and operators which includes hull and machinery insurance, protection and indemnity insurance (which, in turn, includes environmental damage and pollution insurance) and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally do not maintain insurance against loss of hire which covers business interruptions that result in the loss of use of a vessel except in cases we consider such protection appropriate. We may not be adequately insured against all risks and we may not be able to obtain adequate insurance coverage for our fleet in the future. The insurers may not pay particular claims. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs. Since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Moreover, the insurers may default on any claims they are required to pay. If our insurance is not enough to cover claims that may arise, it may have a material adverse effect on our financial condition, results of operations and cash flows.

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Because we obtain some of our insurance through protection and indemnity associations (“P&I Associations”), we may also be subject to calls in amounts based not only on our own claim records, but also the claim records of other members of the P&I Associations.

We are indemnified for legal liabilities incurred while operating our vessels through membership in P&I Associations or clubs.  P&I Associations are mutual insurance associations whose members must contribute to cover losses sustained by other association members.  The objective of a P&I Association is to provide mutual insurance based on the aggregate tonnage of a member’s vessels entered into the association.  Claims are paid through the aggregate premiums of all members of the association, although members remain subject to calls for additional funds if the aggregate premiums are insufficient to cover claims submitted to the association.  We cannot assure you that the P&I Association to which we belong will remain viable or that we will not become subject to additional funding calls which could adversely affect us.  Claims submitted to the association may include those incurred by members of the association as well as claims submitted to the association from other P&I Associations with which our P&I Association has entered into inter-association agreements.

We may be subject to calls in amounts based not only on our claim records but also the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Our vessels are exposed to operational risks, including terrorism, cyber-terrorism and piracy that may not be adequately covered by our insurance.

The operation of any vessel includes risks such as weather conditions, mechanical failure, collision, fire, contact with floating objects, cargo or property loss or damage and business interruption due to political circumstances in countries, piracy, terrorist and cyber-terrorist attacks, armed hostilities and labor strikes. Such occurrences could result in death or injury to persons, loss, damage or destruction of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates and damage to our reputation and customer relationships generally.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Although the frequency of sea piracy worldwide has generally decreased since 2013, sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Sulu Sea and the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our vessels.

If these piracy attacks occur in regions in which our vessels are deployed that insurers characterized as “war risk” zones or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including the employment of onboard security guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter-hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition and earnings.

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We may not be adequately insured against all risks, and our insurers may not pay particular claims. With respect to war risks insurance, which we usually obtain for certain of our vessels making port calls in designated war zone areas, such insurance may not be obtained prior to one of our vessels entering into an actual war zone, which could result in that vessel not being insured. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Under the terms of our credit facilities, we will be subject to restrictions on the use of any proceeds we may receive from claims under our insurance policies. Furthermore, in the future, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs in the event of a claim or decrease any recovery in the event of a loss. If the damages from a catastrophic oil spill or other marine disaster exceeded our insurance coverage, the payment of those damages could have a material adverse effect on our business and could possibly result in our insolvency.

Recent action by the IMO’s Maritime Safety Committee and U.S. agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats.  This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. However, the impact of such regulations is hard to predict at this time. We do not carry cyber-attack insurance, which could have a material adverse effect on our business, financial condition and results of operations.

In general, we do not carry loss of hire insurance. Occasionally, we may decide to carry loss of hire insurance when our vessels are trading in areas where a history of piracy has been reported. Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking or unscheduled repairs due to damage to the vessel. Accordingly, any loss of a vessel or any extended period of vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government, the European Union, the United Nations, or other governmental authorities, it could lead to monetary fines or other penalties and/or adversely affect our reputation and the market for our shares of common stock and its trading price.

Although none of our vessels have called on ports located in countries or territories that are the subject of country-wide or territory-wide comprehensive sanctions or embargoes imposed by the U.S. government or other governmental authorities (“Sanctioned Jurisdictions”) in violation of sanctions or embargo laws during 2021, and we endeavor to take precautions reasonably designed to mitigate such risks, it is possible that, in the future, vessels in our fleet may call on ports located in Sanctioned Jurisdictions on charterers' instructions and/or without our consent in violation of applicable sanctions laws. If such activities result in a violation of applicable sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our common stock could be adversely affected.

Beginning in February of 2022, President Biden and several European leaders announced various economic sanctions against Russia in connection with the conflict in the Ukraine region, which may adversely impact our business. Our business could also be adversely impacted by trade tariffs, trade embargoes or other economic sanctions that limit trading activities by the United States or other countries against countries in the Middle East, Asia or elsewhere as a result of terrorist attacks, hostilities or diplomatic or political pressures.

On March 8, 2022, President Biden issued an executive order prohibiting the import of certain Russian energy products into the United States, including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas and coal.  Additionally, the executive order prohibits any new investments in the Russian energy sector by U.S. persons, among other restrictions.

The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time. Current or future counterparties of ours, including charterers, may be affiliated with persons or entities that are or may be in the future the subject of sanctions or embargoes imposed by the U.S. government, the EU, and/or other international bodies. If we determine that such sanctions or embargoes require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected, we could face monetary fines or penalties, or we may suffer reputational harm.

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All of the Company's revenues are from chartering-out its vessels on voyage or time charter contracts. The Company's vessels can also enter into pooling arrangements under which an international company and trading house involved in the use and/or transportation of commodities directs the Company's vessel to carry cargoes on its behalf. In time charters and pooling arrangements, the Company has no contractual relationship with the owner of the cargo. The vessel is directed to a load port to load the cargo, and to a discharge port to offload the cargo, based solely on the instructions of the charterer. As of March 31, 2022, none of our vessels have called on ports in Sanctioned Jurisdictions in the past or are arranged to call such ports in the future in violation of applicable sanctions laws.

Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations in 2021, and intend to maintain such compliance, there can be no assurance that we will be in compliance with all applicable sanctions and embargo laws and regulations in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries or territories identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries or territories subject to U.S. sanctions or embargo laws that are not controlled by the governments of those countries or territories, or engaging in operations associated with those countries or territories pursuant to contracts with third parties that are unrelated to those countries or territories or entities controlled by their governments. Investor perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in the countries or territories that we operate in.

As a result of sanctions arising from the Russian invasion of Ukraine, the ability to make payments to accounts at certain Russian banks may be limited, which could affect our ability to pay the wages of any crew members or consultants who hold such accounts.

As a result of sanctions arising from the Russian invasion of Ukraine, the ability to make payments to accounts at certain Russian banks may be limited. Although wage payments have not been affected by this issue as of March 31, 2022, continuing or additional sanctions may affect our ability to pay the wages of any crew members or consultants who hold such accounts, which could adversely impact our operations.

We expect to operate substantially outside the United States, which will expose us to political and governmental instability, which could harm our operations.

We expect that our operations will be primarily conducted outside the United States and may be adversely affected by changing or adverse political and governmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with the operation of our vessels, which could harm our business, financial condition and results of operations. Past political efforts to disrupt shipping in these regions, particularly in the Arabian Gulf, have included attacks on ships and mining of waterways. In addition, terrorist attacks outside this region, such as the attacks that occurred against targets in the United States on September 11, 2001 and on a number of occasions in other countries following that, as well as continuing or new unrest and hostilities in Iraq, Iran, Afghanistan, Libya, Egypt, Ukraine, Syria and elsewhere in the world, may lead to additional armed conflicts or to further acts of terrorism and civil disturbance. Any such attacks or disturbances may disrupt our business, increase vessel operating costs, including insurance costs, and adversely affect our financial condition and results of operations. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, economic sanctions or other adverse events or circumstances in or affecting the countries and regions where we operate or where we may operate in the future.

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Further, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, leaders in the United States have indicated that the United States may seek to implement more protective trade measures. The results of the 2020 presidential election in the United States have created significant uncertainty about the future relationship between the United States, China and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. For example, in March 2018, former President Trump announced tariffs on imported steel and aluminum into the United States that could have a negative impact on international trade generally and in January 2019, the United States announced sanctions against Venezuela, which may have an effect on its oil output, and in turn, affect global oil supply. The U.S. government has recently made statements and taken certain actions that may lead to changes to U.S. and international trade policies, including recently-imposed tariffs affecting certain Chinese industries. It is unknown whether and to what extent new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on our business, financial condition, and results of operations. In February 2022, at the onset of the Russia-Ukraine conflict, economic and trade sanctions were imposed against Russia, which will likely have large economic consequences on a global scale. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade.

Moreover, increasing trade protectionism may cause an increase in:

(a) the cost of goods exported from regions globally,

(b) the length of time required to transport goods and

(c) the risks associated with exporting goods.

Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers' business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of operations, financial condition and our ability to pay any cash distributions to our stockholders.

The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.

We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in countries around the world. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court's jurisdiction if any other bankruptcy court would determine it had jurisdiction.

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

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). Section 404 of Sarbanes-Oxley requires that we evaluate and determine the effectiveness of our internal control over financial reporting.

We work with our legal, accounting and financial advisors to identify any areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. We evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow us to satisfy our obligations as a public company on a timely and reliable basis. In addition, compliance with reporting and other requirements applicable to public companies do create additional costs for us and will require the time and attention of management. Our limited management resources may exacerbate the difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. We may not be able to predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management's attention to these matters will have on our business.

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Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.

We generate all our revenues in U.S. dollars, but we incur approximately 25% of our vessel operating expenses and drydocking expenses, all of our vessel management fees, and approximately 2% in 2021 of our general and administrative expenses in currencies other than the U.S. dollar. This could lead to fluctuations in our operating expenses, which would affect our financial results. Expenses incurred in foreign currencies increase when the value of the U.S. dollar falls, which would reduce our profitability and cash flows.

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

We have historically derived a significant part of our revenues from a small number of charterers. During 2021, 2020, and 2019, approximately 79%, 71%, and 87%, respectively, of our revenues were derived from our top five charterers. If one or more of our charterers chooses not to charter our vessels or is unable to perform under one or more charters with us and we are not able to find a replacement charter, we could suffer a loss of revenues that could adversely affect our financial condition and results of operations.

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

A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income”. For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. In addition, United States shareholders of a PFIC are required to file annual information returns with the United States Internal Revenue Service, or IRS.

Based on our current method of operation, we do not believe that we have been, are or will be a PFIC with respect to any taxable year. In this regard, we treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities should not constitute "passive income," and the assets that we own and operate in connection with the production of that income should not constitute passive assets.

There is substantial legal authority supporting this position consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes.  However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes.  Accordingly, in the absence of legal authority directly relating to PFIC rules, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations changed.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, (which election could itself have adverse consequences for such shareholders, as discussed in Item 10 of this Annual Report under "Taxation — United States Federal Income Taxation of U.S. Holders"), such shareholders would be subject to United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our shares, as if the excess distribution or gain had been recognized ratably over the United States shareholder's holding period of our shares. See "Taxation — United States Federal Income Taxation of U.S. Holders" in this Annual Report under Item 10 for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.

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Based on the current and expected composition of our and our subsidiaries' assets and income, it is not anticipated that we will be treated as a PFIC. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurances regarding our status as a PFIC for the current taxable year or any future taxable year. See the discussion in the section entitled "Item 10.E. Taxation — Passive Foreign Investment Company Status and Significant Tax Consequences". We urge U.S. Holders to consult with their own tax advisors regarding the possible application of the PFIC rules.

If management is unable to provide reports as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

Under Section 404 of Sarbanes-Oxley, we are required to include in each of our annual reports on Form 20-F a report containing our management’s assessment of the effectiveness of our internal control over financial reporting. If, in such annual reports on Form 20-F, our management cannot provide a report as to the effectiveness of our internal control over financial reporting as required by Section 404, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

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

Under the United States Internal Revenue Code of 1986, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as us and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code, or Section 883, and the applicable Treasury Regulations promulgated thereunder.

We intend to take the position that we qualified for this statutory tax exemption for United States federal income tax return reporting purposes for our 2021 taxable year and we intend to so qualify for future taxable years. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for any future taxable year and thereby become subject to United States federal income tax on our U.S.-source shipping income. For example, in certain circumstances we may no longer qualify for exemption under Section 883 for a particular taxable year if shareholders, other than “qualified shareholders”, with a five percent or greater interest in our common shares owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year. Due to the factual nature of the issues involved, there can be no assurances on our tax-exempt status.  In addition, we may fail to qualify if our common stock comes to represent 50% or less of the value or outstanding voting power of our stock.

If we are not entitled to exemption under Section 883 for any taxable year, we would be subject for those years to an effective 2% United States federal income tax on the shipping income we derive during the year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

Failure to comply with the U.S. Foreign Corrupt Practices Act (FCPA) could result in fines, criminal penalties, and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws, including the FCPA. We are subject, however, to the risk that we, our affiliated entities or respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and time- and attention-consuming for our senior management.

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

We are a Marshall Islands corporation, and our subsidiaries are incorporated in jurisdictions outside of the United States. Our executive offices are located outside of the United States in Maroussi, Greece. A majority of our directors and officers reside outside of the United States, and a substantial portion of our assets and the assets of our officers and directors are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside of the United States, judgments you may obtain in the U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws.

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There is also substantial doubt that the courts of the Marshall Islands, Greece or jurisdictions in which our subsidiaries are organized would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. In addition, the protection afforded minority shareholders in the Marshall Islands is different than those offered in the United States.

Risk Factors Relating To Our Common Stock

The trading volume for our common stock has been low, which may cause our common stock to trade at lower prices and make it difficult for you to sell your common stock.

Although our shares of common stock have traded on the Nasdaq Global Market since January 31, 2007, on the Nasdaq Global Select Market since January 1, 2008, and on the Nasdaq Capital Market since June 26, 2015, the trading volume had been lower over the last couple of years. In recent months, we have seen an increase in trading volume on our shares, which is reflected, in part, by the increased demand in the international containership market. However, our shares may once again return to lower trading volumes in the public market and any such limited liquidity may cause our common stock to trade at lower prices and make it difficult to sell your common stock.

The market price of our common stock has recently been volatile and may continue to be volatile in the future, and as a result, investors in our common stock could incur substantial losses on any investment in our common stock.

The market price of our common stock has recently been volatile and may continue to be volatile in the future. For example, the reported closing sale price of our common stock on the Nasdaq Capital Market was $23.08 per share on June 30, 2021 and $38.21 per share on September 23, 2021. In addition, on February 24, 2022, the intra-day sale price of our common stock reported on the Nasdaq Capital Market fluctuated between a low of $23.94 per share and a high of $26.86 per share without any discernable announcements or developments by the Company or third parties to substantiate the movement of our stock price.

Among the factors that have in the past and could in the future affect our stock price are:

● actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

● changes in market valuations or sales or earnings estimates or publication of research reports by analysts;

● changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts;

● speculation in the press or investment community about our business or the shipping industry;

● changes in market valuations of similar companies and stock market price and volume fluctuations generally;

● payment of dividends;

● strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings;

● changes in government and other regulatory developments;

● additions or departures of key personnel;

● general market conditions and the state of the securities markets; and

● domestic and international economic, market and currency factors unrelated to our performance.

The international container shipping industry has been highly unpredictable.  In addition, the stock markets in general, and the markets for container shipping and shipping stocks in general, have experienced extreme volatility that has sometimes been unrelated or disproportionate to the operating performance of particular companies. In addition, the ongoing COVID-19 pandemic has caused broad stock market and industry fluctuations. These broad market fluctuations may adversely affect the trading price of our common stock.  As a result of this volatility, our shares may trade at prices lower than you originally paid for such shares and you may incur substantial losses on your investment in our common stock.

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Investors may purchase our common stock to hedge existing exposure or to speculate on the price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent an aggregate short exposure in our common stock becomes significant, investors with short exposure may have to pay a premium to purchase common stock for delivery to common stock lenders at times if and when the price of our common stock increases significantly, particularly over a short period of time. Those purchases may in turn, dramatically increase the price of our common stock. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to our business prospects, operating performance, financial condition or other traditional measures of value for the Company or our common stock.

If our common stock does not meet the Nasdaq Capital Market’s minimum share price requirement, and if we cannot cure such deficiency within the prescribed timeframe, our common stock could be delisted.

Under the rules of the Nasdaq Capital Market, listed companies are required to maintain a share price of at least $1.00 per share.  If the share price declines below $1.00 for a period of 30 consecutive business days, then the listed company has a cure period of at least 180 days to regain compliance with the $1.00 per share minimum. The company may regain compliance if the bid price of its common shares closes at $1.00 per share or more for a minimum of ten consecutive business days at any time during the 180-day cure period. If the price of our common stock closes below $1.00 for 30 consecutive days, and if we cannot cure that deficiency within the 180-day timeframe, then our common stock could be delisted. On January 14, 2019, we received such a notice as our share price traded below $1.00 for 30 consecutive days, however Nasdaq determined that the Company was eligible for an additional 180-day period, or until January 13, 2020, to regain compliance. In December 2019, we effected a 1-for-8 reverse stock split to comply with the minimum share price requirement. Our common stock has been above $1.00 per share since this reverse stock split.

If the market price of our common stock falls below $5.00 per share, under stock exchange rules, our shareholders will not be able to use such shares as collateral for borrowing in margin accounts. This inability to continue to use our common stock as collateral may lead to sales of such shares creating downward pressure on and increased volatility in the market price of our common stock.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our common shares will depend, in part, upon the research and reports that securities or industry analysts publish about us or our business. We do not have any control over analysts as to whether they will cover us, and if they do, whether such coverage will continue. If analysts do not commence coverage of the Company, or if one or more of these analysts cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. In addition, if one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price may likely decline.

Our Amended and Restated Articles of Incorporation, Bylaws and Shareholders' Rights Plan contain anti-takeover provisions that may discourage, delay or prevent (1) merger or acquisition, (2) the removal of incumbent directors and officers and (3) the ability of public shareholders to benefit from a change in control.

Our current amended and restated articles of incorporation and bylaws contain certain anti-takeover provisions. These provisions include blank check preferred stock, the prohibition of cumulative voting in the election of directors, a classified Board of Directors, advance written notice for shareholder nominations for directors, removal of directors only for cause, advance written notice of shareholder proposals for the removal of directors and limitations on action by shareholders. In addition, on May 10, 2019 we adopted a shareholders' rights plan, which replaced and is substantially similar to our prior shareholder rights agreement that expired on May 27, 2019, pursuant to which our Board of Directors may cause the substantial dilution of any person that attempted to acquire us without the approval of our Board of Directors.  These anti-takeover provisions, either individually or in the aggregate, may discourage, delay or prevent (1) our merger or acquisition by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest, (2) the removal of incumbent directors and officers, and (3) the ability of public shareholders to benefit from a change in control. These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders’ ability to realize any potential change of control premium.

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

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

We may issue additional shares of our stock in the future and our stockholders may elect to sell large numbers of shares held by them from time to time. Our amended and restated articles of incorporation authorize us to issue up to 200,000,000 shares of common stock and 20,000,000 shares of preferred stock. 

On January 27, 2014 we entered into an agreement to sell 25,000 of our Series B Convertible Perpetual Preferred Shares (the “Series B Preferred Shares”) to a fund managed by Tennenbaum Capital Partners LLC (“TCP”) and 5,700 shares to Preferred Friends Investment Company Inc., an affiliate of the Company.  The Series B Preferred Shares are convertible into common shares.  Pursuant to a registration rights agreement between us and TCP, we filed a registration statement registering for resale all of the common shares issuable upon conversion of the Series B Preferred Shares, which has resulted in these shares becoming freely tradable without restriction under the Securities Act of 1933, as amended (the “Securities Act”), if such shares are sold under the registration statement. On December 29, 2016 we sold 89,928 shares of our common stock to Friends for total proceeds of $1,000,000. Further, on December 23, 2016 we issued 112,500 shares of our common stock to two funds managed by TCP in order to purchase the M/V “RT Dagr”. Pursuant to a registration rights agreement with TCP, on March 12, 2020 we filed a registration statement covering among other things the resale of such shares, and the registration statement was declared effective on May 7, 2020. In June 2019, we redeemed $11.7 million of our Series B Preferred Shares, leaving an $8 million face value of our Series B Preferred Shares outstanding. In August 2019, we issued 2,816,901 shares of our common stock for the acquisition of M/V “EM Hydra”, M/V “EM Spetses”, M/V “EM Kea” and M/V “Diamantis P”, owned by affiliates of the Pittas family, including our Chief Executive Officer. In November 2019, the acquisition of M/V “Synergy Busan”, M/V “Synergy Keelung”, M/V “Synergy Oakland” and M/V “Synergy Antwerp” (the “Synergy vessels”) was partially financed through a private placement of $6 million, subscribed equally by an entity affiliated with our Chief Executive Officer and an entity controlled by the seller of the Synergy vessels, resulting in the issuance of 1,056,338 shares of our common stock.  On November 16, 2020, we issued 161,357 shares to Synergy Holdings Ltd. as a result of a contingent payment, which was part of the agreement to purchase the Synergy vessels. On November 24, 2020, we issued 702,247 shares of our common stock to Colby Trading Ltd (“Colby”), a company affiliated with our Chairman and Chief Executive Officer, in connection with the conversion of the outstanding balance of $1.875 million out of the $2.5 million loan Colby had provided us in September 2019. On January 29, 2021, we redeemed 2,000 of our Series B Preferred Shares outstanding (par value $1,000 per share) and paid $2.0 million to the Preferred Shares shareholders and in June 2021, we redeemed all of our Preferred Shares by converting all the Series B Preferred Shares into 453,044 common shares, for a redemption amount of $6.365 million to the Preferred Shares shareholders.

In December 2016 and January 2017, we filed with the SEC two prospectus supplements to issue and sell, in an at-the-market (“ATM”) offering, shares of our common stock having an aggregate offering price of up to $10 million. From December 21, 2016 through January 26, 2017, we issued and sold 160,078 shares of our common stock through the ATM offering for net proceeds of approximately $2.7 million. In October 2018, we filed with the SEC a new prospectus supplement under which we may issue and sell, in an ATM offering, shares of our common stock having an aggregate offering price of up to $4.2 million; in October 2019, we issued and sold 144,727 shares of our common stock in this ATM offering for net proceeds of approximately $0.85 million. On March 12, 2020, we filed with the SEC a shelf registration statement on Form F-3 and filed amendments thereto on March 27, 2020 and May 4, 2020, which gave us the ability to sell in one or more offerings, within a three-year period, up to 2,369,950 shares of our common stock that were previously acquired in private transactions or in the open market or which are issuable upon conversion of Series B Convertible Perpetual Preferred Shares (the “Series B Preferred Shares”) or any convertible notes into which the Series B Preferred Shares may convert. On August 3, 2020, we issued and sold 200,000 shares of common stock under our at-the-market offering for net proceeds of approximately $0.7 million. On January 29, 2021, we sold 74,301 shares of common stock under our at-the-market offering for approximately $0.65 million of net proceeds. On February 3, 2021, we filed with the SEC a new prospectus supplement under which may issue and sell, in an ATM offering, shares of our common stock having an aggregate offering price of up to $5,242,800. On February 12, 2021, we sold 8,600 shares of common stock under our at-the-market offering for approximately $0.09 million of net proceeds.

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Issuance of preferred stock may adversely affect the voting power of our shareholders and have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.

Our Board of Directors approved the issuance of 30,700 shares of our Series B Preferred Shares in 2014 (of which none are outstanding as of December 31, 2021) and may decide in the future to issue preferred shares in one or more series and to determine the rights, preferences, privileges and restrictions with respect to, among other things, dividends, conversion, voting, redemption, liquidation and the number of shares constituting any series subject to prior shareholders' approval. If our Board determines to issue preferred shares, such issuance may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. The issuance of preferred shares with voting and conversion rights may also adversely affect the voting power of the holders of common shares. This could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders’ ability to realize any potential change of control premium.

Because the Republic of the Marshall Islands, where we are incorporated, does not have a well-developed body of corporate law, shareholders may have fewer rights and protections than under typical state law in the United States, such as Delaware, and shareholders may have difficulty in protecting their interests with regard to actions taken by our Board of Directors.

Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws, as amended, and by the Marshall Islands Business Corporations Act (the “BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. For example, under Marshall Islands law, a copy of the notice of any meeting of the shareholders must be given not less than 15 days before the meeting, whereas in Delaware such notice must be given not less than 10 days before the meeting. Therefore, if immediate shareholder action is required, a meeting may not be able to be convened as quickly as it can be convened under Delaware law. Also, under Marshall Islands law, any action required to be taken by a meeting of shareholders may only be taken without a meeting if consent is in writing and is signed by all of the shareholders entitled to vote, whereas under Delaware law action may be taken by consent if approved by the number of shareholders that would be required to approve such action at a meeting. Therefore, under Marshall Islands law, it may be more difficult for a company to take certain actions without a meeting even if a majority of the shareholders approve of such action. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of Delaware and other states with substantially similar legislative provisions, public shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.

Item 4. Information on the Company

A. History and Development of the Company

Euroseas Ltd. is a Marshall Islands company incorporated under the BCA on May 5, 2005. We are a provider of worldwide ocean-going transportation services. On May 30, 2018, the Company spun-off its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold at the time) into EuroDry Ltd., a separate publicly listed company also listed on Nasdaq Capital Market the “Spin-off”). Shareholders of the Company received one EuroDry Ltd. share for every five shares of the Company they held. As a result of the Spin-off and the subsequent sale of M/V Monica P, the Company has become a pure containership company and the only publicly listed company concentrating on the feeder and intermediate containership sector.  Our containerships transport dry and refrigerated containerized cargoes, mainly including manufactured products and perishables. As of March 31, 2022, our fleet consisted of 16 containerships. The total cargo carrying capacity of the 16 containerships is 635,806 dwt or 50,371 teu. Two of our vessels were acquired before January 1, 2004 and were controlled by the Pittas family interests. On June 29, 2005, the shareholders of the two vessels (and of five additional vessels that have since been sold) transferred their ownership in each of the vessels to Euroseas in exchange for shares in Friends, a 100% owner of Euroseas at that time. Since June 2005, the Company has purchased 38 vessels, sold 20 vessels and ordered eleven newbuildings. Euroseas took delivery of three of the newbuildings in February 2016, January 2017 and May 2018, respectively, while one newbuilding vessel contract was cancelled. The Company spun-off 6 of its vessels into EuroDry on May 30, 2018.

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During 2019, we acquired eight containership vessels. In August 2019, we took delivery of four feeder containerships, owned by affiliates of the Pittas family including our CEO, for $28.2 million (comprising a cash consideration of $15 million and the issuance of 2,816,901 common shares), the M/V EM Hydra and M/V EM Spetses, both 1,740 teu feeder containerships built in 2005 and 2007, respectively, the M/V EM Kea, a 3,100 teu feeder containership built in 2007, and the M/V Diamantis P, a 2,008 teu feeder containership built in 1998. In November 2019, we took delivery of four intermediate 4,253 teu containerships, three built in 2009 and one in 2008, and also assumed the charters they were under. The vessels were acquired from companies controlled by Synergy Holdings Limited for approximately $40 million. During 2020, we sold five of our containership vessels. In July 2020, we completed the sale of three of our containership vessels for scrap, the M/V Manolis P, M/V EM Oinousses and M/V Kuo Hsiung, and in September 2020 we completed the sale of the M/V Ninos for scrap, for a total of approximately $9.8 million of net proceeds. In November 2020, we sold the M/V EM Athens for further trading for a total of $4.9 million of net proceeds.

In June 2021, January 2022 and March 2022, we entered into three separate agreements with Hyundai Mipo Dockyard Co., Ltd. to construct seven modern containerships; four with a carrying capacity of 2,800 teu each and three with a carrying capacity of 1,800 teu each. The two vessels ordered in June 2021 are scheduled to be delivered in the first and second quarter of 2023 for a total amount of $76.1 million. In October 2021 we took delivery of a feeder containership, M/V “Jonathan P.”, for a purchase price of $25.5 million and in December 2021 of an intermediate container, M/V “Marcos V.”, with an attached time charter, for a purchase price of $40.0 million. The two vessels ordered in January 2022 are scheduled to be delivered during the fourth quarter of 2023 and first quarter of 2024 for approximately $85 million. The three vessels ordered in March 2022 are scheduled to be delivered during the second quarter of 2024 for approximately $103.8 million.       

Our common shares traded under the symbol ESEA on the Nasdaq Global Market beginning January 31, 2007 and on the Nasdaq Global Select Market beginning January 1, 2008, and since June 26, 2015 have traded on the Nasdaq Capital Market.

Our executive offices are located at 4 Messogiou & Evropis Street, 151 24, Maroussi, Greece. Our telephone number is +30-211-1804005.

The SEC maintains an Internet website at www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our website address is www.euroseas.gr. The information contained on our website is not part of this annual report.

B. Business Overview

Our fleet consists of containerships that transport container boxes providing scheduled service between ports.  Please see the information in the section titled "Our Fleet", below. During 2019, 2020, and 2021 we had a fleet utilization of 99.1%, 95.5%, and 98.5% respectively, our vessels achieved daily time charter equivalent rates of $8,782, $9,445, and $19,327 respectively, and we generated voyage charter revenue and time charter revenue totalling $41.77 million, $55.68 million, and $97.98 million respectively.

Our business strategy is focused on providing consistent shareholder returns by carefully selecting the timing and the structure of our investments in containership vessels and by reliably, safely and competitively operating the vessels we own, through our affiliate, Eurobulk. Representing a continuous ship-owning and management history that dates back to the 19th century, we believe that one of our advantages in the industry is our ability to select and safely operate containership vessels of any age.

Our Fleet 

As of March 31, 2022, the profile and deployment of our fleet are the following:

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Name	Type	Dwt	TEU	Year Built	Employment (*)	TCE Rate ($/day)
Container Carriers
MARCOS V.(*)	Intermediate	72,968	6,350	2005	TC until Dec-24 plus 12 months option	$42,200 option $15,000
AKINADA BRIDGE(*)	Intermediate	71,366	5,610	2001	TC until Oct-22	$20,000
SYNERGY BUSAN(*)	Intermediate	50,726	4,253	2009	TC until Aug-24	$25,000
SYNERGY ANTWERP(+)	Intermediate	50,726	4,253	2008	TC until Dec-23	$18,000
SYNERGY OAKLAND(*)	Intermediate	50,787	4,253	2009	TC until Apr-22 TC until Mar - 26	$160,000 (***) $42,000
SYNERGY KEELUNG(+)	Intermediate	50,969	4,253	2009	TC until Jun-22 TC until Feb-23	$11,750 $14,500
EM KEA(*)	Feeder	42,165	3,100	2007	TC until May-23	$22,000
EM ASTORIA(*)	Feeder	35,600	2,788	2004	TC until Feb-23 then until Feb-24 then until Feb-25	$65,000 $50,000 $20,000
EVRIDIKI G(*)	Feeder	34,677	2,556	2001	TC until Feb-25	$40,000
EM CORFU(*)	Feeder	34,654	2,556	2001	TC until Feb-25	$40,000
DIAMANTIS P(*)	Feeder	30,360	2,008	1998	TC until Oct-24	$27,000
EM SPETSES(*)	Feeder	23,224	1,740	2007	TC until Aug-24	$29,500
JONATHAN P.(*)	Feeder	23,357	1,740	2006	TC until Oct-24	$26,662(**)
EM HYDRA(*)	Feeder	23,351	1,740	2005	TC until Apr-23	$20,000
JOANNA(*)	Feeder	22,301	1,732	1999	TC until Oct-22	$16,800
AEGEAN EXPRESS(*)	Feeder	18,581	1,439	1997	TC until Apr-25	$41,000
Total Container Carriers	16	635,806	50,371

Vessels under construction	Type	Dwt	TEU	To be delivered
H4201	Feeder	37,237	2,800	Q1 2023
H4202	Feeder	37,237	2,800	Q2 2023
H4236	Feeder	37,237	2,800	Q4 2023
H4237	Feeder	37,237	2,800	Q1 2024
H4248	Feeder	22,262	1,800	Q1 2024
H4249	Feeder	22,262	1,800	Q2 2024
H4250	Feeder	22,262	1,800	Q2 2024

(*)    TC denotes time charter. All dates listed are the earliest redelivery dates under each TC unless the contract rate is lower than the current market rate in which cases the latest redelivery date is assumed; vessels with the latest redelivery date shown are marked by (₊).

(**)  Rate is net of commissions (which are typically 5-6.25%).

(***) The previous charter of M/V Synergy Oakland of $202,000/day exceeded its maximum duration by about 25 days due to port delays with payment of the higher ($202,000/day) rate to the Company continuing during the extension. However, the extension resulted in the loss of the subsequent short-term charter of $130,000/day that was to be performed before the 4-year charter starts. The vessel, after an idle period of 15 days, was chartered for a single voyage charter at $160,000/day after the completion of which it will commence the 4-yr charter; the new charter arrangements will result in about the same average rate and total revenues as the original arrangements.

We plan to expand our fleet by investing in vessels in the containership market under favorable market conditions. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist.  We employ our vessels in the spot and time charter market. As of March 31, 2022, all of our vessels are employed under time charter contracts.

As of March 31, 2022, approximately 95% of our ship capacity days for the remainder of 2022, 71% of our ship capacity days in 2023, 53% of our ship capacity days in 2024, 10% of our ship capacity days in 2025 and 1% of our ship capacity in 2026 are under contract.

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In “Critical Accounting Estimates – Impairment of vessels” below, we discuss our policy for impairing the carrying values of our vessels. During the past few years, the market values of vessels have experienced extraordinarily high volatility, and substantial declines in many vessel classes.  As a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below those vessels’ carrying value. We may not impair those vessels’ carrying value under our impairment accounting policy, due to our belief that future undiscounted cash flows expected to be earned by such vessels over their operating lives would exceed such vessels’ carrying amounts. 

The table set forth below indicates (i) the carrying value of each of our vessels as of December 31, 2020 and 2021, respectively, (ii) which of our vessels we believe has a basic market value below its carrying value, and (iii) the aggregate difference between carrying and market value represented by such vessels. This aggregate difference represents the approximate analysis of the amount by which we believe we would have to reduce our net income/ (loss) if we sold all of such vessels in the current environment, using industry-standard valuation methodologies, in cash, in arm’s-length transactions.  For purposes of this calculation, we have assumed that the vessels would be sold at a price that reflects our estimate of their current basic market values. However, we are not holding our vessels for sale, except as otherwise noted in this report. 

Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without any notations.  Our estimates are based on information available from various industry sources, including:

● reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;

● news and industry reports of similar vessel sales;

● news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;

● approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;

● offers that we may have received from potential purchasers of our vessels; and

● vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain.  In addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them. 

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Name	Capacity	Purchase Date	Carrying Value as of December 31, 2020 (in millions)	Carrying Value as of December 31, 2021 (in millions) (2)
Container Carriers	(teu)
EVRIDIKI G	2,556	May-2008	$7.27(1)	$6.89
JOANNA	1,732	Jul-2013	$3.02	$2.63
AEGEAN EXPRESS	1,439	Sep-2016	$1.99	$1.72
EM ASTORIA	2,788	Jun-2017	$4.31	$4.19
EM CORFU	2,556	Nov-2017	$4.66	$4.55
AKINADA BRIDGE	5,610	Dec-2017	$9.72	$9.10
EM KEA	3,100	Aug-2019	$8.91	$8.49
EM SPETSES	1,740	Aug-2019	$7.00(1)	$6.61
EM HYDRA	1,740	Aug-2019	$6.18(1)	$5.77
DIAMANTIS P	2,008	Aug-2019	$4.29	$3.68
SYNERGY BUSAN	4,253	Nov-2019	$10.10	$9.53
SYNERGY ANTWERP	4,253	Nov-2019	$9.82	$9.43
SYNERGY OAKLAND	4,253	Nov-2019	$10.16	$9.75
SYNERGY KEELUNG	4,253	Nov-2019	$11.03	$10.57
JONATHAN P.	1,740	Oct-2021	-	$25.27
MARCOS V.	6,350	Dec-2021	-	$57.93
Total Container Carriers	50,371		$98.46	$176.11

(1) Indicates container vessels for which we believe, as of December 31, 2020, the basic charter-free market value is lower than the vessel’s carrying value as of December 31, 2020.  We believe that the aggregate carrying value of these vessels, assessed separately, of $20.45 million as of December 31, 2020 exceeds their aggregate basic charter-free market value of approximately $19.50 million by approximately $0.95 million.  As further discussed in “Critical Accounting Estimates – Impairment of vessels” below, we believe that the carrying values of our vessels as of December 31, 2020 were recoverable.

(2) Our vessels are stated at carrying values (refer to our accounting policy in Note 2 to our consolidated financial statements included herein) and, as of December 31, 2021, the carrying value of none of our vessels exceeded their estimated market value. There were no indications of impairment on any of our vessels and no impairment was recorded during the year ended December 31, 2021.

We note that as of March 31, 2022, all of our container vessels are employed under time charter contracts of durations from 6 to 48 months until the earliest redelivery charter period.  If we sell those vessels with the charters attached, the sale price may be affected by the relationship of the charter rate to the prevailing market rate for a comparable charter with the same terms.

We refer you to the risk factor entitled “The market value of our vessels can fluctuate significantly, which may adversely affect our financial condition, cause us to breach financial covenants, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels” and the discussion in Item 3.D under “Industry Risk Factors.”

Management of Our Fleet

The operations of our vessels are managed by Eurobulk Ltd., or Eurobulk, an affiliated company. Eurobulk manages our fleet under a Master Management Agreement with us and separate management agreements with each shipowning company. Eurobulk was founded in 1994 by members of the Pittas family and is a reputable ship management company with strong industry relationships and experience in managing vessels. Under our Master Management Agreement, Eurobulk is responsible for providing us with: (i) executive services associated with us being a public company; (ii) other services to our subsidiaries and commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers; and (iii) technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising drydocking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services.

Our Master Management Agreement with Eurobulk compensates Eurobulk with an annual fee and a daily management fee per vessel managed. Our Master Management Agreement, which we initially entered into in 2008, was amended and restated as of January 1, 2018, and its term was extended until January 1, 2023.  It provided for a 5% discount of the daily vessel management fee for any period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by Eurobulk is greater than 20 (“volume discount”), which was permanently incorporated into the daily management fee effective January 1, 2018 (see below). The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. This Master Management Agreement will automatically be extended after the initial period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the Master Management Agreement, vessels we might acquire in the future will enter into a separate management agreement with Eurobulk with a term and rate as specified in the Master Management Agreement.

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Under the amended and restated Master Management Agreement, as of January 1, 2018, in exchange for providing us with the services described above, we paid Eurobulk an annual fee of $2,000,000 and a management fee of 685 Euros per vessel per day for any operating vessel and 50% (i.e. 342.50 Euros) of that amount for any vessel laid up. The volume discount was permanently incorporated into the daily management fee which remained unchanged at 685 Euros in 2019, 2020 and 2021. Starting January 1, 2022, the daily management fee per vessel was adjusted to 720 Euros per vessel, to account for inflation. This fee will remain effective until the expiration of the Master Management Agreement on January 1, 2023. This cost is reduced accordingly by half (360 Euros per vessel per day) for any vessels that are laid up. Following the Spin-off, with effect May 30, 2018, the Company signed an addendum with the Manager according to which daily management fees were kept at 685 Euros per day per vessel and the fixed cost was adjusted to $1,250,000. As a result, for the year 2018, the fixed cost was calculated at $2,000,000 pro-rated for the period of January 1, 2018 until May 30, 2018 and at $1,250,000 for the period of May 31, 2018 until December 31, 2018. On November 15, 2019, the Company signed an addendum adjusting the fixed annual cost to $2,000,000 to compensate Eurobulk Ltd. for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition, as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019. For the years ended December 31, 2020 and 2021 the fixed cost of the management fee remained at $2,000,000 per year, before bonuses. During 2021, we paid an additional special bonus of $460,000 to Eurobulk’s employees, affiliated subcontractors and consultants. This annual fee remains unchanged for the year 2022.

Our Competitive Strengths

We believe that we possess the following competitive strengths:

● Experienced Management Team. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry.

● Cost Efficient Vessel Operations. We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 17.8 years on March 31, 2022, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $7,212 per day for the year ended December 31, 2021. We consider this amount to be among the lowest of the publicly listed containerships shipping companies in the United States. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and onboard crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2021, our operational fleet utilization was 98.5%, from 98.0% in 2020, while our commercial utilization rate was 100%, from 97.5% in 2020. Our total fleet utilization rate in 2021 was 98.5%.

● Strong Relationships with Customers and Financial Institutions. We believe ourselves, Eurobulk and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers.

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Our Business Strategy

Our business strategy is focused on providing consistent shareholder returns by carefully timing and structuring acquisitions of containerships and by reliably, safely and competitively operating our vessels through Eurobulk. We continuously evaluate purchase and sale opportunities, as well as long term employment opportunities for our vessels. Key elements of the above strategy are:

● Renew and Expand our Fleet. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market opportunities present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. In August and November 2019, we acquired eight secondhand containerships, expanding our fleet to 19 containership vessels. In July, September and November 2020, we sold five containerships, leaving us with 14 containership vessels. In October and December 2021, we acquired two secondhand containerships, further expanding our fleet to 16 containership vessels. In June 2021 and January 2022, we entered into contracts for the construction of four newbuilding containership vessels with a capacity of 2,800 teu each, while in March 2022, we entered into another contract for the construction of three newbuilding containership vessels with a capacity of 1,800 teu each. The newbuilding vessels will be delivered in the first, second and fourth quarters of 2023 and the first half of 2024, respectively.

● Maintain Balanced Employment. We intend to employ our fleet on either longer-term time charters, i.e. charters with duration of more than a year, or shorter term time/spot charters. We seek longer term time charter employment to obtain adequate cash flow to cover as much as possible of our fleet’s recurring costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. When we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of March 31, 2022, on the basis of our existing time charters, approximately 95% of our vessel capacity for the remainder of 2022 and approximately 71% in 2023, 53% in 2024, 10% in 2025 and 1% in 2026, are under time charter contracts, which will ensure employment of a portion of our fleet, partly protect us from market fluctuations and increase our ability to make principal and interest payments on our debt and pay dividends to our shareholders.

● Optimize Use of Financial Leverage. We intend to use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our bank debt repayment schedule as of December 31, 2021 calls for a reduction of approximately 24.6% of our debt by the end of 2022 and an additional reduction of about 43.5% by the end of 2023 for a total of 68.1% reduction over the next two years, excluding any new debt that we assumed or may assume. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase.

● Environmental, Social and Governance (ESG) Practices. We actively manage a broad range of ESG initiatives, taking into consideration their expected impact on the sustainability of our business over time, and the potential impact of our business on society and the environment. Regarding environmental initiatives, in 2021 we implemented technical and operational measures that we expect will result in energy savings and a reduced carbon footprint for our vessels. Moreover, we pay considerable attention to our human resources both on our vessels and ashore, proven by a variety of practices, including worldwide training on safety and management systems, and medical insurance for all employees.

Our Customers

We have well established relationships with major containership charterers, which we serve by carrying a variety of cargoes over a multitude of routes around the globe. We are a relationship driven company, and our top five customers in 2021 include two of our top five customers from 2020 and three from 2019. Our top five customers accounted for approximately 79% of our revenues in 2021, 64% of our revenues in 2020 and 87% of our revenues in 2019. In 2021, CMA, Maersk, Vasi, GSL and Hapag Lloyd accounted for 25%, 21%, 15%, 9% and 9% of our revenues, respectively. In 2020, Maersk, MSC, CMA and GSS accounted for 19%, 18%, 17% and 10% of our revenues, respectively. In 2019, CMA, GSS, Hapag Lloyd, MSC and Maersk accounted for 24%, 21%, 16%, 15% and 11% of our revenues, respectively. Our dependence on our key charterer customers is moderate, as in the event of a charterer default our vessels can generally be re-chartered at the market rate, in the spot or charter market, although it is likely that such rate will be lower than the charter rate agreed with the charterer. In addition, as of the date of this report, none of our charterers have reported any inability to pay their obligations to us as a result of the COVID-19 outbreak.

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The Containership Industry

       Containership shipping refers to the transport of containerized trade which encompasses mainly the carriage of finished goods, but an increasing number of other cargoes in container boxes. Containerized trade has been the fastest growing sector of seaborne trade, although in the last three years the rate of growth has slowed. Containerships are categorized by their size measured in terms of twenty-foot equivalent unit (“teu”) capacity and whether they have their own gearing (cranes). The different categories of containerships are as follows: (i) Post-Panamax vessels are generally vessels with carrying capacity of more than 4,000 teu; (ii) Panamax vessels are vessels with carrying capacity from 3,000 to 4,000 teu, and, in some designs, even up to 5,000 teu; these vessels are called such because the measurements of their beam and draft are the maximum allowable through the original Panama Canal; and (iii) Feeder containerships are vessels with carrying capacity from 500 to 3,000 teu and are usually equipped with cargo loading and unloading gear. Containerships are primarily employed in time charter contracts with liner companies, which in turn employ them as part of the scheduled liner operations. Feeder containerships are put in liner schedules feeding containers to and from central regional ports (hubs) where larger containerships provide cross ocean or longer haul service. The length of the time charter contract can range from several months to years.

Our Competitors

We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and vessel condition, as well as on reputation. Eurobulk arranges our charters (whether spot charters, time charters or shipping pools) through Eurochart S.A. (“Eurochart”), an affiliated brokering company which negotiates the terms of the charters based on market conditions. We compete with other shipowners of carriers primarily in the Feeder and Panamax containership sectors. Ownership of containerships is highly fragmented and is divided among state controlled and independent shipowners. Some of our publicly listed competitors include Danaos Corporation (NYSE: DAC), Costamare Inc. (NASDAQ: CMRE) and Performance Shipping Inc. (formerly Diana Containerships Inc.) (NASDAQ: PSHG).

Seasonality

The containership shipping industry’s seasonal trends are driven by the import patterns of manufactured goods and refrigerated cargoes by the major importers, such as the United States, Europe and Japan. The volume of containerized trade is usually higher in the fall in preparation for the holiday season. During this period, container shipping rates are higher and, as a result, so are charter rates.

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard (“USCG”), harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.

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Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

While we do not carry oil as cargo, we do carry fuel oil (bunkers) in our containerships. We currently maintain, for each of our vessels, pollution liability insurance coverage of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, that would have a material adverse effect on our financial condition and operating cash flows.

International Maritime Organization

The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the “IMO”), has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL,” the International Convention for the Safety of Life at Sea of 1974 (“SOLAS Convention”), and the International Convention on Load Lines of 1966 (the “LL Convention”). MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020. 

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels.  Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or “PCBs”) are also prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The Marine Environment Protection Committee, or “MEPC,” adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010.  The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships.  On October 27, 2016, at its 70^th session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020.  This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels or certain exhaust gas cleaning systems.  Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention (“IAPP”) Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships were adopted and took effect on March 1, 2020, with the exception of vessels fitted with exhaust gas cleaning equipment (“scrubbers”) which can carry fuel of higher sulfur content.  These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs.

Sulfur content standards are even stricter within certain “Emission Control Areas,” or (“ECAs”).  As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m.  Amended Annex VI establishes procedures for designating new ECAs.  Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local regulations that impose stricter emission controls. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations. In December 2021, the member states of the Convention for the Protection of the Mediterranean Sea Against Pollution (“Barcelona Convention”) agreed to support the designation of a new ECA in the Mediterranean. The group plans to submit a formal proposal to the IMO by the end of 2022 with the goal of having the ECA implemented by 2025. 

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Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation.  At the MEPC meeting held from March to April 2014, amendments to Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect.  Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016.  Tier III requirements could apply to areas that will be designated for Tier III NOx in the future.  At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010.  As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans (“SEEMPs”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index (“EEDI”).  Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. Additionally, MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to April 1, 2022 for several ship types, including gas carriers, general cargo ships, and LNG carriers.

Additionally, MEPC 75 introduced draft amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from ships. These amendments introduce requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”). The attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types and categories. With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to document and verify their actual annual operational CII achieved against a determined required annual operational CII. Additionally, MEPC 75 proposed draft amendments requiring that, on or before January 1, 2023, all ships above 400 gross tonnage must have an approved SEEMP on board. For ships above 5,000 gross tonnage, the SEEMP would need to include certain mandatory content. MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (“HFO”) by ships in Arctic waters on and after July 1, 2024. The draft amendments introduced at MEPC 75 were adopted at the MEPC 76 session in June 2021 and are expected to enter into force on November 1, 2022, with the requirements for EEXI and CII certification coming into effect from January 1, 2023. MEPC 77 adopted a non-binding resolution which urges Member States and ship operators to voluntarily use distillate or other cleaner alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of Black Carbon emissions from ships when operating in or near the Arctic.

We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.

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Safety Management System Requirements

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills.  The Convention of Limitation of Liability for Maritime Claims (the “LLMC”) sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.

Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (the “ISM Code”), our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical management team have developed for compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained applicable documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The documents of compliance and safety management certificates are renewed as required.

Although all our vessels are currently ISM Code-certified, such certification may not be maintained by all our vessels at all times. Non-compliance with the ISM Code may subject such party to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. For example, the U.S. Coast Guard and E.U. authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and E.U. ports.

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”). Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods and (3) new mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas. The upcoming amendments, which will come into force on June 1, 2022, include (1) addition of a definition of dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical waste, (4) addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and segregation provisions.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”).  As of February 2017, all seafarers are required to meet the STCW standards and be in possession of a valid STCW certificate.  Flag states that have ratified SOLAS and STCW generally employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.

The IMO’s Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles.  It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions.  The Polar Code applies to new ships constructed after January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.

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Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. By IMO resolution, administrations are encouraged to ensure that cyber-risk management systems are incorporated by ship-owners and managers by their first annual Document of Compliance audit after January 1, 2021. In February 2021, the U.S. Coast Guard published guidance on addressing cyber risks in a vessel’s safety management system. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. To comply with these regulations, we developed a Cybersecurity Manual for all our vessels that was reviewed by IMO’s Maritime Safety Committee in March 2021.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) in 2004. The BWM Convention entered into force on September 8, 2017.  The BWM Convention requires ships to manage their ballast water to remove, render harmless or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.  The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.  

On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention.  This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation of ballast water management systems on such vessels at the first IOPP renewal survey following entry into force of the convention. The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70. At MEPC 71, the schedule regarding the BWM Convention’s implementation dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast water standards. Those changes were adopted at MEPC 72.  Ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters.  The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms.  Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). As of October 13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard. Under these amendments, all ships must meet the D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial. Additionally, in November 2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water management system for the initial survey or when performing an additional survey for retrofits. This analysis will not apply to ships that already have an installed BWM system certified under the BWM Convention. These amendments are expected to enter into force on June 1, 2022.

Once mid-ocean exchange ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements. 

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC).  With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

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Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as the United States where the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.

Anti‑Fouling Requirements 

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the “Anti‑fouling Convention.” The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the anti‑fouling systems are altered or replaced. We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.

In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling systems containing cybutryne, which would apply to ships from January 1, 2023, or, for ships already bearing such an anti-fouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last application to the ship of such a system. In addition, the IAFS Certificate has been updated to address compliance options for anti-fouling systems to address cybutryne. Ships which are affected by this ban on cybutryne must receive an updated IAFS Certificate no later than two years after the entry into force of these amendments. Ships which are not affected (i.e. with anti-fouling systems which do not contain cybutryne) must receive an updated IAFS Certificate at the next Anti-fouling application to the vessel.  These amendments were formally adopted at MEPC 76 in June 2021.

Compliance Enforcement

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively.  As of the date of this annual report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990 (“OPA”) established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200-nautical mile exclusive economic zone around the U.S.  The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel.  Both OPA and CERCLA impact our operations.

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

(i) injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;

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(ii) injury to, or economic losses resulting from, the destruction of real and personal property;

(iii) loss of subsistence use of natural resources that are injured, destroyed or lost;

(iv) net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;

(v) lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and

(vi) net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs.  Effective November 12, 2019, the USCG adjusted the limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,200 per gross ton or $ 997,100 (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship) or a responsible party’s gross negligence or willful misconduct.  The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations.  The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.  OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of drilling operations, and former U.S. President Trump had proposed leasing new sections of U.S. waters to oil and gas companies for offshore drilling.  In January 2021, current U.S. President Biden signed an executive order temporarily blocking new leases for oil and gas drilling in federal waters. However, attorney generals from 13 states filed suit in March 2021 to lift the executive order, and in June 2021, a federal judge in Louisiana granted a preliminary injunction against the Biden administration, stating that the power to pause offshore oil and gas leases “lies solely with Congress.” With these rapid changes, compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business.

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OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance.  These laws may be more stringent than U.S. federal law.  Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where the Company’s vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and results of operations.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants.  The CAA requires states to adopt State Implementation Plans, or “SIPs,” some of which regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.

The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of WOTUS.  In 2019 and 2020, the agencies repealed the prior WOTUS Rule and promulgated the Navigable Waters Protection Rule (“NWPR”) which significantly reduced the scope and oversight of EPA and the Department of the Army in traditionally non-navigable waterways. On August 30, 2021, a federal district court in Arizona vacated the NWPR and directed the agencies to replace the rule. On December 7, 2021, the EPA and the Department of the Army proposed a rule that would reinstate the pre-2015 definition, which was subject to public comment until February 7, 2022.

The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering U.S. Waters.  The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018 and replaces the 2013 Vessel General Permit (“VGP”) program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act (“NISA”), such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation, compliance, and enforcement regulations within two years of EPA’s promulgation of standards. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent (“NOI”) or retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.

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European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water.  Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties.  The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses. 

The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age and flag as well as the number of times the ship has been detained.  The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.  The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so called “SOx-Emission Control Area”).  As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the European Union’s carbon market. On July 14, 2021, the European Parliament formally proposed its plan, which would involve gradually including the maritime sector from 2023 and phasing the sector in over a three-year period. This will require shipowners to buy permits to cover these emissions. Contingent on another formal approval vote, these proposed regulations may not enter into force for another year or two.

International Labour Organization

The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in another country.  We believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships.  The U.S. initially entered into the agreement, but on June 1, 2017, former U.S. President Trump announced that the United States intends to withdraw from the Paris Agreement, and the withdrawal became effective on November 4, 2020. On January 20, 2021, U.S. President Biden signed an executive order to rejoin the Paris Agreement, which the U.S. officially rejoined on February 19, 2021.

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At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships.  The initial strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition. These regulations could cause us to incur additional substantial expenses. At MEPC 77, the Member States agreed to initiate the revision of the Initial IMO Strategy on Reduction of greenhouse gas (“GHG”) emissions from ships, recognizing the need to strengthen the ambition during the revision process. A final draft Revised IMO GHG Strategy would be considered by MEPC 80 (scheduled to meet in spring 2023), with a view to adoption. 

The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020.  Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information. As previously discussed, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon market are also forthcoming. 

In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources and proposed regulations to limit greenhouse gas emissions from large stationary sources. However, in March 2017, former U.S. President Trump signed an executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions, and in August 2019, the Administration announced plans to weaken regulations for methane emissions. On August 13, 2020, the EPA released rules rolling back standards to control methane and volatile organic compound emissions from new oil and gas facilities. However, U.S. President Biden recently directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules. On November 2, 2021, the EPA issued a proposed rule under the CAA designed to reduce methane emissions from oil and gas sources. The proposed rule would reduce 41 million tons of methane emissions between 2023 and 2035 and cut methane emissions in the oil and gas sector by approximately 74 percent compared to emissions from this sector in 2005. EPA also anticipates issuing a supplemental proposed rule in 2022 to include additional methane reduction measures following public input and anticipates issuing a final rule by the end of 2022. If these new regulations are finalized, they could affect our operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Ship and Port Facility Security Code (“the ISPS Code”).  The ISPS Code is designed to enhance the security of ports and ships against terrorism.  To trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state.  Ships operating without a valid certificate may be detained, expelled from or refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention,  include, for example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance with flag state security certification requirements.

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The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.

The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.

Inspection by Classification Societies

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or “the Rules,” which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. All of our vessels are certified as being “in class” by all the applicable Classification Societies (e.g., Bureau Veritas, Det Norske Veritas, Nippon Kaiji Kyokai).

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

The following table lists the upcoming intermediate or special survey for the vessels in our current fleet. Special surveys typically require drydocking of the vessels while intermediate surveys may not, depending on the age of the vessel and its condition.  The intermediate surveys listed in the table below will not require drydocking of the vessels, unless otherwise specified below.

Vessel	Next	Type
EVRIDIKI G.	May 2024	Intermediate Survey
EM CORFU	November 2024	Intermediate Survey
AKINADA BRIDGE	November 2024	Special Survey (Drydocking)
AEGEAN EXPRESS	October 2022	Special Survey (Drydocking)
EM ASTORIA	April 2024	Special Survey (Drydocking)
JOANNA P	November 2023	Special Survey (Drydocking)
EM SPETSES	July 2022	Special Survey (Drydocking)
EM KEA	September 2022	Special Survey (Drydocking)
EM HYDRA	July 2022	Special Survey (Drydocking)
DIAMANTIS P	September 2023	Special Survey (Drydocking)
SYNERGY BUSAN	January 2024	Special Survey (Drydocking)
SYNERGY ANTWERP	December 2023	Special Survey (Drydocking)
SYNERGY OAKLAND	February 2024	Special Survey (Drydocking)
SYNERGY KEELUNG	May 2022	Intermediate Survey
JONATHAN P.	July 2024	Intermediate Survey
MARCOS V.	October 2023	Intermediate Survey

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Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally do not maintain insurance against loss of hire (except for certain charters for which we consider it appropriate), which covers business interruptions that result in the loss of use of a vessel.

Protection and Indemnity Insurance

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

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The 13 P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. The International Group’s website states that the Pool provides a mechanism for sharing all claims in excess of $10 million up to, currently, approximately $8.2 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on our claim records as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.

C. Organizational structure

Euroseas is the sole owner of all outstanding shares of the subsidiaries listed in Note 1 of our consolidated financial statements under “Item 18. Financial Statements” and in Exhibit 8.1 to this annual report.

D. Property, plants and equipment

We do not own any real property. As part of the management services provided by Eurobulk during the period in which we have conducted business to date, we have shared, at no additional cost, offices with Eurobulk.  We do not have current plans to lease or purchase office space, although we may do so in the future. 

Our interests in our vessels are owned through our wholly-owned vessel owning subsidiaries and these are our only material properties. Please refer to Note 1, “Basis of Presentation and General Information”, of the attached Financial Statements for a listing of our vessel owning subsidiaries. The majority of our vessels are subject to priority mortgages, which secure our obligations under our various credit facilities. For further details regarding our credit facilities, refer to “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Credit Facilities.”

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Item 4A.  Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

The following discussion should be read in conjunction with “Item 3. Key Information – D. Risk Factors”, “Item 4. Business Overview”, and our financial statements and footnotes thereto contained in this annual report. This discussion contains forward-looking statements, which are based on our assumptions about the future of our business. Our actual results may differ materially from those contained in the forward-looking statements. Please read “Forward-Looking Statements” for additional information regarding forward-looking statements used in this annual report. Reference in the following discussion to “we,” “our” and “us” refer to Euroseas and our subsidiaries, except where the context otherwise indicates or requires.

We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters or to participate in shipping pools (if available for our vessels); however, we only expect to enter into additional time charters or shipping pools if we can obtain contract terms that satisfy our criteria.  Containerships are employed almost exclusively on time charter contracts. We carefully evaluate the length and rate of the time charter contract at the time of fixing or renewing a contract considering market conditions, trends and expectations.

We constantly evaluate vessel purchase opportunities to expand our fleet accretive to our earnings and cash flow. Additionally, we will consider selling certain of our vessels when favorable sales opportunities present themselves. If, at the time of sale, the carrying value is less than the sales price, we will realize a gain on sale, which will increase our earnings, but if, at the time of sale, the carrying value of a vessel is more than the sales price, we will realize a loss on sale, which will negatively impact our earnings. Please see “Critical Accounting Estimates”, below, for a further discussion of the consequences of selling our vessels for amounts below their carrying values.

Significant Developments in 2021

Vessel Acquisitions

On October 18, 2021, the Company acquired the feeder containership (1,740 teu, 2006-built) M/V “Jonathan P” for a purchase price of $25.5 million plus costs to make the vessel available for use of $0.3 million. On December 14, 2021, the Company acquired the intermediate containership (6,350 teu, 2005-built) M/V “Marcos V” and its attached time charter for a purchase price of $40.0 million, from which $57.7 million was allocated to the vessel cost plus costs to make the vessel available for use of $0.5 million, and an amount of $17.7 million was allocated to the in-place attached time charter on the date of the transfer.

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Vessels Under Construction

In June 2021, the Company entered into a contract for the construction of two newbuilding feeder container carriers with a carrying capacity of 2,800 teu each, for a total cost of about $76.1 million. The newbuilding vessels will be financed with a combination of debt and equity. Within the third quarter of 2021, we paid an amount of $7.6 million for the first installment, with $19 million payable during 2022.

Loan Refinancings

On September 9, 2021, Joanna Maritime Ltd. and Bridge Shipping Ltd., repaid the full amount of their indebtedness of $7.03 million to their lender, Eurobank Ergasias S.A, by using the Company’s own funds, and became debt-free. As a result, “M/V Joanna” and “M/V Akinada Bridge” are unencumbered. On the same date, Jonathan John Shiping Ltd. and Corfu Navigation Ltd., also repaid their indebtedness of $5.53 million to Eurobank Ergasias S.A, by utilizing a new loan facility of $10.0 million entered into with Sinopac Capital International (HK) Limited. The loan is payable in sixteen consecutive quarterly instalments of $500,000 each, followed by a balloon payment of $2,000,000 to be paid together with the last installment in September 2025.

On October 22, 2021, the Company signed a term loan facility with HSBC Bank plc, and a loan of $15,000,000 was drawn by Jonathan Shipowners Ltd. in order to post-delivery finance part of the acquisition cost of M/V “Jonathan P” and to finance general corporate purposes of the Company. The loan is payable in twelve consecutive quarterly instalments of $1,100,000 followed by balloon payment of $1,800,000 payable together with the twelfth installment in October 2024.

On November 26, 2021, the Company signed a new loan facility agreement with Piraeus Bank S.A., with respect to the existing revolving facility of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” for an amount of up to $16,500,000 in order to finance general corporate needs of the Company. The loan is payable in sixteen consecutive quarterly instalments, the first four in the amount of $1,500,000 each, the next eleven in the amount of $560,000 each and the sixteenth in the amount of $4,340,000.

On December 14, 2021, the Company signed a term loan facility with Eurobank Ergasias S.A., and a loan of $34,000,000 was drawn by Marcos Shipping Ltd. in order to finance part of the acquisition cost of M/V “Marcos V”. The loan is payable in sixteen consecutive quarterly instalments, comprising twelve instalments of $2,000,000 followed by four instalments of $750,000 each and by a balloon payment of $7,000,000 payable together with the sixteenth installment in December 2025.

Redemption of Series B Preferred Shares

In January 2021, the Company agreed to redeem 2,000 of the outstanding balance of its Series B Preferred Shares amounting to $2,000,000. In June 2021, the Company converted the outstanding amount of 6,365 Series B Preferred Shares into common shares by issuing 453,044 shares covering the full redemption of the remaining Series B Preferred Shares amounting to$6,365,264.

Offerings

On January 29 and February 12, 2021 we issued and sold 82,901 shares of our common stock through our at-the-market offering for gross proceeds, net of commissions, of $0.74 million.

Recent Developments

On January 28, 2022, we signed a contract for the construction of two additional eco-design fuel efficient feeder containership vessels for approximately $85 million, which we intend to finance with a combination of debt and equity. The vessels will have a carrying capacity of 2,800 teu each and will also be built at Hyundai Mipo Dockyard Co. Ltd. in South Korea. The two newbuildings are scheduled to be delivered during the fourth quarter of 2023 and first quarter of 2024, respectively and are sisterships of the pair of vessels ordered by the Company in June 2021.

On March 18, 2022, we signed another contract for the construction of three eco-design fuel efficient feeder containership vessels with a carrying capacity of 1,800 teu each, for approximately $102 million. We intend to finance the construction of these vessels with a combination of debt and equity. The three newbuildings will be built at Hyundai Mipo Dockyard Co. Ltd. in South Korea and are scheduled to be delivered during the first half of 2024, one in the first and two in the second quarter of 2024.

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A.  Operating results

Factors Affecting Our Results of Operations

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

Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.

Available days. We define available days as the total number of Calendar days in a period net of off-hire days associated with scheduled repairs, drydockings or special or intermediate surveys, or days of vessels in lay-up. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.

Voyage days. We define voyage days as the total number of Available days in a period net of off-hire days associated with unscheduled repairs or days waiting to find employment but including days our vessels were sailing for repositioning. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues or are sailing for repositioning purposes.

Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our available days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire either waiting to find employment, or commercial off-hire, or for reasons such as unscheduled repairs or other off-hire time related to the operation of the vessels, or operational off-hire.  We distinguish our fleet utilization into commercial and operational. We calculate our commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period.  We calculate our operational fleet utilization by dividing our available days net of operational off-hire days during a period by our available days during that period.

Spot Charter Rates. We calculate spot charter rates on contracts made in the spot market for the use of a vessel for a specific voyage ("voyage charter") to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally commits to a minimum amount of cargo and the charterer is liable for any short loading of cargo or "dead" freight. Spot charter rates are volatile and fluctuate on a seasonal and year to year basis. The fluctuations are caused by imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes.

Time Charter Equivalent (“TCE”). A standard maritime industry performance measure used to evaluate performance is the daily TCE. Daily TCE revenues are time charter revenues and voyage charter revenues minus voyage expenses divided by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter whereas under spot market voyage charters, we pay such voyage expenses. We believe that the daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of containerships on time charter or on the spot market (containerships are, generally, chartered on a time charter basis) and presents a more accurate representation of the revenues generated by our vessels. Our definition of TCE may not be comparable to that used by other companies in the shipping industry.

Basis of Presentation and General Information

We use the following measures to describe our financial performance:

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

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Commissions. We pay commissions on all chartering arrangements of 1.25% to Eurochart, a company affiliated with our CEO, plus additional commission of up to 1.25% to other brokers involved in the transaction, plus address commission of up to 3.75% deducted from charter hire. These additional commissions, as well as changes to charter rates will cause our commission expenses to fluctuate from period to period. Eurochart also receives a fee equal to 1% of the vessel sales price calculated as stated in the relevant memorandum of agreement for any vessel sold by it on our behalf. Eurochart also receives a commission of 1% of the vessel purchase price for acquisitions the Company makes using Eurochart’s services, which is paid by the seller or the buyer of the vessel, depending on the terms stated in the relevant memorandum of agreement.

Voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage which would otherwise be paid by the charterer under a time charter contract, as well as commissions. Under time charters, the charterer pays voyage expenses whereas under spot market voyage charters, we pay such expenses. The amounts of such voyage expenses are driven by the mix of charters undertaken during the period. Voyage expenses are also incurred, when our vessels are idle or are sailing for repositioning purposes or for drydocking, which we pay.

Vessel operating expenses. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Our vessel operating expenses, which generally represent fixed costs, have historically changed in line with the size of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general (including, for instance, developments relating to market prices for insurance or inflationary increases) may also cause these expenses to increase.

Related party management fees. These are the fees that we pay to our affiliated ship manager under our management agreements for the technical and commercial management that Eurobulk performs on our behalf.

Vessel depreciation. We depreciate our vessels on a straight-line basis with reference to the cost of the vessel, age and scrap value as estimated at the date of acquisition. Depreciation is calculated over the remaining useful life of the vessel. Remaining useful lives of property are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of estimated lives are recognized over current and future periods.

Dry-docking expenses. Dry-docking expenses relate to regularly scheduled intermediate survey or special survey necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Our vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are trading. Dry-docking expenses are accounted for using the direct expense method as this method eliminates the significant amount of time and subjectivity to determine which costs and activities related to drydocking and special survey should be deferred.

General and administrative expenses. We incur expenses consisting mainly of executive compensation, professional fees, directors’ liability insurance and reimbursement of our directors’ and officers’ travel-related expenses. We acquire executive services of our chief executive officer, chief financial officer, chief administrative officer, internal auditor and corporate secretary, through Eurobulk as part of our Master Management Agreement.

Interest and other financing costs. We traditionally finance vessel acquisitions partly with loan facilities on which we incur interest expense. The interest rate we pay is generally linked to the 3-month LIBOR rate, although from time to time we may utilize fixed rate loans or could use interest rate swaps to eliminate our interest rate exposure. Interest due is expensed in the period incurred. We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of the relevant debt liability and amortize them to interest and other financing costs over the term of the underlying obligation using the effective interest method; the un-amortized portion is written-off if the loan is prepaid early.

Gain / (Loss) on derivatives, net. We enter into interest rate swap transactions to manage interest costs and risk associated with changing interest rates with respect to our variable interest loans. Interest rate swaps are recorded in the balance sheet as either assets or liabilities, measured at their fair value (Level 2) with changes in such fair value recognized in earnings under Gain / (loss) on derivatives, net, unless specific hedge accounting criteria are met.

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In evaluating our financial condition, we focus on the above measures to assess our historical operating performance and we use future estimates of the same measures to assess our future financial performance.  In addition, we use the amount of cash at our disposal and our total indebtedness to assess our short-term liquidity needs and our ability to finance additional acquisitions with available resources (see also discussion under “Capital Expenditures” below).  In assessing the future performance of our present fleet, the greatest uncertainty relates to the spot market performance which affects those of our vessels that are not employed under fixed time charter contracts as well as the level of the new charter rates for the charters that are to expire. Decisions about the acquisition of additional vessels or possible sales of existing vessels are based on financial and operational evaluation of such action and depend on the overall state of the containership vessel market, the availability of purchase candidates, available employment, anticipated drydocking cost and our general assessment of economic prospects for the sectors in which we operate.

Results from Operations

The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2020 and 2021. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this annual report.

Fleet Data (1)	2020			2021
Average number of vessels		17.23			14.25
Calendar days		6,306			5,203
Available days		6,023			5,115
Voyage days		5,754			5,037
Utilization Rate (percent)		95.5	%		98.5	%
	(In U.S. Dollars per day per vessel)
Average TCE rate (2)		9,445			19,327
Vessel Operating Expenses		5,110			5,716
Management Fees		839			825
G&A Expenses		482			671
Total Operating Expenses excluding drydocking expenses		6,431			7,212
Drydocking expenses		85			787

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	2020			2021
Statement of Operations Data
Time charter revenue		55,681,124			97,977,389
Commissions		(2,378,007	)		(4,085,717	)
Net revenue		53,303,117			93,891,672
Voyage expenses		(1,334,259	)		(624,734	)
Vessel operating expenses		(32,219,689	)		(29,739,437	)
Other operating income		2,687,205			1,298,318
Dry-docking expenses		(536,199	)		(4,094,693	)
Vessel depreciation		(6,605,976	)		(7,203,198	)
Related party management fees		(5,293,199	)		(4,294,789	)
General and administrative expenses		(3,041,435	)		(3,491,120	)
Net gain / (loss) on sale of vessels		2,453,736			(9,417	)
Loss on write-down of vessel held for sale		(121,165	)		-
Operating income		9,292,136			45,732,602
Interest and other financing costs		(4,125,150	)		(2,779,729	)
Loss on derivatives, net		(587,988	)		(27,141	)
Loss on debt extinguishment		(491,571	)		-
Foreign exchange (loss) / gain		(63,007	)		34,418
Interest income		17,011			3,510
Net income		4,041,431			42,963,660
Dividends to Series B preferred shares		(693,297	)		(255,324	)
Preferred deemed dividend		-			(345,628	)
Net income attributable to common shareholders		3,348,134			42,362,913
Earnings per share attributable to common shareholders- basic		0.58			6.07
Preferred stock dividends declared		693,297			255,324
Preferred dividends declared per preferred shares outstanding at end of period		82.88			-
Weighted average number of shares outstanding during period, basic		5,753,917			6,976,905
Earnings per share attributable to common shareholders- diluted		0.58			6.06
Weighted average number of shares outstanding during period, diluted		5,753,917			6,993,405

(1) For the definition of calendar days, available days, voyage days and utilization rate, see “Item 5.A – Operating Results”.

(2) Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of our vessels and is determined by dividing gross time charter revenue and voyage charter revenue less voyage expenses or time charter equivalent revenue, or TCE revenues, by the number of voyage days during the relevant time period. TCE revenues, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with time charter revenue and voyage charter revenue, the most directly comparable U.S. GAAP measure, because it assists the Company’s management in making decisions regarding the deployment and use of its vessels and because the Company believes that it provides useful information to investors regarding the Company’s financial performance. TCE revenues and TCE rate are also standard shipping industry performance measures used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters, pool agreements and bareboat charters) under which the vessels may be employed between the periods (see also “Item 5.A – Operating Results”). Our definition of TCE revenues and TCE rate may not be comparable to that used by other companies in the shipping industry.

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The following table reflects the reconciliation of TCE revenues to time charter revenue as reflected in the consolidated statement of operations (see discussion above) and our calculation of TCE rates for the periods presented.

	Year Ended December 31,
	2020			2021
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day)
Time charter revenue		55,681,124			97,977,389
Voyage expenses		(1,334,259	)		(624,734	)
Time Charter Equivalent or TCE Revenues		54,346,865			97,352,655
Voyage days		5,754			5,037
Average TCE rate		9,445			19,327

Year ended December 31, 2021 compared to year ended December 31, 2020

Time charter revenue. Time charter revenue for 2021 amounted to $97.98 million, increasing by 76.0% compared to $55.68 million for the year ended December 31, 2020. In 2021, we operated an average of 14.25 vessels, a 17.3% decrease over the average of 17.23 vessels we operated during the same period in 2020. In the year 2021 our fleet had 5,037 voyage days earning revenue as compared to 5,754 voyage days earning revenue in 2020. Market charter rates in 2021 were on average at higher levels for our containership vessels compared to the same period of 2020, which was reflected in the average earnings of our ships. While employed, our vessels generated a TCE rate of $19,327 per day per vessel in 2021 compared to a TCE rate of $9,445 per day per vessel in 2020, an increase of 104.4%. We had 88 scheduled off-hire days, including drydocking, nil commercial off-hire days and 77 operational off-hire days in 2021, compared to 283 scheduled off-hire days (including drydocking and time during which vessels were not available to generate revenues because they were committed for sale or suffered unrepaired damages), 151 commercial off-hire and 118 operational off-hire days in 2020. The average TCE rate our vessels achieve is a combination of the time charter rate earned by our vessels under time charter contracts, which is not influenced by market developments during the duration of the fixed term time charter (unless the two charter parties renegotiate the terms of the charter or the charterer is unable to make the contracted payments or we enter into new charter party agreements), and the TCE rate earned by our vessels employed in the spot market, including time charters linked to an index, which is influenced by market developments.

Commissions. We paid a total of $4.09 million in charter commissions for the year ended December 31, 2021, representing 4.2% of charter revenues. This represents a slight decrease over the year ended December 31, 2020, where commissions paid were $2.38 million, representing 4.3% of charter revenues.

Voyage expenses. Voyage expenses for the year 2021 were $0.62 million and relate to expenses for repositioning voyages between time charter contracts and owners’ expenses at certain ports. For the year ended December 31, 2020, voyage expenses amounted to $1.33 million and related mainly to the types of voyage expenses mentioned above. Our vessels are generally chartered under time charter contracts. Voyage expenses are dependent on the number of voyage charters, if any, the cost of fuel, port costs and canal tolls and the number of days our vessels sailed without a charter.

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Vessel operating expenses. Vessel operating expenses were $29.74 million in 2021 compared to $32.22 million in 2020. In 2021, we operated an average of 14.25 vessels, a 17.3% decrease over the average of 17.23 vessels we operated during the same period in 2020. Further, daily vessel operating expenses per vessel amounted to $5,716 per day in 2021 versus $5,110 per day in 2020, an increase of 11.9% mainly due to increased crew costs resulting from difficulties in crew rotation due to COVID-19 related restrictions and the increase in hull and machinery insurance premiums.

Related party management fees. These are part of the fees we pay to Eurobulk under our Master Management Agreement. During 2021, Eurobulk charged us 685 Euros per day per vessel totalling $4.29 million for the year, or $825 per day per vessel. During 2020, Eurobulk charged us 685 Euros per day per vessel totalling $5.29 million for the year, or $839 per day per vessel. The decrease in the total amount of U.S. dollars charged within 2021 is due to the lower number of vessels operated within 2021 compared to the previous year.

General and administrative expenses. These expenses include the fixed portion of our management fees, incentive awards, legal and auditing fees, directors’ and officers’ liability insurance and other miscellaneous corporate expenses. In 2021, we had a total of $3.49 million of general and administrative expenses as compared to $3.04 million in 2020. The increase of $0.46 million in 2021 is mainly due to a special bonus of $0.46 million given to the Manager’s employees and consultants.  

Dry-docking expenses. These are expenses we pay for our vessels to complete a drydocking as part of an intermediate or special survey or, in some cases, an in-water survey in lieu of a drydocking. In 2021, we had three vessels passing their special survey with drydock for a total cost of $4.09 million. In 2020, we had one vessel that underwent intermediate survey in-water and three vessels that underwent their special surveys in-water for a total cost of $0.54 million.

Vessel depreciation. Vessel depreciation for 2021 was $7.20 million, compared to $6.61 million for 2020. Although the average number of vessels operating decreased in 2021 as compared to the same period of 2020, the new vessels acquired in the fourth quarter of 2021 have a higher average daily depreciation charge as a result of their higher acquisition price compared to the vessels sold during 2020, some of which were also fully depreciated.

Net gain / (loss) on sale of vessels. In 2020, we sold four vessels for scrap and one vessel for further trading for a total of $14.62 million of net proceeds and we recorded a $2.45 million net gain on the sale. In 2021 we had no vessel sales and incurred a marginal loss on vessel sale coming from late bills of vessel sale expenses of the previous year.

Loss on write-down of vessel held for sale. In 2020, we recorded a loss on write-down of vessel held for sale of $0.12 million. This amount was booked in order to reduce the carrying value of the M/V "EM Oinousses", held for sale as of June 30, 2020 to its fair value less costs to sell, by reference to its negotiated and thereafter agreed sale price. There was no such case in 2021.

Other operating income. Other operating income for the year ended December 31, 2021 was $1.3 million as compared to $2.69 million in 2020. For the year ended December 31, 2021, the Company recognized other operating income of $0.2 million relating to the collection of amounts previously written off, relating to accounts with charterers of sold vessels. The Company also reached a settlement agreement in relation to a dispute with a fuel oil supplier dating back to 2009 in respect of vessel “Ninos”, to pay $0.06 million to the claimants in order for them to withdraw their claim, recording other operating income of $0.1 million, against the provision of $0.15 million already booked in prior years. Additionally, the Company recognized another $1.0 million of other operating income consisting of the proceeds of a claim award related to the sale of one of our vessels, M/V “Manolis P”, for scrap in March 2020 that initially failed due to COVID-related reasons with the vessel finally being sold to another buyer within the second quarter of 2020. With respect to the year ended December 31, 2020, in January 2020, the M/V "EM Oinousses" experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The vessel completed an evaluation for the type of repairs required and was idle during the evaluation. The Company agreed with the hull and machinery underwriters an “unrepaired damage” claim of $2.69 million, which was recorded as other operating income in 2020.

Interest and other financing costs. Interest expense and other financing costs for the year 2021 were $2.78 million. Comparatively, during the same period in 2020, interest and other financing costs amounted to $4.13 million. Interest expense charged was lower in 2021 due to the lower weighted average LIBOR rate, partly offset by the increase in the Company’s average outstanding debt, as compared to 2020.

Loss on derivatives, net. In 2021, we had an unrealized gain of $0.15 million from the mark to market valuation on our interest rate swap contracts that we entered into in April 2020 and October 2021 and a realized loss of $0.18 million for the net interest settlement on our interest rate swap contracts, compared to an unrealized loss of $0.57 million from the mark to market valuation on our interest rate swap contract that we entered into in April 2020 and a realized loss of $0.02 million for the net interest settlement on our interest rate swap contract in 2020. We have entered into the interest rate swaps to mitigate our exposure to possible increases in interest rates. The performance of our derivative contracts depends on the movement of interest rates. A decline in interest rates increases our loss in our derivative contracts and vice versa.

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Loss on debt extinguishment. For the year ended December 31, 2020, loss on debt extinguishment was $0.49 million and related to the conversion of one of the related party loans, with an outstanding balance of $1.875 million, into common shares of the Company. The difference between the share price less the conversion price was reflected in loss on debt extinguishment. For the year ended December 31, 2021 the Company did not incur any loss on debt extinguishment.

Dividend Series B Preferred Shares and Preferred deemed dividend. From June 11, 2019 until March 31, 2020, dividends to Preferred shareholders were paid in cash at an annual rate of 8.0% per annum. On April 1, 2020, we agreed with the holders of the Series B Preferred Shares, to have the option to pay the Series B Preferred dividends in-kind at a rate of 9.0% per annum, or at 8.0% per annum if paid in cash, until January 29, 2021, after which it was set to increase to 14% per annum. In January 2021, the Company agreed to redeem 2,000 of the outstanding balance of its Series B Preferred Shares amounting to $2,000,000. In June 2021, the Company converted the outstanding amount of 6,365 Series B Preferred Shares into common shares. The difference between (1) the fair value of the consideration transferred to the holders of the Euroseas Series B Preferred Shares (comprising the cash payment and the shares offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption and the conversion (net of issuance costs) amounted to $345,628, and was recorded as preferred deemed dividend. In 2021, the Company declared preferred dividends of $0.26 million, all of which were paid in cash. In 2020, the Company declared preferred dividends of $0.69 million, of which $0.15 million were paid in cash, $0.37 million were paid in-kind, and $0.17 million were accrued as of December 31, 2020 and were paid in cash in the first quarter of 2021.

Net income attributable to common shareholders. As a result of the above, net income attributable to common shareholders for the year ended December 31, 2021 was $42.36 million, as compared to a net income of $3.35 million for the year ended December 31, 2020.

Year ended December 31, 2020 compared to year ended December 31, 2019

For a discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019, please refer to Part A, Item 5, “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2020.

B.  Liquidity and Capital Resources

Historically, our sources of funds have been equity provided by our shareholders, operating cash flows and long-term borrowings. Our principal use of funds has been capital expenditures to establish and expand our fleet, maintain the quality of our vessels during operations and the periodically required drydockings, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and, if necessary, operating shortfalls, make principal repayments on outstanding loan facilities, and pay dividends.

Our short-term liquidity requirements include paying operating expenses, payment of dividends, funding working capital requirements, interest and principal payments on outstanding debt and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary source of short-term liquidity is cash generated from operating activities, available cash balances and portions from debt and equity financings.

Our long-term liquidity requirements are funding vessel acquisitions and debt repayment. Sources of funding for our long-term liquidity requirements include cash flows from operations, bank borrowings, redemption of Series B Preferred Shares, issuance of debt and equity securities, and vessel sales.

Our total cash and cash equivalents and restricted cash at December 31, 2021 were $31.5 million, an increase of $25.2 million from $6.3 million at December 31, 2020. We hold cash and cash equivalents primarily in U.S. Dollars, with a minor balance held in Euros. We conduct our funding and treasury activities based on corporate policies designed to minimize borrowing costs and maximize investment returns while maintaining the safety of the funds and appropriate levels of liquidity for our purposes.

We are exposed to market risk from changes in interest rates and market rates for vessels. We use interest rate swaps to manage interest costs and the risks associated with changing interest rates of some of our loans. Please refer to "Item 11 – Quantitative and Qualitative Disclosures about Market Risk."

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We expect to rely on cash available, funds generated from operating cash flows, funds from our shareholders, equity offerings, and long-term borrowings to meet our liquidity needs going forward and to finance our capital expenditures and working capital needs in 2022 and beyond.

Summary of Contractual Obligations

Contractual obligations are set forth in the following table as of December 31, 2021:

In U.S. dollars	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Long-term bank loans	$	119,009,460	$	29,284,460	$	70,205,000	$	19,520,000		-
Interest Payments (1)	$	7,600,000	$	3,932,000	$	3,380,000	$	288,000		-
Vessel Management fees (2)	$	5,046,000	$	5,046,000		-		-		-
Other Management fees (3)	$	2,000,000	$	2,000,000		-		-		-
Advances for Vessels Under Construction (4)	$	68,529,000	$	19,036,000	$	49,493,000		-		-
Total	$	202,184,460	$	59,298,460	$	123,078,000	$	19,808,000		-

1. Assuming the amortization of the loans as of December 31, 2021 described above, each loan’s interest rate margin over LIBOR and average LIBOR rates of about 0.85%, 2.66%, 3.20% and 3.12% per annum for the four years, respectively, based on the LIBOR yield curve as of December 31, 2021. Also includes our obligation to make payments required as of December 31, 2021 under our interest rate swap agreements based on the same LIBOR forward rate assumptions.

2.  Refers to our obligation for management fees under our Master Management Agreement and management agreements with the shipowning companies in effect as of December 31, 2021 and expiring on January 1, 2023.  The management fees have been computed for 2022 based on a rate of 720 Euros per day per vessel (approximately $864), which was adjusted from the previous level of 685 Euros to reflect Eurozone’s inflation over 2021. We assumed a Euro to US dollar exchange rate of 1.20. We further assume that we hold our vessels until they reach 25 years of age, after which they are considered to be scrapped and no longer bear obligations.

3.  Refers to our obligation for management fees of $2,000,000 per year under our Master Management Agreement with Eurobulk for the cost of providing executive services to the Company. The agreement expires on January 1, 2023.

4. Refers to our obligation as of December 31, 2021 towards our newbuilding program, which consists of two vessels under construction for deliveries in the first and second quarter of 2023. The payments reflect the newbuilding orders that were placed within 2021.

Cash Flows

As of December 31, 2021, we had a working capital deficit of $4.3 million. For the year ended December 31, 2021, we generated net cash from operating activities of $52.6 million. Our cash balance amounted to $26.5 million and cash in restricted and retention accounts amounted to $5.0 million as of December 31, 2021. For 2022, we expect our daily TCE rates to increase compared to 2021, due to increased time charter rates observed in the market, as of the date of this annual report, and the easing of the negative impacts caused by the COVID-19 pandemic on the demand in the containership shipping industry. We believe that our current cash balance, and our operating cash flows to be generated over the short-term period will be sufficient to meet our 2022 liquidity needs and at least through the end of the first half of 2023, including funding the operations of our fleet, capital expenditure requirements and any other present financial requirements. However, we may seek additional indebtedness to finance future vessel acquisitions and our newbuilding program in order to maintain our cash position or to refinance our existing debt in more favorable terms. Our practice has been to fund the acquisition cost of  containership vessels using a combination of funds from operations and bank debt secured by mortgages on our containership vessels held by the relevant lenders.

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Year ended December 31, 2021 compared to year ended December 31, 2020

Net cash from operating activities.

Our net surplus from cash flows provided by operating activities for 2021 was $52.61 million as compared to a surplus of $2.41 million in 2020.

The major drivers of the change of cash flows from operating activities for the year ended December 31, 2021 compared to the year ended December 31, 2020, are the following: the increase in market rates during the year ended December 31, 2021, which resulted in an increased TCE rate of $19,327 compared to $9,445 for the year ended December 31, 2020. The increase in the TCE is also reflected in the increase of our operating income (excluding non-cash items) to $53.13 million for the year ended December 31, 2021 from $10.88 million for the corresponding period in 2020. This positive effect was supported by a net working capital inflow of $2.41 million, compared to a net working capital outflow of $2.97 million for the year ended December 31, 2020, mainly due to a significant increase in the amounts collected from charterers.

Net cash from investing activities.

Net cash flows used in investing activities were $74.10 million for the year ended December 31, 2021 compared to $16.32 million provided by investing activities for the year ended December 31, 2020. The increase in cash outflows used in investing activities of $90.42 million from 2020 is mainly attributable to $66.47 million and $7.62 million payments for vessel acquisitions and vessels under construction, respectively, that took place in 2021, as compared to $0.65 million paid for vessel improvements in 2020, combined with $14.62 million and $2.34 million in cash inflows from vessel sale proceeds and insurance proceeds, respectively, within the year 2020.

Net cash from financing activities.

Net cash flows provided by financing activities were $46.65 million for the year ended December 31, 2021, compared to net cash flows used in financing activities of $18.32 million for the year ended December 31, 2020. This increase in cash flows provided by financing activities of $64.97 million, compared to the year ended December 31, 2020, is mainly attributable to $74.74 million in proceeds from long-term bank loans, net of loan arrangement fees paid for these loans, during the year ended December 31, 2021, compared to the same period of 2020, as well as proceeds from issuance of common stock (net of commissions paid) of $0.7 million, while there were no such proceeds during 2020. The increase in net cash flows from financing activities was partly offset by an outflow of $2.0 million arising from the redemption of the Series B Preferred Shares in 2021, an increase of $5.89 million in repayments of long-term bank loans, a $2.5 million repayment of a related party loan, a $0.10 million increase in cash paid for dividends on the Series B Preferred Shares, between 2020 and 2021.

Year ended December 31, 2020 compared to year ended December 31, 2019

For a discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019, please refer to Part A, Item 5, “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2020.

Debt Financing

We operate in a capital-intensive industry which requires significant amounts of investment, and we fund a major portion of this investment through long term debt. We maintain debt levels we consider prudent based on our market expectations, cash flow, interest coverage and percentage of debt to capital.

As of December 31, 2021, we had seven outstanding loans with a combined outstanding balance of $119.0 million. These loans mature between 2022 and 2025. Our long-term debt as of December 31, 2021 comprises bank loans granted to our vessel-owning subsidiaries with margins over LIBOR ranging from 2.35% to 3.90%.  A description of our loans as of December 31, 2021 is provided in Note 9 of our attached financial statements. As of December 31, 2021, we are scheduled to repay approximately $29.28 million of the above bank loans in 2022.  

Our loan agreements contain covenants.

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Our loans have various covenants such as minimum requirements regarding the security cover ratio (the ratio of fair value of vessel to outstanding loan less cash in retention accounts) and restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (in effect not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of our subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash). When necessary, we do provide supplemental collateral in the form of restricted cash or cross-collateralize vessels to ensure compliance with security cover ratio (“loan-to-value” ratio).  Increases in restricted cash required to satisfy loan covenants would reduce funds available for investment or working capital and could have a negative impact on our operations.  If we cannot cure any violated covenants, we might be required to repay all or part of our loans, which, in turn, might require us to sell one or more of our vessels under distressed conditions. As of December 31, 2021, we were not in default of any credit facility covenant.

Shelf Registration  

On May 7, 2020, the SEC declared effective our shelf registration statement on Form F-3 pursuant to which we may offer and sell, within a three year period, up to $400,000,000 of our securities, consisting of common shares, preferred shares, debt securities, warrants and units, as well as 2,369,950 common shares that were previously acquired in private transactions or in the open market or which are issuable upon conversion of the Series B Preferred Shares or any convertible notes into which the Series B Preferred Shares may convert. On August 3, 2020, we issued and sold 200,000 shares of our common stock through our at-the-market offering for net proceeds of approximately $0.7 million. On January 29, 2021, we sold 74,301 shares of common stock under our at-the-market offering for approximately $0.65 million of net proceeds. On February 12, 2021, we sold 8,600 shares of common stock under our at-the-market offering for approximately $0.09 million of net proceeds.    

Capital Expenditures 

We make capital expenditures from time to time in connection with our vessel acquisitions or participation in joint ventures to acquire vessels.

In August 2019 we took delivery of four feeder containerships, the M/V “Diamantis P”, M/V “EM Hydra”, M/V “EM Spetses”, and M/V “EM Kea”, owned by affiliates of the Pittas family including the Company’s CEO, for a total of $28.2 million. The consideration towards the feeder vessels included a cash payment of $15.0 million, financed by two bank loans, and the issuance of 2,816,902 shares of common stock to the sellers. In November 2019, we took delivery of four intermediate size containerships, the M/V “Synergy Busan”, M/V “Synergy Antwerp”, M/V “Synergy Oakland” and M/V “Synergy Keelung”, for a cost of approximately $40 million. The acquisition was financed by bank debt of $32.0 million, existing funds of the Company and $6.0 million raised in private placements. In November 2020, we made a supplementary contingent payment of $0.5 million as part of the acquisition cost of the abovementioned vessels through the issuance of 161,357 shares of our common stock to the sellers. In 2020, we did not acquire any vessels. In October 2021 we took delivery of the feeder containership M/V “Jonathan P” for a total of $25.8 million. In December 2021 we took delivery of the intermediate container carrier M/V “Marcos V” with attached time charter, for a total of $40.5 million. Both vessels were financed by the Company’s own cash and two bank loans.

In June 2021, the Company decided to proceed with the construction of two newbuilding feeder container carriers for a total cost of about $76.1 million, which we intend to finance with a combination of debt and own cash and for which $41.9 million are payable within the next twelve months following the date of the issuance of these financial statements. The Company has already paid an amount of $7.6 million for the first installment within the third quarter of 2021 and $3.8 million for the second installment of the first newbuilding within the second quarter of 2022. All the payments are guaranteed by the Company. In January 2022, the Company signed an agreement for the construction of another two newbuilding feeder container carriers for a total cost of $86.3 million, which we also intend to finance with a combination of debt and own funds and for which $8.5 million have already been paid in the first quarter of 2022 and $12.8 million are payable within the next twelve months following the date of the issuance of these financial statements. In March 2022, the Company signed another agreement for the construction of three newbuilding feeder contain carriers for a total cost of $103.8 million, which we intend to finance with a combination of debt and own funds and for which $13.6 million are payable within the next twelve months following the date of issuance of these financial statements.

We currently have four vessels scheduled for drydocking over the next 12 months. We may face delays in performing these drydocks or special surveys due to the effects of COVID-19, particularly if travel restrictions persist (refer to section above “B. Liquidity and Capital Resources – Cash Flows” for a discussion of how we plan to cover our working capital requirements and capital commitments).

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Dividends

In 2019, 2020 and 2021, the Company declared no dividend on its common stock. During the fourth quarter of 2013, the Company decided to suspend the quarterly dividend on its common stock to focus all its resources in exploiting investment opportunities in the markets.

Within 2019, the Company declared dividends on its Series B Preferred Shares, amounting to $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019, and another $0.16 million were accrued as of December 31, 2019 and were paid in the first quarter of 2020. Within 2020, the Company declared dividends on its Series B Preferred Shares of $0.69 million, of which $0.37 million were paid in-kind, $0.15 million were paid in cash during 2020 and another $0.17 million were accrued as of December 31, 2020 and were paid in February 2021. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5% per annum. From January 29, 2019 to January 29, 2021, the dividend rate on the Series B Preferred Shares was set to increase to 12% per annum and to 14% per annum thereafter. On June 10, 2019, we redeemed $11.7 million of the Series B Preferred Shares, with a simultaneous reduction of the dividend rate to 8% per annum until January 29, 2021, after which date it would be increased to 14% per annum. From January 29, 2019 to June 11, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum, and 8% per annum from June 11, 2019 until March 31, 2020, and were paid in cash. On April 1, 2020, we agreed with the holders of the Series B Preferred Shares, to have the option to pay the Series B Preferred dividends in-kind at a rate of 9.0% per annum, or at 8.0% per annum if paid in cash, until January 29, 2021, after which date it was set to increase to 14% per annum. On January 29, 2021, we redeemed 2,000 of our Series B Preferred Shares outstanding and paid $2,000,000 to our Preferred Shares shareholders. In connection with the redemption, we agreed with the Preferred Shares shareholders to set the dividend rate of the Preferred Shares to 8% per annum if paid in cash and 9% if paid in-kind, at the Company’s option until January 29, 2023, after which date the dividend rate would increase to 14%, and would be payable only in cash. In June 2021, the Company converted the remaining amount of 6,365 Series B Preferred Shares into common shares.

C.  Research and development, patents and licenses, etc.

Not applicable.

D.  Trend information

Our results of operations depend primarily on the charter rates that we are able to realize. Charter rates paid for container vessels are primarily a function of the underlying balance between vessel supply and demand.

The demand for containership capacity is determined by the underlying demand for commodities transported in these vessels, which in turn is influenced by trends in the global economy. One of the main drivers of the containerized trade has been the growth in exports of finished goods. Demand for containership capacity is also affected by the operating efficiency of the global fleet, i.e., the average speed the fleet operates, and port congestion. A factor affecting mainly the containership sector, especially during periods of high fuel prices and/or low charter rates, is slow-steaming (i.e., the practice of running a vessel at lower speeds to economize on fuel costs). Slow-steaming increases the number of ships required to carry a given amount of trade volume and thus increases demand for ships as do higher levels of port congestion, leading to higher charter rates if all other factors influencing rates are unchanged.

The supply of containerships is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss.  According to industry sources, as of March 31, 2022, the capacity of the fully cellular worldwide container vessel fleet was approximately 24.9 million teu with approximately 6.6 million teu, or, about 26.5% of the present fleet capacity on order. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline. The level of scrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs. The average age at which a vessel is scrapped over the last ten years has been between 25 and 27 years, with smaller vessels scrapped at a later age. During strong markets, the average age at which the vessels are scrapped increases; during 2004, 2005, 2006, 2007 and the first nine months of 2008, the majority of the Feeder, Handysize and Intermediate size containerships that were scrapped were in excess of 30 years of age.  Continued weakness of containership charter rates resulted in increased scrapping rates at even lower vessel scrapping ages. In fact, 2016 saw scrapping of more than 500,000 teu, a 35-year record. In 2017 scrapping reached 398,610 teu, while in 2018, scrapping rates declined year on year reaching 119,910 teu. In 2019, the scrapping rate increased, reaching 182,560 teu. In 2020, there were 187,640 teu of containerships that were scrapped, while in 2021, due to the exceptional positive increase in the containership market, there were only 11,990 teu of containerships that were scrapped, the lowest level seen since 2006. Containership scrap markets remain subdued in 2022, with no containerships reported sold for scrap in the first quarter of 2022.

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Declining shipping charter rates have a negative impact on our earnings when our vessels are employed in the spot market or when they are to be re-chartered after completing a time charter contract. As of March 31, 2022, approximately 95% of our ship capacity days in the remainder of 2022, 71% of our ship capacity days in 2023,  53% of our ship capacity days in 2024, 10% of our ship capacity days in 2025 and 1% of our ship capacity days in 2026 are under time charter contracts. If the market rates decrease from current levels or the supply of vessels increases, our vessels may have difficulty securing employment and, if so, may be employed at rates lower than their present charters. The extent to which COVID-19 will impact our future results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted, including the high level of uncertainty relating to how the pandemic will evolve, including the new Omicron variant of COVID-19, which appears to be the most transmissible variant to date, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. The Company’s business could be materially and adversely affected by the risks, or the public perception of the risks and travel restrictions related to COVID-19. We are unable to reasonably predict the estimated length or severity of the COVID-19 pandemic on future operating results. If the market rates decrease from current levels or the supply of vessels increases, our vessels may have difficulty securing employment and, if so, may be employed at rates lower than their present charters.

The recent outbreak of war between Russia and the Ukraine has disrupted supply chains and caused instability in the global economy, while the United States and the European Union, among other countries, announced sanctions against Russia. For example, on March 8, 2022, President Biden issued an executive order prohibiting the import of certain Russian energy products into the United States, including coal and certain petroleum products. Additionally, the executive order prohibits any investments in the Russian energy sector by U.S. persons, among other restrictions. The ongoing conflict could result in the imposition of further economic sanctions against Russia, and the Company’s business may be adversely impacted. Currently, the Company’s charter contracts have not been affected by the events in Russia and Ukraine. However, it is possible that in the future third parties with whom the Company has or will have charter contracts may be impacted by such events. While in general much uncertainty remains regarding the global impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business, financial condition, results of operation and cash flows.

E.  Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting estimates are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting estimates that involve a high degree of judgment and the methods of their application.

Impairment of vessels

We review our vessels held for use for impairment whenever events or changes in circumstances (such as vessel market values, vessel sales and purchases, business plans and overall market conditions) indicate that the carrying amount of the vessels may not be recoverable. If indicators for impairment are present, we determine future undiscounted net operating cash flows for the related vessels and compare them to their carrying values. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the vessel is less than its carrying amount, we record an impairment loss calculated by comparing the vessel’s carrying value to its estimated fair market value. We estimate fair market value primarily through the use of third party valuations performed on an individual vessel basis.

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The carrying values of the Company’s vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings.

As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels. As of December 31, 2020, we had indicators of impairment for three of our vessels. For the vessels with impairment indicators as of December 31, 2020, the Company determined the rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years (based on the length of charters that can be secured at the time of the analysis, generally, one to two years) and on inflation-unadjusted historical average rates for similar vessels, from year three onwards. The Company calculated the historical average rates over a 19-year period for 2020, excluding peak periods, which starts in 2002 and takes into account complete market cycles, and which provides a more representative reference for the long term rates. These rates are used for the period a vessel is not under a charter contract; if there is a contract, the fixed charter rate of the contract is used for the period of the contract.

Our impairment exercise is highly sensitive on variances in the time charter rates and it also requires assumptions for:

● the effective fleet utilization rate;

● estimated scrap values;

● vessel operating costs;

● future drydocking costs; and

● probabilities of sale for each vessel.

Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company’s past experience in finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company’s data for its own vessels; past estimates for such costs have generally been very close to the actual levels observed. Specifically, we use our budgeted operating expenses escalated by 1.5% per annum and our budgeted drydocking costs, assuming a five-year special survey cycle. Overall, the assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.

There can be no assurance as to how long-term charter rates and vessel values will increase as compared to their current levels and as compared to historical average levels for similarly aged vessels or whether they will improve by any significant degree. Charter rates, which have improved significantly since the second half of 2020 may return to their previously very depressed levels which could adversely affect our revenue, profitability and future assessments of vessel impairment. The impairment analysis may determine that the carrying value of a vessel is recoverable if the vessel is held and operated to the end of its useful life, however, if the vessel is sold when the market is depressed, the Company might suffer a loss on the sale. Whether the Company realizes a gain or loss on the sale of a vessel is primarily a function of the relative market values of vessels at the time the vessel was acquired less the accumulated depreciation and impairment, if any, versus the relative market values on the date a vessel is sold.

For a discussion of the potential loss in the case of sale of all of our vessels with market value below their carrying value, we refer to the “Item 4.B. Business Overview – Our Fleet”. As of December 31, 2021, the market value of each of the vessels of the Company’s fleet exceeded its carrying value.

Recent Accounting Pronouncements

Please refer to Note 2 of the financial statements included in Item 18 of this annual report for a description of recent accounting pronouncements that may apply to us.

COVID-19

The COVID-19 pandemic has had and continues to have a significant negative impact on the global economy and the demand for shipping regionally as well as globally. At present, it is not possible to ascertain any future impact of COVID-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the Company’s results for 2020 and 2021.  To date there has not been any significant effect on the Company’s operating activities due to COVID-19, other than the decrease in market rates during 2020, which have recovered since the final quarter of 2020 and continuing into 2021 and 2022, and increased crew cost as a result of COVID-19 restrictions imposed since 2020. However, an increase in the severity or duration or a resurgence of the Covid-19 pandemic and any significant disruption of wide-scale vaccine distribution could have a material adverse effect on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends.

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Russia-Ukraine Conflict

The conflict between Russia and Ukraine, which commenced in February 2022, has disrupted supply chains and caused instability and significant volatility in the global economy. Much uncertainty remains regarding the global impact of the conflict in Ukraine, and it is possible that such instability and resulting volatility could significantly increase our costs and adversely affect our business, including our ability to secure charter and financing on attractive terms, and as a result, adversely affect our business, financial condition, results of operation and cash flows.

As a result of the conflict between Russia and Ukraine, Switzerland, the European Union, the United Kingdom and others have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and nationals. Such sanctions against Russia may adversely affect our business, financial condition, results of operation and cash flows. For example, apart from the immediate commercial disruptions in the conflict zone, escalating tensions and fears of potential shortages in the supply of Russian crude have caused the price of oil to trade above $100 per barrel in March 2022. The ongoing conflict could result in the imposition of further economic sanctions against Russia, with uncertain impacts on the containership market and the world economy. While our vessels do not currently sail in the Black Sea, it is possible that the continued conflict in Ukraine, including any effect on our ability to pay the wages of crew members or consultants who may hold accounts at Russian banks that are subjected to sanctions, any increased shipping costs, disruptions of global shipping routes, any impact on the global supply chain and any impact on current or potential customers caused by the events in Russia and Ukraine, could adversely affect our operations or financial performance. Due to the recent nature of these activities, the full impact on our business is not yet known.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

The following sets forth the name and position of each of our directors and executive officers.

Name	Age	Position
Aristides J. Pittas	62	Chairman, President and CEO; Class A Director
Dr. Anastasios Aslidis	62	CFO and Treasurer; Class A Director
Aristides P. Pittas	70	Vice Chairman; Class A Director
Stephania Karmiri	54	Secretary
Panagiotis Kyriakopoulos	61	Class B Director
Andreas Papathomas	70	Class C Director
George Taniskidis	61	Class C Director
Apostolos Tamvakakis	64	Class C Director

Aristides J. Pittas has been a member of our Board of Directors and our Chairman and Chief Executive Officer since our inception on May 5, 2005. Since 1997, Mr. Pittas has also been the President of Eurochart, our affiliate. Eurochart is a shipbroking company specializing in chartering and selling and purchasing ships. Since January 1995, Mr. Pittas has been the President and Managing Director of Eurobulk, our affiliated ship management company. He resigned as Managing Director of Eurobulk in June 2005. Eurobulk is a ship management company that provides ocean transportation services. From September 1991 to December 1994, Mr. Pittas was the Vice President of Oceanbulk Maritime SA, a ship management company. From March 1990 to August 1991, Mr. Pittas served both as the Assistant to the General Manager and the Head of the Planning Department of Varnima International SA, a shipping company operating tanker vessels. From June 1987 until February 1990, Mr. Pittas was the head of the Central Planning department of Eleusis Shipyards S.A. From January 1987 to June 1987, Mr. Pittas served as Assistant to the General Manager of Chios Navigation Shipping Company in London, a company that provides ship management services. From December 1985 to January 1987, Mr. Pittas worked in the design department of Eleusis Shipyards S.A. where he focused on shipbuilding and ship repair. Mr. Pittas has a B.Sc. in Marine Engineering from University of Newcastle - Upon-Tyne and a MSc in both Ocean Systems Management and Naval Architecture and Marine Engineering from the Massachusetts Institute of Technology.

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Dr. Anastasios Aslidis has been our Chief Financial Officer and Treasurer and member of our Board of Directors since September 2005. Prior to joining Euroseas, Dr. Aslidis was a partner at Marsoft, an international consulting firm focusing on investment and risk management in the maritime industry. Dr. Aslidis has more than 25 years of experience in the maritime industry. He also served as consultant to the Boards of Directors of shipping companies (public and private) advising on strategy development, asset selection and investment timing. Dr. Aslidis holds a Ph.D. in Ocean Systems Management (1989) from the Massachusetts Institute of Technology, M.S. in Operations Research (1987) and M.S. in Ocean Systems Management (1984) also from the Massachusetts Institute of Technology, and a Diploma in Naval Architecture and Marine Engineering from the National Technical University of Athens (1983).

Aristides P. Pittas has been a member of our Board of Directors since our inception on May 5, 2005 and our Vice Chairman since September 1, 2005. Mr. Pittas has been a shareholder in over 100 oceangoing vessels during the last 20 years. Since February 1989, Mr. Pittas has been the Vice President of Oceanbulk Maritime SA, a ship management company. From November 1987 to February 1989, Mr. Pittas was employed in the supply department of Drytank SA, a shipping company. From November 1981 to June 1985, Mr. Pittas was employed at Trust Marine Enterprises, a brokerage house as a sale and purchase broker. From September 1979 to November 1981, Mr. Pittas worked at Gourdomichalis Maritime SA in the operation and Freight Collection department. Mr. Pittas has a B.Sc in Economics from Athens School of Economics.

Stephania Karmiri has been our Secretary since our inception on May 5, 2005. Since July 1995, Mrs. Karmiri has been executive secretary to Eurobulk, our affiliated ship management company. Eurobulk is a ship management company that provides ocean transportation services. At Eurobulk, Mrs. Karmiri has been responsible for dealing with sale and purchase transactions, vessel registrations/deletions, bank loans, supervision of office administration and office/vessel telecommunication. From May 1992 to June 1995, she was secretary to the technical department of Oceanbulk Maritime SA, a ship management company. From 1988 to 1992, Mrs. Karmiri served as assistant to brokers for Allied Shipbrokers, a company that provides shipbroking services to sale and purchase transactions. Mrs. Karmiri has taken assistant accountant and secretarial courses from Didacta college.

Panagiotis Kyriakopoulos has been a member of our Board of Directors since our inception on May 5, 2005. Since July 2002, he has been the Chief Executive Officer of STAR INVESTMENTS S.A., one of the leading Mass Media Companies in Greece, running television and radio stations. From July 1997 to July 2002 he was the C.E.O. of the Hellenic Post Group, the Universal Postal Service Provider, having the largest retail network in Greece for postal and financial services products. From March 1996 until July 1997, Mr. Kyriakopoulos was the General Manager of ATEMKE SA, one of the leading construction companies in Greece listed on the Athens Stock Exchange. From December 1986 to March 1996, he was the Managing Director of Globe Group of Companies, a group active in the areas of shipowning and management, textiles and food and distribution. The company was listed on the Athens Stock Exchange. From June 1983 to December 1986, Mr. Kyriakopoulos was an assistant to the Managing Director of Armada Marine S.A., a company active in international trading and shipping, owning and managing a fleet of twelve vessels. Presently he is Chairman of the Hellenic Private Television Owners Association, BoD member of the Hellenic Federation of Enterprises (SEV) and BoD member of Digea S.A.  He has also been an investor in the shipping industry for more than 20 years. Mr. Kyriakopoulos has a B.Sc. degree in Marine Engineering from the University of Newcastle upon Tyne, a MSc. degree in Naval Architecture and Marine Engineering with specialization in Management from the Massachusetts Institute of Technology and a Master degree in Business Administration (MBA) from Imperial College, London. 

George Taniskidis has been a member of our Board of Directors since our inception on May 5, 2005. He is the Chairman of Optima Bank and Chairman of Core Capital Partners, a consulting firm specializing in debt restructuring. He was Chairman and Managing Director of Millennium Bank and a member of the Board of Directors of BankEuropa (subsidiary bank of Millennium Bank in Turkey) until May 2010. He was also a member of the Executive Committee and the Board of Directors of the Hellenic Banks Association. From 2003 until 2005, he was a member of the Board of Directors of Visa International Europe, elected by the Visa issuing banks of Cyprus, Malta, Portugal, Israel and Greece. From 1990 to 1998, Mr. Taniskidis worked at XIOSBANK (until its acquisition by Piraeus Bank in 1998) in various positions, with responsibility for the bank’s credit strategy and network. Mr. Taniskidis studied Law in the National University of Athens and in the University of Pennsylvania Law School, where he received a L.L.M. After law school, he joined the law firm of Rogers & Wells in New York, where he worked until 1989 and was also a member of the New York State Bar Association. He is also a member of the Young Presidents Organization.

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Apostolos Tamvakakis has been a member of our Board of Directors since June 25, 2013. Mr. Tamvakakis has also been a member of the Board of Directors of EuroDry Ltd. since May 5, 2018. From January 2015 to February 2017 he was independent non-executive Vice Chairman of the Board of Directors of Piraeus Bank. Since July 2012 he participated as a Member of the Board of Directors and Committees in various companies. From December 2009 to June 2012, Mr. Tamvakakis was appointed Chief Executive Officer of the National Bank of Greece. From May 2004 to March 2009, he served as Chairman and Managing Director of Lamda Development, a real estate development company of the Latsis Group and from March 2009 to December 2009, he served on the management team of the Geneva-based Latsis Group, as Head of Strategy and Business Development. From October 1998 to April 2004, he served as Deputy CEO of National Bank of Greece. Prior to that, he worked as Deputy Governor of National Mortgage Bank of Greece, as Deputy General Manager of ABN AMRO Bank, as Manager of Corporate Finance at Hellenic Investment Bank and as Planning Executive at Mobil Oil Hellas. He also served as Vice-Chairman of Athens Stock Exchange, Chairman of the Steering Committee of Interalpha Group of Banks, Chairman of Ethnokarta, National Securities, AVIS (Greece), ETEVA and the Southeastern European Board of the Europay Mastercard Group. Mr. Tamvakakis has also served in numerous boards of directors and committees. He is the Chairman and Managing Partner of EOS Capital Partners Alternative Investment Fund Manager, the investment manager of a private equity fund “EOS Hellenic Renaissance Fund”. He holds the positions of Vice Chairman of Gek Terna, Member of the BoD of Quest Holdings, Chairman of the Liquidations Committee of PQH Single Special Liquidation S.A. and member of the Marketing Commission of the Hellenic Olympic Committee. He is a graduate of the Athens University of Economics and has an M.A. in Economics from the Saskatchewan University in Canada with major in econometrics and economics.

Andreas Papathomas has been a member of the Board of Directors since November 8, 2019. Mr Papathomas' background is in international business and shipping. He read Economics at Gonville & Caius College, Cambridge and undertook post-graduate studies in international economics in Geneva, following which he joined his late father's shipping business, now called the Synergy Group, where he is currently Chairman. He has successfully run the Synergy Group since 1980 and, over the years, has been involved in all aspects of shipping, including chartering, international trade, sale & purchase, financing and operations.

Family Relationships

Aristides P. Pittas, Vice Chairman, is the cousin of Aristides J. Pittas, our Chairman, President and CEO.

B. Compensation

Executive Compensation

We have no direct employees. The services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary are provided by Eurobulk. These services are provided to us under our Master Management Agreement with Eurobulk under which we pay a fee, before bonuses, adjusted annually for Eurozone inflation to account for the increased management cost associated with us being a public company and other services to our subsidiaries. Following the Spin-off, with effect May 30, 2018, the executive services fee we pay to Eurobulk each year for the services of our executives, Mr. Aristides J. Pittas, Dr. Anastasios Aslidis and Mr. Symeon Pariaros, our Secretary, Mrs. Stephania Karmiri, and our Internal Auditor, has amounted to $1,250,000. On November 15, 2019, the Company signed an addendum adjusting the fixed annual executive compensation to $2,000,000 to compensate Eurobulk for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition as a result of his appointment to our Board of Directors in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019. For the years 2020 and 2021, the fixed cost amounted to $2,000,000 for each year.

Director Compensation

Our directors who are also our officers or have executive positions or beneficially own greater than 10% of the outstanding common stock receive no compensation for serving on our Board of Directors or its committees.

Directors who are not our officers, do not have any executive position or do not beneficially own greater than 10% of the outstanding common stock receive the following compensation: an annual retainer of $7,500, plus $1,875 for attending a quarterly meeting of the Board of Directors, plus an additional retainer of $3,750 if serving as Chairman of the Audit Committee. They also participate in the Company’s Equity Incentive Plan.

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All directors are reimbursed reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors or any committee of our Board of Directors.

Equity Incentive Plan

In November 2021, our Board of Directors approved a new equity incentive plan (the "2021 Equity Incentive Plan") to replace the 2018 Equity Incentive Plan. The 2021 Equity Incentive Plan is administered by the Board of Directors which can make awards totaling in aggregate up to 225,000 shares over 10 years after the 2021 Equity Incentive Plan's adoption date. Officers, directors and employees (including any prospective officer or employee) of the Company and its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates are eligible to receive awards under the 2021 Equity Incentive Plan.  Awards may be made under the 2021 Equity Incentive Plan in the form of non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units, performance shares and cash awards.

On November 21, 2018, an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% vested on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk. On November 4, 2019, an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% vested on July 1, 2020 and 50% vested on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk. On November 5, 2020, the Board of Directors issued an award of 45,900 non-vested restricted shares to 16 key persons, of which 50% vested on November 16, 2021 and 50% will vest on November 16, 2022; awards to officers and directors amounted to 27,100 shares and the remaining 18,800 shares were awarded to employees of Eurobulk. 817 shares were forfeited in 2020 due to employee termination. On November 4, 2021 an award of 49,650 non-vested restricted shares was made to 21 key persons of which 50% will vest on July 1, 2022 and 50% will vest on July 1, 2023; awards to officers and directors amounted to 27,700 shares and the remaining 21,950 shares were awarded to employees of Eurobulk. The grant date of the awards was set as November 19, 2021.

C. Board Practices

The current term of our Class A directors expires in 2023, the current term of our Class B director expires in 2024 and the current term of our Class C directors expires in 2022.

There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.

Our Board of Directors does not have separate compensation or nomination committees, and instead, the entire Board of Directors performs those responsibilities.

Audit Committee

We currently have an Audit Committee comprised of three independent members of our Board of Directors. The Audit Committee is responsible for reviewing the Company’s accounting controls and the appointment of the Company’s outside auditors. The members of the Audit Committee are Mr. Panos Kyriakopoulos (Chairman and “audit committee financial expert” as such term is defined under SEC regulations), Mr. Apostolos Tamvakakis and Mr. George Taniskidis.

Code of Ethics

We have adopted a code of ethics that complies with the applicable guidelines issued by the SEC. Our code of ethics is posted on our website: http://www.euroseas.gr under “Corporate Governance.” We intend to disclose any waivers of the code of ethics on our website under “Corporate Governance.”

Corporate Governance

Our Company’s corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. We are exempt from many of Nasdaq’s corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. The practices that we follow in lieu of Nasdaq’s corporate governance rules are described below.

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● We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may not be able to maintain a Board of Directors with a majority of independent directors in the future.

● In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing the executive officers’ compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee.

● In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bylaws.

● In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

● As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf.

● In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands.

● The Board of Directors adopted a new Equity Incentive Plan in November 2021.  Shareholder approval was not necessary since Marshall Islands law permits the Board of Directors to take such actions.

● As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers, or 5% or greater shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company, or assets to be acquired, or in the consideration to be paid in the transaction(s) and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more.  

● In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances.

Other than as noted above, we are in full compliance with all other applicable Nasdaq corporate governance standards.

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D. Employees

We have no salaried employees, although we pay Eurobulk for the services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary: Mr. Aristides J. Pittas, Dr. Anastasios Aslidis, Mr. Symeon Pariaros, Mr. Konstantinos Siademas and Ms. Stephania Karmiri, respectively.  Eurobulk also ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that all of our vessels employ experienced and competent personnel.  As of December 31, 2021, approximately 128 officers and 237 crew members served on board the vessels in our fleet.

E. Share Ownership

With respect to the ownership of our common stock by each of our directors and executive officers, and all of our directors and executive officers as a group, see “Item 7. Major Shareholders and Related Party Transactions”.

All of the shares of our common stock have the same voting rights and are entitled to one vote per share.

Equity Incentive Plan

See Item 6.B of this annual report, “Compensation”.

Options

No options were granted during the fiscal year ended December 31, 2021. There are currently no options outstanding to acquire any of our shares.

Warrants

We do not currently have any outstanding warrants.

Item 7. Major Shareholders and Related Party Transactions

A. Major Stockholders

The following table sets forth certain information regarding the beneficial ownership of our voting stock as of March 31, 2022 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of our voting stock, each of our directors and executive officers, and all of our directors and executive officers and 5% owners as a group. All of our shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.

Name of Beneficial Owner (1)	Number of Shares of Common Stock Beneficially Owned		Percent of common Stock (15)
Containers Shareholders Trinity Ltd. (2)		2,753,013		37.7	%
Eurobulk Marine Holdings Inc. (3)		528,169		7.2	%
Friends Investment Company Inc. (4)		492,286		6.7	%
Family United Navigation Co. (5)		173,094		2.4	%
Synergy Holdings Limited (6)		38,296		(*	)
Aristides J. Pittas(7)		37,237		(*	)
Anastasios Aslidis (8)		20,788		(*	)
Panagiotis Kyriakopoulos (9)		16,287		(*	)
Aristides P. Pittas (10)		8,598		(*	)
Apostolos Tamvakakis (11)		4,142		(*	)
George Taniskidis (12)		4,940		(*	)
Andreas Papathomas		-		-
Stephania Karmiri (13)		300		(*	)
Symeon Pariaros (14)		2,100		(*	)
All directors and officers and 5% owners as a group		4,079,250		55.9	%

*      Indicates less than 1.0%.

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(1) Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her

(2) Represents 2,753,013 shares of common stock held of record by Containers Shareholders Trinity Ltd. (“CST”). A majority of the shareholders of CST are members of the Pittas family. Investment power and voting control by CST resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by CST may be taken by a majority of the members on its Board of Directors.

(3) Represents 528,169 shares of common stock held of record by Eurobulk Marine Holdings Inc. (“EMH”). A majority of the shareholders of EMH are members of the Pittas family. Investment power and voting control by EMH resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by EMH may be taken by a majority of the members on its Board of Directors.

(4) Represents 492,286 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors.

(5) Represents 173,094 shares of common stock held of record by Family United Navigation Co. (“FUN”). A majority of the shareholders of FUN are members of the Pittas family. Investment power and voting control by FUN resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by FUN may be taken by a majority of the members on its Board of Directors.

(6) Represents 38,296 shares of common stock held of record by Synergy Holdings Ltd. (“SHL”). SHL is indirectly controlled by a trust (under which Andreas Papathomas is a beneficiary) which may be deemed to have beneficial ownership of shares beneficially owned by SHL. Mr. Papathomas is a director of the Company.

(7) Does not include 1,268,032 shares of common stock held of record by CST, EMH and Friends by virtue of ownership interest in above entities by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 5,400 shares vesting on July 1, 2022, 5,400 shares of common stock vesting on November 16, 2022 and 5,400 shares vesting on July 1, 2023.

(8) Does not include 15,344 shares of common stock held of record by CST by virtue of ownership interest in above entity by Mr. Aslidis. Mr. Aslidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 3,650 shares vesting on July 1, 2022, 3,650 shares of common stock vesting on November 16, 2022 and 3,650 shares vesting on July 1, 2023.

(9) Includes 600 shares vesting on July 1, 2022, 600 shares of common stock vesting on November 16, 2022 and 600 shares vesting on July 1, 2023.

(10) Does not include 346,640 shares of common stock held of record by CST, Friends and Family United Navigation Co., by virtue of ownership interest in above entities by Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 1500 shares vesting on July 1, 2020, 1,500 shares of common stock vesting on November 16, 2022 and 1,500 shares vesting on July 1, 2023.

(11) Includes 600 shares vesting on July 1, 2022, 600 shares of common stock vesting on November 16, 2022 and 600 shares vesting on July 1, 2023.

(12) Does not include 45,133 shares held of record by Friends, by virtue of Mr. Taniskidis’ ownership in CST and Friends. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 600 shares vesting on July 1, 2022, 600 shares of common stock vesting on November 16, 2022 and 600 shares vesting on July 1, 2023.

(13) Includes 150 shares vesting on July 1, 2022 and 150 shares vesting on July 1, 2023.

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(14) Includes 750 shares vesting on July 1, 2022, 600 shares of common stock vesting on November 16, 2022 and 750 shares vesting on July 1, 2023.

(15) Voting stock includes 72,600 unvested shares for a total of 7,294,541 issued and outstanding shares of the Company as of March 31, 2022.

B. Related Party Transactions

The operations of our vessels are managed by Eurobulk, an affiliated ship management company owned by our Chairman and CEO and his family, under a Master Management Agreement with us and separate management agreements with each shipowning company. Under our Master Management Agreement, Eurobulk is responsible for all aspects of management and compliance for the Company, including the provision of the services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary. Eurobulk is also responsible for all commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers. Eurobulk also performs technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising dry docking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services.

Our Master Management Agreement with Eurobulk, which we initially entered in 2008, was most recently amended and restated as of January 1, 2018 and its term was extended until January 1, 2023. The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. The Master Management Agreement will automatically be extended after the initial period for an additional five-year period unless terminated on or before the 90th day preceding the termination date. Each new vessel we may acquire in the future will enter into a separate management agreement with Eurobulk with a rate and term coinciding with the rate and remaining term of the Master Management Agreement pursuant to the Master Management Agreement. Under the amended and restated Master Management Agreement, as of January 1, 2018, we pay Eurobulk a fixed cost of $2,000,000 annually, together with a per ship per day cost of 685 Euros (or about $822 based on $1.20/Euro exchange rate) and also adjusted annually for inflation in the Eurozone every January 1^st (there was no inflation adjustment on January 1, 2019, 2020 or 2021).  This cost is reduced by half (342.5 Euros per vessel per day) for any vessels that are laid up. Vessels under construction start paying the daily management fee after steel cutting. The daily management fee remained at 685 Euros in 2019, 2020 and 2021. Starting January 1, 2022, the daily management fee per vessel was adjusted to 720 Euros per vessel, to reflect Eurozone inflation over 2021. This fee will remain effective until the expiration of the Management Agreement on January 1, 2023. This cost is reduced by half (360 Euros per vessel per day) for any vessels that are laid up. As of May 30, 2018, following the Spin-off, the fixed annual cost was adjusted to $1,250,000. On November 15, 2019, the Company signed an addendum adjusting the fixed annual cost to $2,000,000 to compensate Eurobulk for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition, as a result of his appointment to our Board of Directors in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019 for a total amount of $1,344,250. For the year 2020 and 2021, the fixed annual cost paid to Eurobulk was $2,000,000. For 2021 we also paid an additional special bonus of $460,000 to Eurobulk’s employees, affiliated subcontractors and consultants.

Eurobulk has received fees for management and executive compensation expenses of $5,015,585, $7,293,199, and $6,754,789 during 2019, 2020, and 2021, respectively.

We receive chartering and sale and purchase services from Eurochart, an affiliate, and pay a commission of 1.25% on charter revenue and 1% on vessel sale price. During 2021, the Company for the acquisition of M/V “Marcos V” paid Eurochart a commission of $0.4 million, equaling to 1% of the purchase price of the vessel. The Company also paid Eurochart the amount of $1,075,274 for chartering commissions and paid nil commissions for vessel sales. In October 2021, the Company withheld the amount of $255,000 from the sellers of the M/V “Jonathan P”, on behalf of Eurochart, as a 1% commission in connection with the acquisition of the vessel. During 2020, Eurochart received: $153,750 for vessel sales, as there were five vessels sold in 2020, and $504,892 for chartering services calculated as 1.25% of chartering revenues. During 2019, Eurochart received nil commissions for vessel sales and chartering commissions of $493,341.

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Technomar S.A., a crewing agent, and Sentinel Marine Services Inc., an insurance brokering company, are affiliates to whom we pay a fee of about $50 per crew member per month and a commission on insurance premiums not exceeding 5%, respectively. Total fees charged by Sentinel and Technomar were $106,749 and $142,332 in 2019, $100,837 and $203,678 in 2020, and $77,896 and $155,739 in 2021, respectively.

In August 2019, we took delivery of four feeder containerships, M/V “Diamantis P”, M/V “EM Hydra”, M/V “EM Spetses”, and M/V “EM Kea”, owned by affiliates of the Pittas family, controlled by the Company’s CEO for $28.2 million. The consideration towards the feeder vessels included a cash payment of $15.0 million, financed by two bank loans, and issuance of 2,816,902 shares of common stock to the sellers. The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

On September 30, 2019, we reached an agreement with a related party, Colby, a company controlled by the Pittas family and affiliated with our CEO, to draw a $2.5 million loan to finance the special survey and water ballast treatment plant installation on M/V “Akinada Bridge”. The interest rate applied was 8% per annum. Interest on the loan was payable quarterly. The loan was payable in four repayment installments of a principal amount of $625,000 each, maturing by November 2020. Under certain circumstances, the Company could pay principal in equity, and the loan could be convertible in common stock of the Company at the option of the lender at certain times. The first repayment installment was due on May 15, 2020 and the remaining three installments, which were payable on a quarterly basis, were rescheduled to be paid at the maturity of the loan in November 2020. On November 24, 2020, we received notice from Colby, whereby Colby exercised its right to convert the outstanding balance of the loan of $1.875 million into the common shares of the Company as per the terms of the loan agreement. As a result, on November 25, 2020, the Company issued 702,247 common shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan. We paid $0.05 million and $0.16 million on interest for this loan for the fiscal years 2019 and 2020, respectively.  

On November 1, 2019, the Company entered into a second agreement with Colby, to draw another $2.5 million loan to finance working capital needs. Interest on the loan was 8% per annum and was payable quarterly. On November 15, 2020, the maturity date of the loan was extended from December 31, 2020 to March 31, 2021, when it was fully repaid. We paid $0.03 million, $0.20 million and $0.05 million on interest for this loan for the fiscal years 2019, 2020 and 2021, respectively.

Aristides J. Pittas is currently the Chairman of each of Eurochart and Eurobulk, both of which are our affiliates.

We have entered into a registration rights agreement with Friends, our largest shareholder, pursuant to which we granted Friends the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of our common stock held by Friends. Under the registration rights agreement, Friends has the right to request us to register the sale of shares held by it on its behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, Friends has the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us.   

Eurobulk, Friends and Aristides J. Pittas, our Chairman and Chief Executive Officer, have granted us a right of first refusal to acquire any containership which any of them may consider for acquisition in the future. In addition, Mr. Pittas has granted us a right of first refusal to accept any chartering out opportunity for a containership which may be suitable for any of our vessels, provided that we have a suitable vessel, properly situated and available, to take advantage of the chartering out opportunity. Mr. Pittas has also agreed to use his best efforts to cause any entity he directly or indirectly controls to grant us this right of first refusal.

C. Interests of Experts and Counsel

Not Applicable.  

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See Item 18.

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Legal Proceedings

To our knowledge, there are no material legal proceedings to which we are a party or to which any of our properties are subject, other than routine litigation incidental to our business. In our opinion, the disposition of these lawsuits should not have a material impact on our consolidated results of operations, financial position and cash flows.

Dividend Policy

We paid a quarterly dividend to our common stock for thirty-two consecutive quarters from our inception in 2005 until November 2013 when our Board of Directors decided to suspend our quarterly dividend in order to focus every resource available in exploiting investment opportunities in the market. Our last dividend of $1.20 per share (adjusted for the 1-for-10 reverse stock split effected on July 23, 2015 and the 1-for-8 reverse stock split effected on December 18, 2019) was declared in August 2013. The exact timing and amount of any future dividend payments to our common stock will be determined by our Board of Directors and will be dependent upon our earnings, financial condition, cash requirement and availability, restrictions in our loan agreements, growth strategy, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors, such as the acquisition of additional vessels.

If reinstated, the payment of dividends to our common stock is not guaranteed or assured, and may again be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of these subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the containership charter market, our earnings would be negatively affected, thus limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends. Dividends may be declared in conformity with applicable law by, and at the discretion of, our Board of Directors at any regular or special meeting. Dividends may be declared and paid in cash, stock or other property of the Company.

The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5% per annum. From January 29, 2019 to January 29, 2021, the dividend rate on the Series B Preferred Shares was set to increase to 12% per annum and to 14% per annum thereafter. On June 10, 2019, the Board of Directors agreed to redeem approximately $11.7 million of the Series B Preferred Shares with a simultaneous reduction of the dividend rate to 8% per annum until January 29, 2021, after which date was set to increase to 14% per annum, payable only in cash. From January 29, 2019 to June 19, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum, and 8% per annum from June 11, 2019 until March 31, 2020. On April 1, 2020, we agreed with the holders of the Series B Preferred Shares, to have the option to pay the Series B Preferred dividends in-kind at a rate of 9.0% per annum, or at 8.0% per annum if paid in cash, until January 29, 2021, after which it was set to increase to 14% per annum. Subsequently, on January 29, 2021, we agreed to keep the annual dividend rate at 8.0% per annum for dividends paid in cash, and 9.0% for dividends paid in-kind, until January 29, 2023. Cash dividends are declared at each quarter and actual payments are made within the following quarter. In addition, if a cash dividend is paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares shall receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares can be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones are met. Each Series B Preferred Share is convertible into common stock at an initial conversion price of $14.05 (subject to adjustment, including upon a default). The Series B Preferred Shares are redeemable in cash by the Company at any time after the fifth anniversary of the original issue date, i.e. January 29, 2019. Holders of the Series B Preferred Shares may require the Company to redeem their shares only upon the occurrence of certain corporate events. For the year ended December 31, 2019 the Company declared dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in cash in the first quarter of 2020. In addition, $0.50 million of preferred deemed dividends were recorded as a result of the redemption of $11.7 million of the Series B Preferred Shares, representing the difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs). For the year ended December 31, 2020 we declared dividends of $0.69 million, of which $0.37 million were paid in-kind, $0.15 million were paid in cash during 2020, and another $0.17 million were accrued as of December 31, 2020 and were paid in February 2021. In January 2021, the Company agreed to redeem 2,000 of the outstanding balance of its Series B Preferred Shares amounting to $2,000,000. In June 2021, the Company converted the remaining amount of 6,365 Series B Preferred Shares into common shares. The difference between (1) the fair value of the consideration transferred to the holders of the Euroseas Series B Preferred Shares (comprising the cash payment and the shares offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption and the conversion (net of issuance costs) amounted to $0.35 million, and was recorded as preferred deemed dividend. For the year ended December 31, 2021, the Company declared preferred dividends of $0.26 million, all of which were paid in cash during 2021.

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B. Significant Changes

There have been no significant changes since the date of the annual consolidated financial statements included in this annual report, other than those described in Note 20 “Subsequent Events” of our annual consolidated financial statements.

Item 9. The Offer and Listing

A. Offer and Listing Details

The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol "ESEA" since June 26, 2015. 

B. Plan of Distribution

        Not Applicable.

C. Markets

The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol "ESEA" since June 26, 2015.  Our shares began trading on the Nasdaq Global Market on January 31, 2007 and on the Nasdaq Global Select Market on January 1, 2008, and have traded on the Nasdaq Capital Market since June 26, 2015.  Prior thereto, our shares traded on the OTCBB under the symbol “ESEAF.OB” until October 5, 2006 and then under the symbol “EUSEF.OB” until January 30, 2007.

D. Selling Shareholders

        Not Applicable.

E. Dilution

        Not Applicable.

F. Expenses of the Issue

        Not Applicable.

Item 10. Additional Information

A. Share Capital

        Not Applicable.

B. Memorandum and Articles of Association

Amended and Restated Articles of Incorporation and Bylaws, as amended

              Our current amended and restated articles of incorporation were filed with the SEC as Exhibit 1.1 (Amended and Restated Articles of Incorporation) to our Annual Report on Form 20-F on May 27, 2011, and our current bylaws, as amended, were filed with the SEC as Exhibits 1.2 (Bylaws) and 1.4 (Amendment to Bylaws) to our Annual Report on Form 20-F on May 28, 2010.

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Purpose

       Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Business Corporations Act of the Marshall Islands, or the BCA.

Authorized Capitalization

       Under our amended and restated articles of incorporation, our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.03 per share and 20,000,000 shares of preferred stock par value $0.01 per share. All of our shares of stock are in registered form.

Common Stock

As of March 31, 2022, we are authorized to issue up to 200,000,000 shares of common stock, par value $0.03 per share, of which there are 7,294,541, shares issued and outstanding. Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the shareholders. Holders of our common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of our assets available for distribution upon liquidation, dissolution or winding up; and (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of our common stock when issued will be fully paid for and non-assessable.

Preferred Stock

As of March 31, 2022, we are authorized to issue up to 20,000,000 shares of preferred stock, par value $0.01 per share, of which there are currently no shares issued and outstanding.

Directors

Our directors are elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Cumulative voting may not be used to elect directors.

Our Board of Directors must consist of at least three directors, such number to be determined by the Board of Directors by a majority vote of the entire Board of Directors from time to time. Shareholders may change the number of our directors only by an affirmative vote of the holders of the majority of the outstanding shares of capital stock entitled to vote generally in the election of directors.

Our Board of Directors is divided into three classes as set out below in “Classified Board of Directors.” Each director is elected to serve until the third succeeding annual meeting after his election and until his successor shall have been elected and qualified, except in the event of his death, resignation or removal.

Shareholder Meetings

Under our bylaws, as amended, annual shareholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called at any time by the Board of Directors, the Chairman of the Board or by the President. Notice of every annual and special meeting of shareholders must be given to each shareholder of record entitled to vote at least 15 but no more than 60 days before such meeting.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our shareholders have the right to dissent from various corporate actions, including any merger or consolidation or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our amended and restated articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which the Company’s shares are primarily traded on a local or national securities exchange.

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Shareholders Derivative Actions

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

Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their shareholders for monetary damages for breaches of directors’ fiduciary duties. Our bylaws, as amended, include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law.

Our bylaws, as amended, provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to carry directors’ and officers’ insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our bylaws, as amended, may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Anti-takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Bylaws, as Amended

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

Blank Check Preferred Stock

Under the terms of our amended and restated articles of incorporation, our Board of Directors has authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change in control of our company or the removal of our management.

Classified Board of Directors

Our amended and restated articles of incorporation provide for the division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of Directors for two years.

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Election and Removal of Directors

Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws, as amended, require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws, as amended, also provide that our directors may be removed only for cause and by either action of the Board of Directors or the affirmative vote of the holders of 51% of the issued and outstanding voting shares of the Company. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Limited Actions by Shareholders

Our amended and restated articles of incorporation and our bylaws, as amended, provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation and our bylaws, as amended, provide that, subject to certain exceptions, our Board of Directors, our Chairman of the Board or by the President and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may not call a special meeting and shareholder consideration of a proposal may be delayed until the next annual meeting.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bylaws, as amended, provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one-year anniversary of the immediately preceding annual meeting of shareholders. Our bylaws, as amended, also specify requirements as to the form and content of a shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

Certain Business Combinations

Our amended and restated articles of incorporation also prohibit us, subject to several exclusions, from engaging in any “business combination” with any interested shareholder for a period of three years following the date the shareholder became an interested shareholder.

Shareholders’ Rights Plan

On May 10, 2019, we adopted a shareholder rights agreement effective as of May 27, 2019 and declared a dividend distribution of one preferred stock purchase right to purchase one one-thousandth of our Series C Participating Preferred Stock for each outstanding share of our common stock, to shareholders of record at the close of business on May 27, 2019. Each right entitles the registered holder, upon the occurrence of certain events, to purchase from us one one-thousandth of a share of Series C Participating Preferred Stock at an exercise price of $3.00, subject to adjustment. The rights will expire on the earliest of (i) May 31, 2029 or (ii) redemption or exchange of the rights. The shareholder rights agreement was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the Company. We believe that the shareholder rights agreement should enhance the board of directors' negotiating power on behalf of shareholders in the event of a coercive offer or proposal. We are not currently aware of any such offers or proposals and we adopted the plan as a matter of prudent corporate governance. This shareholder rights agreement replaced our existing, substantially similar shareholder rights agreement which expired on May 27, 2019.

C. Material Contracts

We have a number of credit facilities with commercial banks. For a discussion of our facilities, please see the section of this annual report entitled “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Debt Financing”, and Note 9 of our attached financial statements.

We are a party to a registration rights agreement with Friends and Synergy Holdings Limited. For a discussion of these agreements, please see the section of this annual report entitled “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

There are no other material contracts, other than contracts entered into in the ordinary course of business, to which the Company or any of its subsidiaries is a party.

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D. Exchange Controls

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

E. Taxation

The following is a discussion of the material Marshall Islands, Liberian and United States federal income tax considerations applicable to us and U.S. Holders and Non-U.S. Holders, each as discussed below, of our common stock. 

Marshall Islands Tax Considerations

We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to holders of our common stock that are not residents or domiciled or carrying any commercial activity in the Marshall Islands. The holders of our common stock will not be subject to Marshall Islands tax on the sale or other disposition of such common stock.

Liberian Tax Considerations

Certain of our subsidiaries are incorporated in the Republic of Liberia. Under the Consolidated Tax Amendments Act of 2010, our Liberian subsidiaries will be deemed non-resident Liberian corporations wholly exempted from Liberian taxation effective as of 1977, and distributions we make to our shareholders will be made free of any Liberian withholding tax.

United States Federal Income Tax

The following are the material United States federal income tax consequences to us of our activities and to U.S. Holders and Non-U.S. Holders, each as defined below, of our common stock. The following discussion of United States federal income tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all as of the date of this Annual Report, and all of which are subject to change, possibly with retroactive effect. This discussion is also based in part upon Treasury Regulations promulgated under Section 883 of the Code. The discussion below is based, in part, on the description of our business as described in “Business” above and assumes that we conduct our business as described in that section. References in the following discussion to “we” and “us” are to Euroseas and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: In General

Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as “shipping income,” to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States exclusive of certain U.S. territories and possessions constitutes income from sources within the United States, which we refer to as “U.S.-source shipping income.”

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

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

In the absence of exemption from tax under Section 883 of the Code, our gross U.S.-source shipping income would be subject to a 4% tax imposed without allowance for deductions as described below.

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Exemption of Operating Income from United States Federal Income Taxation

Under Section 883 of the Code and the Treasury Regulations thereunder, we will be exempt from United States federal income taxation on our U.S.-source shipping income if:           

● we are organized in a foreign country, or our country of organization, that grants an “equivalent exemption” to corporations organized in the United States; and

either

● more than 50% of the value of our stock is owned, directly or indirectly, by “qualified shareholders,” individuals who are “residents” of our country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States, which we refer to as the “50% Ownership Test,” or

● our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States, which we refer to as the “Publicly-Traded Test.”

The Marshall Islands, Liberia and Panama, the jurisdictions where we and our ship-owning subsidiaries were incorporated, each grants an “equivalent exemption” to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S.-source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.

The Treasury Regulations provide, in pertinent part, that the stock of a foreign corporation will be considered to be "primarily traded" on an established securities market in a country if the number of shares of each class of stock that is traded during the taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded during that year on established securities markets in any other single country. Our common stock is "primarily traded" on the Nasdaq Capital Market, which is an established securities market for these purposes.

The Treasury Regulations also require that our stock be “regularly traded” on an established securities market.  Under the Treasury Regulations, our common shares will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes of stock entitled to vote and total value, are listed on such market, to which we refer as the Listing Threshold. Our common stock, which is listed on the Nasdaq Capital Market and is our only class of publicly-traded stock, constituted more than 50% of our outstanding shares by value for most of the 2021 taxable year, and accordingly, we believe that we satisfied the listing threshold for the 2021 taxable year.

It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, or the Trading Frequency Test; and (ii) the aggregate number of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the Trading Volume Test. The Company currently satisfies and anticipates that it will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.

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

For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or 5% Shareholders, the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the SEC, as owning 5% or more of our common shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

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In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if we can establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half the number of days during the taxable year.  In order to benefit from this exception to the 5% Override Rule, the Company must satisfy certain substantiation requirements in regards to the identity of its 5% Shareholders.

We believe that we were subject to the Five Percent Override Rule, but nonetheless satisfied the Publicly-Traded Test for the 2021 taxable year because our nonqualified 5% Shareholders did not own more than 50% of our common stock for more than half of the days during the taxable year. We intend to take this position on our 2021 U.S. federal income tax returns.

Taxation in Absence of Exemption

To the extent that the benefits of Section 883 are unavailable for any taxable year, our U.S.-source shipping income, to the extent not considered to be “effectively connected” with the conduct of a United States trade or business, as described below, was subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions which we refer to as the “4% gross basis tax regime”. Since under the sourcing rules described above, no more than 50% of our shipping income is treated as being derived from United States sources, the maximum effective rate of United States federal income tax on our shipping income will not exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 of the Code are unavailable and our U.S.-source shipping income is considered to be “effectively connected” with the conduct of a United States trade or business, as described below, any such “effectively connected” U.S.-source shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at a rate of 21%. In addition, we may be subject to the 30% United States federal “branch profits” taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such United States trade or business.

Our U.S.-source shipping income would be considered “effectively connected” with the conduct of a United States trade or business only if:

● We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and

● substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not currently have, intend to have, or permit circumstances that would result in our having, any vessel sailing to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, it is anticipated that none of our United States source shipping income will be "effectively connected" with the conduct of a United States trade or business for any taxable year.

United States Taxation of Gain on Sale of Vessels

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

United States Federal Income Taxation of U.S. Holders

As used herein, the term “U.S. Holder” means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if (i) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a United States person for United States federal income tax purposes.

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This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities, investors whose functional currency is not the United States dollar, persons required to recognize income for United States federal income tax purposes no later than when such income is reported on an “applicable financial statement” and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be subject to special rules. This discussion deals only with holders who hold the common stock as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common stock. This discussion does not address the tax consequences of owning our preferred stock.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in his common stock on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations generally will not be entitled to claim a dividend received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as “passive category income” or, in the case of certain types of U.S. Holders, “general category income” for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a U.S. Holder who is an individual, trust or estate, or a U.S. Individual Holder, will generally be treated as “qualified dividend income” that is taxable to such U.S. Individual Holders at preferential tax rates provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be), (2) our common stock is readily tradable on an established securities market in the United States (such as the Nasdaq Capital Market, on which our common stock is listed), (3) the U.S. Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend, and (4) the U.S. Individual Holder is not under an obligation (whether pursuant to a short sale or otherwise) to make payments with respect to positions in similar or related property. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Dividends paid on our stock prior to the date on which our common stock became listed on the Nasdaq Capital Market were not eligible for these preferential rates.  Any dividends paid by us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder.

Special rules may apply to any “extraordinary dividend” generally, a dividend paid by us in an amount which is equal to or in excess of ten percent of a shareholder’s adjusted tax basis (or fair market value in certain circumstances) in a share of our common stock. If we pay an “extraordinary dividend” on our common stock that is treated as “qualified dividend income,” then any loss derived by a U.S. Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock. Such gain or loss will generally be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for United States foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.

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Passive Foreign Investment Company Status and Significant Tax Consequences

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

● at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

● at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as “passive assets”.

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

Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes.  Moreover, in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, there can be no assurance that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year which included a U.S. Holder’s holding period in our common stock, then such U.S. Holder would be subject to different United States federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “qualified electing fund,” which election we refer to as a “QEF election”. As an alternative to making a QEF election, a U.S. Holder should be able to make a “mark-to-market” election with respect to our common stock, as discussed below.  In addition, if we were to be treated as a PFIC, a U.S. Holder of our common stock would be required to file annual information returns with the IRS.

In addition, if a U.S. Holder owns our common stock and we are a PFIC, such U.S. Holder must generally file IRS Form 8621 with the IRS.

U.S. Holders Making a Timely QEF Election

A U.S. Holder who makes a timely QEF election with respect to our common stock, or an Electing Holder, would report for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder.  Our net operating losses or net capital losses would not pass through to the Electing Holder and will not offset our ordinary earnings or net capital gain reportable to the Electing Holder in subsequent years (although such losses would ultimately reduce the gain, or increase the loss, if any, recognized by the Electing Holder on the sale of his common stock).  Distributions received from us by an Electing Holder are excluded from the Electing Holder’s gross income to the extent of the Electing Holder’s prior inclusions of our ordinary earnings and net capital gain. The Electing Holder’s tax basis in his common stock would be increased by any amount included in the Electing Holder’s income. Distributions received by an Electing Holder, which are not includible in income because they have been previously taxed, would decrease the Electing Holder’s tax basis in the common stock.  An Electing Holder would generally recognize capital gain or loss on the sale or exchange of common stock.

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U.S. Holders Making a Timely Mark-to-Market Election

A U.S. Holder who makes a timely mark-to-market election with respect to our common stock would include annually in the U.S. Holder’s income, as ordinary income, any excess of the fair market value of the common stock at the close of the taxable year over the U.S. Holder’s then adjusted tax basis in the common stock. The excess, if any, of the U.S. Holder’s adjusted tax basis at the close of the taxable year over the then fair market value of the common stock would be deductible in an amount equal to the lesser of the amount of the excess or the net mark-to-market gains that the U.S. Holder included in income in previous years with respect to the common stock. A U.S. Holder’s tax basis in his common stock would be adjusted to reflect any income or loss amount recognized pursuant to the mark-to-market election.  A U.S. Holder would recognize ordinary income or loss on a sale, exchange or other disposition of the common stock; provided, however, that any ordinary loss on the sale, exchange or other disposition may not exceed the net mark-to-market gains that the U.S. Holder included in income in previous years with respect to the common stock.

U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election

A U.S. Holder who does not make a timely QEF Election or a timely mark-to-market election, which we refer to as a “Non-Electing Holder”, would be subject to special rules with respect to (i) any “excess distribution” (generally, the portion of any distributions received by the Non-Electing Holder on the common stock in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common stock), and (ii) any gain realized on the sale or other disposition of the common stock. Under these rules, (i) the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s holding period for the common stock; (ii) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, would be taxed as ordinary income; and (iii) the amount allocated to each of the other prior taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. If a Non-Electing Holder dies while owning the common stock, the Non-Electing Holder’s successor would be ineligible to receive a step-up in the tax basis of that common stock.

United States Federal Income Taxation of “Non-U.S. Holders”

A beneficial owner of common stock (other than a partnership) that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder.”

Dividends on Common Stock

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

Sale, Exchange or Other Disposition of Common Stock

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

● such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States, if the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or

● the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

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

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Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if a U.S. Individual Holder:             

● fails to provide an accurate taxpayer identification number;

● is notified by the IRS that he failed to report all interest or dividends required to be shown on your United States federal income tax returns; or

● in certain circumstances, fails to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an appropriate IRS Form W-8.

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

Backup withholding is not an additional tax. Rather, a shareholder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed the shareholder’s United States federal income tax liability by filing a refund claim with the IRS.

Individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who are Non-U.S. Holders and certain United States entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code and the applicable Treasury Regulations) are required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) with information relating to each such asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year.  Specified foreign financial assets would include, among other assets, our common stock, unless the common stock were held through an account maintained with a United States financial institution.  Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect.  Additionally, the statute of limitations on the assessment and collection of United States federal income tax with respect to a taxable year for which the filing of IRS Form 8938 is required may not close until three years after the date on which IRS Form 8938 is filed.  U.S. Holders (including United States entities) and Non-U.S. Holders are encouraged to consult their own tax advisors regarding their reporting obligations under Section 6038D of the Code.

We encourage each shareholder to consult with his, her or its own tax advisor as to particular tax consequences to it of holding and disposing of our common stock, including the applicability of any state, local or foreign tax laws and any proposed changes in applicable law.

F. Dividends and paying agents

        Not Applicable.

G. Statement by experts

              Not Applicable.

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H. Documents on display

We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC's website: http://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.

I. Subsidiary Information

Not Applicable. 

Item 11. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we face risks that are non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk. Our operations may be affected from time to time in varying degrees by these risks but their overall effect on us is not predictable. We have identified the following market risks as those which may have the greatest impact upon our operations:

Interest Rate Fluctuation Risk

The international containership shipping industry is capital-intensive, requiring significant amounts of investment. Much of this investment is financed by long term debt. Our debt usually contains interest rates that fluctuate with LIBOR. See Item 3.D: “Risk Factors” above for more information on risks related to volatility in, and the discontinuance of LIBOR.

We are subject to market risks relating to changes in interest rates because we have floating rate debt outstanding, which is based on U.S. dollar LIBOR plus, in the case of each credit facility, a specified margin. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings and to this effect, when we deem appropriate, we use derivative financial instruments. The notional principal amount of our interest rate swap as of December 31, 2021 and 2020 was $40 million and $30 million, respectively. The swap has specified rates and duration. Refer to the table in Note 15 of our financial statements included at the end of this annual report, which summarizes the interest rate swaps in place as of December 31, 2021 and December 31, 2020. Our swap contracts expire in April 2025 and November 2025. As at December 31, 2021, our average debt coverage for the three year period of 2022, 2023 and 2024 was approximately 78.0% and for the year of 2025 was approximately 137.0%.

As at December 31, 2021, we had $119.0 million of floating rate bank debt outstanding with margins over LIBOR ranging from 2.35% to 3.90%. Our interest expense is affected by changes in the general level of interest rates. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100 basis points would have increased our net loss and decreased our cash flows in the twelve-month period ended December 31, 2021 by approximately $653,601 assuming the same debt profile throughout the year.

The following table sets forth the sensitivity of our loans and the interest rate swaps as of December 31, 2021 in U.S. dollars to a 100 basis points increase in LIBOR during the next five years. Specifically, the interest we will have to pay for our floating rate loans will increase, but net payments we will have to make under our interest rate swap contracts will decrease.

Year Ended December 31,	Amount in $ (floating rate loans)		Amount in $ (swap)
2022		1,045,094		(400,000	)
2023		662,050		(400,000	)
2024		292,800		(400,000	)
2025		130,440		(177,260	)

Inflation Risk

The general rate of inflation has been relatively low in recent years and as such its associated impact on costs has been minimal. We do not believe that inflation has had, or is likely to have in the foreseeable future, a significant impact on expenses. Should inflation increase, it will increase our expenses and subsequently have a negative impact on our earnings.

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Foreign Currency Exchange Rate Risk

The international containership shipping industry’s functional currency is the U.S. dollar. We generate all of our revenues in U.S. dollars, but incurred approximately 25% of our vessel operating expenses and drydocking expenses in 2021 in currencies other than U.S. dollars. Comparatively, in 2020 approximately 25% of our vessel operating expenses and drydocking expenses were in currencies other than U.S. dollars. In addition, our vessel management fee is denominated in Euros and certain general and administrative expenses (about 2% in 2021) are mainly in Euros and some other currencies. As of December 31, 2021, approximately 50% of our outstanding trade accounts payable were denominated in currencies other than the U.S. dollar, mainly in Euros. We do not use currency exchange contracts to reduce the risk of adverse foreign currency movements but we believe that our exposure from market rate fluctuations is unlikely to be material. Net foreign exchange gain for the year ended December 31, 2021 was $34,418, and for the year ended December 31, 2020 we had a net foreign exchange loss of $63,007.

A hypothetical 10% immediate and uniform adverse move in all currency exchange rates from the rates in effect as of December 31, 2021, would have increased our vessel operating expenses by approximately $0.83 million and the fair value of our outstanding trade accounts payable by approximately $0.28 million.

Item 12. Description of Securities Other than Equity Securities

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

On May 10, 2019, we adopted a shareholder rights agreement effective as of May 27, 2019 and declared a dividend distribution of one preferred stock purchase right to purchase one one-thousandth of our Series C Participating Preferred Stock for each outstanding share of our common stock, to shareholders of record at the close of business on May 27, 2019. Each right entitles the registered holder, upon the occurrence of certain events, to purchase from us one one-thousandth of a share of Series C Participating Preferred Stock at an exercise price of $3.00, subject to adjustment. The rights will expire on the earliest of (i) May 31, 2029 or (ii) redemption or exchange of the rights. The shareholder rights agreement was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the Company. We believe that the shareholder rights agreement should enhance the board of directors' negotiating power on behalf of shareholders in the event of a coercive offer or proposal. We are not currently aware of any such offers or proposals and we adopted the plan as a matter of prudent corporate governance. This shareholder rights agreement replaced our existing, substantially similar shareholder rights agreement which expired on May 27, 2019.

Item 15. Controls and Procedures

(a)       Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act, the Company’s management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2021. The term disclosure controls and procedures is defined under SEC rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

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Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2021, our disclosure controls and procedures, which include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to the management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

(b)       Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its consolidated financial statements.

        Our management, with the participation of Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this assessment, the Company used the control criteria framework of the Committee of Sponsoring Organizations of the Treadway Commission, or COSO 2013, published in its report entitled 2013 Internal Control-Integrated Framework. As a result of its assessment, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal controls over financial reporting are effective as of December 31, 2021.

(c)       Attestation Report of the Registered Public Accounting Firm

This annual report does not contain an attestation report of our registered public accounting firm regarding internal control over financial reporting as the Company is a non-accelerated filer and is exempt from this requirement.

(d)      Changes in Internal Control over Financial Reporting

No significant change in the Company’s internal control over financial reporting occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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Item 16A. Audit Committee Financial Expert

Our Board of Directors has determined that all the members of our Audit Committee qualify as financial experts and they are all considered to be independent according to Nasdaq and SEC rules. Mr. Panos Kyriakopoulos serves as the Chairman of our Audit Committee and as the Audit Committee’s financial expert with Mr. Apostolos Tamvakakis and Mr. George Taniskidis as members.

Item 16B. Code of Ethics

We have adopted a code of ethics that applies to officers and employees. Our code of ethics is posted in our website, http://www.euroseas.gr, under “Corporate Governance”.

Item 16C. Principal Accountant Fees and Services

Deloitte Certified Public Accountants S.A. (“Deloitte”) (PCAOB ID No. 1163), an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal years ended December 31, 2019, 2020 and 2021. 

	2020 (dollars in thousands)	2021 (dollars in thousands)
Audit Fees	$     259	$ 267
Audit-Related Fees	-	-
Tax Fees	-	-
All Other Fes	-	-
Total	$      259	$ 267

Audit fees relate to compensation for professional services rendered for the audit of the consolidated financial statements of the Company and for the review of the quarterly financial information as well as in connection with any other audit services required for SEC or other regulatory filings or offerings.

The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independent registered public accounting firm. As part of this responsibility, the Audit Committee pre-approves the audit and non-audit services performed by the independent registered public accounting firm in order to assure that they do not impair the auditor's independence from the Company. The Audit Committee has adopted a policy which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent registered public accounting firm may be pre-approved.

All services provided by Deloitte Certified Public Accountants, S.A., were pre-approved by the Audit Committee.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not Applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not Applicable.

Item 16F. Change in Registrant’s Certifying Accountant

None.

Item 16G. Corporate Governance

Please see Item 6.C. Board Practices - Corporate Governance.

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OTHER THAN AS NOTED IN THE SECTION ABOVE, WE ARE IN FULL COMPLIANCE WITH ALL OTHER APPLICABLE NASDAQ CORPORATE GOVERNANCE STANDARDS.

Item 16H. Mine Safety Disclosure

Not Applicable.

Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

PART III

Item 17. Financial Statements

See Item 18.

Item 18. Financial Statements

The financial statements set forth on pages F-1 through F-64, together with the report of independent registered public accounting firm, are filed as part of this annual report.

Item 19. Exhibits

1.1	Amended and Restated Articles of Incorporation of Euroseas Ltd.(8)
1.2	Bylaws of Euroseas Ltd.(7)
1.3	Amendment to Bylaws of Euroseas Ltd.(7)
2.1	Specimen Common Stock Certificate(5)
2.2	Form of Securities Purchase Agreement(1)
2.3	Form of Registration Rights Agreement(1)
2.4	Form of Warrant(1)
2.5	Registration Rights Agreement between Euroseas Ltd. and Friends Investment Company Inc., dated November 2, 2005(2)
2.6	Form of Subscription Rights Certificate(9)
2.7	Description of Securities
4.1	Form of Lock-up Agreement(1)
4.2	Form of Standard Ship Management Agreement(1)
4.3	Agreement between Eurobulk Ltd. and Eurochart S.A., for the provision of exclusive brokerage services, dated December 20, 2004(1)
4.4	Form of Current Time Charter(1)
4.5	Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of July 17, 2007, as amended February 7, 2008(4)
4.6	Addendum No. 1 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of February 7, 2009(6)
4.7	Form of Right of First Refusal(3)
4.8	Form of Advisory Agreement(3)
4.9	Form of Senior Security Debt Indenture(5)
4.10	Form of Subordinated Debt Security Indenture(5)
4.11	Addendum No. 10 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of November 15, 2019(13)
4.12	Loan Agreement between Euroseas Ltd., as borrower, and Eurobank Ergasias, S.A., as arranger, relating to a revolving credit facility of up to US$45,000,000 dated November 21, 2018(10)
4.13	Supplemental Letter to the Facility Agreement of up to US$45,000,000 between Euroseas Ltd., as borrower, and Eurobank Ergasias, S.A., as the bank, dated May 30, 2019(13)
4.14	Loan Agreement between Diamantis Shipowners Ltd., as borrower, and Piraeus Bank S.A., as lender, for a term loan facility of up to US$4,000,000 dated July 29, 2019(13)

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4.15	Secured Loan Agreement between Kea Shipowners Ltd., Spetses Shipowners Ltd. and Hydra Shipowners Ltd., as borrowers, and HSBC Bank PLC, as lender, for a secured loan of US$12,500,000 dated July 30, 2019(13)
4.16	Loan Agreement between Antwerp Shipping Ltd., Busan Shipping Ltd., Keelung Shipping Ltd. and Oakland Shipping Ltd., as borrowers, and Piraeus Bank S.A., as lender, for a term loan facility of up to US$32,000,000 dated November 8, 2019(13)
4.17	Loan Agreement between Euroseas Ltd., as borrower, and Colby Trading Ltd., as lender, for a term loan facility of up to US$2,500,000 dated November 1, 2019(13)
4.18	Euroseas Ltd. 2018 Equity Incentive Plan(10)
4.19	Form of Stockholders Rights Agreement dated May 27, 2019(11)
4.20	Registration Rights Agreement between Euroseas Ltd. and Synergy Holdings Limited dated November 7, 2019(13)
4.21	Equity Distribution Agreement between Euroseas Ltd. and Maxim Group LLC dated October 30, 2018(13)
4.22	Interest Rate Swap Agreement between Euroseas Ltd. and Eurobank SA/Athens dated April 16, 2020(13)
4.23	Amendment No. 1. to the Equity Distribution Agreement between Euroseas Ltd. and Maxim Group LLC dated May 29, 2020(14)
4.24	Supplemental Letter to the Facility Agreement of up to US$45,000,000 dated November 21, 2018, as amended by a first supplemental letter dated May 30, 2019, between Euroseas Ltd., as Borrower, and Eurobank S.A. (formerly Eurobank Ergasias S.A.), as Lender, dated June 26, 2020(15)
4.25	Supplemental Agreement between Antwerp Shipping Ltd., Busan Shipping Ltd., Keelung Shipping Ltd. and Oakland Shipping Ltd., as Joint and Several Borrowers, and Piraeus Bank S.A, as Lender, dated July 16, 2020 in relation to a Loan Agreement dated November 8, 2019(15)
4.26	Supplemental Agreement between Diamantis Shipowners Ltd., as Borrower, and Piraeus Bank S.A, as Lender, dated July 16, 2020 in relation to a Loan Agreement dated July 29, 2019(15)
4.27	Loan Agreement between Corfu Navigation Ltd. and Jonathan John Shipping Ltd., as Borrowers, and Sinopac Capital International (HK) Limited, as Lender, in respect of a loan of up to US$10,000,000 dated September 6, 2021
4.28	Interest Rate Swap Agreement between Euroseas Ltd. and Eurobank SA/Athens dated October, 12, 2021
4.29	Loan Agreement between Jonathan Shipowners Ltd., as Borrower, and HSBC Bank plc, as Lender in relation to a Secured Loan of US$15,000,000 dated October 22, 2021
4.30	Facility Agreement between Antwerp Shipping Ltd, Busan Shipping Ltd., Keelung Shipping Ltd. and Oakland Shipping Ltd., as Borrowers, and Piraeus Bank S.A., as Lenders, in respect of revolving credit facility of up to US$16,500,000 dated November 26, 2021
4.31	Loan Agreement between Marcos Shipping Ltd., as Borrower, and Eurobank S.A., as the Lenders, Arranger, Account Bank, Agent and Security Trustee, in respect of a loan of up to US$34,000,000 dated December 14, 2021
4.32	Euroseas Ltd. 2021 Equity Incentive Plan
8.1	Subsidiaries of the Registrant
12.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
13.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Deloitte Certified Public Accountants  S.A.
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

97

(1)	Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005.
(2)	Filed as an Exhibit to the Company's Amendment No.1 to Registration Statement (File No. 333-129145) on December 5, 2005.
(3)	Filed as an Exhibit to the Company’s Amendment No. 4 to Registration Statement (File No. 333-138780) on January 29, 2007.
(4)	Filed as an Exhibit to the Company’s Annual Report on Form 20-F (File No. 001-33283) on May 13, 2008.
(5)	Filed as an Exhibit to the Company’s Registration Statement (File No. 333-152089) on July 2, 2008.
(6)	Filed as an Exhibit to the Company’s Annual Report on Form 20-F (File No. 001-33283) on May 18, 2009.
(7)	Filed as an Exhibit to the Company’s Annual Report on Form 20-F (File No. 001-33283) on May 28, 2010.
(8)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 27, 2011.
(9)	Filed as an Exhibit to the Company’s Form 6-K (File No. 001-33283) on May 25, 2012.
(10)	Filed as an Exhibit to the Company’s Annual Report on Form 20-F (File No. 001-33283) on April 25, 2019.
(11)	Filed as an Exhibit to the Company’s Form 6-K (File No. 001-33283) on May 28, 2019.
(12)	Filed as an Exhibit to the Company’s Form 6-K (File No. 001-33283) on February 1, 2021.
(13)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 30, 2020.
(14)	Filed as an Exhibit to the Company’s Form 6-K (File No. 001-33283) on May 29, 2020.
(15)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 28, 2021.

98

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	EUROSEAS LTD.
	(Registrant)
	By:  /s/ Aristides J. Pittas
	Aristides J. Pittas
	Chairman, President and CEO
Date: April 22, 2022

99

Euroseas Ltd. and Subsidiaries

Consolidated financial statements

Index to consolidated financial statements

	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2020 and 2021	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2020 and 2021	F-5
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2019, 2020 and 2021	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2020 and 2021	F-8
Notes to the Consolidated Financial Statements	F-11

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Euroseas Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Euroseas Ltd. and subsidiaries (the “Company” ) as of December 31, 2021 and 2020, the related consolidated statements of operations, shareholders' equity and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Deloitte Certified Public Accountants S.A.

Athens, Greece

April 22, 2022

We have served as the Company's auditor since at least 2004, in connection with its initial public offering; however, an earlier year could not be reliably determined.

F-2

Euroseas Ltd. and Subsidiaries

Consolidated Balance Sheets

December 31, 2020 and 2021

(All amounts, except share data, expressed in U.S. Dollars)

	Notes		2020		2021
Assets
Current assets
Cash and cash equivalents				3,559,399		26,530,944
Restricted cash		9		345,010		167,285
Trade accounts receivable, net				2,013,023		1,274,729
Other receivables				1,866,624		1,722,885
Inventories		3		1,662,422		2,274,454
Prepaid expenses				244,315		382,729
Derivatives		15,17		-		540,753
Total current assets				9,690,793		32,893,779
Long-term assets
Vessels, net		5		98,458,447		176,111,486
Advances for vessels under construction		4		-		7,615,958
Restricted cash		9		2,433,768		4,800,000
Total assets				110,583,008		221,421,223
Liabilities, mezzanine equity and shareholders’ equity
Current liabilities
Long-term bank loans, current portion		9		20,645,320		29,034,049
Related party loan, current		8, 9		2,500,000		-
Trade accounts payable				2,854,377		2,804,194
Accrued expenses		6		1,300,420		1,702,925
Accrued preferred dividends		16		168,676		-
Deferred revenues				949,364		3,293,986
Due to related company		8		24,072		309,970
Derivative		15, 17		203,553		-
Total current liabilities				28,645,782		37,145,124

(Consolidated balance sheets continue on the next page)

F-3

Euroseas Ltd. and Subsidiaries

Consolidated Balance Sheets

December 31, 2020 and 2021

(All amounts, except share data, expressed in U.S. Dollars)

(continued)

	Notes		December 31, 2020			December 31, 2021
Long-term liabilities
Long-term bank loans, net of current portion		9		46,220,028			89,004,951
Derivatives		15,17		362,195			952,666
Fair value of below market time charters acquired		7		-			17,461,586
Total long-term liabilities				46,582,223			107,419,203
Total liabilities				75,228,005			144,564,327
Commitments and contingencies		11
Mezzanine Equity
Preferred shares (par value $0.01, 20,000,000 shares authorized, 8,365 and nil issued and outstanding, respectively)		16		8,019,636			-
Shareholders’ equity
Common stock (par value $0.03, 200,000,000 shares authorized, 6,708,946 and 7,294,541 issued and outstanding)		18		201,268			218,836
Additional paid-in capital				257,467,980			264,609,233
Accumulated deficit				(230,333,881	)		(187,971,173	)
Total shareholders’ equity				27,335,367			76,856,896
Total liabilities, mezzanine equity and shareholders’ equity				110,583,008			221,421,223

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

F-4

Euroseas Ltd. and Subsidiaries

Consolidated statements of operations

Years ended December 31, 2019, 2020 and 2021

(All amounts, except for share data, expressed in U.S. Dollars)

	Notes		2019			2020			2021
Revenues
Time charter revenue				41,769,278			55,681,124			97,977,389
Commissions (including $493,341, $504,892 and $1,075,274, respectively, to related party)		8		(1,745,599	)		(2,378,007	)		(4,085,717	)
Net revenue				40,023,679			53,303,117			93,891,672
Operating expenses/ (income)
Voyage expenses		14		1,055,408			1,334,259			624,734
Vessel operating expenses (including $249,081, $304,515 and $233,635, respectively, to related party)		8, 14		23,983,282			32,219,689			29,739,437
Dry-docking expenses				2,714,662			536,199			4,094,693
Vessel depreciation		5		4,178,886			6,605,976			7,203,198
Related party management fees		8		3,671,335			5,293,199			4,294,789
General and administrative expenses (including $1,344,250, $2,000,000 and $2,460,000, respectively, to related party)		8, 12		2,444,495			3,041,435			3,491,120
Net (gain) / loss on sale of vessels (including $0, $153,750 and $0, respectively, to related party)		5, 8		-			(2,453,736	)		9,417
Other operating income		19		-			(2,687,205	)		(1,298,318	)
Loss on write-down of vessel held for sale		5		-			121,165			-
Total operating expenses, net				38,048,068			44,010,981			48,159,070
Operating income				1,975,611			9,292,136			45,732,602
Other (expenses)/ income
Interest and other financing costs (including $84,444, $361,283 and $50,000, respectively, to related party)		8, 9		(3,424,969	)		(4,125,150	)		(2,779,729	)
Loss on debt extinguishment		8, 9		(328,291	)		(491,571	)		-
Loss on derivatives, net		15		(2,885	)		(587,988	)		(27,141	)
Foreign exchange gain / (loss)				2,024			(63,007	)		34,418
Interest income				95,839			17,011			3,510
Other expenses, net				(3,658,282	)		(5,250,705	)		(2,768,942	)
Net (loss) / income				(1,682,671	)		4,041,431			42,963,660
Dividends to Series B preferred shares		16		(1,271,782	)		(693,297	)		(255,324	)
Preferred deemed dividend		16		(504,577	)		-			(345,628	)
Net (loss) / income attributable to common shareholders				(3,459,030	)		3,348,134			42,362,708
Weighted average number of shares outstanding during the year, basic		13		2,861,928			5,753,917			6,976,905
(Loss) / earnings per share attributable to common shareholders - basic		13		(1.21	)		0.58			6.07
Weighted average number of shares outstanding during the year, diluted		13		2,861,928			5,753,917			6,993,405
(Loss) / earnings per share attributable to common shareholders - diluted		13		(1.21	)		0.58			6.06

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

F-5

Euroseas Ltd. and Subsidiaries

Consolidated statements of shareholders’ equity

Years ended December 31, 2019, 2020 and 2021

(All amounts, except share data, expressed in U.S. Dollars)

	Number of Shares Outstanding (*)			Common Stock Amount (*)			Additional Paid - in Capital (*)			Accumulated Deficit			Total
Balance January 1, 2019		1,564,456			46,934			233,996,669			(230,222,985	)		3,820,618
Net loss		-			-			-			(1,682,671	)		(1,682,671	)
Dividends to Series B preferred shares		-			-			-			(1,271,782	)		(1,271,782	)
Preferred deemed dividend		-			-			-			(504,577	)		(504,577	)
Issuance of shares sold at the market (ATM), net of issuance costs		144,727			4,342			771,190			-			775,532
Issuance of restricted shares for stock incentive award and share-based compensation		15,444			463			97,456			-			97,919
Shares issued in connection with acquisition of vessels		2,816,901			84,507			13,134,155			-			13,218,662
Issuance of shares through private placement		1,056,338			31,690			5,968,310			-			6,000,000
Rounding of stock split		2,393			72			(72	)		-			-
Balance December 31, 2019		5,600,259			168,008			253,967,708			(233,682,015	)		20,453,701
Net income		-			-			-			4,041,431			4,041,431
Dividends to Series B preferred shares		-			-			-			(693,297	)		(693,297	)
Issuance of shares sold at the market (ATM), net of issuance costs		200,000			6,000			490,718			-			496,718
Issuance of restricted shares for stock incentive award and share-based compensation		45,900			1,377			120,254			-			121,631
Issuance of shares in connection with related party loan converted to equity		702,247			21,067			2,345,504			-			2,366,571
Issuance of shares for contingent consideration in connection with acquisition of vessels (Note 5)		161,357			4,841			543,771			-			548,612
Shares forfeited		(817	)		(25	)		25			-			-
Balance December 31, 2020		6,708,946			201,268			257,467,980			(230,333,881	)		27,335,367

(consolidated statements of shareholders’ equity continue on next page)

F-6

Euroseas Ltd. and Subsidiaries

Consolidated statements of shareholders’ equity

Years ended December 31, 2019, 2020 and 2021

(All amounts, except share data, expressed in U.S. Dollars)

(continued)

	Number of Shares Outstanding (*)		Common Stock Amount (*)		Additional Paid - in Capital (*)		Accumulated Deficit			Total
Balance December 31, 2020		6,708,946		201,268		257,467,980		(230,333,881	)		27,335,367
Net income		-		-		-		42,963,660			42,963,660
Dividends to Series B preferred shares		-		-		-		(255,324	)		(255,324	)
Preferred deemed dividend		-		-		-		(345,628	)		(345,628	)
Issuance of shares sold at the market (ATM), net of issuance costs		82,901		2,487		608,746		-			611,233
Issuance of restricted shares for stock incentive award and share-based compensation		49,650		1,490		180,834		-			182,324
Issuance of shares in connection with Series B Preferred Shares converted to equity		453,044		13,591		6,351,673		-			6,365,264
Balance December 31, 2021		7,294,541		218,836		264,609,233		(187,971,173	)		76,856,896

(*) Adjusted to reflect the 1-for-8 reverse stock split effected at the close of trading on December 18, 2019.

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

F-7

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

	2019			2020			2021
Cash flows from operating activities:
Net (loss) / income		(1,682,671	)		4,041,431			42,963,660
Adjustments to reconcile net (loss) / income to net cash provided by operating activities:
Vessel depreciation		4,178,886			6,605,976			7,203,198
Gain on hull & machinery claim		-			(2,687,205	)		-
Loss on write-down of vessel held for sale		-			121,165			-
Amortization and write off of deferred charges		205,590			288,163			223,492
Amortization of debt discount		95,214			-			-
Net (gain) / loss on sale of vessels		-			(2,453,736	)		9,417
Amortization of fair value of below market time charters acquired		(857,945	)		(1,714,370	)		(230,112	)
Share-based compensation		97,919			121,631			182,324
Change in the fair value of derivatives		(41,435	)		565,748			(153,835	)
Loss on debt extinguishment		328,291			491,571			-
Changes in operating assets and liabilities:
(Increase) / decrease in:
Trade accounts receivable		243,608			(1,297,926	)		738,294
Prepaid expenses		(304,195	)		282,216			(138,414	)
Other receivables		460,909			47,479			143,739
Inventories		(184,773	)		226,742			(612,032	)
Increase / (decrease) in:
Due to related company		(1,877,333	)		(771,490	)		285,898
Trade accounts payable		1,539,553			(1,008,707	)		(740,664	)
Accrued expenses		482,671			(424,901	)		393,352
Deferred revenues		556,140			(24,410	)		2,344,622
Net cash provided by operating activities		3,240,429			2,409,377			52,612,939
Cash flows from investing activities:
Cash paid for vessels under construction		-			-			(7,615,958	)
Cash paid for capitalized expenses and acquisition of vessels including attached time charter agreements		(55,720,226	)		(647,069	)		(66,474,058	)
Insurance proceeds		-			2,343,606			-
Net proceeds from sale of vessels		-			14,622,770			(9,417	)
Net cash (used in) / provided by investing activities		(55,720,226	)		16,319,307			(74,099,433	)

(Consolidated statements of cash flows continue on the next page)

F-8

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

(Continued)

	2019			2020			2021
Cash flows from financing activities:
Redemption of Series B preferred shares		(11,686,000	)		-			(2,000,000	)
Proceeds from issuance of common stock, net of commissions paid		6,853,101			715,550			743,553
Preferred dividends paid		(1,031,827	)		(320,877	)		(424,000	)
Offering expenses paid		(136,724	)		(184,321	)		(123,167	)
Loan arrangement fees paid		(566,500	)		-			(758,000	)
Proceeds from long-term bank loans		60,167,680			-			75,500,000
Repayment of long-term bank loans and vessel profit participation liability		(13,401,460	)		(17,905,920	)		(23,791,840	)
Proceeds from related party loan		5,000,000			-			-
Repayment of related party loan		-			(625,000	)		(2,500,000	)
Net cash provided by / (used in) financing activities		45,198,270			(18,320,568	)		46,646,546
Net (decrease) / increase in cash, cash equivalents and restricted cash		(7,281,527	)		408,116			25,160,052
Cash, cash equivalents and restricted cash at beginning of year		13,211,588			5,930,061			6,338,177
Cash, cash equivalents and restricted cash at end of year		5,930,061			6,338,177			31,498,229
Cash breakdown
Cash and cash equivalents		985,418			3,559,399			26,530,944
Restricted cash, current		610,376			345,010			167,285
Restricted cash, long term		4,334,267			2,433,768			4,800,000
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		5,930,061			6,338,177			31,498,229

(Consolidated statements of cash flows continue on the next page)

F-9

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

(Continued)

Supplemental cash flow information
Cash paid for interest, net of capitalized expenses	3,100,049	4,253,625	2,447,089
Financing, and investing activities fees:
Offering expenses accrued	40,846	75,357	84,510
Payment-in-kind dividends	78,640	365,059	-
Capital expenditures included in liabilities	71,890	-	690,481
Accrued preferred dividends	161,315	168,676	-
Shares issued as consideration for acquisition of vessels	13,218,662	548,612	-
Shares issued in connection with related party loan converted to equity	-	2,366,571	-
Issuance of shares in connection with Series B Preferred Shares converted to equity	-	-	6,365,264

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

F-10

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information

Euroseas Ltd. (the “Company” or “Euroseas”) was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of certain ship-owning companies. On June 28, 2005, the beneficial owners exchanged all their shares in the ship-owning companies for shares in Friends Investment Company Inc., a newly formed Marshall Islands company. On June 29, 2005, Friends Investment Company Inc. then exchanged all the shares in the ship-owning companies for shares in Euroseas Ltd., thus becoming the sole shareholder of Euroseas Ltd. at that time. In January 2007, the Company pursued a public offering and its common shares started trading on the Nasdaq Capital Market under the ticker symbol “ESEA” on January 31, 2007.

The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family. Eurobulk has an office in Greece located at 4 Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note 8).

The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co., which, in turn, collectively own 54.7% of the Company’s shares as of December 31, 2021.

F- 11

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “COVID-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, implemented measures to combat the outbreak, such as social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes and closure of non-essential businesses. Such measures have and will likely continue to cause severe trade disruptions, significant reduction in global economic activity and extreme volatility in the global financial markets. Although to date there has not been any significant effect on the Company’s operating activities due to COVID-19, other than the decrease in market rates during 2020, which have recovered since the final quarter of 2020 and continuing into 2021 and 2022, and increased crew cost, there continues to be a high level of uncertainty relating to how the pandemic will evolve, including the new Omicron variant of COVID-19, which appears to be the most transmissible variant to date, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. Accordingly, an estimate of the future impact of COVID-19 on the Company’s operational and financial performance cannot be made at this time, as it may take some time to materialize and may not be fully reflected in the results for 2020 and 2021.

The Company effected an 8-for-1 reverse stock split of its issued and outstanding common shares, effective at the close of trading on December 18, 2019 (Note 18).  All share and per share amounts disclosed in the consolidated financial statements give effect to this reverse stock split retroactively, for all periods presented.

F- 12

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

The Company is engaged in the ocean transportation of containers through ownership and operation of container carrier ship-owning companies. Details of the Company’s wholly owned subsidiaries are set out below:

● Allendale Investment S.A., incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons (“DWT”) / 1,169 twenty-foot equivalent (“TEU” – a measure of carrying capacity in containers) container carrier M/V “Kuo Hsiung”, which was built in 1993 and acquired on May 13, 2002. The vessel was sold on July 30, 2020.

● Alterwall Business Inc., incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V “Ninos” (previously named M/V “Quingdao I”) which was built in 1990 and acquired on February 16, 2001. The vessel was sold on September 30, 2020.

● Manolis Shipping Ltd., incorporated in the Republic of Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V “Manolis P”, which was built in 1995 and acquired on April 12, 2007. The vessel was sold on July 2, 2020.

● Noumea Shipping Ltd, incorporated in the Republic of Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V “Evridiki G” (previously named “Maersk Noumea”), which was built in 2001 and acquired on May 22, 2008.

F- 13

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

● Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna”, which was built in 1999 and acquired on July 4, 2013.

● Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.

● Gregos Shipping Ltd., incorporated in the Republic of Liberia on May 25, 2017, owner of the Liberian flag 35,600 DWT / 2,788 TEU container carrier M/V “EM Astoria”, which was built in 2004 and acquired on June 20, 2017.

● Athens Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Athens”, which was built in 2000 and acquired on September 29, 2017. The vessel was sold on November 9, 2020.

● Corfu Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 34,654 DWT / 2,556 TEU container carrier M/V “EM Corfu”, which was built in 2001 and acquired on October 29, 2017.

● Oinousses Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Oinousses”, which was built in 2000 and acquired on October 23, 2017. The vessel was sold on July 17, 2020.

● Bridge Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 71,366 DWT / 5,610 TEU container carrier M/V “Akinada Bridge”, which was built in 2001 and acquired on December 21, 2017.

● Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier M/V “Diamantis P”, which was built in 1998 and acquired on August 2, 2019.

F- 14

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

● Hydra Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,351 DWT / 1,740 TEU container carrier M/V “EM Hydra”, which was built in 2005 and acquired on August 2, 2019.

● Spetses Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,224 DWT / 1,740 TEU container carrier M/V “EM Spetses”, which was built in 2007 and acquired on August 7, 2019.

● Kea Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 42,165 DWT / 3,100 TEU container carrier M/V “EM Kea”, which was built in 2007 and acquired on August 7, 2019.

● Antwerp Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Antwerp”, which was built in 2008 and acquired on November 19, 2019.

● Keelung Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,969 DWT / 4,253 TEU container carrier M/V “Synergy Keelung”, which was built in 2009 and acquired on November 18, 2019.

● Oakland Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,787 DWT / 4,253 TEU container carrier M/V “Synergy Oakland”, which was built in 2009 and acquired on November 19, 2019.

● Busan Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Busan”, which was built in 2009 and acquired on November 21, 2019.

● Jonathan Shipowners Ltd., incorporated in the Republic of Liberia on August 25, 2021, owner of the Liberian flag 23,357 DWT / 1,740 TEU container carrier M/V “Jonathan P”, which was built in 2006 and acquired on October 18, 2021.

● Marcos Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 27, 2021, owner of the Panamanian flag 72,968 DWT / 6,350 TEU container carrier M/V “Marcos V”, which was built in 2005 and acquired on December 14, 2021.

● Gregos Maritime Ltd., incorporated in the Republic of the Marshall Islands on December 14, 2020, entered on June 29, 2021, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4201). The vessel is expected to be delivered in the first quarter of 2023.

F- 15

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

● Terataki Shipping Ltd., incorporated in the Republic of the Marshall Islands on June 25, 2021, entered on June 29, 2021, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4202). The vessel is expected to be delivered in the second quarter of 2023.

● Tender Soul Shipping Ltd., incorporated in the Republic of the Marshall Islands on January 27, 2022, entered on January 28, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4236). The vessel is expected to be delivered in the fourth quarter of 2023.

● Leonidas Shipping Ltd., incorporated in the Republic of the Marshall Islands on January 27, 2022, entered on January 28, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4237). The vessel is expected to be delivered in the first quarter of 2024.

● Monica Shipowners Ltd., incorporated in the Republic Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4248). The vessel is expected to be delivered in the first quarter of 2024.

● Stephania Shipping Ltd., incorporated in the Republic of Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4249). The vessel is expected to be delivered in the second quarter of 2024.

● Pepi Shipping Ltd., incorporated in the Republic of Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4250). The vessel is expected to be delivered in the second quarter of 2024.

F- 16

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

1. Basis of Presentation and General Information - continued

During the years ended December 31, 2019, 2020 and 2021, the following charterers individually accounted for more than 10% of the Company’s revenues as follows:

	Year ended December 31,
Charterer	2019			2020			2021
CMA CGM, Marseille		24	%		17	%		24	%
Maersk Line A/S		11	%		19	%		21	%
Vasi Shipping Pte. Ltd., Singapore		-			-			15	%
MSC Geneva		15	%		18	%		-
New Golden Sea Shipping Pte. Ltd., Singapore		21	%		10	%		-
Hapag-Lloyd AG, Hamburg		16	%		-			-

F-17

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. The following are the significant accounting policies adopted by the Company:

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries. Inter-company balances and transactions are eliminated on consolidation.

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other comprehensive income / (loss)

The Company has no other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such, no statement of comprehensive income / (loss) has been presented.

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of three months or less.

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

F- 18

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling price less reasonably predictable costs of disposal and transportation. Inventories are valued using the FIFO (First-In First-Out) method.

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses to prepare the vessel for her initial voyage, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Vessels Held for Sale 

The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies a vessel as being held for sale when the following criteria are met: (i) management has committed to a plan to sell the vessel; (ii) the vessel is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; (iv) the sale of the vessel is probable, and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; (v) the vessel is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell. The resulting difference, if any, is recorded under “Loss on write-down of vessel held for sale” in the consolidated statements of operations. The vessels are no longer depreciated once they meet the criteria to be classified as held for sale.

F- 19

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of 25 years from the completion of their construction. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is $250 per light weight ton as of December 31, 2020 and 2021.

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is not subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue and expense recognition

Revenues are generated from time charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified fixed or index-linked daily charter hire rate.

On January 1, 2019, the Company adopted ASC 842 Leases (“ASC 842”), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842 provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease.

F- 20

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily fixed or index-linked charter hire rate, which is generally payable 15 or 30 days in advance as determined in the charter party agreement. The duration of the contracts that the Company enters into depends on the market conditions, with the duration decreasing during weak market conditions. During 2019, 2020 and 2021 the duration of the Company’s time charter contracts ranged from 20 days to 3 years and certain time charter contracts included renewal options up to 12 months. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC 842, because (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

The Company, making use of the practical expedient for lessors, elected not to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with ASC 842.

F- 21

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies – continued

Both the lease component and non-lease component are earned by the passage of time. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and are recorded in “Time charter revenue” in the consolidated statements of operations for the years ended December 31, 2019, 2020 and 2021. Time charter agreements may include ballast bonus payments made by the charterer which serve as compensation for the ballast trip of the vessel to the delivery port, which are deferred and also recognized on a straight-line basis over the charter period.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

F- 22

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning may be recovered from the charterer; such amounts recovered are recorded as other income within “Time charter revenue” in the consolidated statements of operations.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to 9 months). Accordingly, they are not liable for any pension or post-retirement benefits.

F- 23

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Financing costs

Fees paid to lenders or required to be paid to third parties on the lenders’ behalf for obtaining new loans or for refinancing or amending existing loans, are presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, similar to debt discounts. These costs are amortized as interest and other financing costs over the duration of the underlying loan using the effective interest method. Any unamortized balance of costs relating to debt repaid or refinanced that meet the criteria for Debt Extinguishment pursuant to the provisions of Subtopic 470-50, is expensed in the period in which the repayment is made or refinancing occurs. Any unamortized balance of costs relating to debt refinanced that do not meet the criteria for Debt Extinguishment, are amortized over the term of the refinanced debt.

Offering expenses

Expenses directly attributable to an equity offering are deferred and are either presented against proceeds from the offering within paid-in capital or are written-off and charged to “General and administrative expenses” in the consolidated statements of operations when it is probable that the offering will be aborted.

Fair value of above/below market time charters acquired

The Company values any asset or liability arising from the market value of any time charter assumed when a vessel is acquired. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the market rate for a charter of equivalent duration prevailing at the time the vessels are delivered. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary. The cost of the acquisition is allocated to the vessel and the in-place time charter attached on the basis of their relative fair values. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. The shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do not contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Further, the Company accounts for restricted share award forfeitures upon occurrence.

F- 24

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Impairment of vessels

The Company reviews its vessels held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related vessels. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company records an impairment loss to the extent the vessel’s carrying value exceeds its fair market value. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

In developing its estimates of future undiscounted net operating cash flows, the Company makes assumptions and estimates about vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessel operating expenses, drydocking costs, vessels’ residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations.

The Company determines the rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years and on inflation-unadjusted historical average rates for similar size vessels, from the third year onwards. As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels. As of December 31, 2020, the Company calculated the historical average rates over a 19-year period for 2020, excluding peak periods, which starts in 2002 and takes into account complete market cycles. These rates are used for the period a vessel is not under a charter contract; if there is a contract, the charter rate of the contract is used for the period of the contract. Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company's past experience in finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company's data for its own vessels. Specifically, the Company’s management uses the Company’s internal budget for operating expenses escalated by 1.5% per annum and the Company’s budgeted drydocking costs, assuming a five-year special survey cycle. The estimated salvage value of each vessel is $250 per light weight ton, in accordance with the Company’s vessel depreciation policy. The Company uses a probability weighted approach for developing estimates of future cash flows used to test its vessels for recoverability when alternative uses are under consideration (i.e. sale or continuing operation of a vessel).

If the Company’s estimate of future undiscounted net operating cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down to the vessel’s fair market value with a charge recorded under “Impairment loss” in the consolidated statements of operations.

F- 25

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Derivative financial instruments

Derivative instruments are recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to “Derivatives and Hedging” or in earnings if hedging criteria are not met.

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Business Combinations (Topic 805): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. To be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

F- 26

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of December 31, 2020 and 2021, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment reporting

The Company reports financial information and evaluates its operations by total charter revenues and not by the type of vessel, length of vessel employment, customer or type of charter. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment, that of operating container carriers. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

F- 27

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Recent accounting pronouncements

In January 2021, the FASB issued Accounting Standard Update (“ASU”) 2021-01 (Topic 848), which amends and clarifies the existing ASU issued in March 2020, the ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Reference rates such as LIBOR, are widely used in a broad range of financial instruments and other agreements. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). The ASU 2020-04 is effective for adoption at any time between March 12, 2020 and December 31, 2022, for all entities and the ASU 2021-01 is effective for all entities as of January 7, 2021 through December 31, 2022. The Company is still evaluating the timing of the adoption and the optional expedients and exceptions it may adopt, as well as the effect of the adoption on its consolidated financial statements.

3. Inventories

Inventories consisted of the following:

	2020		2021
Lubricants		1,558,484		1,851,508
Victualing		103,938		105,527
Bunkers		-		317,419
Total		1,662,422		2,274,454

4. Advances for vessels under construction

On  June 29, 2021, the Company has signed a contract for the construction of two Eco design fuel efficient containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in Korea. The two newbuildings are scheduled to be delivered during the first and second quarter of 2023, respectively. The total consideration for these two newbuilding contracts is about $76.1 million which will be financed with a combination of debt and own cash. Within the year ended  December 31, 2021 the Company paid the first instalment of $3.8 million per vessel related to the construction of the vessels. The total balance of $7.6 million as of  December 31, 2021 is included under “Advances for vessels under construction” in the consolidated balance sheet. See Note 11 for schedule of outstanding payments to the yard.

F- 28

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

5. Vessels, net

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

	Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2020		132,863,067			(16,632,734	)		116,230,333
- Depreciation for the year		-			(6,605,976	)		(6,605,976	)
- Sale of vessels		(17,655,916	)		5,365,717			(12,290,199	)
- Contingent consideration for the Synergy Vessels acquisition		548,612			-			548,612
- Capitalized expenses		575,677			-			575,677
Balance, December 31, 2020		116,331,440			(17,872,993	)		98,458,447
- Depreciation for the year		-			(7,203,198	)		(7,203,198	)
- Delivery of M/V “Jonathan P”		25,771,926			-			25,771,926
- Delivery of M/V “Marcos V”		58,215,173			-			58,215,173
- Capitalized expenses		869,138			-			869,138
Balance, December 31, 2021		201,187,677			(25,076,191	)		176,111,486

Capitalized expenses for the year ended December 31, 2020 mainly refer to smart bunkers monitoring systems (“Flow meters”) installed on all of the Company’s vessels. During the year ended December 31, 2021, two vessels completed the installation of the Water Ballast Treatment (“WBT”) systems with a total cost of $0.47 million. The Company also spent another $0.40 million installing smart monitoring systems onboard the Company’s vessels. All these installations qualified as vessel improvements and were therefore capitalized.

Vessels acquired / delivered

On September 2, 2021, Jonathan Shipowners Ltd., signed a memorandum of agreement to purchase M/V “Piraeus Trader II” a 23,357 DWT / 1,740 TEU, 2006-built feeder container carrier, for a purchase price of $25,500,000 plus costs to make the vessel available for use of $271,926, resulting in a total cost of 25,771,926. The vessel was delivered to the Company on October 18, 2021 and was renamed to “Jonathan P”.

F- 29

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

5. Vessels, net - continued

On November 11, 2021, Marcos Shipping Ltd., signed a memorandum of agreement to purchase M/V “Leo Paramount” a 72,968 DWT / 6,350 TEU, 2005-built intermediate container carrier and its attached time charter, for a purchase price of $40,000,000, from which $57,691,698 was allocated to the vessel plus costs to make the vessel available for use of $523,475, resulting in a total amount of $58,215,173 presented within “Vessels, net” in the consolidated balance sheet. In addition, an amount of $17,691,698 was allocated to the in-place attached time charter on the date of the transfer and was recorded as liability within “Fair value of below market time charters acquired” in the consolidated balance sheet (see Note 7). The vessel was delivered to the Company on December 14, 2021 and was renamed to “Marcos V”.

Contingent consideration for Synergy Vessels Acquisition

On November 7, 2019, Euroseas Ltd. and Synergy Holdings Limited, as part of the agreement for the acquisition of the vessels M/V “Synergy Busan”, M/V “Synergy Keelung”, M/V “Synergy Oakland” and M/V “Synergy Antwerp” (“the Synergy Vessels Acquisition”) agreed that Euroseas will issue certain shares of its common stock to Synergy Holdings Limited under the following terms: If the 12-month New ConTex index for a 4,250 TEU vessel (as published on https://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers’ Association) (the “Index Value”) is higher on November 16, 2020 at 4:00 p.m. New York time than the Index Value on November 15, 2019 at 4:00 p.m. New York time, then, on November 16, 2020, Euroseas shall issue to Synergy Holdings Limited, $500,000 divided by the 20-day volume weighted average price of the Company’s common shares calculated on November 16, 2020 at 4:00 p.m. New York time, allocated equally to the four vessels. The specific contingency was resolved on November 16, 2020 with the Index Value as of that date being higher than the Index Value on November 15, 2019. Based on the above agreement the Company issued on November 16, 2020 161,357 shares to Synergy Holdings Limited based on the 20-day volume weighted average price of the Company’s common Shares calculated on November 16, 2020 which was $3.09871. The supplementary contingent payment was recorded as part of the acquisition cost of the abovementioned vessels, using the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of $3.40 per share.

Sale of vessels

The Company considers the potential sale of its vessels, for scrap or further trading, depending on a vessel’s age, any additional capital expenditures required, the expected revenues from continuing to own the vessel and the overall market prospects.

F- 30

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

5. Vessels, net - continued

In January 2020, M/V “EM Oinousses”, experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The Company agreed with the Hull & Machinery (“H&M”) underwriters to sell the vessel for scrap as is without effecting permanent repairs (see Note 19). As of June 30, 2020 M/V “EM Oinousses” was classified as vessel held for sale and was written down to its fair market value less costs to sell amounting to $3.7 million, resulting in a non-cash loss of $0.1 million compared to its net book value of $3.8 million. This amount is presented in the "Loss on write-down of vessel held for sale" line in the "Operating Expenses" section of the consolidated statement of operations for the year ended December 31, 2020. On July 6, 2020 the Company agreed to sell for scrap M/V “EM Oinousses”, for a net price of $3.6 million. The vessel was delivered to its buyers on July 17, 2020. The Company recorded a loss on sale of approximately $0.1 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

Following a strategy of disposing of older vessels the Company entered into the following vessel sale agreements:

In February 2020, the Company entered into an agreement to sell for scrap M/V “Manolis P”. The vessel reached her destination port on April 7, 2020, but the sale was not completed due to complications during its delivery to the buyers related to COVID-19 restrictions and port lockdowns in the territory of arrival (Alang, India). A dispute with the buyers was in arbitration. The advance received from the buyers amounting to $1,133,817 was transferred from the Company’s bank account to an escrow account following this dispute. The court dismissed the opponents claim in June 2021. The Company recognized other operating income of $1.0 million in the year ended  September 30, 2021, after accounting for estimated expenses for the arbitration (see Note 19). On June 19, 2020 the Company agreed to sell for scrap M/V “Manolis P.”, for a net price of $2.0 million. The vessel was delivered to its buyers on July 2, 2020. The Company recorded a gain on sale of approximately $0.3 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

On July 13, 2020 the Company agreed to sell for scrap M/V “Kuo Hsiung”, for a net price of $1.9 million. The vessel was delivered to its buyers on July 30, 2020. The Company recorded a gain on sale of approximately $0.3 million, presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

F- 31

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

5. Vessels, net - continued

On September 17, 2020 the Company agreed to sell for scrap M/V “Ninos”, for a net price of $2.3 million. The vessel was delivered to its buyers on September 30, 2020. The Company recorded a gain on sale of approximately $0.8 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

On October 29, 2020 the Company agreed to sell for further trading M/V “EM Athens”, for a net price of $4.9 million, in line with the Company’s strategy to dispose older vessels, combined with the increased drydocking expenses required. The vessel was delivered to its buyers on November 9, 2020. The Company recorded a gain on sale of approximately $1.2 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

No vessel sales took place during the year ended December 31, 2021. The amount of $9,417 presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2021, refers to minor expenses associated with the vessel sales concluded during 2020.

Impairment analysis

In light of the economic downturn and the prevailing conditions in the shipping industry caused primarily by Covid-19 disruptions, as of December 31, 2020, the Company performed the undiscounted cash flow test for those operating vessels whose carrying values were above their respective market values and determined that the net book value of its vessels held for use was recoverable. As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels.

As of December 31, 2021, fourteen of the Company’s vessels are used as collateral under the Company’s loan agreements (refer Note 9), while two of the Company’s vessels, M/V “Akinada Bridge” and M/V “Joanna” are unencumbered.

F- 32

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

6. Accrued Expenses

The accrued expenses consisted of:

	December 31, 2020		December 31, 2021
Accrued payroll expenses		339,004		604,761
Accrued interest expense		173,576		282,724
Accrued general and administrative expenses		187,311		119,750
Accrued commissions		76,130		239,313
Other accrued expenses		524,399		456,377
Total		1,300,420		1,702,925

7. Fair Value of Below Market Time Charters Acquired

As part of the Trinity / Diamantis Vessel Acquisition (see Note 8) in August 2019 and with respect to the vessels “EM Hydra”, “EM Kea” and “EM Spetses”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $778,287, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

As part of the Synergy Vessels Acquisition in November 2019 and with respect to the vessels “Synergy Keelung”, “Synergy Oakland” and “Synergy Busan”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $1,794,028, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

In addition, as part of the acquisition of M/V “Marcos V”, in December 2021, which was acquired by the Company with time charter agreement attached, the Company recognized a liability of $17,691,698, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

For the years ended December 31, 2019, 2020 and 2021, the amortization of fair value of the below market acquired time charters analyzed above was $857,945, $1,714,370 and $230,112, respectively, and is included under “Time charter revenue” in the consolidated statements of operations.

The unamortized balance of this intangible liability as of December 31, 2021 of $17,461,586 will be amortized by the end of September 2025 as per the table below.

F- 33

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

7. Fair Value of Below Market Time Charters Acquired - Continued

As of December 31, 2021, the remaining carrying amount of unamortized below market acquired time charter will be amortized in future years as follows:

For the year ending December 31,	Below market acquired charters
2022	$	(4,940,640	)
2023		(4,940,640	)
2024		(4,954,176	)
2025		(2,626,130	)
Total	$	(17,461,586	)

8. Related Party Transactions

The Company’s vessel owning companies are parties to management agreements with the Manager (see Note 1) which is controlled by members of the Pittas family, whereby the Manager provides technical and commercial vessel management for a fixed daily fee of Euro 685 per vessel for each of 2019, 2020 and 2021, under the Company’s Master Management Agreement. An additional fixed management fee (see below) is paid to the Manager for the provision of management executive services.

The Company’s Master Management Agreement (“MMA”) with Eurobulk provides for an annual adjustment of the daily vessel management fee due to inflation to take effect January 1 of each year. The vessel management fee for laid-up vessels is half of the daily fee for the period they are laid-up. The MMA, as periodically amended and restated, will automatically be extended after the initial five-year period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the MMA, each ship owning company has signed – and each future ship owning company when a vessel is acquired will sign - with the Manager, a management agreement with the rate and term of these agreements set in the MMA effective at such time.

The MMA was amended and restated as of January 1, 2012 to reflect a 5% discount of the daily vessel management fee for the period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by the Manager is greater than 20 (“volume discount”). The daily vessel management fee was set at Euro 685 per day per vessel in operation and 342.5 Euros per day per vessel in lay-up after the 5% discount.

The MMA was further renewed on January 1, 2018 for an additional five-year term until January 1, 2023 with the 5% volume discount permanently incorporated in the daily management fee. The daily management fee remained unchanged at Euro 685 for the years ended December 31, 2019, 2020 and 2021 and will be adjusted annually for inflation in the Eurozone. From January 1, 2022, the vessel fixed management fee was adjusted for inflation at Euro 720 per day per vessel in operation and Euro 360 per day per vessel in lay-up.

F- 34

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

8. Related Party Transactions - continued

Vessel management fees paid to the Manager amounted to $3,671,335, $5,293,199 and $4,294,789 in 2019, 2020 and 2021, respectively, and are recorded under “Related party management fees” in the consolidated statements of operations.

In addition to the vessel management services, the Manager provides executive services to the Company. On November 15, 2019, the Company signed an addendum adjusting the fixed annual executive compensation to $2,000,000 to compensate the Manager for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company following the Synergy Vessels Acquisition, as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated on $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and on $2,000,000 for the period of November 16, 2019 until December 31, 2019. The Company incurred costs of $1,344,250, $2,000,000 and $2,460,000 in 2019, 2020 and 2021, respectively, which are recorded in “General and administrative expenses” in the consolidated statements of operations. The amount of fixed costs reported for the year ended December 31, 2021, includes an amount of $0.46 million paid as a special bonus to the Manager’s employees and consultants.

Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company during the normal course of operations for which a right of off-set exists. As of December 31, 2020 and 2021, the amounts due to related company were $24,072 and $309,970, respectively. Based on the MMA between Euroseas Ltd. and Euroseas’ ship owning subsidiaries and the Manager an estimate of the quarter’s operating expenses, expected dry-dock expenses, vessel management fee and fee for management executive services are to be advanced by the Company’s ship-owning subsidiaries in the beginning of each quarter to the Manager.

In August 2019, the Company completed the acquisition of the four feeder containerships, owned by affiliates of the Pittas family including the Company’s Chief Executive Officer for a consideration of $28.2 million that included a cash payment of $15 million and the issuance of 2,816,901 common shares to the sellers ("the Trinity / Diamantis Vessel Acquisition”). The four vessels are M/V EM Hydra and M/V EM Spetses, both 1,740 teu feeder containerships built in 2005 and 2007, respectively, M/V EM Kea, a 3,100 teu feeder containership built in 2007, and M/V Diamantis P, a 2,008 teu feeder containership built in 1998. On August 2, 2019, the Company took delivery of M/V Diamantis P and M/V EM Hydra, and, on August 7, 2019, the Company took delivery of M/V EM Spetses and M/V EM Kea. The Company financed the cash portion of the acquisition price via the arrangement of two bank loans described below (refer Note 9-b and 9-c), drawing a total of $16,167,680 with the excess amount used for general corporate purposes. The cash portion of the acquisition price was used to repay the existing indebtedness of the vessels, with the sellers receiving only payment in Euroseas common shares.  The common shares issued to the sellers represented at that time approximately 64.3% of Euroseas’ outstanding common shares.  The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

F- 35

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

8. Related Party Transactions - continued

On September 30, 2019, the Company reached an agreement with a related party, Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, to draw a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. The interest rate applied was 8% per annum. Interest on the loan was payable quarterly. Within the second quarter of 2020 the Company repaid $625,000 of the above loan. In November 2020, the outstanding amount of the loan was converted into Company’s common shares. For further details refer to Note 9-h.

On November 1, 2019, the Company entered into a second agreement with Colby Trading Ltd., to draw another $2.5 million loan to finance working capital needs. The interest rate applied was 8% per annum. Interest on the loan was payable quarterly. The loan was repaid in March 2021. For further details refer to Note 9-h.

The Company uses brokers for various services, as is industry practice. Eurochart S.A. (“Eurochart”), an affiliated company controlled by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of 1% of the vessel sales price and 1.25% of charter revenues. Commissions to Eurochart for vessel sales were nil, $153,750 and nil in 2019, 2020 and 2021, respectively, recorded in “Net gain / (loss) on sale of vessels” in the consolidated statements of operations. A commission of 1% of the purchase price is also paid to Eurochart by the seller of the vessel for the acquisitions the Company makes using Eurochart’s services. For the acquisition of M/V “Marcos V” the Company also paid Eurochart a commission of $0.4 million, equaling to 1% of the purchase price of the vessel. In October 2021, the Company withheld the amount of $255,000 from the sellers of the M/V “Jonathan P”, on behalf of Eurochart, as a 1% commission in connection with the acquisition of the vessel. Commissions to Eurochart for chartering services were, $493,341, $504,892 and $1,075,274 in 2019, 2020 and 2021, respectively, recorded in “Commissions” in the consolidated statements of operations.

Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker Sentinel Maritime Services Inc. (“Sentinel”). Technomar Crew Management Services Corp (“Technomar”) is a company owned by certain members of the Pittas family, together with two other unrelated ship management companies, which provides crewing services. Sentinel is paid a commission on insurance premiums not exceeding 5%; Technomar is paid a fee of about $50 per crew member per month. Total fees charged by Sentinel and Technomar were $106,749 and $142,332 in 2019, $100,837 and $203,678 in 2020, and $77,896 and $155,739 in 2021, respectively. These amounts are recorded in “Vessel operating expenses” in the consolidated statements of operations.

F- 36

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans

These consist of bank loans of the ship-owning companies and are as follows:

Borrower		December 31, 2020			December 31, 2021
Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		24,625,000			-
Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		-			9,375,000
Diamantis Shipowners Ltd.	(b)		3,026,300			2,384,460
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(c)		11,150,000			8,450,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(d)		28,500,000			40,300,000
Jonathan John Shipping Ltd. / Corfu Navigation Ltd.	(e)		-			9,500,000
Jonathan Shipowners Ltd.	(f)		-			15,000,000
Marcos Shipping Ltd.	(g)		-			34,000,000
			67,301,300			119,009,460
Less: Current portion			(20,891,840	)		29,284,460
Long-term portion			46,409,460			89,725,000
Deferred charges, current portion			246,520			250,411
Deferred charges, long-term portion			189,432			720,049
Long-term bank loans, current portion net of deferred charges			20,645,320			29,034,049
Long-term bank loans, long-term portion net of deferred charges			46,220,028			89,004,951
Loan from related party, current
Euroseas Ltd.	(h)		2,500,000			-

F- 37

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans - continued

The future annual loan repayments are as follows:

To December 31:
2022	29,284,460
2023	51,765,000
2024	18,440,000
2025	19,520,000
Total	119,009,460

F- 38

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans - continued

(a) On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A. (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 to fully refinance all of the Company’s existing facilities with this bank and provide working capital. As of December 31, 2020, and following the sale of five vessels used as collateral during 2020 (see below) the borrowers of the specific tranche were Joanna Maritime Ltd., Jonathan John Shipping Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. The revolving tranche was available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and could be renewed subject to the bank’s approval and a fee to be determined. The loan was payable in 12 equal consecutive quarterly principal installments of $900,000 followed by a balloon amount of $19,200,000 to be paid together with the last principal installment in November 2021. The interest rate margin was 3.90% over LIBOR, reduced from 4.40% as described below.   Each quarterly principal instalment paid was added to the revolving tranche and could be redrawn. The remaining $7,350,000 of the revolving facility, after including principal repayments up to December 31, 2019, remained available to the Company in order to finance up to 55% of the market value of post 2001-built ships. The undrawn amount available under the revolving facility incurred an annual commitment of 0.40% and any amount drawn would incur a 1% underwriting fee. On June 26, 2020, the Lender signed with the borrower a second supplement letter according to which the undrawn committed amount under the abovementioned credit facility agreement was cancelled upon the borrower’s request. Additionally, the Lender agreed to defer the amount of $2,700,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in November 2021.   Within the third and the fourth quarter of 2020 the Company sold five vessels used as collateral under the abovementioned credit facility agreement (M/V “Manolis P.”, M/V “EM Oinousses”, M/V “Kuo Hsiung”, M/V “Ninos” and M/V “EM Athens”). An aggregate amount of $11,750,000 was prepaid and all aforementioned vessels were released from their mortgages. Following the above prepayment, the quarterly principal installments were reduced to $400,000 and the balloon payment was reduced to $12,150,000 with the repayment of the loan resuming in February 2021.   On September 9, 2021 and November 19, 2021, Bridge Shipping Ltd. and Joanna Maritime Ltd., respectively, repaid their full amount of outstanding indebtedness amounting to $7.03 million by using the Company’s own funds and became unencumbered. At the same date Jonathan John Shipping Ltd. and Corfu Navigation Ltd. repaid also their indebtedness to the Lender using a new loan facility by Sinopac Capital International (HK) Limited as explained in note (f) below.

F- 39

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

On May 30, 2019, the Lender made available to the Company two new ship-related (M/V “EM Astoria” and M/V “Evridiki G”) advances totaling $12.0 million or 55% of the aggregate market value of the two aforementioned vessels, with a simultaneous reduction of the margin of the loan, from 4.40% to 3.90% per annum. The Lender also agreed, during the remaining facility period, to reduce the amount held as cash collateral from $5.0 million to $1.0 million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shipping Ltd. and to provide working capital. The loan is payable in 16 equal consecutive quarterly principal installments of $375,000 followed by a balloon amount of $6,000,000 to be paid together with the last principal installment in May 2023. On June 26, 2020, the Lender agreed to defer the amount of $1,125,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in May 2023, increasing the balloon amount to $7,125,000. The loan is secured with (i) first priority mortgages over M/V “Evridiki G” and M/V “EM Astoria”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this tranche. The security cover ratio covenant for the facility is set to 140%.

(b)

On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. (“Piraeus”) for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value of M/V “Diamantis P”. On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V “Diamantis P”. The loan is payable in twelve equal consecutive quarterly installments of $160,460 plus a balloon amount of $1,742,160 to be paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Diamantis P”, (ii) first assignment of earnings and insurance of M/V “Diamantis P”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter. On July 29, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $160,460, representing half of the installments of the third and the fourth quarter of 2020 to be repaid together with the balloon payment in July 2022, increasing the balloon amount to $1,902,620.

F- 40

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

(c) On July 30, 2019, the Company signed a term loan facility with HSBC Bank Plc. (“HSBC”) for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019. The loan is payable in fourteen consecutive equal quarterly installments of $450,000 plus a balloon payment of $6,200,000 to be paid together with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%. On September 30, 2020, the Company signed a supplemental agreement with HSBC under which it was agreed to defer the amount of $900,000, representing the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in February 2023, increasing the balloon amount to $7,100,000.

F- 41

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

(d) On November 8, 2019, the Company signed a term loan facility with Piraeus for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 to paid together with the last instalment in November 2023. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%. On July 7, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $1,500,000 from the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in November 2023, increasing the balloon amount to $18,900,000. On November 23, 2021, the Company paid the amount of $1,500,000 that was deferred according to the latest supplemental agreement reducing again the balloon of the loan to $17,400,000.   On November 26, 2021, the Company signed a new facility agreement with Piraeus in respect to the existing revolving facility and on November 29, 2021 drew the amount of $16,500,000 in order to finance general corporate needs of the Company. The loan is payable in sixteen consecutive quarterly instalments, the first four in the amount of $1,500,000 each, the next eleven in the amount of $560,000 each and a last instalment of $4,340,000. The loan bears interest at LIBOR plus a margin of 2.60%. The Company paid loan arrangement fees of $115,000 within 2021 for this loan. The security cover ratio covenant for the facility was set to 125%, the same with the existing facility.

F- 42

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

(e) On September 6, 2021, the Company signed a term loan facility with Sinopac Capital International (HK) Limited (“Sinopac”) for an amount of up to $10,000,000, in order to refinance the existing indebtedness of M/V “Aegean Express” and M/V “EM Corfu.”, amounting to $5,525,000 as of the date of refinancing, and for working capital purposes. The facility was available in two advances. Both advances of $3,500,000 and $6,500,000 were drawn on September 9, 2021 by Jonathan John Shipping Ltd. and Corfu Navigation Ltd. as the borrowers. The loan is payable in sixteen consecutive quarterly installments of $500,000 each, followed by a balloon payment of $2,000,000 to be paid together with the last installment in September 2025. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with the following: (i) first priority mortgages over M/V “Aegean Express” and M/V “EM Corfu”, (ii) first assignment of earnings and insurance of the abovementioned vessels and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $225,000 for this loan.

(f) On October 22, 2021, the Company signed a term loan facility with HSBC, and on October 26, 2021, a loan of $15,000,000 was drawn by Jonathan Shipowners Ltd. in order to post-delivery finance part of the acquisition cost of M/V “Jonathan P” and to finance general corporate purposes of the Company. The loan is payable in twelve consecutive quarterly installments of $1,100,000 followed by a balloon payment of $1,800,000 payable together with the last installment in October 2024. The loan bears interest at LIBOR plus a margin of 2.35%. The loan is secured with the following: (i) first priority mortgage over M/V “Jonathan P”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 130%. The Company paid loan arrangement fees of $117,500 for this loan.

(g) On December 14, 2021, the Company signed a term loan facility with Eurobank Ergasias S.A., and a loan of $34,000,000 was drawn by Marcos Shipping Ltd. in order to finance part of the acquisition cost of M/V “Marcos V”. The loan is payable in sixteen consecutive quarterly installments, comprising twelve installments of $2,000,000 followed by four installments of $750,000 each and by a balloon payment of $7,000,000 payable together with the last installment in December 2025. The loan bears interest at LIBOR plus a margin of 2.80%. The loan is secured with the following: (i) first priority mortgage over M/V “Marcos V”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $300,000 for this loan.

F- 43

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

(h) On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd. (“Colby”), a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as supplemented on December 20, 2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan was 8% per annum and was payable quarterly. The loan was payable in four repayment installments of a principal amount of $625,000 each, maturing by November 2020. The first repayment instalment was paid on May 15, 2020 and the remaining three installments, which were payable on a quarterly basis, were rescheduled to be paid at the maturity of the loan in November 2020. Under certain limited circumstances, the Company could pay principal in equity, and the loan was convertible in common stock of the Company at the option of the lender at certain times. The Company paid $51,111 and $160,035 on interest for the years ended December 31, 2019 and 2020, respectively. On November 24, 2020, Colby exercised its right to convert the outstanding balance of the loan of $1,875,000 into the Company’s common shares as per the terms of the loan agreement. As a result, on November 25, 2020, the Company issued 702,247 shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan, amounting to approximately $2.67 per share. The Company incurred a loss on the extinguishment of the above debt of $491,571, deriving from the difference between the conversion price and the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of approximately $3.37 per share. The specific amount was recorded under “Loss on debt extinguishment” in the consolidated statement of operations for the year ended December 31, 2020.   On November 1, 2019, Euroseas signed a second agreement with Colby, as supplemented on November 15, 2020, to draw another $2.5 million loan to finance working capital needs. Interest on the loan was 8% per annum and was payable quarterly. This loan was fully repaid upon its maturity on March 31, 2021. The Company paid $33,333, $201,248 and $50,000 on interest for this loan for the years ended December 31, 2019, 2020 and 2021, respectively.

F- 44

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

9. Long-Term Bank Loans – continued

In addition to the terms specific to each bank loan described above, all the above bank loans are secured with a pledge of all the issued shares of each borrower.

The bank loan agreements also contain covenants such as minimum requirements regarding the security cover ratio covenant (the ratio of fair value of vessel to outstanding loan less cash in retention accounts), restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (i.e. not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of the Company’s subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash). The loan agreements also require the Company to make deposits in retention accounts with certain banks that can only be used to pay the current loan installments. Minimum cash balance requirements are in addition to cash held in retention accounts. These cash deposits amounted to $2,245,010 and $4,967,285 as of December 31, 2020 and 2021, respectively, and are included in “Restricted cash” under “Current assets” and “Long-term assets” in the consolidated balance sheets. As of December 31, 2021, all the debt covenants are satisfied.

Interest expense for the years ended December 31, 2019, 2020 and 2021 amounted to $3,219,471, $3,836,985 and $2,556,237 respectively.

F-45

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

10. Income Taxes

Under the laws of the countries of the companies’ incorporation and/or vessels’ registration, the companies are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in “Vessel operating expenses” in the consolidated statements of operations.

Under the United States Internal Revenue Code of 1986, as amended (the "Code"), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

For the taxable years 2019, 2020 and 2021 the Company believes that it was exempt from U.S. federal income tax of 4% on U.S. source shipping income, as it believes that it was subject to the 5% Override Rule, but nonetheless satisfied the Publicly Traded Test for the respective years, because the non-qualified 5% shareholders did not own more than 50% of the Company’s common stock for more than half of the days during the taxable years.

F-46

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

11. Commitments and Contingencies

There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company’s business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.

As of December 31, 2021, future gross minimum revenues under non-cancellable time charter agreements total $281.9 million. The amount of $122.4 million is due in the year ending December 31, 2022, $91.0 million due in the year ending December 31, 2023 and another $68.5 million due in the year ending December 31, 2024. In arriving at the future gross minimum revenues, the Company has deducted an estimated one off-hire day per quarter. Such off-hire estimate may not be reflective of the actual off-hire in the future. In addition, the actual revenues could be affected by early delivery of the vessel by the charterers or any exercise of the charterers’ options to extend the terms of the charters, which however cannot be estimated and hence not reflected above.

As of  December 31, 2021, the Company had under construction two container carriers with a total contracted amount of $76.1 million. In the third quarter of 2021, the Company paid an amount of $7.6 million for the first instalment of the contract. An amount of $19.0 million is payable in the year ending  December 31, 2022 and $49.5 million is payable in the year ending  December 31, 2023. The Company intends to finance these commitments with bank financing and own cash.

F-47

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

12. Stock Incentive Plan

On July 31, 2014, the Board of Directors approved the Company’s 2014 Stock Incentive Plan (the “2014 Plan”). On May 5, 2018, the Board of Directors approved a new equity incentive plan (the “2018 Plan”) to replace the 2014 Plan. The 2018 Plan is administered by the Board of Directors which can make awards totaling in aggregate up to 75,000 shares, over 10 years after the 2018 Plan’s adoption date. The persons eligible to receive awards under the 2018 Plan are officers, directors, and executive, managerial, administrative and professional employees of the Company or Eurobulk or Eurochart (collectively, “key persons”) as the Board, in its sole discretion, shall select based upon such factors as the Board shall deem relevant.  Awards may be made under the 2018 Plan in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares. Details of awards granted under the 2014 Plan and the 2018 Plan during the three year period ended December 31, 2021 are noted below.

a)	On November 2, 2017 an award of 12,534 non-vested restricted shares, was made to 18 key persons of which 50% vested on July 1, 2018 and 50% vested on July 1, 2019; awards to officers and directors amounted to 7,213 shares and the remaining 5,321 shares were awarded to employees of Eurobulk.
b)	On November 21, 2018 an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% vested on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk.
c)	On November 4, 2019 an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% vested on July 1, 2020 and 50% vested on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk.
d)	On November 5, 2020 an award of 45,900 non-vested restricted shares, was made to 16 key persons of which 50% vested on November 16, 2021 and the remaining 50% will vest on November 16, 2022; awards to officers and directors amounted to 27,100 shares and the remaining 18,800 shares were awarded to employees of Eurobulk.
e)	On November 19, 2021 an award of 49,650 non-vested restricted shares, was made to 21 key persons of which 50% will vest on July 1, 2022 and 50% will vest on July 1, 2023; awards to officers and directors amounted to 27,700 shares and the remaining 21,950 shares were awarded to employees of Eurobulk.

F- 48

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

12. Stock Incentive Plan - continued

All non-vested restricted shares are conditional upon the grantee’s continued service as an employee of the Company or Eurobulk or as a director of the Company until the applicable vesting date. The grantee does not have the right to vote on such non-vested restricted shares until they vest or exercise any right as a shareholder of these shares, however, the non-vested shares will accrue dividends as declared and paid which will be retained by the Company until the shares vest at which time they are payable to the grantee. As non-vested restricted share grantees accrue dividends on awards that are expected to vest, such dividends are charged to retained earnings.

The Company accounts for restricted share awards forfeitures as they occur. During the year ended December 31, 2020, 817 shares were forfeited with a weighted-average grant-date fair value of $8.39 per share. No forfeitures occurred in the years ended December 31, 2019 and 2021.

F- 49

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

12. Stock Incentive Plan - continued

The compensation cost that has been charged against income for awards was $97,919, $121,631 and $182,324, for the years ended December 31, 2019, 2020 and 2021, respectively and is included within “General and administrative expenses” in the consolidated statements of operations. The Company has used the straight-line method to recognize the cost of the awards.         

A summary of the status of the Company’s non-vested shares as of December 31, 2019, 2020 and 2021, and the movement during these years, is presented below:

Non-vested Shares	Number of shares			Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019		21,948			10.16
Granted		15,444			8.13
Vested		(14,108	)		11.01
Non-vested on December 31, 2019		23,284			8.28
Non-vested on January 1, 2020		23,284			8.28
Granted		45,900			2.71
Vested		(15,064	)		8.34
Forfeited		(817	)		8.39
Non-vested on December 31, 2020		53,303			3.46
Non-vested on January 1, 2021		53,303			3.46
Granted		49,650			26.26
Vested		(30,360	)		3.47
Non-vested on December 31, 2021		72,593			19.05

As of December 31, 2021, there was $1,265,365 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2018 Plan and is expected to be recognized over a weighted-average period of 0.86 years. The total fair value at grant-date of shares granted during the years ended December 31, 2019, 2020 and 2021 was $125,560, $124,389 and $1,303,809 respectively.

F- 50

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

13. Earnings / (Loss) Per Share

Basic and diluted loss per common share is computed as follows:

	2019			2020			2021
Income:
Net (loss) / income		(1,682,671	)		4,041,431			42,963,660
Dividends to Series B preferred shares		(1,271,782	)		(693,297	)		(255,324	)
Preferred deemed dividend		(504,577	)		-			(345,628	)
Net (loss) / income attributable to common shareholders		(3,459,030	)		3,348,134			42,362,708
Weighted average common shares –outstanding, basic		2,861,928			5,753,917			6,976,905
Basic (loss) / earnings per share		(1.21	)		0.58			6.07
Effect of dilutive securities:
Dilutive effect of non-vested shares		-			-			16,500
Weighted average common shares –outstanding, diluted		2,861,928			5,753,917			6,993,405
Diluted (loss) / earnings per share		(1.21	)		0.58			6.06

For the years ended December 31, 2019 and 2020, the effect of 23,284 and 53,303 non-vested stock awards, respectively, and of 8,000 and 8,365 Series B Convertible Perpetual Preferred Shares ("Series B Preferred Shares"), respectively, was anti-dilutive. The number of dilutive securities was nil shares in 2019 and 2020. Hence for the years ended December 31, 2019 and 2020, “Basic (loss)/ earnings per share” equals “Diluted (loss) / earnings per share”. For the year ended December 31, 2021, the denominator of the diluted earnings per share calculation includes 16,500 common shares, being the number of incremental shares assumed issued under the treasury stock method.

F- 51

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

14. Voyage Expenses and Vessel Operating Expenses

These consisted of:

	Year ended December 31,
	2019		2020		2021
Voyage expenses
Port charges and canal dues		251,197		451,586		253,855
Bunkers		804,211		882,673		370,879
Total		1,055,408		1,334,259		624,734
Vessel operating expenses
Crew wages and related costs		13,111,682		17,866,847		15,961,904
Insurance		1,844,088		2,947,937		2,917,042
Repairs and maintenance		1,110,995		1,316,864		1,247,176
Lubricants		2,029,230		2,609,647		2,471,994
Spares and consumable stores		4,758,290		6,245,518		5,784,004
Professional and legal fees		259,311		255,948		212,108
Other		869,686		976,928		1,145,209
Total		23,983,282		32,219,689		29,739,437

15. Derivative Financial Instruments

Interest rate swaps

On October 17, 2014, the Company entered into one interest rate swap contract with Eurobank – Ergasias S.A. (“Eurobank”) for a notional amount of $10.0 million, with inception date on October 14, 2014 and maturity date on May 28, 2019, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank made a quarterly payment to the Company equal to the 3-month LIBOR while the Company paid an adjustable rate averaging 1.97% (more specifically, the Company paid the fixed rate of 0.50% until November 28, 2016, then 0.95% until November 28, 2017 and then 3.55% until May 28, 2019) based on the relevant notional amount.

F- 52

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

15. Derivative Financial Instruments - continued

On April 16, 2020, the Company entered into one interest rate swap contract with Eurobank for a notional amount of $30.0 million, with inception date on April 24, 2020 and maturity date on April 24, 2025. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 0.78% based on the relevant notional amount.

On October 12, 2021, the Company entered into one interest rate swap contract with Eurobank for a notional amount of $10.0 million, with inception date on November 1, 2021 and maturity date on November 1, 2025. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 1.09% based on the relevant notional amount.

The interest rate swap contracts did not qualify for hedge accounting as of December 31, 2020 and 2021.

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2020		December 31, 2021
Interest rate swap contracts	Current assets – Derivatives		-		540,753
Total derivative assets			-		540,753
Interest rate swap contract	Current liabilities – Derivative		203,553		-
Interest rate swap contracts	Long-term liabilities – Derivatives		362,195		952,666
Total derivative liabilities			565,748		952,666

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2019			Year Ended December 31, 2020			Year Ended December 31, 2021
Interest rate swap contract– Unrealized (loss) / gain	Loss on derivatives, net		-			(565,748	)		153,835
Interest rate swap contract- Realized loss	Loss on derivatives, net		(2,885	)		(22,240	)		(180,976	)
Total net (loss) / gain on interest rate swap contract			(2,885	)		587,988			(27,141	)

F- 53

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

16. Preferred shares

	Number of Shares			Preferred Shares Amount			Dividends paid-in-kind			Total
Balance, January 1, 2019		19,605			14,500,000			4,257,361			18,757,361
Dividends declared		81			-			78,639			78,639
Redemption of Preferred shares		(11,686	)		(8,155,055	)		(3,530,945	)		(11,686,000	)
Preferred deemed dividend		-			504,577			-			504,577
Balance, December 31, 2019		8,000			6,849,522			805,055			7,654,577
Dividends declared		365			-			365,059			365,059
Balance, December 31, 2020		8,365			6,849,522			1,170,114			8,019,636
Redemption of Preferred shares		(2,000	)		(2,000,000	)		-			(2,000,000	)
Preferred shares converted to common shares		(6,365	)		(5,195,150	)		(1,170,114	)		(6,365,264	)
Preferred deemed dividend		-			345,628			-			345,628
Balance, December 31, 2021		-			-			-			-

On January 27, 2014, the Company entered into an agreement to sell 25,000 Series B Preferred Shares to a fund managed by Tennenbaum Capital Partners, LLC ("TCP") and 5,700 Series B Preferred Shares to Preferred Friends Investment Company Inc, an affiliate of the Company, for total net proceeds of approximately $29 million. The redemption amount of the Company’s Series B Preferred Shares is $1,000 per share. The Company used the proceeds for the acquisition of vessels and general corporate purposes. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5%.

F- 54

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

16. Preferred shares - continued

The dividend rate increased to 12% for the two years following January 29, 2019 and would increase to 14% thereafter and is payable only in cash. Cash dividends were declared at each quarter and actual payments were made within the following quarter. If a cash dividend was paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares should receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares could be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones were met. Each Series B Preferred Share was convertible into common stock at a conversion price of $15.58 (as adjusted in September 2015 following the shareholders’ rights offering of the Company) subject to further adjustment for certain events. The Series B Preferred Shares were redeemable in cash by the Company at any time after the fifth anniversary of the original issue date. Holders of the Series B Preferred Shares could require the Company to redeem their shares only upon the occurrence of certain corporate events.

Following the close of trading on the Nasdaq Capital Market on May 30, 2018, the Company completed the spin-off (the “Spin-off”) of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd ("EuroDry"). Shareholders of the Company received one EuroDry common share for every five common shares of the Company they owned as of May 23, 2018. Shares of EuroDry commenced trading on May 31, 2018 on the Nasdaq Capital Market under the symbol "EDRY."

At the Spin-off date Euroseas distributed EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares, representing 50% of Euroseas Series B Preferred Stock, i.e. $14,500,000 of the initial preferred shares amount of the Company and $3,692,131 of dividends paid in kind. Euroseas contributed to EuroDry its interests in seven of its drybulk subsidiaries and related intercompany debts and obligations in exchange for approximately 2,254,830 of EuroDry common shares and 19,042 of EuroDry Series B Preferred Shares (representing all of the EuroDry's issued and outstanding stock as of that time). Euroseas made a special dividend of 100% of EuroDry's outstanding common shares to holders of Euroseas' common stock as of the record date of the special dividend. In addition, Euroseas distributed 100% of EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares as described above.

On June 10, 2019 the Company proceeded with the redemption of $11.7 million of value, or about 59.4%, of its outstanding Series B Preferred Shares at that time with simultaneous reduction by 4% of the dividend rate for the $8 million value of preferred shares remaining outstanding until January 29, 2021. After that date the dividend rate would increase to 14%. The difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs) amounted to $504,577, and was recorded as preferred deemed dividend.

F- 55

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

16. Preferred shares - continued

In January 2021, the Company agreed to redeem 2,000 of the outstanding balance of its Series B Preferred Shares and paid $2,000,000 to the Series B Preferred Shares shareholders. In connection with the redemption, the Company agreed with its Series B Preferred Shares shareholders to set the dividend rate of its Series B Preferred Shares to 8% per annum if paid in cash and 9% if paid in-kind at the Company’s option until   January 29, 2023, after which date the dividend rate would increase to 14%, and would be payable only in cash. In June 2021, the Company converted the remaining amount of 6,365 Series B Preferred Shares into common shares. The difference between (1) the fair value of the consideration transferred to the holders of the Euroseas Series B Preferred Shares (comprising the cash payment and the shares offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption and the conversion (net of issuance costs) amounted to $345,628, and was recorded as preferred deemed dividend.

For the year ended December 31, 2019 the Company declared four consecutive dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in the first quarter of 2020. For the year ended December 31, 2020, the Company declared four consecutive dividends totaling $0.69 million, of which $0.37 were paid in kind, $0.15 million were paid in cash and another $0.17 million were accrued as of December 31, 2020 and paid in February 2021. For the year ended December 31, 2021, the Company declared dividends totaling $0.26 million, all of which were paid in cash during 2021.

Subject to certain ownership thresholds, holders of Series B Preferred Shares had the right to appoint one director to the Company's board of directors and TCP also had consent rights over certain corporate actions. In addition, the holders of Series B Preferred Shares voted as one class with the Company's common stock on all matters on which shareholders are entitled to vote, with each Series B Preferred Share having a number of votes equal to 50% of the numbers of shares of common stock of the Company into which such Series B Preferred Share would be convertible on the applicable record date.

17. Financial Instruments

The principal financial assets of the Company consist of cash and cash equivalents, restricted cash, trade accounts receivable, other receivables and derivatives. The principal financial liabilities of the Company consist of long-term bank loans, derivatives, trade accounts payable, accrued expenses and amount due to related company.

F- 56

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

17. Financial Instruments - continued

Interest rate risk

The Company enters into interest rate swap contracts as economic hedges to manage some of its exposure to variability in its floating rate long-term bank loans. Under the terms of the interest rate swaps the Company and Eurobank agree to exchange, at specified intervals the difference between a paying fixed rate and receiving floating rate interest amount calculated by reference to the agreed principal amounts and maturities. Interest rate swaps allow the Company to convert long-term bank loans issued at floating rates into equivalent fixed rates. Even though the interest rate swaps were entered into for economic hedging purposes, as noted in Note 15 they do not qualify for hedge accounting, under the guidance relating to Derivatives and Hedging, as the Company does not have currently written contemporaneous documentation identifying the risk being hedged and, both on a prospective and retrospective basis, performing an effectiveness test to support that the hedging relationship is highly effective. Consequently, the Company recognizes the change in fair value of these derivatives in the “Loss on derivatives, net” in the consolidated statements of operations. As of December 31, 2021, the Company had two open swap contracts for a notional amount of $40.0 million.

Concentration of credit risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit quality financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable.

Fair value of financial instruments

The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;

F- 57

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

17. Financial Instruments - continued

Level 3: Unobservable inputs that are not corroborated by market data.

The fair value of the Company’s interest rate swap agreements is determined using a discounted cash flow approach based on market-based LIBOR swap rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items. The fair values of the interest rate swaps determined through Level 2 of the fair value hierarchy as defined in guidance relating to "Fair value measurements" are derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.

Recurring Fair Value Measurements

	Fair Value Measurement as of December 31, 2021
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Interest rate swap contracts, current portion	$	540,753		-	$	540,753		-
Liabilities
Interest rate swap contracts, long-term portion	$	952,666		-	$	952,666		-

	Fair Value Measurement as of December 31, 2020
	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities
Interest rate swap contract, current portion	$	203,553		-	$	203,553		-
Interest rate swap contract, long-term portion	$	362,195		-	$	362,195		-

F- 58

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

17. Financial Instruments - continued

Asset Measured at Fair Value on a Non-recurring Basis

As of June 30, 2020 the vessel "EM Oinousses" with a carrying amount of $3.77 million, was classified as vessel held for sale and written down to its fair value of $3.87 million, less estimated costs to sell of $0.22 million, resulting in a loss of $0.12 million, which was included in the consolidated statement of operations under “Loss on write-down of vessel held for sale” for the year ended December 31, 2020. The fair value of M/V "EM Oinousses" was determined by reference to its negotiated and thereafter agreed sale price and was considered Level 2.

The estimated fair values of the Company’s financial instruments such as cash and cash equivalents and restricted cash approximate their individual carrying amounts as of December 31, 2020 and 2021, due to their short-term maturity. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair value of the Company’s long-term bank loans, bearing interest at variable interest rates approximates their recorded values as of December 31, 2021, due to the variable interest rate nature thereof. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence fair values of the long-term bank loans are considered Level 2 items in accordance with the fair value hierarchy due to their variable interest rate, being the LIBOR. The fair value of the Company’s related party loan outstanding as of December 31, 2020, is estimated based on current interest rates offered to the Company for similar loans and approximates its individual carrying amount due to its short-term maturity. The fair value of the Company’s interest rate swaps is the estimated amount the Company would pay to terminate the swap agreement at the reporting date, taking into account current interest rates and the current creditworthiness of the Company and its counter parties.

F-59

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

18. Common Stock

As per the Company’s Amended and Restated Articles of Incorporation, the Company is authorized to issue 200,000,000 shares of common stock, par value $0.03 per share.

Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the shareholders. Subject to preferences that may be applicable to any outstanding preferred shares, holders of the Company’s common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of the Company’s assets available for distribution upon liquidation, dissolution or winding up; and (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of the Company’s common stock when issued will be fully paid for and non-assessable. The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares which the Company has issued or may issue in the future.

F- 60

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

18. Common Stock - continued

In August 2019, the Company issued 2,816,901 common shares for the acquisition of M/V “EM Hydra”, M/V “EM Spetses”, M/V “EM Kea” and M/V “Diamantis P”, owned by affiliates of the Pittas family, including the Company’s Chief Executive Officer (refer Note 8).

During October 2019, following the Company’s prospectus supplement filed with the SEC on December 20, 2016, as further supplemented by the prospectus dated January 13, 2017, October 30, 2018 and May 30, 2019, the Company issued and sold at-the-market (ATM) 144,727 shares of common stock for gross proceeds net of commissions of $0.9 million.

In November 2019, the Synergy Vessels Acquisition was partially financed through a private placement of $6 million, subscribed equally by an entity affiliated with the Company’s Chief Executive Officer and an entity controlled by the seller of the Synergy vessels, resulting in the issuance of 1,056,338 common shares. 

In addition, during the year ended December 31, 2019, the Company issued 15,444 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 12).

On December 19, 2019, the Company announced that it has completed a 1-for-8 reverse stock split, effective at the close of trading on December 18, 2019. The Company’s common shares began trading on a split-adjusted basis on December 19, 2019.

During August 2020, following the Company’s prospectus supplement filed with the SEC on May 12, 2020, as further supplemented by the prospectus dated May 29, 2020, the Company issued and sold at-the-market (ATM) 200,000 shares of common stock for gross proceeds net of commissions of $0.7 million.

In addition, during the year ended December 31, 2020, the Company issued 45,900 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 12).

On November 16, 2020, the Company issued 161,357 shares to Synergy Holdings Ltd. as a result of a contingent payment agreed upon on November 7, 2019 as part of the agreement for the acquisition of the vessels M/V "Synergy Busan", M/V "Synergy Keelung", M/V "Synergy Oakland" and M/V "Synergy Antwerp"(see Note 5).

On November 24, 2020, the Company received notice from Colby, which had provided Euroseas with a loan of $2.5 million in September 2019, whereby Colby exercised its right to convert the outstanding balance of the loan of $1.875 million into common shares of the Company as per the terms of the loan. As a result, the Company issued 702,247 common shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan (see Note 9-h).

F- 61

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

18. Common Stock - continued

During February 2021, following the Company’s prospectus supplement filed with the SEC on May 12, 2020, as further supplemented by the prospectus dated May 29, 2020 and February 3, 2021 the Company issued and sold 82,901 shares of common stock at-the-market (ATM) for gross proceeds net of commissions of $0.74 million.

On June 30, 2021, the Company converted the remaining outstanding 6,365 Series B Preferred Shares into common stock by issuing 453,044 shares covering the full redemption of the remaining Series B Preferred Shares amounting to $6.365 million (Note 16).

19. Other operating income

In  January 2020, M/V "EM Oinousses" experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The vessel completed an evaluation for the type of repairs required and was idle during the evaluations. The Company agreed with the Hull & Machinery (“H&M”) underwriters an “unrepaired damage” claim of $2.7 million. Under this agreement the vessel was sold for scrap as is without effecting any permanent repairs. As a result of the above the Company, recognized a gain on hull and machinery claim of $2.7 million, which was included under “Other operating income” in the consolidated statement of operations for the year ended December 31, 2020.

In the year ended December 31, 2021, the Company recognized “Other operating income” of $0.2 million relating to the collection of amounts previously written off, relating to accounts with charterers of sold vessels. The Company also reached a settlement agreement in relation to a dispute with a fuel oil supplier dating back in 2009 in respect of vessel “Ninos”, to pay $0.06 million to the claimants in order for them to withdraw their claim, recording “Other operating income” of $0.1 million, against the provision of $0.15 million already booked in prior years. Additionally, the Company recognized another $1.0 million of “Other operating income” consisting of the proceeds of a claim award related to the sale of one of the Company’s vessels, M/V “Manolis P”, for scrap in March 2020 that initially failed due to COVID-related reasons with the vessel finally being sold to another buyer within the second quarter of 2020 (see Note 5). All these amounts are included under “Other operating income” in the consolidated statement of operations.

F- 62

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2020 and 2021 and for the

years ended December 31, 2019, 2020 and 2021

(All amounts expressed in U.S. Dollars)

20. Subsequent Events

(a)

On January 28, 2022, the Company signed a contract for the construction of two eco-design fuel efficient containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea. The two newbuildings are scheduled to be delivered during the fourth quarter of 2023 and first quarter of 2024, respectively. The total consideration for these two newbuilding contracts is approximately $85 million, which the Company intends to finance with a combination of debt and equity.

(b)

On March 18, 2022, the Company signed a contract for the construction of three 1,800 teu eco-design fuel efficient feeder containerships. The vessels will have a carrying capacity of about 1,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea and are scheduled to be delivered during the first half of 2024, one in the first and two in the second quarter of 2024. The total consideration for the construction of the three vessels is approximately $102 million which the Company intends to finance with a combination of debt and equity.

F-63

EX-2.7

Exhibit 2.7

DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

As of December 31, 2021, Euroseas Ltd. (the “Company”) had common stock, par value $0.03 per share, registered under Section 12 of the Securities Exchange Act of 1934, as amended.

The following description sets forth certain material terms and provisions of the Company’s common stock. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of the Company’s Amended and Restated Articles of Incorporation (the “Articles of Incorporation”), and the Company’s Bylaws, as amended (the “Bylaws”), each of which is incorporated by reference as an exhibit to the annual report on Form 20-F of which this Exhibit is a part. We encourage you to refer to our Articles of Incorporation and Bylaws for additional information.

Authorized Capitalization

Under our Articles of Incorporation, we are authorized to issue up to 200,000,000 shares of common stock, par value $0.03 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share. All of our shares of stock are in registered form.

DESCRIPTION OF COMMON SHARES

The number of common shares issued and outstanding as of the last day of the fiscal year for the annual report on Form 20-F to which this description is attached or incorporated by reference as an exhibit, is provided on the cover page of such annual report on Form 20-F. Holders of our common shares do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares that we may issue in the future.

Voting Rights

Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. At any annual or special general meeting of shareholders where there is a quorum, the affirmative vote of a majority of the votes cast by holders of shares of stock represented at the meeting shall be the act of the shareholders.

Dividend Rights

Subject to preferences that may be applicable to any outstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends.

Liquidation Rights

Upon our dissolution, liquidation or winding up, after payment in full of all amounts required to be paid to creditors and to the holders of our preferred shares having liquidation preferences, if any, the holders of our common shares will be entitled to receive pro rata our remaining assets available for distribution.

Limitations on Ownership

Under Marshall Islands law generally, there are no limitations on the right of non-residents of the Marshall Islands or owners who are not citizens of the Marshall Islands to hold or vote our common shares.

1

Directors

Our directors are elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Cumulative voting may not be used to elect directors.

Our Board of Directors must consist of at least three directors, such number to be determined by the Board of Directors by a majority vote of the entire Board of Directors from time to time. Shareholders may change the number of our directors only by an affirmative vote of the holders of the majority of the outstanding shares of capital stock entitled to vote generally in the election of directors.

Our Board of Directors is divided into three classes as set out below in “Classified Board of Directors.” Each director is elected to serve until the third succeeding annual meeting after his election and until his successor shall have been elected and qualified, except in the event of his death, resignation or removal.

Shareholder Meetings

Under our bylaws, as amended, annual shareholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called at any time by the Board of Directors, the Chairman of the Board or by the President. Notice of every annual and special meeting of shareholders must be given to each shareholder of record entitled to vote at least 15 but no more than 60 days before such meeting.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our shareholders have the right to dissent from various corporate actions, including any merger or consolidation or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our Articles of Incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which the Company’s shares are primarily traded on a local or national securities exchange.

Shareholders Derivative Actions

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

Anti-takeover Effect of Certain Provisions of our Articles of Incorporation and Bylaws

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

Blank Check Preferred Stock

Under the terms of our Articles of Incorporation, our Board of Directors has authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change in control of our company or the removal of our management.

2

Classified Board of Directors

Our Articles of Incorporation provide for the division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of Directors for two years.

Election and Removal of Directors

Our Articles of Incorporation prohibit cumulative voting in the election of directors. Our bylaws, as amended, require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws, as amended, also provide that our directors may be removed only for cause and by either action of the Board of Directors or the holders of 51% of the issued and outstanding voting shares of the Company. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Limited Actions by Shareholders

Our Articles of Incorporation and our Bylaws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our Articles of Incorporation and our bylaws, as amended, provide that, subject to certain exceptions, our Board of Directors, our Chairman of the Board or by the President and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may not call a special meeting and shareholder consideration of a proposal may be delayed until the next annual meeting.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our Bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one-year anniversary of the immediately preceding annual meeting of shareholders. Our Bylaws also specify requirements as to the form and content of a shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

Certain Business Combinations

Our Articles of Incorporation also prohibit us, subject to several exclusions, from engaging in any “business combination” with any interested shareholder for a period of three years following the date the shareholder became an interested shareholder.

Marshall Islands Company Considerations

Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the BCA. You should be aware that the BCA differs in certain material respects from the laws generally applicable to U.S. companies incorporated in the State of Delaware. While the BCA also provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Republic of the Marshall Islands and we cannot predict whether Republic of the Marshall Islands courts would reach the same conclusions as U.S. courts. Thus, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the BCA and the Delaware General Corporation Law relating to shareholders’ rights.

3

Marshall Islands	Delaware
Shareholder Meetings and Voting Rights
Held at a time and place as designated or in the manner provided in the bylaws.	Held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors.
Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the articles of incorporation or by the bylaws.	Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
May be held within or outside the Republic of the Marshall Islands.	May be held within or outside Delaware.
Notice:	Notice:
Whenever shareholders are required or permitted to take action at a meeting, written notice shall state the place, date and hour of the meeting and, unless it is the annual meeting, indicate that it is being issued by or at the direction of the person calling the meeting.	Whenever shareholders are required or permitted to take any action at a meeting, written notice shall state the place, if any, date and hour of the meeting and the means of remote communication, if any, by which shareholders may be deemed to be present and vote at the meeting.
A copy of the notice of any meeting shall be given not less than 15 nor more than 60 days before the meeting.	Written notice of any meeting shall be given not less than 10 nor more than 60 days before the date of the meeting.
Any action required or permitted to be taken by meeting of shareholders may be taken without meeting if consent is in writing and is signed by all the shareholders entitled to vote.	Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting, without prior notice and without a vote if consent is in writing and signed by the holders of outstanding stock having the number of votes necessary to authorize or take action at a meeting.
Each shareholder entitled to vote may authorize another person to act for him by proxy.	Each shareholder entitled to vote may authorize another person or persons to act for each shareholder by proxy.
Unless otherwise provided in the articles of incorporation or bylaws, a majority of shares entitled to vote shall constitute a quorum but in no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting.	The certificate of incorporation or bylaws may specify the number necessary to constitute a quorum but in no event shall a quorum consist of less than one-third of the shares entitled to vote at the meeting. In the absence of such specifications, a majority of shares entitled to vote at the meeting shall constitute a quorum.
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders.	When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders.
Except as otherwise required by the BCA or the articles of incorporation, directors shall be elected by a plurality of the votes cast by holders of shares entitled to vote, and, except as required or permitted by the BCA or the articles of incorporation, any other corporate action shall be authorized by a majority of votes cast by holders of shares entitled to vote thereon	Unless otherwise specified in the certificate of incorporation or bylaws, directors shall be elected by a plurality of the votes of the shares entitled to vote on the election of directors, and, in all other matters, the affirmative vote of the majority of the shares entitled to vote on the subject matter shall be the act of the shareholders.
The articles of incorporation may provide for cumulative voting.	The certificate of incorporation may provide for cumulative voting.

4

Merger or Consolidation
Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a shareholder meeting.	Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting.
Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation’s usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting.	Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote.
Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any corporation.	Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting.
Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation.	Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides.
Dissenters’ Rights of Appraisal
Shareholders have a right to dissent from a merger or consolidation or sale or exchange of all or substantially all assets not made in the usual and regular course of business, and receive payment of the fair value of their shares, subject to exceptions.	Appraisal rights shall be available for the shares of a corporation in a merger or consolidation, subject to exceptions.
A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment:	The certificate of incorporation may provide that appraisal rights are available for shares as a result of an amendment to the certificate of incorporation, any merger or consolidation or the sale of all or substantially all of the assets.
Alters or abolishes any preferential right of any outstanding shares having preferences; or
Creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or
Excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class.

5

Shareholders’ Derivative Actions
An action may be brought in the right of a corporation to procure a judgment in its favor by a holder of shares or of a beneficial interest in such shares. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law.	In any derivative suit instituted by a shareholder or a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law.
Complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort.	Delaware Court of Chancery Rule 23.1 governs the procedures for derivative actions by shareholders.
Such action shall not be discontinued, compromised or settled without the approval of the High Court of the Republic of the Marshall Islands.
Attorney’s fees may be awarded if the action is successful.
Corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of stock and the shares have a value of $50,000 or less.

6

Directors
Board must consist of at least one member.	Board must consist of at least one member.
Removal:	Removal:
●     Any or all of the directors may be removed for cause by vote of the shareholders. ●    If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders.	●     Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote except: (1) unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified, stockholders may effect such removal only for cause, or (2) if the corporation has cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which such director is a part.
Number of board members may be fixed by the bylaws, by the shareholders, or by action of the board under the specific provisions of a bylaw.
Number of board members may be changed by amendment of the bylaws, by the shareholders or by action of the board under specific provision of a bylaw; however if the board is authorized to change the number of directors, it can only do so by a majority of the entire board.	Number of board members shall be fixed by the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by amendment of the certificate.
Duties of Directors
Members of a board of directors owe a fiduciary duty to the company to act honestly and in good faith with a view to the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.	The business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.

7

EX-4.27

Exhibit 4.27

Private and Confidential EXECUTION VERSION

DATED 6 September 2021

CORFU NAVIGATION LTD

- and –

JONATHAN JOHN SHIPPING LTD

- and -

SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED

___________________________________

LOAN AGREEMENT

in respect of a loan of

up to USD10,000,000

____________________________________

Index

Clause Page

1 Purpose, definitions and construction ................................................................ 3

2 The Commitment and cancellation .................................................................. 17

3 Interest and Interest Periods ......................................................................... 20

4 Repayment and prepayment .......................................................................... 22

5 Fees and expenses ....................................................................................... 24

6 Payments and taxes; accounts and calculations ................................................ 25

7 Representations and warranties ..................................................................... 28

8 Undertakings ............................................................................................... 33

9 Conditions ................................................................................................... 44

10 Events of Default ........................................................................................ 45

11 Indemnities ............................................................................................... 49

12 Unlawfulness and increased costs ................................................................. 50

13 Application of moneys, set off, pro-rata payments and miscellaneous ................ 51

14 Assignment, transfer and lending office ......................................................... 56

15 Notices and other matters ........................................................................... 58

16 Governing law ........................................................................................... 59

17 Jurisdiction ............................................................................................... 59

Schedule 1 Form of Drawdown Notice ............................................................... 62

Schedule 2 Conditions precedent and subsequent ............................................... 63

Execution Page .............................................................................................. 72

THIS AGREEMENT dated 6 Septembet 2021 is made BY and BETWEEN:

(1) (i) CORFU NAVIGATION LTD; and

(ii) JONATHAN JOHN SHIPPING LTD as Borrowers; and

(2) SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED as Lender.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1 PURPOSE, DEFINITIONS AND CONSTRUCTION

1.1 Purpose

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrowers jointly a loan facility of up to ten million Dollars (USD10,000,000) in two advances for the purposes of enabling the Borrowers to refinance the Vessels.

1.2 Definitions

In this Agreement, unless the context otherwise requires:

“Annual Financial Statements” means the financial statements for a financial year of each of the Borrowers and the Corporate Guarantor delivered pursuant to clause 8.1.6(a);

“Approved Broker” means Clarksons Valuation Limited, Maersk Broker KS, Simpsons Spence and Young Ltd, Howe Robinson Partners, Arrow Shipbroking Group, Fearnleys AS or an affiliate of any of the entities referred to the aforementioned or such ship broker as the Lender may agree with the Borrowers is an Approved Broker for the purposes of this Agreement;

“Available Facility” means, at any relevant time, such part of the Commitment which is available for borrowing under this Agreement at such time in accordance with clause 9;

“Balloon Instalment” has the meaning given to it in clause 4.1.1, as the same may reduce from time to time;

“Banking Day” means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Athens, Hong Kong, Taipei and New York City (or any other relevant place of payment under clause 6);

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to

(vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

“Borrower A” means Corfu Navigation Ltd, a corporation incorporated in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro Marshall Islands, MH 96960;

“Borrower B” means Jonathan John Shipping Ltd, a corporation incorporated in the Republic of the Marshall Islands and having its registered office at Trust Company Complex Ajeltake Road Ajeltake Island, Majuro Marshall Islands MH 96960;

“Borrowers” means collectively, Borrower A and Borrower B, and each a “Borrower”;

“Break Costs” means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Lender at any time and from time to time as having been incurred by the Lender in maintaining or funding the Loan or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

(a) any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1, or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

(b) the Borrowers failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

“Casualty Amount” means five hundred thousand Dollars (USD500,000) (or the equivalent in any other currency);

“Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

“Charter Assignment” means, in respect of a Vessel, a specific assignment of any Extended Employment Contract required to be executed hereunder by the relevant Borrower in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may reasonably require;

“Classification” means, in relation to a Vessel, the highest class available for a vessel of her type with the Classification Society;

“Classification Society” means, in respect of a Vessel, any classification society which is a member of the International Association of Classification Societies which the Lender shall, at the request of the relevant Borrower, have agreed in writing shall be treated as the classification society in relation to such Vessel for the purposes of the relevant Ship Security Documents;

“Closing Date” has the meaning ascribed to it under clause 2.7.1.

“Co-Assured” means, in respect of a Vessel, any other person (other than the relevant Borrower or the Manager) who is named as a co-assured or a member under the Insurance of such Vessel.

“Code” means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Commitment” means ten million Dollars (USD10,000,000) which the Lender is obliged to lend to the Borrowers under this Agreement, as such amount may be reduced and/or cancelled under this Agreement;

“Compulsory Acquisition” means, in respect of a Vessel, requisition for title or other compulsory acquisition including, if such Vessel is not released therefrom within the Relevant Period, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) by or on behalf of any Government Entity or other competent authority or by pirates, hijackers, terrorists or similar persons; and “Relevant Period” means for the purposes of this definition of Compulsory Acquisition either (i) one (1) calendar month or, (ii) in respect of pirates, hijackers, terrorists or similar persons, if relevant underwriters confirm in writing (in terms satisfactory to the Lender) prior to the end of such one (1) month period that such capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation will be fully covered by the relevant Borrower’s relevant insurances, the shorter of twelve (12) months after the date upon which the relevant incident occurred and such period at the end of which the relevant cover expires;

“Constitutional Documents” means, in relation to a Security Party, its memorandum and articles of association, by-laws and/or any other documents that form part of its constitution, including those referred to as such in any certificate delivered pursuant to schedule 2;

“Corporate Guarantee” means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrowers under this Agreement required to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may reasonably require;

“Corporate Guarantor” means Euroseas Ltd., a corporation incorporated in the Republic of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Default” means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

“Dollars” and “USD” mean the lawful currency of the USA and in respect of all payments to be made under any of the Security Documents means funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

“Drawdown” means a drawdown of the Loan Facility;

“Drawdown Date” means any date being a Banking Day falling during the Drawdown Period on which a Loan is, or is to be, made available;

“Drawdown Notice” means a notice substantially in the form of schedule 1;

“Drawdown Period” means the period commencing on the Execution Date and ending on the earliest of (i) the date falling three (3) months from the Execution Date, (ii) such later date as the Lender may agree in its sole discretion and (iii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

“Earnings” means, in respect of a Vessel, all moneys whatsoever from time to time due or payable to the relevant Borrower during the Facility Period arising out of the use or operation of such Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to such Borrower in event of requisition of such Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) of any charterparty or other contract (including any contract of affreightment) for the employment of such Vessel (including any proceeds under any loss of hire insurance, if applicable);

“EIAPP Certificate” means, in respect of a Vessel, the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to such Vessel;

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention having a similar effect, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

“Environmental Approvals” means all authorisations, consents, licences, permits, exemptions or other approvals required under applicable Environmental Laws;

“Environmental Claim” means (i) any claim by, or directive from, any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, “claim” shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

“Environmental Incident” means, in respect of a Vessel, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from such Vessel; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than such Vessel

which involves collision between such Vessel and such other vessel or some other incident of navigation or operation, in either case, where such Vessel , the Manager and/or relevant Borrower and/or the relevant Group Member and/or the Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than such Vessel and where the Vessel is actually or potentially liable to be arrested as a result and/or where the Manager and/or the relevant Borrower and/or other Group Member and/or the Operator are actually, contingently or allegedly at fault or otherwise howsoever liable;

“Environmental Laws” means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the USA);

“Environmentally Sensitive Material” means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

“Event of Default” means any of the events or circumstances listed in clause 10.1;

“Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

“Extended Employment Contract” means, in respect of a Vessel and at any relevant time, any bareboat charterparty (irrespective of the duration of such charterparty) or any time charterparty or other contract of employment of such ship (including the entry of such Vessel in any pool) which has a remaining tenor exceeding twelve (12) months (excluding any options to renew or extend such tenor) at such time;

“Existing Lender” means Eurobank S.A. (as universal successor of EUROBANK ERGASIAS S.A.) which has made the Existing Mortgage Loan and has, at the date of this Agreement, the Existing Mortgages over the Vessels (such Existing Mortgage Loan to be partially repaid by Loan A and Loan B);

“Existing Mortgage” means, in respect of a Vessel, the mortgage over such Vessel as at the date of this Agreement in favour of the Existing Lender;

“Existing Mortgage Loan” means the loan already provided to the Corporate Guarantor by the Existing Lender pursuant to which, as at the date of this Agreement, there are the Existing Mortgages in favour of the Existing Lender, which loan shall be partially repaid under this Agreement and whereupon the Existing Mortgages shall be fully satisfied and released and the relevant Mortgage will be given simultaneously in favour of the Lender to provide a first priority Encumbrance over each of the Vessels;

“Facility Period” means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising,

actual or contingent, have been irrevocably paid, performed and/or complied with;

“FATCA” means:

(i) sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the “Code”) or any associated regulations or other official guidance;

(ii) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

(iii) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

“FATCA Application Date” means:

(i) in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

(ii) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA;

“FATCA Deduction” means a deduction or withholding from a payment under a Security Document required by FATCA;

“FATCA Exempt Party” means a party to a Security Document that is entitled to receive payments free from any FATCA Deduction;

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Bank is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

“Final Repayment Date” means, in respect of each Loan, the date falling 48 Months after the relevant Drawdown Date;

“Flag State” means the Republic of the Marshall Islands, the Republic of Panama or any other country, or such other state or territory which is acceptable to the Lender, on whose flag the relevant Vessel is or is to be registered in the ownership of the relevant Borrower;

“General Assignment” means, in respect of a Vessel, the deed of assignment of its earnings, insurances and requisition compensation executed or to be executed by the relevant Borrower in favour of the Lender in such form as the Lender may reasonably require;

“Government Entity” means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

“Group” means, at any relevant time, the Corporate Guarantor and its Subsidiaries (including the Borrowers);

“Group Member” means any member of the Group;

“IAPP Certificate” means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

“Insurances” means, in relation to a Vessel, all policies and contracts of insurance (which expression includes all entries of such Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of the relevant Borrower (whether in the sole name of the relevant Borrower, or in the joint names of the relevant Borrower and the Mortgagee or otherwise) in respect of such Vessel or otherwise howsoever in connection with such Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

“Insurance Assignment” means, in relation to a Vessel, a specific assignment of any Insurances required to be executed hereunder by a Co-Assured in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may reasonably require;

“Interest Payment Date” means the last day of an Interest Period and, if an Interest Period is longer than three (3) months, the date falling at the end of each successive period of three (3) months from the start of such Interest Period;

“Interest Period” means, in relation to each Loan, each period determined in accordance with clause 3.2 and, in relation to any unpaid sum, each period determined in accordance with clause 3.3;

“ISM Code” means in relation to its application to a Borrower, a Vessel and its operation:

(a) ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 December 1993 and incorporated on 19 May 1994 into Chapter IX of the International Convention for Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including, without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 December 1995,as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” means, in relation to a Vessel, the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to such Vessel within the periods specified by the ISM Code;

“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulations issued pursuant thereto;

“ISSC” means an International Ship Security Certificate issued in respect of the Vessel pursuant to the ISPS Code;

“Latest Accounts” means, in respect of any fiscal year of each Borrower and the Corporate Guarantor, the latest annual unaudited unconsolidated accounts of such Borrower and the latest annual audited consolidated accounts of the Corporate Guarantor required to be prepared pursuant to clause 8.1.6;

“Lender” means SinoPac Capital International (HK) Limited having its registered office at Suites 3306, 33/F., Tower 1, The Gateway, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong (fax no. +886-2-81612452);

“LIBOR” means, in relation to each Loan:

(a) the applicable Screen Rate; or

(b) (if no such Screen Rate is available) the arithmetic mean of the rates quoted to the Lender in the London Interbank Market,

each as of the Specified Time on the Quotation Day for Dollars and for a period equal in length to the Interest Period of such Loan and, in each case, if that rate is less than zero, LIBOR shall be deemed to be zero;

“Loan” means a loan made or to be made under the Loan Facility or the principal amount outstanding for the time being of that loan;

“Loan A” means the Loan to be made available to the Borrowers in the amount set out in clause 2.3.3(a);

“Loan B” means the Loan to be made available to the Borrowers in the amount set out in clause 2.3.3(b);

“Loan Facility” means the loan facility provided by the Lender on the terms and subject to the conditions of this Agreement in an amount not exceeding the lesser of (i) ten million Dollars (USD10,000,000) and (ii) 50% of the Market Value of the Vessels (to be determined immediately prior to the first Drawdown Date);

“Management Agreement” means, in respect of a Vessel, the agreement between the relevant Borrower and the Manager, in a form approved by the Lender;

“Manager” means, in respect of a Vessel, Eurobulk Ltd., a corporation incorporated in the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, or any other commercial and/or technical manager appointed by the relevant Borrower, with the prior written consent of the Lender (such consent not to be unreasonably withheld), as the manager of such Vessel;

“Manager's Undertaking” means, in respect of a Vessel, the undertaking and assignment of insurances required to be executed hereunder by the Manager in favour of the Lender in such form as the Lender may reasonably require;

“Margin” means 3.50% (three point five per cent) per annum;

“Market Value” means, in respect of a Vessel, the market value of such Vessel as determined from time to time in accordance with clause 8.2.1;

“Material Adverse Effect” means, a material adverse effect on:

(a) the business, operations, property, condition (financial or otherwise) or prospects of the Corporate Guarantor and its Subsidiaries taken as a whole; or

(b) the ability of a Borrower or the Corporate Guarantor to perform its obligations under the relevant Security Documents; or

(c) the validity or enforceability of, or the effectiveness or ranking of, any Encumbrance granted or purporting to be granted pursuant to any of the Security Documents, or the rights or remedies of the Lender under any of the Security Documents;

“Maturity Date” means, in respect of each Loan, the date falling 4 years after the Drawdown Date of such Loan;

“MII Policy” means, in respect of a Vessel, a mortgagee’s interest insurance policy in respect of such Vessel to be effected by the Lender on or before the Drawdown Date to cover such Vessel as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Lender in its sole discretion, insuring a sum of at least one hundred and twenty per cent (120%) of the relevant Loan in respect of mortgagee’s interest insurance;

“Month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) 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 such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no the Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage A” means the first preferred Marshall Islands ship mortgage of Vessel A required to be executed hereunder by Borrower A, to be in such form as the Lender may reasonably require;

“Mortgage B” means the first preferred Panamanian ship mortgage of Vessel B required to be executed hereunder by Borrower B, to be in such form as the Lender may reasonably require;

“Mortgages” means collectively, Mortgage A and Mortgage B, and each a “Mortgage”;

“Operator” means any person who is from time to time during the Facility Period concerned in the operation of the relevant Vessel and falls within the definition of “Company” set out in rule 1.1.2 of the ISM Code;

“Permitted Encumbrance” means any Encumbrance in favour of the Lender created pursuant to the Security Documents any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

“Permitted Liens” means any lien on a Vessel for master's, officer's or crew's wages outstanding in the ordinary course of trading, any lien for salvage and any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Lender) exceeding the Casualty Amount any lien arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue (and while such obligations are not overdue) or which are being contested in good faith by bona fide and appropriate proceedings (and for the payment of which adequate, freely-available reserves have been provided) unless such proceedings or the continued existence of such lien makes likely the sale, forfeiture or loss of, or of any interest in, such Vessel, and liens securing liabilities for Taxes against which adequate, freely-available reserves have been provided;

“Pertinent Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment or assets, carries on, or has a place of business or is otherwise howsoever effectively connected;

“Prepayment Fee” means the fee payable by the Borrowers in accordance with clause 4.7.5;

“Proceedings” means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

“Quotation Day” means, in relation to any period for which an interest rate is to be determined under any provision of a Security Document, the day which is 2 Banking Days before the first day of that period unless market practice differs in the London Interbank Market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Day will be the last of those days);

“Registry” means, in respect of a Vessel, the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register such Vessel, the relevant Borrower’s title thereto and the relevant Mortgage under the laws and flag of the Flag State;

“Repayment Date” means, in respect of each Loan, the date on which any instalment of such Loan is repayable under the provisions of clause 4.1.1;

“Repayment Instalment” means, in respect of each Loan, each of the repayment instalments falling due under and in accordance with clause 4.1.1, as the same may be reduced in accordance with this Agreement;

“Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrowers lawfully to borrow the Loans and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all their respective obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

“Requisition Compensation” means, in respect of a Vessel, all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of such Vessel;

“Restricted Person” means a person that is: listed on, or directly or indirectly owned or controlled (as such terms are defined by the relevant Sanctions Authority) by a person listed on, any Sanctions List; located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of, a country or territory that is the target of country or territory-wide Sanctions (“Sanctions

Restricted Jurisdiction”); or otherwise a target of Sanctions;

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

(i) the United States government;

(ii) the United Nations;

(iii) the European Union or any of its Member States;

(iv) the United Kingdom;

(v) any country to which any Security Party or any other member of the Group or any affiliate of any of them is bound; or

(vi) the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury

(“OFAC”), the United States Department of State, and Her Majesty’s Treasury (“HMT”) (together “Sanctions Authorities” and each, “Sanctions Authority”);

“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets in the UK” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate), or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the appropriate rate after consultation with the Borrowers;

“Security Documents” means this Agreement, the Mortgages, the Corporate Guarantee, the General Assignments, any Charter Assignments, the Shares Securities, the Manager’s Undertakings, any Subordination Deed, any Tripartite Deed, any Insurance Assignment and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loans, interest thereon and other moneys from time to time owing by the Borrowers pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means the Borrowers, the Corporate Guarantor, the Shareholder, the Manager or any other person who may at any time be a party to any of the Security Documents (other than the Lender);

“Semi-Annual Financial Statements” means the financial statements for a financial half year of each of the Borrowers and the Guarantor delivered pursuant to clause 8.1.6(b);

“Security Value” means, in respect of a Vessel, at any time, the amount in Dollars which, at that time, is the aggregate of (a) the Market Value of such Vessel which has not then become a Total Loss and (b) the value of any additional security then held by the Lender provided under clause 8.2;

“Shareholder” means Eurocon Ltd., a corporation incorporated in the Republic of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Shares Security” means, in respect of a Borrower, the charge of the shares of and in such Borrower to be executed by the Shareholder in favour of the Lender, to be in such form as the Lender may reasonably require;

“Ship Security Documents” means the Mortgages, the General Assignments, any Charter Assignment, any Tripartite Deed, any Insurance Assignment and the Manager’s Undertakings;

“Specified Time” means 11:00am London time;

“Subordination Deed” means any deed of subordination required by clause 8.3.7;

“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person, and for this purpose “control” means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise;

“Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly);

“Total Commitment” means, at any relevant time, the aggregate of the Commitments of the Lender at such time;

“Total Loss” means, in relation to a Vessel: the actual, constructive, compromised or arranged total loss of such Vessel; or Compulsory Acquisition; or any hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel not falling within the definition of Compulsory Acquisition, unless such Vessel be released and restored to the relevant Borrower within sixty (60) days after such incident;

“Tripartite Deed” means, if a Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer’s interest in the insurances of such Vessel, required to be executed by the relevant Borrower and the relevant charterer in favour of the Lender in such form as the Lender may reasonably require and the relevant charterer may agree;

“Underlying Documents” means, together, any Extended Employment Contract and the Management Agreements;

“Unlawfulness” means any event or circumstance which is the subject of a notification by the Lender to the Borrowers under clause 12.1;

“USA” means the United States of America;

“US Tax Obligor” means:

(a) a Borrower if it is resident for tax purposes in the USA; or

(b) a Security Party some or all of whose payments under the Security Documents are from sources within the USA for US federal income tax purposes;

“Vessel A” means the bulk carrier named “EM CORFU” with IMO Number 9231494 registered in the name of Borrower A under the Marshall Islands flag;

“Vessel B” means the bulk carrier named “AEGEAN EXPRESS” with IMO Number 9138161 registered in the name of Borrower B under the Panamanian flag; and

“Vessels” means collectively, Vessel A and Vessel B, and each a “Vessel”.

1.3 Construction

In this Agreement, unless the context otherwise requires:

1.3.1 clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

1.3.2 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

1.3.3 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 in force for the time being and as duly amended and/or supplemented and/or novated;

1.3.4 references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority;

1.3.5 references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to the Lender shall also include a Transferee Lender;

1.3.6 words importing the plural shall include the singular and vice versa;

1.3.7 references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

1.3.8 references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

1.3.9 references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

1.3.10 a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrowers except for manifest error;

1.3.11 if any document, term or other matter or thing is required to be approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated;

1.3.12 time shall be of the essence in respect of all obligations whatsoever of the Borrowers under this Agreement, howsoever and whensoever arising;

1.3.13 a Default or an Event of Default is “continuing” if it has not been remedied or waived;

1.3.14 and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible.

1.4 References to currencies

Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

1.5 Contracts (Rights of Third Parties Act) 1999

Except for clause 18, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

2 THE COMMITMENT AND CANCELLATION

2.1 Agreement to lend

The Lender, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrowers upon and subject to the terms of this Agreement, the Loan Facility in two advances for the purposes of enabling the Borrowers to refinance the Vessels.

2.2 Drawdown

2.2.1 Subject to the terms and conditions of this Agreement, each Loan shall be made available to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 10:00 a.m. (Taipei Time) on the second Banking Day before the date, which shall be a Banking Day falling within the Drawdown Period, on which the Borrowers propose such Loan is made available.

2.2.2 A Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall, subject as provided in clause 3.4, be irrevocable.

2.3 Limitation and application of the Loans

2.3.1 The amount of any proposed Loan in respect of the Loan Facility must not exceed the Total Commitments.

2.3.2 (a) Only one (1) Drawdown may be requested for each of Loan A and Loan B.

(b) The Borrowers may only make a maximum of two (2) Drawdowns of the Loan Facility.

2.3.3 (a) The total principal amount of Loan A specified in the relevant Drawdown Notice for borrowing on the relevant Drawdown Date shall, subject to the terms of this Agreement, not exceed the lesser of (i) six million and five hundred thousand Dollars (USD6,500,000) and (ii) 50% of the Market Value of Vessel A (to be determined immediately prior to the first Drawdown Date), to be applied in or towards financing the Existing Mortgage Loan and providing working capital to the Borrowers.

(b) The total principal amount of Loan B specified in the relevant Drawdown Notice for borrowing on the relevant Drawdown Date shall, subject to the terms of this Agreement, not exceed the lesser of (i) three million and five hundred thousand Dollars (USD3,500,000) and (ii) 50% of the Market Value of Vessel B (to be determined immediately prior to the first Drawdown Date), to be applied in or towards financing the Existing Mortgage Loan and providing working capital to the Borrowers.

2.3.4 The aggregate of all the Drawdowns must not exceed the Loan Facility.

2.3.5 Each Loan shall be paid forthwith upon drawdown to such account as the Borrowers shall stipulate in the relevant Drawdown Notice.

2.4 Availability

2.4.1 The Borrowers acknowledge that payment of a Loan referred to in clause 2.3.5 to the account or accounts specified in a Drawdown Notice shall satisfy the obligation of the Lender to lend such Loan to the Borrowers under this Agreement.

2.5 Cancellation in changed circumstances

2.5.1 The Borrowers may at any time during the Facility Period by notice to the Lender (effective only on actual receipt) cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, all or part of the undrawn Total Commitment.

2.6 Use of proceeds

2.6.1 Without prejudice to the Borrowers’ obligations under clause 8.1.4, the Lender shall not have any responsibility for the application of the proceeds of a Loan or any part thereof by the Borrowers.

2.6.2 A Borrower shall not, and shall procure that each Security Party and each other Group Member and any Subsidiary of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of a Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in such Borrower or any other Security Party being in breach of any Sanctions or becoming a Restricted Person.

2.7 Repayment of Existing Mortgages

2.7.1 Each Existing Mortgage shall be discharged using the proceeds of the relevant Loan simultaneously with the registration of the Mortgages to the favour of the Lender (the “Closing Date”).

2.7.2 Proceeds of each Loan may be remitted to a designated account of the Existing Lender, to be held by the Existing Lender as unallocated funds and to be released to the Existing Lender under a SWIFT MT103 and an irrevocable SWIFT MT199 instruction (or analogous) to be agreed between the Borrowers, the Existing Lender and the Lender prior to the relevant Drawdown Date (the “Conditional Payment”).

2.7.3 Each Loan will only be released upon the Borrowers’ presentation to the Lender (and to its satisfaction) a copy of (i) the certificate of ownership and encumbrance of Vessel A issued by the Marshall Islands ship registry (in the case of Loan A), or (ii) the certificate of ownership and encumbrance of Vessel B issued by the Panama Maritime Authority (in the case of Loan B), evidencing that the relevant Existing Mortgage has been discharged and released. The Lender shall only release the proceeds of each Loan pursuant to the Conditional Payment thereafter.

2.7.4 In the event the conditions under the Conditional Payment are not satisfied expressly in accordance with its terms, the Borrowers shall procure that the proceeds of the relevant Loan are promptly returned to the Lender (or to its order) in accordance with the terms of the Conditional Payment.

2.8 Borrower’s rights and obligations

2.8.1 The obligations of each Borrower under this Agreement are joint and several and shall continue until all amounts which may be or become payable by the Borrowers under or in connection with the Security Documents have been irrevocably and unconditionally paid or discharged in full, regardless of any intermediate payment or discharge in whole or in part. Each Borrower declares that it is and will remain, throughout the Facility Period, a principal debtor for all amounts owing hereunder and under the other Finance Documents and that it shall be construed to be a surety for the obligations of each other Borrower hereunder.

2.8.2 The obligations of each Borrower shall not be impaired by (i) any obligation under this agreement being or becoming void, unenforceable or illegal as regards any other Borrower (ii) any amendment of any Security Document (iii) any rescheduling, refinancing or similar arrangement of any kind with any other Borrower (iv) the release (in whole or in part) of any other Security Party from its obligations under, or the release of any security interest created by, any Security Document.

2.8.3 If any payment by a Borrower or any discharge given by the Lender (whether in respect of the obligations of any Borrower or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event then (i) the liability of such Borrower under the Security Documents shall continue as if the payment, release, avoidance or reduction had not occurred and (ii) the Lender shall be entitled to recover the value or amount of that security or payment from such Borrower, as if the payment, release, avoidance or reduction had not occurred.

2.8.4 No Borrower shall, during the Facility Period (i) claim any amount due to it from any other Borrower, or (ii) prove for any such amount in any liquidation, administration, arrangement or similar procedure or (iii) take or enforce any security from or against any other Borrower.

2.8.5 Each Borrower waives any right it may have of first requiring the Lender to proceed against or enforce any other rights or security or claim payment from any other Borrower before claiming from that Borrower under a Security Document.

3 INTEREST AND INTEREST PERIODS

3.1 Normal interest rate

The Borrowers must pay interest on a Loan in respect of each Interest Period relating thereto on each Interest Payment Date at the rate per annum determined by the Lender to be the aggregate of (a) the Margin in respect thereof and (b) LIBOR for such period.

3.2 Interest Periods

3.2.1 The period during which a Loan is outstanding under this Agreement shall, subject to clause 3.2.2 and clause 3.2.4, be divided into consecutive Interest Periods of 3 Month’s duration unless provided otherwise in this Agreement or such other duration as may be agreed by the Lender and the Borrowers.

3.2.2 The first Interest Period shall start on the relevant Drawdown Date and end on the date falling 3 Months after such Drawdown Date.

3.2.3 Each subsequent Interest Period shall start on the last day of the preceding Interest Period and end on the date falling 3 Months therefrom.

3.2.4 No Interest Period of a Loan shall extend beyond the Final Repayment Date.

3.3 Default interest

If the Borrowers fail to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.3) on its due date for payment under any of the Security Documents, the Borrowers must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Lender pursuant to this clause 3.3. The period starting on such due date and ending on such date of payment shall be divided into successive periods selected by the Lender each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods. Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Lender and on the day on which all amounts in respect of which interest is being paid under this clause are paid, 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 an amount of principal which became due and payable by reason of a declaration by the Lender under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender 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 of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.4.1, the Lender is unable to determine a rate in accordance with the foregoing provisions of this clause 3.3, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Lender compounded at such intervals as the Lender selects.

3.4 Market disruption; non-availability

3.4.1 If at any time prior to the commencement of any Interest Period:

(a) the Lender for any reason is unable to obtain Dollars in the London Interbank Market in order to fund the Loans (or any part of them) during that Interest Period; or

(b) the Lender considers that LIBOR would not accurately reflect the cost to it of funding the Loans (or any part of them) during that Interest Period,

then the Lender must promptly give notice (a “Determination Notice”) thereof to the Borrowers. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice, regardless of any other provision of this Agreement, no Commitment shall be borrowed until notice to the contrary is given to the Borrowers by the Lender.

3.4.2 Within ten (10) Banking Days of any Determination Notice being given by the Lender under clause 3.4.1, the Lender must certify an alternative basis in place of LIBOR (the “Alternative Basis”) for maintaining the Loans. The Alternative Basis may at the Lender’s sole discretion include (without limitation) alternative interest periods, alternative currencies or alternative rates of interest but shall include the relevant Margin above the cost of funds to the Lender.

Once the Alternative Basis has been received by the Borrowers, the Borrowers and the Lender shall negotiate in good faith for a period of thirty (30) Banking Days in order to arrive at a mutually acceptable substitute basis for the Lender to continue to make available the Loans and, if within such thirty (30) Banking Day period the Borrowers and the Lender shall agree in writing upon such an alternative basis (the “Substitute Basis”) the Substitute Basis should be retroactive to and effective from the first day of the relevant Interest Period.

The Substitute Basis so certified shall be binding upon the Borrowers, and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Lender notifies the Borrowers that none of the circumstances specified in clause 3.4.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall again apply and, subject to the other provisions of this Agreement, the Commitment may again be borrowed.

If the Borrowers do not agree the Substitute Basis, then the Borrowers shall have the right to repay the Loans without any premium or penalty on the next Interest Payment Date after receiving notice of the Substitute Basis, together with accrued interest thereon payable to the Lender at the rate certified by the Lender and notified to the Borrowers as being a reasonable interest reflecting the cost to the Lender of funding the Loans during the period ending on the date of such prepayment, plus the Margin.

So long as any Substitute Basis is in force, the Lender shall from time to time (but at least monthly) review whether or not the circumstances are such that such Substitute Basis is no longer necessary and, if the Lender so determines it shall notify the Borrowers that the Substitute Basis shall cease to be effective from such date as the Lender shall reasonably specify.

4 REPAYMENT AND PREPAYMENT

4.1 Repayment

4.1.1 Subject to any obligation to pay earlier under this Agreement, the Borrowers must repay each Loan by:

(a) sixteen (16) equal quarterly instalments of USD325,000 each (in the case of Loan A) and USD175,000 (in the case of Loan B); and

(b) an instalment (the “Balloon Instalment”) of USD1,300,000 (in the case of Loan A) and USD700,000 (in the case of Loan B),

the first repayment instalment falling due 3 months after the relevant Drawdown Date and subsequent instalments falling due at quarterly intervals thereafter, with the final instalment falling due on the relevant Maturity Date and the Balloon Instalment being repayable together with the final such instalment.

4.1.2 If less than the full amount of a Loan under the Loan Facility is drawn down, then each of the said repayment instalments and the relevant Balloon Instalment shall be reduced pro rata by the amount of, in aggregate, such undrawn amount.

4.1.3 The Borrowers shall on the relevant Maturity Date also pay to the Lender all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents relating to the relevant Loan.

4.2 Voluntary prepayment

Subject to clauses 4.3, 4.4, 4.5 and 4.6, the Borrowers may, subject to having given 10 Banking Days’ prior written notice (or such shorter period as the Lender may agree) thereof to the Lender, prepay any specified amount (such part being in an amount of two hundred and fifty thousand Dollars (USD250,000) or any larger sum which is an integral multiple of such amount) of a Loan on any relevant Interest Payment Date without premium or penalty.

4.3 Mandatory Prepayment on Total Loss

On the date falling ninety (90) days after that on which a Vessel became a Total Loss or, if earlier, on the date upon which the relevant insurance proceeds are, or Requisition Compensation is, received by the relevant Borrower (or the Lender pursuant to the Security Documents) the Borrowers must prepay the relevant Loan (i.e. Loan A or Loan B, as the case may be) in full.

4.3.1 Interpretation

For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:

(a) in the case of an actual total loss of a Vessel, on the actual date and at the time such Vessel was lost or, if such date is not known, on the date on which such Vessel was last reported;

(b) in the case of a constructive total loss of a Vessel, upon the date and at the time notice of abandonment of such Vessel is given to the then insurers of such Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

(c) in the case of a compromised or arranged total loss of a Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of such Vessel;

(d) in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

(e) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Vessel (other than within the definition of Compulsory Acquisition) by any Government Entity, or by persons allegedly acting or purporting to act on behalf of any Government Entity, which deprives the relevant Borrower of the use of such Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant incident occurred.

4.4 Mandatory prepayment on sale of the Vessel

On the date of completion of the sale of a Vessel, the Borrowers must prepay the relevant Loan (i.e. Loan A or Loan B, as the case may be) in full, including the applicable Prepayment Fee, if any, in accordance with clause 4.7.5.

4.5 Illegality

4.5.1 If, in any applicable jurisdiction, it becomes unlawful for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its funding of a Loan or it becomes unlawful for any affiliate of the Lender for the Lender to do so:

(a) the Lender shall promptly notify the Borrowers upon becoming aware of that event;

(b) upon the Lender notifying the Borrowers, the Available Facility will be immediately cancelled; and

the Borrowers shall repay the Loans on the last day of the relevant Interest Period occurring after the Lender has notified the Borrowers or, if earlier, the date specified by the Lender (being no earlier than the last day of any applicable grace period permitted by law) and the Commitment shall be cancelled in the amount of the Loans repaid.

4.6 Amounts payable on prepayment

4.6.1 Any prepayment of all or part of a Loan under this Agreement shall be made together with:

(a) accrued interest on the amount to be prepaid to the date of such prepayment;

(b) any additional amount payable under clauses 3.4, 6.6 or 12.2; and

(c) all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Security Documents including, without limitation any Break Costs.

4.7 Notice of prepayment; reduction of Repayment Instalments

4.7.1 Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.

4.7.2 Any amount prepaid pursuant to clause 4.2 shall satisfy the obligations specified in clause 4.1.1 in inverse order of maturity.

4.7.3 The Borrowers may not prepay a Loan or any part thereof except as expressly provided in this Agreement.

4.7.4 No amount repaid or prepaid may be re-borrowed.

4.7.5 Save and except for the occurrence of mandatory prepayment, the Borrowers shall pay a fee in an amount equal to 1% of the amount prepaid or cancelled under this clause 4 within the first two (2) years from the relevant Drawdown Date, which fee shall be paid on the date of the relevant prepayment or cancellation date.

5 FEES AND EXPENSES

5.1 Arrangement fee

The Borrowers agree to pay to the Lender a non-refundable arrangement fee of one point two five per cent (1.25%) of the amount of the Loan Facility within seven (7) Banking Days from the Execution Date, but latest by one (1) Banking Day before the first Drawdown Date.

5.2 Expenses

The Borrowers agree to reimburse the Lender on a full indemnity basis within ten (10) days of demand all reasonable expenses and/or disbursements whatsoever (including without limitation legal, printing and out of pocket expenses) certified by the Lender as having been incurred by them from time to time:

5.2.1 in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any contemplated or actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees) (but excluding any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under the Security Documents);

5.2.2 in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Lender’s rights thereunder or any action proposed or taken following the occurrence of an Event of Default which is continuing or otherwise in respect of the moneys owing under any of the Security Documents; and

5.2.3 in connection with obtaining a written report from a maritime insurance consultant or broker acceptable to the Lender in relation to the Insurances of the Vessels (which the Lender may obtain not more than once a year,),

5.3 Value added tax

All fees and expenses payable pursuant to this Agreement must be paid together with value added tax or any similar tax (if any) properly chargeable thereon in any jurisdiction. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

5.4 Stamp and other duties

The Borrowers must pay all stamp, documentary, registration or other like duties or taxes, but excluding any FATCA Deduction (except for any such Taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under any of the Security Documents) (including any duties or taxes payable by the Lender) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loans and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.

6 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

6.1 No set-off or counterclaim

All payments to be made by the Borrowers under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am (London time) on the due date in freely available funds to such account at the Lender and in such place as the Lender may from time to time specify for this purpose.

6.2 Payment by the Lender

All sums to be advanced by the Lender to the Borrowers under this Agreement shall be remitted in USD on the relevant Drawdown Date to the account specified in such Drawdown Notice.

6.3 Non-Banking Days

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

6.4 Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

6.5 Currency of account

If any sum due from the Borrowers under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against the Borrowers, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrowers undertake to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Borrowers under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

6.6 Grossing-up for Taxes - by the Borrowers

If at any time a Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or otherwise from any payment due under any of the Security Documents for the account of the Lender or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from such Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and such Borrower must indemnify the Lender against any losses or costs incurred by it by reason of any failure of such Borrower to make

any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The relevant Borrower must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

6.7 Claw back of Tax benefit

If, following any such deduction or withholding as is referred to in clause 6.6 from any payment by a Borrower, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, and to the extent that it can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse such Borrower with such amount as Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by such Borrower as aforesaid. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the Lender to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this clause 6.7, be entitled to enquire about the Lender’s tax affairs.

6.8 Loan account

The Lender shall maintain, in accordance with its usual practice, an account evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Lender shall maintain a control account or accounts (as the Lender may deem necessary) showing the Loans and other sums owing by the Borrowers under the Security Documents and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrowers under the Security Documents.

6.9 Partial payments

If, on any date on which a payment is due to be made by the Borrowers under any of the Security Documents, the amount received by the Lender from the Borrowers falls short of the total amount of the payment due to be made by the Borrowers on such date then, without prejudice to any rights or remedies available to the Lender under any of the Security Documents, the Lender must apply the amount actually received from the Borrowers in or towards discharge of the obligations of the Borrowers under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrowers:

6.9.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

6.9.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

6.9.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.3 but remains unpaid;

6.9.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loans which shall have become due under any of the Security Documents but remains unpaid;

6.9.5 fifthly, in or towards payment to the Lender of any due but unpaid Repayment Instalments; and

6.9.6 sixthly, in or towards payment to the Lender, on a pro rata basis, for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loans repaid and which amounts are so payable under this Agreement and any other sum relating to the Loans which shall have become due under any of the Security Documents but remains unpaid.

The order of application set out in clauses 6.9.1 to 6.9.6 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

7 REPRESENTATIONS AND WARRANTIES

7.1 Continuing representations and warranties

Each Borrower represents and warrants to the Lender that:

7.1.1 Due incorporation

each of the corporate Security Parties is duly incorporated, validly existing and in good standing under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own its respective property and other assets, to which it has unencumbered legal and beneficial title except as disclosed to the Lender, and the shares of each Borrower are in registered form;

7.1.2 Corporate power

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the Security Documents to which it is a party; all necessary corporate, shareholder (if applicable) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrowers to borrow or any other Security Party to howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loans;

7.1.3 Binding obligations

the Underlying Documents and the Security Documents, when executed, will constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;

7.1.4 No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party or other member of the Group is 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 any Security Party or other member of the Group is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the Constitutional Documents of any Security Party or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties;

7.1.5 No default

no Event of Default has occurred;

7.1.6 No litigation or judgments

no Proceedings are current, pending or threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Security Parties under the Security Documents to which they are a party;

7.1.7 No filings required

except for the registration of the Mortgages in the relevant register under the laws of the Flag State through the Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

7.1.8 Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected or waived by the person requiring the same and, to the extent no such waiver exists, are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation (including all such as relate to money laundering) to which such Security Party is subject;

7.1.9 Choice of law

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages), the choice of the law of the Flag State to govern the Mortgages and the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

7.1.10 No immunity

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

7.1.11 Financial statements correct and complete

the latest audited consolidated accounts of the Corporate Guarantor and its Subsidiaries (including the Borrowers) in respect of the relevant financial year as delivered to the Lender present or will present fairly and accurately the consolidated financial position of the Borrowers and the Corporate Guarantor as at the date thereof and the results of the operations of the Corporate Guarantor and its Subsidiaries (including the Borrowers) and, as at such date, neither Borrower nor the Corporate Guarantor have any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

7.1.12 Pari passu

the obligations of each Borrower under this Agreement are direct, general and unconditional obligations of such Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of such Borrower except for obligations which are mandatorily preferred by operation of law and not by contract;

7.1.13 Information

all information, whatsoever provided by any Security Party to the Lender in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading in any (in the reasonable opinion of the Lender) material respect;

7.1.14 No withholding Taxes

no Taxes anywhere are imposed whatsoever by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents to which such Security Party is or is to be a party or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

7.1.15 No Default under Underlying Documents

except as disclosed in writing by the Borrowers to the Lender, no Security Party is in material default of any of its obligations under any relevant Underlying Document;

7.1.16 Use of proceeds

the Borrowers shall apply the Loans only for the purposes specified in clause 2.1;

7.1.17 Copies true and complete

the Certified Copies of the Underlying Documents delivered or to be delivered to the Lender pursuant to clause 9.1 are, or will when delivered be, true and complete copies or, as the case may be, originals of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

7.1.18 Ownership of Borrowers

all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

7.1.19 No Indebtedness

no Borrower has incurred any Borrowed Moneys save as envisaged by this Agreement or as otherwise disclosed to the Lender or incurred in the ordinary course of its business of owning, operating and chartering the relevant Vessel;

7.1.20 Tax returns

each Borrower and the Corporate Guarantor have filed all tax and other fiscal returns (if any) which may be required to be filed by any tax authority to which they are subject;

7.1.21 Freedom from Encumbrances

neither Vessel nor its Earnings, Insurances or Requisition Compensation (each as defined in the relevant Ship Security Documents) nor any Extended Employment Contract in respect of a Vessel nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

7.1.22 Environmental Matters

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:

(a) the Borrowers, the Manager and the other Group Members have complied with the provisions of all Environmental Laws;

(b) the Borrowers, the Manager and the other Group Members have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals;

(c) no Environmental Claim has been made or threatened or pending against any of the Borrowers, the Manager, or any other Group Member; and

(d) there has been no Environmental Incident;

7.1.23 ISM and ISPS Code

each Borrower has complied with and continue to comply with and have procured that the Manager of the relevant Vessel has complied with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to their business and in particular they or the Manager have obtained and maintains a valid DOC, IAPP Certificate, EIAPP Certificate (if applicable) and SMC for the relevant Vessel and that they and the Manager have implemented and continue to implement an ISM SMS;

7.1.24 Accounting reference date

each Borrower’s and the Corporate Guarantor’s accounting reference date is 31 December.

7.1.25 Office

neither of the Borrowers have an office in England;

7.1.26 Restricted Persons, unlawful activity

(a) none of the shares in a Borrower, in (to the best of its knowledge) the Corporate Guarantor, or in any other Security Party or a Vessel are or will be at any time during the Facility Period legally or beneficially owned or controlled by a Restricted Person;

(b) no Restricted Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of a Borrower, (to the best of its knowledge) the Corporate Guarantor, or any other Security Party or a Vessel;

7.1.27 Sanctions

(to the best of its knowledge only in respect of an agent) no Security Party nor any director, officer, agent, employee of any Security Party or any person acting on behalf of any Security Party, is a Restricted Person nor acts directly or indirectly on behalf of a Restricted Person;

7.1.28 FATCA

none of the Security Parties is a FATCA FFI or a US Tax Obligor; and

7.1.29 Republic of the Marshall Islands Economic Substance Regulation 2018

All of the Security Parties are in compliance with the Republic of the Marshall Islands Economic Substance Regulation 2018 in accordance with its terms and the time frame thereof.

7.2 Repetition of representations and warranties

On each day throughout the Facility Period, the Borrowers shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day and in clause 7.1.11 as if made with reference to the Latest Accounts at any relevant time.

8 UNDERTAKINGS

8.1 General

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

8.1.1 Notice of Event of Default and Proceedings

promptly inform the Lender of (a) any Event of Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents to which it is a party and (b) as soon as the same is commenced or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of the relevant Vessel (including, but not limited to any Total Loss of such Vessel or the occurrence of any Environmental Incident) and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing and no such Proceedings have been commenced or threatened;

8.1.2 Authorisation

to the extent a waiver has not been obtained, obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

8.1.3 Corporate Existence

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

8.1.4 Use of proceeds

use the Loans exclusively for the purposes specified in clauses 1.1 and 2.1;

8.1.5 Pari passu

ensure that its obligations under this Agreement shall, without prejudice to the provisions of clause 8.3, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

8.1.6 Financial statements

(a) supply to the Lender as soon as become available, but in any event within 180 days after the end of each of its financial years: the unaudited Annual Financial Statements of such Borrower for that financial year; and the audited consolidated Annual Financial Statements of the Corporate Guarantor for that financial year.

(b) supply to the Lender as soon as become available, but in any event within 90 days after the end of each financial half year (i) in the case of the Borrowers, the Semi-Annual Financial Statements; and (ii) in the case of the Corporate Guarantor, the unaudited consolidated Semi-Annual Financial Statements, for that financial half year.

(c) procure that each set of Annual Financial Statements and Semi-Annual Financial Statements includes a balance sheet, a profit and loss account and a cashflow statement and that, in addition each set of Annual Financial Statements of the Corporate Guarantor shall be audited.

(d) procure that each set of financial statements delivered pursuant to this clause 8.1.6 shall: give a true and fair view of (in the case of Annual Financial Statements for any financial year), or fairly present (in other cases), the financial condition and operations of the relevant Security Party as at the date as at which those financial statements were drawn up; and in the case of Annual Financial Statements of the Corporate Guarantor, not be the subject of any adverse auditor’s qualification having a Material Adverse Effect in its ability to perform its obligations under the relevant Security Documents.

(e) supply to the Lender the bank account statement of each Borrower each month evidencing that the charterhire of each charter of the relevant Vessel is remitted to the account designated by the Lender.

8.1.7 Reimbursement of MII Policy premiums

reimburse the Lender on the Lender’s written demand the amount of the premium payable by the Lender for the inception or, as the case may be, extension and/or continuance of the MII Policy (including any insurance tax thereon);

8.1.8 Provision of further information

provide the Lender, and procure that the Corporate Guarantor (including its Subsidiaries), shall provide the Lender, with such financial or other information (including, but not limited to, financial standing, Indebtedness, balance sheet, off-balance sheet commitments, repayment schedules, operating expenses, charter arrangements concerning each Borrower, the Corporate Guarantor (including its Subsidiaries), the Group and their respective affairs, activities, financial standing, Indebtedness and operations and the performance of each Vessel as the Lender may from time to time reasonably require save for any information which is confidential in relation to arms-length third parties or is not disclosable by law, convention or regulatory requirements;

8.1.9 Obligations under Security Documents, etc.

duly and punctually perform each of the obligations expressed to be imposed or assumed by them under the Security Documents and any Extended Employment Contact and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and any Extended Employment Contract to which it is a party;

8.1.10 Compliance with ISM Code

and will procure that any Operator will, comply with and ensure that each Vessel and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Facility Period;

8.1.11 Withdrawal of DOC and SMC

immediately inform the Lender if there is any actual withdrawal of its or any Operator’s DOC, IAPP Certificate, EIAPP Certificate or the SMC of a Vessel;

8.1.12 Issuance of DOC and SMC

and will procure that any Operator will promptly inform the Lender of the receipt by a Borrower or any Operator of notification that its application for a DOC or any application for an SMC or IAPP Certificate or EIAPP Certificate for relevant Vessel has been refused;

8.1.13 ISPS Code Compliance

and will procure that the Manager or any Operator will:

(a) maintain at all times a valid and current ISSC in respect of the relevant Vessel;

(b) immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or material modification of the ISSC in respect of the relevant Vessel; and

(c) procure that the relevant Vessel will comply at all times with the ISPS Code;

8.1.14 Compliance with Laws and payment of taxes

(a) comply with all relevant Environmental Laws, laws, statutes and regulations applicable to it and pay all taxes for which it is liable as they fall due; and

(b) comply in all respects with, and will procure that each Security Party and each other Group Member will comply in all respects with, all Sanctions;

8.1.15 Inspection ensure that the Lender, by independent marine surveyors or other persons appointed by it for such purpose (who shall be appointed by the Lender at the Lender’s expense), may board the relevant Vessel, once per calendar year or whenever the Lender deems necessary after the occurrence of an Event of Default which is continuing, provided in each case that the Lender shall use reasonable endeavours to ensure that such inspections or surveys shall not interfere with the operation of such Vessel, for the purpose of inspecting or surveying her and will afford all proper facilities for such inspections or survey and for this purpose will give the Lender reasonable advance notice of any intended drydocking of such Vessel (whether for the purpose of classification, survey or otherwise) and will provide the Lender with or ensure that the Lender receives on request all reports of such inspections;

8.1.16 The Vessels

ensure that throughout the Facility Period the relevant Vessel will (except as the Lender may otherwise permit) be:

(i) in the absolute sole, legal and beneficial ownership of the relevant Borrower and not held on trust for any third party;

(ii) registered through the offices of the Registry as a ship under the laws and flag of the Flag State;

(iii) in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

(iv) classed with the Classification free of all overdue requirements and recommendations of the Classification Society affecting the Classification;

(v) insured in accordance with the Ship Security Documents; and

(vi) managed by the Manager in accordance with the terms of the Management Agreement, which shall be acceptable to the Lender.

8.1.17 Charters

deliver to the Lender, a Certified Copy of each Extended Employment Contract upon its execution or from time to time upon the Lender’s request, forthwith on the Lender’s request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and use reasonable efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer (provided that any failure to procure the acknowledgement shall not constitute an Event of Default) and (c) (if the relevant Vessel is subject to a bareboat charter) procure execution by such Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and will provide evidence acceptable to the Lender that such notice has been given to the relevant charterer and such Borrower shall pay all legal and other costs incurred by the Lender in connection with any such Charter Assignment and Tripartite Deed, forthwith following the Lender’s demand;

8.1.18 Chartering

not without the prior written consent of the Lender and, if such consent is given, only subject to such conditions as the Lender may reasonably impose (and in the case of (b) only, such consent not to be unreasonably withheld or delayed), to let the relevant Vessel:

(a) on demise charter for any period; or

(b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; or

(c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance;

8.1.19 Sanctions

(a) (to the best of its knowledge only in respect of an agent) not be, and shall procure that any Security Party and other Group Member, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person;

(b) and shall procure that each Security Party and each other Group Member shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Lender;

(c) procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with the Lender in its name or in the name of any other member of the Group;

(d) take, and shall procure that each Security Party and each other Group Member has taken, reasonable measures to ensure compliance with Sanctions;

(e) and shall procure that each Security Party and each other Group Member shall, to the extent permitted by law promptly upon becoming aware of them, supply to the Lender details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority; and

(f) not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting clause 8.1.19(b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by such Borrower, any other Security Party or any other Group Member in accordance with this Agreement;

8.1.20 Ownership

ensure that all the shares in such Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

8.1.21 Shipping activities

procure that the Corporate Guarantor shall at all times remain the ultimate holding company of shipowning companies engaged in shipping activities reasonably acceptable to the Lender;

8.1.22 FATCA Information

(a) subject to paragraph (c) below each party to any Security Document shall, within 10 Banking Days of a reasonable request by the other party to that Security Documents:

(i) confirm to that other party whether it is:

(A) a FATCA Exempt Party; or

(B) not a FATCA Exempt Party; and

(ii) supply to that other party such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the purposes of that other party’s compliance with FATCA;

(iii) supply to that other party such forms, documentation and other information relating to its status as that other party reasonably requests for the purposes of that other party's compliance with any other law, regulation, or exchange of information regime;

(b) if a party to any Security Document confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify the other party reasonably promptly;

(c) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion constitute a breach of:

(i) any law or regulation;

(ii) any policy of the Lender;

(iii) any fiduciary duty; or

(iv) any duty of confidentiality;

(d) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion cause it to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this paragraph (d);

(e) if a party to any Security Document fails to confirm whether or not it is a FATCA Exempt Party, or to supply forms, documentation or other information requested in accordance with paragraph (a) (i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Security Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as that party provides the requested confirmation, forms, documentation or other information;

8.1.23 FATCA Deduction

(a) A party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b) A party to any Security Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the party to whom it is making the payment and, in addition, shall notify the Borrowers and the Lender; and

8.1.24 Republic of the Marshall Islands Economic Substance Regulation 2018

procure that all Security Parties will be in compliance with the Republic of the Marshall Islands Economic Substance Regulation 2018 in accordance with its terms and time frame once the same becomes applicable.

8.2 Security value maintenance

8.2.1 Valuation of the Vessels

The Market Value of a Vessel shall be determined in each June and December in each calendar year within the Facility Period by a valuation report:

(a) in Dollars;

(b) by an Approved Broker appointed by the Lender;

(c) without physical inspection of such Vessel (unless the Lender may so require); and

(d) on the basis of a sale for prompt delivery at arm’s length on normal commercial terms as between a willing seller and a willing buyer, without taking into account any existing charter or other contract of employment,

which valuation shall be binding as regards the Borrowers.

8.2.2 Information

Each Borrower shall promptly provide the Lender and any shipbroker or expert carrying out the valuation with any information which the Lender or the shipbroker or expert may reasonably request for the proposes of the valuation and, if such Borrower fails to provide the information by the date specified in the request, the valuation may be made on assumptions which the Lender and any shipbroker or expert appointed by it, considers prudent.

8.2.3 Costs

Within the Facility Period, the Borrowers shall provide the Lender with a valuation report of the Vessels and shall bear the costs in connection with the Lender obtaining valuations of such Vessels not more than twice per year. In the event of valuation for additional securities provided for the purpose of clause 8.2.5, same should be under the Borrowers’ account and shall not be included in the aforementioned frequency.

8.2.4 Minimum required security cover

Clause 8.2.5 applies if the Lender notifies the Borrowers that the aggregate Security Value, in relation to a Vessel, is below 120% of the relevant Loan (i.e. Loan A or Loan B) at any time during the Facility Period.

8.2.5 Provision of additional security; prepayment

If the Lender serves a notice on the Borrowers under clause 8.2.4, the Borrowers shall, or shall procure the Corporate Guarantor to, within thirty (30) days after the date on which the Lender’s notice is served, either:

(a) provide, or ensure that a third party provides, cash deposit in the amount equal to the shortfall, or additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and is documented in such terms as the Lender may approve or require; and/or

(b) prepay such part (at least) of the relevant Loans (Loan A or Loan B) under clause 4.2 as will eliminate the shortfall.

For the purpose of the Security Documents, the value at any time of any other asset over which additional security is provide under this Clause 8.2 will be value as most recently determined in accordance with this Clause 8.2.

In addition, for the purposes of this clause 8.2.5 the market value (i) of any additional security over a ship (other than the Vessels) shall be determined (at the Borrowers’ expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuation to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant Vessel and (ii) of any other additional security provided or to be provided to the Lender shall be determined by the Lender in its reasonable discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

8.2.6 Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Lender shall be entitled to receive (at the Borrowers’ expense) such evidence and documents of the kind referred to in schedule 2 as may in the Lender’s reasonable opinion be appropriate and such favourable legal opinions as the Lender shall reasonably require.

8.2.7 Release of Security

If the Security Value in relation to a Vessel shall at any time exceeds 120% of the relevant Loan (i.e. Loan A or Loan B), and the Borrowers shall previously have provided further security to the Lender pursuant to clause 8.2.5 for more than three (3) months, the Lender shall, as soon as reasonably practicable after notice from the Borrowers to do so and subject to being indemnified to its reasonable satisfaction against the cost of doing so, release any such further security specified by the Borrowers provided that the Lender is satisfied that, immediately following such release, the Security Value in relation to such Vessel will equal or exceed 120% of such Loan (i.e. Loan A or Loan B).

8.3 Negative undertakings relating to the Borrower

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will procure that, except with the prior written consent of the Lender (and such consent in respect of any change of name of a Vessel not to be unreasonably withheld), it will not:

8.3.1 Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Group Member or any other person;

8.3.2 No merger or transfer

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of its shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause 8.3);

8.3.3 Disposals

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

8.3.4 Other business or manager

undertake any type of business other than the ownership and operation of the relevant Vessel or (without the prior consent of the Lender) employ anyone other than the Manager as commercial and technical manager of such Vessel;

8.3.5 Acquisitions

acquire, any assets other than the relevant Vessel and rights arising under contracts entered into by or on behalf of such Borrower in the ordinary course of its business of owning, operating and chartering such Vessel;

8.3.6 Other obligations

incur, any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of its business of owning, operating and chartering the relevant Vessel;

8.3.7 No borrowing

incur any Borrowed Money except for Borrowed Money (i) pursuant to the Security Documents or (ii) incurred in the ordinary course of its business of owning, operating and chartering the relevant Vessel or (iii) owed by any Group Member provided that such Borrowed Money is fully subordinated to the Borrowed Money incurred under the Security Documents by a Subordination Deed in form and substance reasonably acceptable to the Lender;

8.3.8 Repayment of borrowings

repay or prepay the principal of, or pay interest on or any other sum in connection with any of their Borrowed Money except for Borrowed Money pursuant to or permitted under the Security Documents;

8.3.9 Guarantees

issue any guarantees or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees from time to time required in the ordinary course of trading up to USD350,000 per Vessel or such higher amount as agreed with the Lender or by any protection and indemnity or war risks association with which the relevant Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees required for the salvage of such Vessel;

8.3.10 Loans

make any loans or grant any credit (save for normal trade credit in the ordinary course of business) to any person or agree to do so;

8.3.11 Sureties

permit any Indebtedness of such Borrower to any person (other than to the Lender pursuant to the Security Documents) to be guaranteed by any person (except for guarantees from time to time required in the ordinary course of trading up to USD350,000 per Vessel or such higher amount as agreed with the Lender or by any protection and indemnity or war risks association with which the relevant Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of such Vessel); or

8.3.12 Flag, Class etc.permit:

(a) any change in the name or flag of the relevant Vessel;

(b) any change of Classification or Classification Society in respect of the relevant Vessel;

(c) any change of Manager in respect of the relevant Vessel; or

(d) any change in the ownership (including ultimate beneficial ownership) or control of such Borrower from that existing as at the date hereof and shall procure that there is no change in the ownership (including ultimate beneficial ownership) or control of the Manager (if other than the Corporate Guarantor) from that existing as at the date hereof (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

8.3.13 Underlying Documents

terminate or materially amend or vary an Extended Employment Contract or a Management Agreement (and for the avoidance of doubt, material amendments include, but are not limited to, reductions of rate of hire, increase of management fees not already provided for in the Management Agreement and termination rights); or

8.3.14 Lay-up

de-activate or lay up the relevant Vessel; or

8.3.15 Place of business

own or operate and will procure that no Security Party shall own or operate a place of business situate in England; or

8.3.16 Share capital and distribution

declare or pay any dividends if an Event of Default has occurred and is continuing or would occur as a result of such declaration or payment or distribute any of its present or future assets, undertakings, rights or revenue;

8.3.17 Sharing of Earnings

permit there to be any agreement or arrangement whereby the Earnings (as defined in the relevant Ship Security Documents) of the relevant Vessel may be shared or pooled howsoever with any other person except for customary profit sharing arrangements under a charterparty;

8.3.18 Lawful use

permit the relevant Vessel to be employed:

(i) in any way or in any activity with a Restricted Person or in any Sanctions Restricted Jurisdiction or which is (i) unlawful under international law or the domestic laws of any relevant country or (ii) contrary to any Sanctions;

(ii) to the best of its knowledge, in carrying illicit or prohibited goods;

(iii) in a way which may make such Vessel liable to be condemned by a prize court or destroyed, seized or confiscated;

(iv) in any part of the world where there are hostilities (whether war has been declared or not), unless such employment has been notified to, and approved by, the relevant insurers of such Vessel; or

(v) to the best of its knowledge, in carrying contraband goods,

and such Borrower shall procure that the persons responsible for the operation of such Vessel shall take all necessary and proper precautions to ensure that this does not happen, including participation in industry or other voluntary schemes available to such Vessel and in which leading operators of ships operating under the same flag or engaged in similar trades generally participate at the relevant time;

8.3.19 FATCA

become a FATCA FFI or a US Tax Obligor and shall procure that no Security Party shall do so.

9 CONDITIONS

9.1 Initial conditions precedent

The Borrowers may not deliver a Drawdown Notice unless the Lender, or its duly authorised representative, has received in form and substance satisfactory to it all of the documents and other evidence listed in part 1 of schedule 2, in form and substance satisfactory to the Lender.

9.2 Conditions precedent on Drawdown

Subject to clause 9.1, the Lender will only be obliged to comply with clause 2.2 in relation to any Drawdown if the Lender, or its duly authorised representative, has received in form and substance satisfactory to it all of the documents and evidence listed in part 2 of schedule 2 on or prior to the relevant Drawdown Date.

9.4 Conditions precedent on Closing Date

Subject to clause 9.1, the Lender will only be obliged to proceed with the release of funds under the relevant SWIFT MT103/SWIFT MT199 instructions if the Lender, or its duly authorised representative, has received in form and substance satisfactory to it all of the documents and evidence listed in part 3 of schedule 2 on the relevant Closing Date.

9.5 Further conditions precedent

The Lender will only be obliged to comply with clause 2.2 if on the date of the relevant Drawdown Notice and on the proposed Drawdown Date:

(c) no Default is continuing or would result from the proposed Drawdown;

(d) all of the representations set out in clause 7 are true; and

the representations are true so far as they relate to the Vessel.

9.6 Conditions subsequent

Each Borrower undertakes to deliver or to cause to be delivered to the Lender the documents and evidence listed in part 4 of schedule 2 as soon as practicable after the relevant Drawdown Date, but no later than the relevant date as stipulated set out therein.

9.7 Waiver of conditions precedent

The conditions in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

10 EVENTS OF DEFAULT

10.1 Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

10.1.1 Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Lender within two (2) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within two (2) Banking Days of demand); or

10.1.2 Breach of Insurance and certain other obligations: a Borrower or, as the context may require, the Manager or any other person fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Ship Security Documents) for a Vessel or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of a Borrower or any other person or a Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 8; or

10.1.3 Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents to which it is a party (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within fifteen (15) Banking Days of the occurrence thereof; or

10.1.4 Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents to which it is a party or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or

10.1.5 Cross-default: any Indebtedness of a Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of the Borrowers or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by a Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of a Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to a Borrower or the Corporate Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned, and such Indebtedness of such Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

10.1.6 Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within fifteen (15) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within twenty (20) days; or

10.1.7 Insolvency: any Security Party is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or has negative net worth (taking into account contingent liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or

10.1.8 Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party unless the Borrowers can demonstrate to the satisfaction of the Lender, by providing an opinion of leading counsel that such corporate action, Proceedings or other steps are frivolous, vexatious or an abuse of the process of the court or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

10.1.9 Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or an administration order is made in relation to any Security Party; or

10.1.10 Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any material part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of any Security Party; or

10.1.11 Compositions: any corporate action, legal proceedings or other procedures or steps are taken or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or a substantial part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors (excluding always negotiations with holders of preferred shares); or

10.1.12 Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.11 (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

10.1.13 Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior consent of the Lender; or

10.1.14 Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity and the same are not returned to the relevant Security Party within 45 days of such seizure, nationalisation, expropriation or compulsory acquisition; or

10.1.15 Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or

10.1.16 Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Lender to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

10.1.17 Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

10.1.18 Encumbrances enforceable: any Encumbrance (other than Permitted Encumbrances) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or

10.1.19 Arrest: a Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Borrower and such Borrower shall fail to procure the release of such Vessel within a period of fifteen (15) Banking Days thereafter; or

10.1.20 Registration: the registration of a Vessel under the laws and flag of the Flag State is cancelled or terminated without the prior written consent of the Lender; or

10.1.21 Unrest: the Flag State of a Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the relevant Borrower shall have transferred such Vessel onto a new flag acceptable to the Lender within thirty (30) days of the Lender’s written request to such Borrower to effect such transfer; or

10.1.22 Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Lender be expected to have a Material Adverse Effect (i) on the financial condition of any Security Party or the Group taken as a whole or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

10.1.23 P&I: a Borrower or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which a Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where such Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or

10.1.24 Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents or (iii) the value or nature of the financial condition of any Security Party (other than the Manager); or

10.1.25 Required Authorisations: to the extent it has not been waived, any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect; or

10.1.26 Money Laundering: any Security Party is in breach of or fails to observe any law, official requirement, other regulatory measure or procedure implemented to combat “money laundering” as defined in Article 1 of the Directive (2015/849/EC) of the Council of the European Communities; or

10.1.27 Management Agreement: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the prior consent of the Lender; or

10.1.28 Change of Ownership: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of a Borrower or the Shareholder from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause); or

10.1.29 Sanctions: A Security Party fails to comply with clauses 7.1.26, 7.1.27 or 8.1.19 of this Agreement.

10.2 Acceleration

The Lender may at any time after the occurrence of an Event of Default, and only while the same is continuing, by notice to the Borrowers declare that:

10.2.1 the obligation of the Lender to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or

10.2.2 the Loans and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

10.3 Demand Basis

If, under clause 10.2.2, the Lender has declared the Loans to be due and payable on demand, at any time thereafter the Lender shall by written notice to the Borrowers (a) demand repayment of the Loans on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loans shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

11 INDEMNITIES

11.1 General indemnity

The Borrowers agree to indemnify the Lender on demand, without prejudice to any of the Lender's other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs) which the Lender shall certify as sustained by it as a consequence of any Default, any prepayment of a Loan being made under clauses 4.3, 4.4, 8.2.5 or 12.1 or any other repayment or prepayment of a Loan being made otherwise than on an Interest Payment Date relating to the part of such Loan prepaid or repaid; and/or a Loan not being made for any reason (excluding any default by the Lender) after the relevant Drawdown Notice has been given.

11.2 Environmental indemnity

The Borrowers shall indemnify the Lender on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against the Lender which would not have been, or been capable of being, made or asserted against the Lender had it not entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

11.3 Capital adequacy and reserve requirements indemnity

The Borrowers shall promptly indemnify the Lender on demand against any cost incurred or loss suffered by the Lender as a result of its complying with (i) the minimum reserve requirements from time to time (ii) any capital adequacy directive and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to the Commitment and/or the Loans or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by the Lender under clause 12.2.

12 UNLAWFULNESS AND INCREASED COSTS

12.1 Unlawfulness

If it is or becomes contrary to any law, directive or regulation for the Lender to contribute to the Loans or to maintain its Commitment or fund the Loans, the Lender shall promptly give notice to the Borrowers whereupon (a) the Loans and Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay the Loans either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement.

Provided that if circumstances arise which would result in a notification under this clause 12.1 then, prior to giving such notice, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office of the Lender not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

12.2 Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

12.2.1 subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

12.2.2 increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of a Loan; and/or

12.2.3 reduce the amount payable or the effective return to the Lender under any of the Security Documents; and/or

12.2.4 reduce the Lender's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or

12.2.5 require the Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or

12.2.6 require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loans from its capital for regulatory purposes,

then and in each such case (subject to clause 12.3):

(a) the Lender shall notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and

(b) the Borrowers shall on demand made at any time whether or not the Loans have been repaid, pay to the Lender the amount which the Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, forgone return or loss.

For the purposes of this clause 12.2 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.

12.3 Exception

Nothing in clause 12.2 shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

13 APPLICATION OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND MISCELLANEOUS

13.1 Application of moneys

All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Lender’s discretion, shall be applied in the following manner:

13.1.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender and the Lender under any of the Security Documents;

13.1.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

13.1.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.3 but remains unpaid;

13.1.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loans which shall have become due under any of the Security Documents but remains unpaid;

13.1.5 fifthly, in or towards payment to the Lender of any due but unpaid Repayment Instalments;

13.1.6 sixthly, in or towards payment to the Lender in application in repayment of the Loans in accordance with clause 4.7.2;

13.1.7 seventhly, in or towards payment for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of a Loan repaid and which amounts are so payable under this Agreement and any other sum relating to a Loan which shall have become due under any of the Security Documents but remains unpaid; and

13.1.8 eighthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may then be entitled to receive such surplus.

The order of application set out in clauses 13.1.1 to 13.1.8 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

13.2 Set-off

13.2.1 The Borrowers irrevocably authorise the Lender (without prejudice to any of the Lender’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing and without notice to the Borrowers, to apply any credit balance to which a Borrower is then entitled standing upon any account of such Borrower with any branch of the Lender in or towards satisfaction of any sum due and payable from the Borrowers to the Lender under any of the Security Documents. For this purpose, the Lender is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

13.2.2 The Lender shall not be obliged to exercise any right given to it by this clause 13.2. The Lender shall notify the Borrowers forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto.

13.2.3 Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

13.3 Further assurance

The Borrowers undertake with the Lender that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of the Lender thereunder, are enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary for perfecting the security contemplated or constituted by the Security Documents.

13.4 Conflicts

In the event of any conflict between this Agreement and any of the other Security Documents, the provisions of this Agreement shall prevail.

13.5 No implied waivers, remedies cumulative

No failure or delay on the part of the Lender to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender 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 in the Security Documents are cumulative and are not exclusive of any remedies provided by law. No waiver by the Lender shall be effective unless it is in writing.

13.6 Severability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

13.7 Force Majeure

Regardless of any other provision of this Agreement, the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism or (v) any other circumstances whatsoever outside the Lender’s control.

13.8 Amendments

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

13.9 Replacement of Screen Rate

13.9.1 Subject to 13.8 (Amendments), if a Screen Rate Replacement Event has occurred in relation to the Screen Rate, any amendment or waiver which relates to:

(a) providing for the use of a Replacement Benchmark; and

(b) any or all of the following:

(i) aligning any provision of any Security Document to the use of that Replacement Benchmark;

(ii) enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

(iii) implementing market conventions applicable to that Replacement Benchmark;

(iv) providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

(v) adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Lender and the Security Parties.

13.9.2 In this clause 13.9:

“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.

“Replacement Benchmark” means a benchmark rate which is:

(a) formally designated, nominated or recommended as the replacement for a Screen Rate by: the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or any Relevant Nominating Body, and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;

(b) in the opinion of the Lender and the Security Parties, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or

(c) in the opinion of the Lender and the Security Parties, an appropriate successor to a Screen Rate.

“Screen Rate Replacement Event” means, in relation to the Screen Rate:

(a) the methodology, formula or other means of determining that Screen Rate has, in the reasonable opinion of the Lender, and the Borrowers materially changed; or

(b)

(i)

(A) the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

(B) information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Scree Rate; or

(ii) the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate; or

(iii) the supervisor of the administrator of that Screen Rate publicly announces that the Screen Rate has been or will be permanently or indefinitely discontinued; or

(iv) the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

(v) in the case of a Screen Rate for LIBOR, the supervisor of the administrator of that Screen Rate makes a public announcement or publishes information stating that that Screen Rate is no longer or, as of a specified future date will no longer be, representative of the underlying market or economic reality that it is intended to measure and that representativeness will not be restored (as determined by such supervisor); or

(c) the administrator of the Screen Rate determines that the Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:

(i) the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lender and the Borrower) temporary; or

(ii) that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than 15 Business Days; or

(d) in the reasonable opinion of the Lender and the Security Parties, the Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

13.10 Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

13.11 English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied, at the Lender’s request, by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

14 ASSIGNMENT, TRANSFER AND LENDING OFFICE

14.1 Benefit and burden

This Agreement shall be binding upon, and ensure for the benefit of, the Lender and the Borrowers and their respective successors in title.

14.2 No assignment by Borrower

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

14.3 Transfer by Lender

The Lender may at any time (i) change its office through which the Loan is made available or (ii) cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be transferred or assigned without the consent of the Borrowers or the Corporate Guarantor to a wholly-owned banking subsidiary or associated company of the Lender or with the consent (which should not be unreasonably withheld) of the Borrowers to any third party (in either case a “Transferee Lender”) provided always that any such Transferee Lender, by delivery of such undertaking as the Lender may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, relevant part of the Lender’s obligations under this Agreement the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim. The Lender shall give a notice to the Borrowers at least 14 Banking Days if such transfer or assignment is to any third party.

14.4 Documenting transfers

If the Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 14.3, the Borrowers undertake, immediately on being requested to do so by the Lender and at the cost of the Transferee Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferee Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of the Lender’s interest in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests. For the avoidance of doubt there will be no expense for the Borrowers in connection with an assignment or transfer, as provided in clauses 14.3 and 14.5.

14.5 Sub-Participation

The Lender may sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, or notice to, the Borrowers. Any such sub-participation shall have no effect on the Lender’s rights under the Security Documents and shall not affect the Borrowers at all.

14.6 Disclosure of information

The Lender may disclose to:

(a) its officers, employees, auditors and professional advisers;

(b) persons to whom disclosure is required to be made by applicable law or court order or pursuant to the rules or regulations of any supervisory or regulatory body or in connection with any judicial proceedings;

(c) any person who may conduct any merger and acquisition (or any transaction of such kind) with the Lender;

(d) any person to bring lawsuits against, or to collect and recover whole or a part of the money payable by, a Borrower or the Corporate Guarantor under and pursuant to any of the Security Documents;

(e) any person conducting credit appraisal or verification, or any other person permitted by the laws;

(f) any person who (i) becomes a lender in accordance with this Agreement, (ii) is a prospective assignee, transferee of the Lender; or (iii) is a potential sub-participant of the Lender, and their respective professional advisers (a “Prospective Assignee”) who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrowers and/or the other Security Parties as the Lender shall consider appropriate, but only if the Prospective assignee has first undertaken to the Borrowers to keep secret and confidential and, not without the prior written consent of the Borrowers, disclose to any third party, any of the information, reports or documents to be supplied by the Lender.

14.7 No additional costs

If at the time of, or immediately after, any assignment or transfer by the Lender of all or any part of its rights or benefits or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrowers would be obliged to pay to the Lender or, as the case may be, the Transferee Lender under clause 3.4, 6.6 or 12.2 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender or the Transferor Lender, as the case may be, under the relevant clause in the absence of such assignment, transfer or change, the Borrowers shall not be obliged to pay that excess.

15 NOTICES AND OTHER MATTERS

15.1 Notices

15.1.1 unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or electronically;

15.1.2 in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

15.2 Addresses for communications, effective date of notices

15.2.1 Subject to clause 15.2.2 and clause 15.2.5 notices to a Borrower shall be deemed to have been given and shall take effect when received in full legible form by such Borrower at the address and/or the fax number appearing below (or at such other address or fax number as such Borrower may hereafter specify for such purpose to the Lender by notice in writing);

Address: c/o Euroseas Ltd

4, Messogiou & Evropis Street, 151 24, Maroussi, Greece

Fax: +30 211 180 40 97

Attn: Tassos Aslidis/Simos Pariaros

15.2.2 notwithstanding the provisions of clause 15.2.1 or clause 15.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrowers shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrowers to the address or fax number referred to in clause 15.2.1;

15.2.3 subject to clause 15.2.5, notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the fax number appearing below (or at any such other address or fax number as the Lender may hereafter specify for such purpose to the Borrowers in writing);

Address: c/o SinoPac Leasing Corp.

5/F., NO. 203 Bade Road, Sec. 2, Taipei 10491, Taiwan, R.O.C.

Fax No. +886-2-81612452

Attention: Carol Lin

Email: carol.cl.lin@sinopac.com

15.2.4 subject to clause 15.2.5, notices to the Lender shall be deemed to be given and shall take effect when received in full legible form by the Lender at its address and/or fax number specified in the definition of “Lender” (or at anyother address or fax number as the Lender may hereafter specify for such purpose); and 15.2.5 if under clause 15.2.1 or clause 15.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

15.3 Electronic Communication

15.3.1 Any communication to be made by and/or between the Lender and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

(a) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(b) notify each other of any change to their electronic mail address or any other such information supplied by them.

15.3.2 Any electronic communication made by and/or between the Lender and the Security Parties or any of them will be effective only when actually received in readable form.

16 GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

17 JURISDICTION

17.1 Exclusive Jurisdiction

For the benefit of the Lender, and subject to clause 17.4 below, the Borrowers hereby irrevocably agree that the courts of England shall have exclusive jurisdiction:

17.1.1 to settle any disputes or other matters whatsoever arising under or in connection with this Agreement or any non-contractual obligation arising out of or in connection with this Agreement and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

17.1.2 to grant interim remedies or other provisional or protective relief.

17.2 Submission and service of process

The Borrowers accordingly irrevocably and unconditionally submit to the jurisdiction of the English courts. Without prejudice to any other mode of service, each Borrower:

17.2.1 irrevocably empowers and appoints Messrs Shoreside Agents Ltd at present of 11, The Timber Yard, Drysdale Street, London, N1 6ND, England, as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

17.2.2 agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

17.2.3 agrees that failure by a process agent to notify such Borrower of service of process will not invalidate the proceedings concerned;

17.2.4 without prejudice to the effectiveness of service of process on its agent under clause 17.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 16.2; and

17.2.5 agrees that if the appointment of any person mentioned in clause 17.2.1 ceases to be effective, such Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by such Borrower in those circumstances to appoint such person by notice tosuch Borrower.

17.3 Forum non conveniens and enforcement abroad

Each Borrower:

17.3.1 waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 17.1; and

17.3.2 agrees that a judgment or order of an English court in a dispute or other matter falling within clause 17.1 shall be conclusive and binding on the Borrowers and may be enforced against it in the courts of any other jurisdiction.

17.4 Right of Lender, but not Borrower, to bring proceedings in any other jurisdiction

17.4.1 Nothing in this clause 17 limits the right of the Lender to bring Proceedings, including third party proceedings, against a Borrower, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

17.4.2 the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

17.5 Enforceability despite invalidity of Agreement

Without prejudice to the generality of clause 13.6, the jurisdiction agreement contained in this clause 17 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

17.6 Effect in relation to claims by and against non-parties

17.6.1 For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by the Lender pursuant thereto or which would, if brought by a Borrower against the Lender, have been required to be brought in the English courts;

17.6.2 no Borrower shall bring or pursue any Foreign Proceedings against the Lender and each Borrower shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against the Lender;

17.6.3 If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party (including but not limited to any shareholder of a Borrower) brings or pursues against the Lender any Foreign Proceedings, the Borrowers shall indemnify the Lender on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which the Lender certifies as having been incurred by it;

the Lender and the Borrowers hereby agree and declare that the benefit of this clause 17 shall extend to and may be enforced by any officer, employee, agent or business associate of the Lender against whom a Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of the Lender pursuant thereto or which, if it were brought against the Lender, would fall within the material scope of clause 17.1. In those circumstances this clause 17 shall be read and construed as if references to the Lender were references to such officer, employee, agent or business associate, as the case may be.

Schedule 1 Form of Drawdown Notice

To: SinoPac Capital International (HK) Limited

Suites 3306, 33/F., Tower 1, The Gateway, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong

[●] 2021

Dear Sirs

Re: Loan agreement dated 2021 in respect of a loan of up to USD10,000,000 (the “Loan Agreement”) made between (1) Corfu Navigation Ltd and Jonathan John Shipping Ltd as Borrowers and (2) SinoPac Capital International (HK) Limited as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.

We hereby give you notice that we wish to draw Loan [A/B] the sum of USD[6,500,000/3,500,000] on [date] 2021. The funds should be credited to the account of [ ] and numbered [ ] with [ ] of [ ].

We confirm that:

(a) no Default has occurred and is continuing;

(b) 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;

(c) the borrowing to be effected by the drawdown of Loan [A/B] will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

(d) there has been no material adverse change in our financial position or in the consolidated financial position of the Borrowers or the Corporate Guarantor from that described by us to the Lender in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Lender in connection therewith;

(e) there are no Required Authorisations; and

(f) there has occurred nothing which would have a Material Adverse Effect.

By ………………………………..

Authorised Signatory

CORFU NAVIGATION LTD

By ………………………………..

Authorised Signatory

JONATHAN JOHN SHIPPING LTD

Schedule 2 Conditions precedent and subsequent

Part 1

Conditions precedent to the first Drawdown Notice

1. Security Parties’ documents

1.1 A copy of the Constitutional Documents of each Security Party.

1.2 A copy of a resolution of the board of directors of each Security Party (or any committee of such board empowered to approve and authorise the following matters):

(i) approving the terms of, and the transactions contemplated by, the Security Documents to which it is a party and resolving that it execute, deliver and perform such Security Documents;

(ii) authorising a specified person or persons to execute the Security Documents on its behalf; and

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, the Drawdown Notices) to be signed and/or despatched by it under or in connection with the Security Documents.

1.3 If applicable, a copy of a resolution of the board of directors of the relevant company, establishing any committee referred to in paragraph 1.2 above and conferring authority on that committee.

1.4 A specimen of the signature of each person authorised by the resolution referred to in paragraph 1.2 above.

1.5 A copy of a resolution signed by all the holders of the issued shares in each Security Party (other than the Corporate Guarantor) approving the terms of, and the transactions contemplated by, the relevant Security Documents to which such Security Party is a party.

1.6 A certificate of each Security Party (signed by a director) confirming that borrowing or guaranteeing or securing, as appropriate, the Commitment would not cause any borrowing, guaranteeing or similar limit binding on such Security Party to be exceeded.

1.7 The original of any power of attorney under which any person is to execute any of the Security Documents on behalf of any Security Party.

1.8 A certificate of an authorised signatory of the relevant Security Party certifying that each copy document relating to it specified in this Part of this Schedule is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement and that any resolutions or power of attorney relating to it have not been revoked or amended.

2. Legal opinions

2.1 A legal opinion addressed to the Lender as to English law, substantially in the form approved by the Lender prior to signing this Agreement.

2.2 A legal opinion of the legal advisers to the Lender in each jurisdiction (other than England) in which a Security Party is incorporated and/or which is or is to be the Flag State of the Vessel, each substantially in the form approved by the Lender prior to signing this Agreement.

3. Other documents and evidence

3.1 Evidence that any process agent referred to in clause 17.2 or any equivalent provision of any other Security Document entered into on or before the Drawdown Date has accepted its appointment.

3.2 A copy of any other authorisation or other document, opinion or assurance which the Lender reasonably considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Security Document or for the validity and enforceability of any Security Document.

3.3 A copy, certified by a director of the Borrowers to be a true and complete copy, of the Original Financial Statements.

3.4 Evidence that the fees, commissions, costs and expenses then due from the Borrowers pursuant to clause 5 (Fees and Expenses) have been paid or will be paid by the Drawdown Date.

3.5 A copy of the formal executed and dated prepayment notice issued by the Existing Lender with respect to prepayment of the Existing Mortgage Loan excluding the amount that corresponds to the vessel m.v. Joanna.

3.6 Evidence that any shortfall to the prepayment of the Existing Mortgage Loan, excluding the amount that corresponds to the vessel m.v. Joanna not being funded by the proposed Loans has been or will be paid in full by or for and on behalf of the Corporate Guarantor to the Existing Lender.

4. “Know your customer” information

Such documentation and information as the Lender may reasonably request to comply with “know your customer” or similar identification procedures under all laws and regulations applicable to it.

5. Security Documents

5.1 The Corporate Guarantee duly executed by the Corporate Guarantor in favour of the Lender.

5.2 The Share Security duly executed by the Shareholder together with all letters, transfers, certificates and other documents required to be delivered under each Share Security.

5.3 A Subordination Deed in respect of each of the Borrowers duly executed by that Borrower and the Shareholder in favour of the Lender.

6. Value of security

Valuations obtained (not more than 3 months before the first Drawdown Date) in accordance with clause 8.2.

7. Capital injection

Evidence of receipt by the Borrowers of capital injection of minimum HKD1,000,000 or USD130,000 or other equivalent currencies which may be freely used for the Borrowers’ corporate/business purposes.

8. Related documents

A Certified Copy of each of the Extended Employment Contracts.

Part 2

Conditions precedent to Drawdown of Loan A or Loan B

1. Corporate documents

1.1 A certificate of an authorised signatory of each Borrower certifying that each copy document relating to it specified in part 1 of this schedule remains correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in part 1 of this schedule in relation to it have not been revoked or amended.

1.2 A certificate of an authorised signatory of each other Security Party which is party to any of the Security Documents required to be executed at or before Drawdown Date certifying that each copy document relating to it specified in part 1 of this schedule remains correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in part 1 of this schedule in relation to it have not been revoked or amended.

1.3 A certificate of each Borrower (signed by a director) confirming that each condition specified in clause 9.3 is satisfied on the Drawdown Date.

2. Security

2.1 Each Mortgage duly executed (but undated) by the relevant Borrower.

2.2 Each General Assignment duly executed (but undated) by the relevant Borrower.

2.3 Each Charter Assignment duly executed (but undated) by the relevant Borrower.

2.4 Any Tripartite Deed (if applicable).

2.5 Any Insurance Assignment (if applicable).

2.6 Each Manager's Undertaking pursuant to the Security Documents duly executed (but undated) by the Manager.

2.7 Duly executed (but undated) notices of assignment and (if available) acknowledgments of those notices as required by any of the above Security Documents.

3. Registration of Vessels and Mortgages

3.1 Evidence that each Vessel is:

(a) legally and beneficially owned by the relevant Borrower and registered in the name of that Borrower through the relevant Registry as a ship under the laws and flag of the relevant Flag State;

(b) operationally seaworthy and in every way fit for service;

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(c) classed with the relevant Classification free of all requirements and outstanding recommendations of the relevant Classification Society affecting Classification; and

(d) insured in the manner required by the Security Documents.

3.2 Evidence that each Mortgage has been (or shall, promptly upon the de-registration of the relevant Existing Mortgage be) duly registered with the relevant Registry in the relevant Flag State.

4. Insurance

4.1 In relation to each Ship's Insurances:

(a) If required, an opinion from insurance consultant appointed by the Lender;

(b) evidence that such Insurances have been placed; and

(c) evidence (including but not limited in the form of an email) from approved brokers, insurers and/or associations that they will issue letters of undertaking in favour of the Lender in an approved form in relation to the Insurances (including but not limited to insurances relating to fire and usual marine risks (including hull and machinery and excess risks), war risks (including acts of terrorism and piracy) and protection and indemnity risks) and will note the interest of the Lender as loss payee.

5. ISM and ISPS Code

5.1 A copy of each of:

(a) the document of compliance issued in accordance with the ISM Code to the person who is the operator of the Vessels for the purposes of that code;

(b) the safety management certificate in respect of the Vessels issued in accordance with the ISM Code;

(c) the international ship security certificate in respect of the Vessels issued under the ISPS Code; and

(d) if so requested by the Lender, any other certificates issued under any applicable code required to be observed by the Vessels or in relation to its operation under any applicable law.

6. Management agreement

A copy of the Management Agreement of each Vessel.

7. Fees and expenses

Evidence that the fees, commissions, costs and expenses then due from the Borrowers pursuant to clause 5.1 have been paid or will be paid by the relevant Drawdown Date.

8. Taxes

If applicable, evidence that any withholding Tax has been paid or will be paid or that the relevant applications have been or will be lodged with the relevant tax authorities.

Part 3

Conditions precedent on the Closing Date of Loan A or Loan B

1. Corporate documents

1.1 A certificate of an authorised signatory of each Borrower certifying that each copy document relating to it specified in part 1 of this schedule remains correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in part 1 of this schedule in relation to it have not been revoked or amended.

1.2 A certificate of an authorised signatory of each other Security Party which is party to any of the Security Documents required to be executed at or before Drawdown Date certifying that each copy document relating to it specified in part 1 of this schedule remains correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in part I of this schedule in relation to it have not been revoked or amended.

1.3 A certificate of each Borrower (signed by a director) confirming that each condition specified in clause 9.3 is satisfied on the Drawdown Date.

2. Security

2.1 The relevant Mortgage duly executed by the relevant Borrower.

2.2 The relevant General Assignment duly executed by the relevant Borrower.

2.3 The relevant Charter Assignment duly executed by the relevant Borrower.

2.4 Any Tripartite Deed (if applicable).

2.5 Any Insurance Assignment (if applicable).

2.6 The relevant Manager's Undertaking pursuant to the Security Documents duly executed by the Manager.

2.7 Duly executed notices of assignment and (if available) acknowledgments of those notices as required by any of the above Security Documents.

3. Registration of Vessel and Mortgage

3.1 Evidence that the relevant Vessel is:

(a) legally and beneficially owned by the relevant Borrower and registered in the name of that Borrower through the relevant Registry as a ship under the laws and flag of the relevant Flag State;

(b) operationally seaworthy and in every way fit for service;

(c) classed with the relevant Classification free of all requirements and outstanding recommendations of the relevant Classification Society affecting Classification; and

(d) insured in the manner required by the Security Documents.

3.2 Evidence that:

(a) in the case of Vessel A, Mortgage A has been or shall, promptly upon the de-registration of the relevant Existing Mortgage be duly permanently registered with the Marshall Islands ship registry; and

(b) in the case of Vessel B, Mortgage B has been or shall, promptly upon the de-registration of the relevant Existing Mortgage be duly preliminarily registered with the Panama Maritime Authority.

3.3 Evidence that there are no Encumbrance of any kind created or permitted by any person on or in relation to the relevant Vessel, other than the relevant Mortgage.

4. Insurance

4.1 In relation to the relevant Ship's Insurances:

(a) If required, an opinion from insurance consultant appointed by the Lender; and

(b) evidence that such Insurances have been placed.

5. ISM and ISPS Code

5.1 A copy of each of:

(a) the document of compliance issued in accordance with the ISM Code to the person who is the operator of the relevant Vessel for the purposes of that code;

(b) the safety management certificate in respect of the relevant Vessel issued in accordance with the ISM Code;

(c) the international ship security certificate in respect of the relevant Vessel issued under the ISPS Code; and

(d) if so requested by the Lender, any other certificates issued under any applicable code required to be observed by the relevant Vessel or in relation to its operation under any applicable law.

6. Management agreement

A copy of the management agreement between the relevant Borrower and the Manager relating to the appointment of the Manager.

7. Taxes

If applicable, evidence that any withholding Tax has been paid or will be paid or that the relevant applications have been or will be lodged with the relevant tax authorities.

Part 4

Conditions subsequent

Conditions Subsequent to Drawdown

1. Mortgage

Within two (2) months from the Drawdown Date of Loan B, evidence that Mortgage B having first priority is permanently registered at the Registry of the Flag State.

2. Acknowledgements of notices of assignment

Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Lender.

3. Legal Opinions

Such of the legal opinions specified in part 1 of this schedule 2 as have not already been provided to the Lender.

4. Insurance

(a) Within 10 Banking Days from the Drawdown Date of each Loan, signed letters of undertaking in favour of the Lender in relation to the Insurances (including but not limited to insurances relating to fire and usual marine risks (including hull and machinery and excess risks), war risks (including acts of terrorism and piracy) and protection and indemnity risks) and endorsed the interest of the Lender as loss payee.

(b) Within one (1) month from the Drawdown Date of each Loan, copies of all policies and contracts of insurance (including hull and machinery insurances and all entries of the relevant Vessel in a protection and indemnity or war risks association), and the original of the mortgagee’s interest insurance policies and contracts of insurance, of that Vessel.

5. Fees and expenses

Evidence that the fees, commissions, costs and expenses then due from the Borrowers pursuant to clause 5.2 and not previously paid have been paid or will be paid with 14 days following receipt of the appropriate invoices / vouchers.

Execution Page

IN WITNESS whereof the parties of this Agreement have caused this Agreement to be duly executed on the date the first above written.

THE BORROWERS SIGNED by MRS STEFANIA KARMIRI attorney-in-fact for and on behalf of CORFU NAVUGATION LTD pursuant to a Power of Attorney dated August 30, 2021	} } …/s/ Stefania Karmiri…… } Attorney in fact }
SIGNED by MRS STEFANIA KARMIRI attorney-in-fact for and on behalf of JONATHAN JOHN SHIPPING LTD pursuant to a Power of Attorney dated August 30, 2021	} } …/s/ Stefania Karmiri…. } Attorney in fact

THE LENDER

EXECUTED	)
by: Lia, Chia-Heng, Director	)
for and on behalf of	)
SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED	) .../s/ Lia, Chia-Heng... ) Authorised Signatory
	)
in the presence of:
……../S/ Carol Lin................
Name: Carol Lin
Address:

EX-4.28

Exhibit 4.28

To: EUROSEAS LTD

Athens, 12 October 2021

FINAL TERMS &

CONDITIONS

Dear Mr. Pariaros,

Please find below the Final Terms and Conditions of the Interest Rate Hedging structure we traded today.

Trade Date: 12 October 2021

Effective Date: 01 November 2021

Termination Date: 01 November 2025, subject of adjustment in accordance with the Modified Following Business Day Convention.

FIXED AMOUNTS

Fixed Rate Payer: EUROSEAS LTD

Fixed Rate Payer Notional Amount: USD 10,000,000.00 Bullet

Fixed Rate: 1.090 %

Transaction Fee: In relation to each Calculation Period 0.086% of the Notional Amount per annum, embedded in the Fixed Rate. The total Transaction Fee in respect of the Transaction is USD 34,901.69

Fixed Rate Payer Payment Dates: Quarterly, on 01 February, 01 May, 01 August and 01 November of each year, commencing on 01 February 2022 up to and including the Termination Date subject to adjustment in accordance with the Modified Following Business Day Convention.

Initial Calculation Period: From and including 01 November 2021 to and excluding 01 February 2022.

Calculation Periods: Quarterly, from and including 01 February to and excluding 01 May, from and including 01 May to and excluding 01 August, from and including 01 August to and excluding 01 November and from and including 01 November to and excluding 01 February of each year, commencing on 01 November 2021 up to the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention.

Fixed Rate Day Count Fraction: Actual/360, adjusted

Business Days for Payment Dates: New York, London, Athens

FLOATING AMOUNTS

Floating Rate Payer: EUROBANK S.A.

Floating Rate Payer Notional Amount: USD 10,000,000.00 Bullet

Floating Rate Payer Payment Dates: Quarterly, on 01 February, 01 May, 01 August and 01 November of each year, commencing on 01 February 2022 up to and including the Termination Date subject to adjustment in accordance with the Modified Following Business Day Convention.

Floating Rate: USD-LIBOR-ICE Benchmark Administration

Designated Maturity: 3 months

Spread: None

Initial Calculation Period: From and including 01 November 2021 to and excluding 01 February 2022.

Calculation Periods: Quarterly, from and including 01 February to and excluding 01 May, from and including 01 May to and excluding 01 August, from and including 01 August to and excluding 01 November and from and including 01 November to and excluding 01 February of each year, commencing on 01 November 2021 up to the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention.

Floating Rate Day Count Fraction: Actual/360, adjusted

Reset Dates: Two business days prior to the start of each calculation period.

Business Days: New York, London, Athens

Calculation Agent: Eurobank S.A. in its capacity as Hedging counterparty.

Account Details
Account(s) for payments to EUROBANK SA:	00260029211200236674
Account(s) for payments to Party B:	00260029211200236674

Offices:

(a) The Office of EUROBANK SA for the Swap Transaction is: 8, Othonos Str. GR 105 57 Athens

(b) The Office of Party B for the Swap Transaction is: 4 Messogiou & Evropis Street, Maroussi GR 15124, Athens

REPRESENTATIONS:

Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into this Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for this Transaction):

(a) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction, it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of this Transaction.

(b) Assessment and Understanding. It is capable of assessing the merits of an understanding (on its own behalf or through independent professional advice) and understands and accepts the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the risks of this Transaction.

(c) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of this Transaction.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this confirmation enclosed for that purpose and returning it to us.

Yours sincerely,

EUROBANK SA

By: ____________/s/ Bantou Eleni

/s/ Delinis Christos__________________

Confirmed as of the

Date first above written:

___/s/_Aristides J. Pittas______________________________

By: _______/s/ Stefania Karmiri________________

Name:

Title:

EX-4.29

Exhibit 4.29

US$15,000,000

Secured Loan Agreement

Dated                   22 October 2021                

(1)         Jonathan Shipowners Ltd

(as Borrower)

(2)         HSBC BANK plc

(as Lender)

PIRAEUS\9044303.5

Contents

Section 1         Interpretation	2
1         Definitions and Interpretation	2
Section 2         The Loan	21
2         The Loan	21
3         Purpose	21
4         Conditions of Utilisation	21
Section 3         Utilisation	23
5         Advance	23
Section 4         Repayment, Prepayment and Cancellation	24
6         Repayment	24
7         Illegality, Prepayment and Cancellation	24
Section 5         Costs of Utilisation	26
8         Interest	26
9         Interest Periods	27
10         Changes to the Calculation of Interest	28
11         Fees	29
Section 6         Additional Payment Obligations	30
12         Tax Gross Up and Indemnities	33
13         Increased Costs	36
14         Other Indemnities	37
15         Mitigation by the Lender	39
16         Costs and Expenses	39
Section 7         Security and Application of Moneys	41
17         Security Documents and Application of Moneys	41

Section 8         Representations, Undertakings and Events of Default	45
18         Representations	45
19         Information Undertakings	51
20         Financial Covenants	53
21         General Undertakings	55
22         Events of Default	62
Section 9         Changes to Parties	69
23         Changes to the Lender	69
24         Changes to the Obligors	70
Section 10         The Lender's Business	71
25         Conduct of Business by the Lender	71
Section 11         Administration	72
26         Payment Mechanics	72
27         Set-Off	76
28         Notices	76
29         Calculations and Certificates	77
30         Partial Invalidity	78
31         Remedies and Waivers	78
32         Confidentiality	78
33         Counterparts	82
Section 12         Governing Law and Enforcement	83
34         Governing Law	83
35         Enforcement	83
Schedule 1         Part I Conditions Precedent	84
Part II Conditions Subsequent	88
Schedule 2         Utilisation Request	88
Schedule 3         Form of Compliance Certificate	90

Loan Agreement

Dated     2021  

Between:

Jonathan Shipowners Ltd, company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia and company number C-123141 (the "Borrower"); and

HSBC BANK plc, of 8 Canada Square, London, E14 5HQ, England (the "Lender").

Preliminary

The Borrower has purchased the Vessel from the Seller on the terms of the MOA and has registered the Vessel under the flag of Liberia.

The Lender has agreed to advance to the Borrower up to the lesser of (a) $15,000,000 and (b) 59,9% of the Market Value of the Vessel in order to finance general corporate purposes of the Borrower and the Guarantor.

It is agreed as follows:

1

Section 1         Interpretation

Definitions and Interpretation

Definitions In this Agreement:

"2018 Withdrawal Act" means the European Union (Withdrawal) Act 2018.

"2020 Withdrawal Act" means the European Union (Withdrawal Agreement) Act 2020.

"Account Holder" means HSBC France of 103, avenue des Champs-Elysées, 75008 Paris, France acting through its branch at 109-111 Messoghion Avenue, 115 26 Athens, Greece, HSBC Bank plc of 8 Canada Square, London, E14 5HQ, England, any other branch of the Lender and any other bank or financial institution which at any time, with the Lender's prior written consent, holds the Earnings Account and/or the Cash Collateral Account and "Account Holder" means any of them.

"Accounts" means the Earnings Account and the Cash Collateral Account.

"Account Security Deeds" means the account security deeds referred to in Clause 17.1.5 and 17.1.6 (Security Documents).

"Administration" has the meaning given to it in paragraph 1.1.3 of the ISM Code.

"Affiliate" means:

in respect of Clauses 14.2 (Other indemnities), 18.1.26 (Sanctions), 21.2 (Sanctions), 21.3 (Compliance with laws), 21.4 (Sanctions and Vessel trading), a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified; and

in any other case, in relation to any person a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

"Annex VI" means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

"Approved Shipbroker" means each of Hartland Shipping Services Limited, H. Clarkson & Company Limited, Maersk Brokers K/S, Arrow Sale and Purchase (U.K.) Ltd., Fearnley AS, Simpson Spence & Young (SSY), Barry Rogliano Salles of France, Galbraith's Limited Shipbrokers, Braemar Shipping Services PLC, Banchero-Costa & C. S.p.A, Associated Shipbroking S.A.M., Howe Robinson & Co Ltd., Maritime Strategies International (MSI), E.A. Gibson Shipbrokers Ltd., Oslo Shipbrokers A.S, Inge Steensland Shipbrokers AS and any other reputable, independent and first class firm of ship brokers appointed by the Borrower with the Lender's prior approval.

"Assignments" means all the forms of assignment referred to in Clauses 17.1.2, 17.1.7 and 17.1.9 (Security Documents).

2

"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

"Availability Period" means the period from and including the date of this Agreement to and including 31 December 2021 or any other later date acceptable to the Lender in its absolute discretion.

"Basel III" means:

the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".

"Break Costs" means the amount (if any) by which:

the interest which the Lender should have received for the period from the date of receipt of all or any part of the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

the amount which the Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York and Athens.

"Cash Collateral Account" means the bank account opened or to be opened in the name of the Borrower with the Account Holder and designated "HSBC Bank Plc, Re: Jonathan Shipowners Ltd– Cash Collateral Account".

"Cash Collateral Amount" means the amount set out under Clause 20.2 (Cash Collateral Amount).

3

"Charged Property" means all of the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Security Documents.

"Chargor" means Euroseas Ltd., a company incorporated under the laws of the Republic of the Marshall Islands, with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands.

"Charter" means, in respect of the Vessel, any charter, or other contract for its employment of twelve (12) months or more duration (including any extension options), whether or not already in existence, entered or to be entered into from time to time between the Borrower, as owner of the Vessel and a Charterer, as charterer of the Vessel, as approved by the Lender, including without limitation the Initial Charter.

"Charterer" means, in respect of the Vessel, any person who enters into any Charter with the Borrower, including without limitation the Initial Charterer.

"Charter Rights" means the benefit of any Charter and any and all Earnings due and/or to become due to the Borrower under or pursuant to any Charter.

"Code" means the US Internal Revenue Code of 1986.

"Commitment Fee" means the commitment fee to be paid by the Borrower to the Lender under Clause 11.1 (Commitment Fee).

"Compliance Certificate" means a certificate substantially in the agreed form set out in Schedule 3 (Form of Compliance Certificate).

"Confidential Information" means all information relating to any Obligor, any other member of the Group, the Finance Documents or the Loan of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Loan from any Obligor, any other member of the Group or any of its advisers in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

is or becomes public information other than as a direct or indirect result of any breach by the Lender of Clause 32 (Confidentiality); or

is identified in writing at the time of delivery as non-confidential by any Obligor, any other member of the Group or any of its advisers; or

is known by the Lender before the date the information is disclosed to it by any Obligor, any other member of the Group or any of its advisers or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with any Obligor or any other member of the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

4

"Confidentiality Undertaking" means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.

"CRD IV" means EU CRD IV and UK CRD IV.

"CTA" means the Corporation Tax Act 2009.

"Default" means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

"Delegate" means any delegate, agent or attorney or co-trustee appointed by the Lender as holder of any of the Security Documents.

"Disruption Event" means either or both of:

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

from performing its payment obligations under the Finance Documents; or

from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

"DOC" means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

"Earnings" means all hires, freights, pool income and other sums payable to or for the account of the Borrower in respect of the Vessel 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 and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.

''Early Termination Date'' has the meaning ascribed to it in the Hedging Agreement.

5

"Earnings Account" means the bank account opened or to be opened in the name of the Borrower with the Account Holder and designated "Jonathan Shipowners Ltd – Earnings Account".

"Encumbrance" means a mortgage, charge, assignment, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

"Environmental Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.

"Environmental Claim" means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, "claim" includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.

"Environmental Incident" means:

any release, emission, spill or discharge into the Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from the Vessel; or

any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligor and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.

"Environmental Law" means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

6

"Environmentally Sensitive Material" means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.

"EU CRD IV" means:

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 548/2012; and

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

"Event of Default" means any event or circumstance specified as such in Clause 22 (Events of Default).

"Facility Office" means the Lender's office at 8 Canada Square, London E14 5HQ, England or such other office as the Lender may designate in writing.

"Facility Period" means the period beginning on the date of this Agreement and ending on the date on which the Lender is satisfied that there is no outstanding amount under the Loan in force and that the Indebtedness has been irrevocably and unconditionally paid and discharged in full.

"FATCA" means:

sections 1471 to 1474 of the Code or any associated regulations;

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in (a); or

any agreement pursuant to the implementation of any treaty, law or regulation referred to in (a) or (b) with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.

"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.

7

"FCPA" means the US Foreign Corrupt Practices Act of 1977.

"Finance Documents" means this Agreement, the Hedging Agreement, the Security Documents and any other document designated as such by the Lender and the Borrower and "Finance Document" means any one of them.

"Financial Indebtedness" means any indebtedness for or in respect of:

moneys borrowed and debit balances at banks or other financial institutions;

any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

the amount of any liability in respect of any finance or capital lease;

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);

any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not an Obligor which liability would fall within one of the other sections of this definition or (ii) any liabilities of any Obligor relating to any post-retirement benefit scheme;

any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the Termination Date or are otherwise classified as borrowings under GAAP;

any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than thirty (30) days after the date of supply;

any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under GAAP; and

the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (j).

"GAAP" means generally accepted accounting principles in the United States of America.

8

"Group" means the Borrower, the Guarantor and each company which is a Subsidiary of the Guarantor from time to time.

"Guarantee" means the guarantee and indemnity of the Guarantor referred to in Clause 17.1.3 (Security Documents).

"Guarantor" means Euroseas Ltd., a company incorporated under the laws of the Republic of the Marshall Islands, with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands and/or (where the context permits) any other person who shall at any time during the Facility Period issue to the Lender a guarantee and/or indemnity for the payment of all or part of the Indebtedness.

"Hedging Agreement" means any hedging agreement, confirmation, schedule or other agreement in agreed form entered into or to be entered into between the Borrower and the Lender for the purpose of hedging interest rate liabilities and/or any exchange rate or other risks in relation to all or part of the Loan.

"Hedging Agreement Proceeds" means any and all sums due and payable to the Borrower under the Hedging Agreement following an Early Termination Date (subject always to all rights of netting and set-off contained in the Hedging Agreement) and all rights to require and enforce the payment of those sums.

"Hedging Agreement Proceeds Charge" means the deed of charge referred to in Clause 17.1.8 (Security Documents).

"Holding Company" means, in relation to a person, any other person in respect of which it is a Subsidiary.

"IAPPC" means a valid international air pollution prevention certificate for the Vessel issued under Annex VI.

"Increased Costs" have the meaning given to them in Clause 13.1 (Increased Costs).

"Indebtedness" means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to the Lender under all or any of the Finance Documents.

"Initial Charter" means, in respect of the Vessel, the time charter dated 8 September 2021 entered into by and between Piraeus Trader Shipping Corporation (as previous owner) (the "Previous Owner") and the Initial Charterer (as charterer) and novated in favour of the Borrower (as current owner) for a minimum period of not less that 36 months at a gross daily rate of $27,000 minus 1.25% brokerage commission for Eurochart.

"Initial Charterer" means Hapag-Lloyd Aktiengesselschaft, a company incorporated under the laws of Germany with its registered office at Hamburg, Germany.

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"Initial Market Value" means the Market Value of the Vessel calculated in accordance with the valuation relative thereto referred to in Part I 2 (e) of Schedule 1 (Conditions Precedent).

"Insurances" means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with the Vessel or her increased value and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

"Interest Payment Date" means each date for the payment of interest in accordance with Clause 8.2 (Payment of interest).

"Interest Period" means each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

"ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

"ISM Company" means, at any given time, the company responsible for the Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

"ISPS Code" means the International Ship and Port Facility Security Code.

"ISSC" means a valid international ship security certificate for the Vessel issued under the ISPS Code.

"ITA" means the Income Tax Act 2007.

"Joint Venture" means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

"Legal Opinion" means any legal opinion delivered to HSBC Bank plc under Clause 4.1 (Initial conditions precedent) or Clause 4.3 (Conditions subsequent).

"Legal Reservations" means:

the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

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"LIBOR" means:

the applicable Screen Rate; or

(if (i) no Screen Rate is available for the currency of the Loan or (ii) no Screen Rate is available for the relevant Interest Period) the Reference Bank Rate,

as of 11.00 a.m. on the Quotation Day for dollars and for a period equal in length to the relevant Interest Period and, if that rate is less than zero, LIBOR shall be deemed to be zero.

"Limitation Acts" means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.

"Loan" means the aggregate amount advanced or to be advanced by the Lender to the Borrower under Clause 2 (The Loan) or, where the context permits, the principal amount advanced and for the time being outstanding.

"Management Agreement" means the agreement for the commercial and technical management of the Vessel dated 18 October 2021 made by and between the Borrower and the Managers.

"Managers" means, in relation to the commercial and technical management of the Vessel, Eurobulk Ltd. of 80 Broad Street Monrovia, Republic of Liberia or, in either case, such other commercial and/or technical managers of the Vessel nominated by the Borrower as the Lender may approve.

"Managers’ Undertaking" means the written undertaking of the Managers whereby, throughout the Facility Period unless otherwise agreed by the Lender:

it will remain the commercial or technical manager of the Vessel (as the case may be); and

it will not, without the prior written consent of the Lender, subcontract or delegate the commercial or technical management of the Vessel (as the case may be) to any third party; and

the interests of the Managers in the Insurances (other than the right to be reimbursed for protection and indemnity claims under the "pay and be paid" rule) will be assigned to the Lender with first priority; and

(following the occurrence of an Event of Default which is continuing) all claims of the Managers against the Borrower shall be subordinated to the claims of the Lender under the Finance Documents.

"Margin" means two point thirty five per cent (2.35%) per cent per annum.

"Market Value" means the value of the Vessel conclusively determined by a valuation (obtained by an Approved Shipbrokers selected and appointed by the Borrower for and on behalf of the Lender and approved by and reporting to the Lender on the basis of a charter attached, sale for prompt delivery and free of encumbrances for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and evidenced by a valuations of the Vessel addressed to the Lender certifying a value for the Vessel.

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"Material Adverse Effect" means a material adverse change of circumstances or any event or series of events which, in the reasonable opinion of the Lender, is likely to have a material adverse effect on the business, assets, financial condition or credit worthiness of an Obligor (other than the Manager) or an Obligor's ability (other than the Manager) to repay the Loan.

"Maximum Loan Amount" means the lesser of (a) fifteen million dollars ($15,000,000) and (b) fifty nine point nine per cent (59,9%) of the Market Value of the Vessel evidenced by the valuation received by the Lender under Clause 4.1 (Initial conditions precedent).

"MOA" means the memorandum of agreement dated 2 September 2021 on the terms and subject to the conditions of which the Seller has sold the Vessel to the Borrower for a purchase price of $25,000,000.

"Mortgage" means the first preferred mortgage referred to in Clause 17.1.1 (Security Documents).

"Nominated Family" means the family disclosed in writing and approved by the Lender prior to the date of this Agreement and "members of the Nominated Family" shall be construed accordingly.

"Obligors" means the Borrower, the Guarantor, the Chargor, the Managers and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and "Obligor" means any one of them.

"Original Financial Statements" means the audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2020 (including profit and loss accounts and annual balance sheets).

"Original Jurisdiction" means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.

"Party" means a party to this Agreement.

"Permitted Encumbrance" means:

any Encumbrance created by the Finance Documents;

any netting or set-off arrangement entered into by any Obligor in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;

liens for unpaid master's and crew's wages in accordance with first class ship ownership and management practice and not being enforced through arrest;

liens for salvage;

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liens for master's disbursements incurred in the ordinary course of trading in accordance with first class ship ownership and management practice and not being enforced through arrest; and

any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel:

not as a result of any default or omission by the Borrower; and

not being enforced through arrest,

provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps).

"Prohibited Person" means any person (whether designated by name or by reason of being included in a class of persons) that is, or is owned or controlled by persons that are:

the target of Sanctions; or

located, organised or resident in a country or territory that is, or whose government is, the target of Sanctions (currently, the Crimea region, Cuba, Iran, North Korea and Syria).

"Quasi-Security" has the meaning given to that term in Clause 21.11 (Negative pledge).

"Quotation Day" means, in relation to any period for which an interest rate is to be determined (for dollars) two (2) Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

"Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

"Reference Bank Rate" means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Lender at its request by the Reference Banks, in relation to LIBOR, as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in dollars and for that period.

"Reference Banks" means in relation to LIBOR, such banks as may be appointed by the Lender in consultation with the Borrower.

"Related Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

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"Relevant Documents" means the Finance Documents, the MOA, any Charter, and the Management Agreement.

"Relevant Interbank Market" means the London interbank market.

"Relevant Jurisdiction" means, in relation to an Obligor:

its Original Jurisdiction;

any jurisdiction where any asset (other than the Vessel) subject to or intended to be subject to a Security Document to be executed by it is situated and, in relation to the Vessel, the flag of the Vessel;

any jurisdiction where it conducts its business; and

the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.

"Repayment Date" means the date for payment of any Repayment Instalment in accordance with Clause 6 (Repayment).

"Repayment Instalment" means any instalment of the Loan to be repaid by the Borrower under Clause 6 (Repayment).

"Repeating Representations" means each of the representations set out in Clause 18.1.1 (Status) to Clause 18.1.6 (Governing law and enforcement), Clause 18.1.10 (No default) to Clause 18.1.19 (Pari passu ranking), Clause 18.1.24 (No Immunity), Clause 18.1.25 (Money Laundering) and Clause 18.1.27 (Valuations).

"Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

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

"Sanctions" means the sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by any of the Sanctions Authorities.

"Sanctions Authorities" means:

the United States of America;

the United Nations;

the European Union;

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the United Kingdom;

Hong Kong;

the respective Governmental Authorities of any of the foregoing, including without limitation, OFAC, the US Department of State and Her Majesty's Treasury; or

any other authority which may impose Sanctions that are binding upon any Obligor, any member of the Group or any Affiliate of any of them at any relevant time, as advised by the Lender to the Borrower.

"Screen Rate" means, in relation to LIBOR, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate), in each case, or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower.

"Secured Parties" means the Lender and any Receiver or Delegate.

"Security Cover Ratio" means, at any relevant time, the aggregate of (a) the Market Values of the Vessels, (b) the Cash Collateral Amount and (c) the net realisable value of any additional security provided at that time under Clause 17.14 (Additional security), expressed as a percentage of the Loan.

"Security Documents" means the Mortgage, the Assignments, the Guarantee, the Account Security Deeds, the Shares Charge, the Managers' Undertaking and the Hedging Agreement Proceeds Charge or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and "Security Document" means any one of them.

"Seller" means Piraeus Trader Shipping Corporation, a company incorporated under the laws of Panama with its registered office at 9th and 10th Floors, West Boulevard, Santa Maria Business District Panama, Republic of Panama and registration number 155694505.

"Shares Charge" means the charge or charges of the issued share capital of the Borrower referred to in Clause 17.1.4 (Security Documents).

"SMC" means a valid safety management certificate issued for the Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

"Subsidiary" means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

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"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

"Tax Deduction" has the meaning given to it in Clause 12 (Tax Gross-Up and Indemnities).

"Termination Date" means the date falling 36 months from the Utilisation Date in respect of the last Vessel Loan to be drawn.

"Total Loss" means:

an actual, constructive, arranged, agreed or compromised total loss of the Vessel; or

the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire); or

the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within (b)), unless the Vessel is released and returned to the possession of the Borrower within 60 days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.

"Treasury Transaction" means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

"UK Bribery Act" means the United Kingdom Bribery Act 2010.

"UK CRD IV" means:

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 548/2012 as it forms part of domestic law of the United Kingdom by virtue of the 2018 Withdrawal Act);

the law of the United Kingdom or any part of it, which immediately before IP Completion Day (as defined in the 2020 Withdrawal Act) implemented Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and its implementing measures; and

direct EU legislation (as defined in the 2018 Withdrawal Act), which immediately before IP Completion Day (as defined in the 2020 Withdrawal Act) implemented EU CRD IV as it forms part of domestic law of the United Kingdom by virtue of the 2018 Withdrawal Act.

"Unpaid Sum" means any sum due and payable but unpaid by any Obligor under the Finance Documents.

"US" means the United States of America.

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"US Tax Obligor" means:

an Obligor which is resident for tax purposes in the US; or

an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

"Utilisation Date" means the date on which the Loan is advanced under Clause 5 (Advance).

"Utilisation Request" means a notice substantially in the form set out in Schedule 2 (Utilisation Request).

"VAT" means:

any value added tax imposed by the Value Added Tax Act 1994;

any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

any other tax of a similar nature, whether imposed in the United Kingdom or in a Member State of the European Union in substitution for, or levied in addition to, such tax referred to in paragraphs (a) or (b) above, or imposed elsewhere.

"Vessel" means the container vessel of approximately 1,732 TEU "JONATHAN P" (ex m.v. "PIRAEUS TRADER") with IMO no. 9357872 built in 2006 by Guangzhou Wenchong Shipyard Co., LTD, Republic of China, registered under the flag of Liberia in the ownership of the Borrower and everything now or in the future belonging to her on board and ashore.

Construction Unless a contrary indication appears, any reference in this Agreement to:

the "Lender", the "Borrower", any "Secured Party" or any "Party" shall be construed so as to include its successors in title, permitted assignees and permitted transferees;

a document in "agreed form" is a document which is previously agreed in writing by or on behalf of the Borrower and the Lender or, if not so agreed, is in the form specified by the Lender;

"assets" includes present and future properties, revenues and rights of every description;

a "Finance Document", a "Security Document", a "Relevant Document" or any other document is a reference to that Finance Document, Security Document, Relevant Document or other document as amended, novated, supplemented, extended or restated from time to time;

"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);

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a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

a "provision of law" is a reference to that provision as amended or re-enacted from time to time; and

a time of day (unless otherwise specified) is a reference to London time.

Headings Section, Clause and Schedule headings are for ease of reference only.

Defined terms Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

Default A Default (and/or an Event of Default) is "continuing" if it has not been remedied or waived.

Currency symbols and definitions "$", "USD" and "dollars" denote the lawful currency of the United States of America.

Third party rights A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the "Third Parties Act") to enforce or to enjoy the benefit of any term of this Agreement.

Offer letter This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Lender and the Borrower or their representatives before the date of this Agreement.

Contractual recognition of bail-in

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

any Bail-In Action in relation to any such liability, including (without limitation):

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it;

a cancellation of any such liability; and

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a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability."

In this Clause 1.9, the following terms will have the following meanings:

"Article 55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.

"Bail-In Action" means the exercise of any Write-down and Conversion Powers.

"Bail-In Legislation" means:

in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and

in relation to the United Kingdom, the UK Bail-In Legislation.

"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.

"EU Bail-In Legislation Schedule" means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

"Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers.

"UK Bail-In Legislation" means Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).

"Write-down and Conversion Powers" means:

in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;

in relation to any other applicable Bail-In Legislation other than the UK Bail-In Legislation:

any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers;

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any similar or analogous powers under that Bail-In Legislation; and

in relation to the UK Bail-In Legislation any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.

Sanctions

In this Clause:

"Sanctions Provisions" means the representations and warranties given in Clause 18.1.26 (Sanctions) and the undertakings given in Clause 21.2 (Sanctions).

The Sanctions Provisions shall only be given to the Lender to the extent that the making, the receiving of the benefit of and/or, where applicable, the repetition of these representations and warranties, and the compliance with these undertakings do not result in a violation of or conflict with:

any provision of Council Regulation (EC) 2271/1996 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom;

if applicable, any provision of Council Regulation (EC) 2271/1996 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom (as it forms part of the domestic law of the United Kingdom by virtue of the 2018 Withdrawal Act) and any provisions of the Sanctions and Anti-Money Laundering Act 2018;

if applicable, section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung) (in conjunction with section 4 paragraph 1 of No.3 foreign trade law (AWG) (Außenwirtschaftsgesetz)); or

any similar applicable anti-boycott law or regulation.

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Section 2         The Loan

The Loan

Subject to the terms of this Agreement, the Lender agrees to make available to the Borrower a term loan in an aggregate amount (in dollars) not exceeding the Maximum Loan Amount.

Purpose

Purpose The Borrower shall apply the Loan for the purposes referred to in Preliminary (B).

Monitoring The Lender shall not be bound to monitor or verify the application of any amount borrowed under this Agreement.

Conditions of Utilisation

Initial conditions precedent

The Lender will only be obliged to comply with Clause 5.3 (Lender's compliance with the Utilisation Request) in relation to the advance of the Loan if on or before the Utilisation Date, the Lender has received all of the documents and other evidence listed in Part I of Schedule 1 (Conditions Precedent) in form and substance reasonably satisfactory to the Lender. The Lender shall notify the Borrower promptly upon being so satisfied.

Further conditions precedent

The Lender will only be obliged to advance the Loan if on the date of the Utilisation Request and on the proposed Utilisation Date:

no Default is continuing or would result from the advance of the Loan;

the representations made by the Borrower under Clause 18 (Representations) are true in all material respects; and

no event or series of events has occurred which is likely to have a Material Adverse Effect.

Conditions subsequent The Borrower undertakes to deliver or to cause to be delivered to the Lender within 14 days (or as specifically otherwise specified in Part II of Schedule 1 (Conditions Subsequent)) after the Utilisation Date the additional documents and other evidence listed in Part II of Schedule 1 (Conditions Subsequent).

No waiver If the Lender in its sole discretion agrees to advance all or any part of the Loan to the Borrower before all of the documents and evidence required by Clause 4.1 (Initial conditions precedent) have been delivered to or to the order of the Lender, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Lender no later than thirty (30) days after the Utilisation Date or such other date specified by the Lender.

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The advance of all or any part of the Loan under this Clause 4.4 shall not be taken as a waiver of the Lender's right to require production of all the documents and evidence required by Clause 4.1 (Initial conditions precedent).

Form and content All documents and evidence delivered to the Lender under this Clause shall:

be in form and substance acceptable to the Lender; and

if required by the Lender, be certified, notarised, legalised or attested in a manner acceptable to the Lender.

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Section 3         Utilisation

Advance

Delivery of a Utilisation Request The Borrower may request the Loan to be advanced by delivery to the Lender of a duly completed Utilisation Request not more than ten (10) and not fewer than three (3) Business Days before the proposed Utilisation Date.

Completion of a Utilisation Request A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

it is signed by an authorised signatory of the Borrower;

the proposed Utilisation Date is a Business Day within the Availability Period; and

the proposed Interest Period complies with Clause 9 (Interest Periods).

Lender's compliance with a Utilisation Request Subject to Clauses 2 (The Loan), 3 (Purpose) and 4 (Conditions of Utilisation), the Lender shall comply with a Utilisation Request by advancing the Loan through the Facility Office.

Cancellation of undrawn amount The availability of the Loan shall be cancelled at the end of the Availability Period to the extent that it is undrawn at that time.

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Section 4         Repayment, Prepayment and Cancellation

Repayment

Repayment of Loan The Borrower agrees to repay the Loan to the Lender by twelve (12) consecutive quarterly instalments, the first eleven (11) such instalments each in the amount of one million one hundred thousand dollars ($1,100,000), and the twelfth (12) and final such instalment in the sum of two million nine hundred thousand dollars ($2,900,000) (comprising an instalment of one million one hundred thousand dollars ($1,100,000), and a balloon payment in the sum of one million eight hundred thousand dollars ($1,800,000) (the "Balloon")), the first instalment falling due on the date which is three (3) calendar months after the Utilisation Date and subsequent instalments falling due at consecutive intervals of three (3) calendar months thereafter and the twelfth (12th) and final instalment falling due not later than the Termination Date.

Reduction of Repayment Instalments If the aggregate amount advanced to the Borrower is less than fifteen million dollars ($15,000,000), the amount of each Repayment Instalment (including the Balloon) shall be reduced pro rata to the amount actually advanced.

Reborrowing The Borrower may not reborrow any part of the Loan which is repaid or prepaid.

Illegality, Prepayment and Cancellation

Illegality If it becomes unlawful in any jurisdiction (other than by reason of Sanctions) for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan or it becomes unlawful for any Affiliate of the Lender for the Lender to do so:

the Lender shall promptly notify the Borrower upon becoming aware of that event;

upon the Lender notifying the Borrower, the availability of the Loan will be immediately cancelled; and

the Borrower shall repay the Loan on the last day of the current Interest Period or, if earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law).

Voluntary cancellation The Borrower may, if it gives the Lender not less than 14 Business Days' (or such shorter period as the Lender may agree) prior notice, cancel the whole or any part (being a minimum amount of $200,000) of the undrawn amount of the Loan.

Voluntary prepayment of Loan The Borrower may prepay the whole or any part of the Loan freely and without penalty on the final day of an Interest Period (but, if in part, being an amount that reduces the Loan by an amount which is an integral multiple of $200,000 subject as follows:

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it gives the Lender not less than five Business Days' (or such shorter period as the Lender may agree) prior notice;

the Loan may only be prepaid after the last day of the Availability Period; and

any prepayment under this Clause 7.3 shall satisfy the obligations under Clause 6.1 (Repayment of Loan) by reducing the amount of the repayment instalments on a pro rata basis including the Balloon.

Right of cancellation and prepayment

If:

any sum payable to the Lender by the Borrower is required to be increased under Clause 12.2.2 (Tax gross-up); or

the Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),

the Borrower may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Lender notice of cancellation of the Loan and its intention to procure the repayment of the Loan.

On the last day of the Interest Period which ends after the Borrower has given notice under Clause 7.4.1 (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay the Loan together with all interest and other amounts accrued under the Finance Documents.

Mandatory prepayment on sale or Total Loss If the Vessel is sold by the Borrower or becomes a Total Loss, the Borrower shall, simultaneously with any such sale or on the earlier of the date falling one hundred and twenty (120) days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, prepay the whole of the Loan.

Mandatory prepayment on change of ownership of Guarantor

7.6.1         If, without the prior written consent of the Lender (such consent not be unreasonably withheld), there is a Change of Control, the Borrower shall promptly notify the Lender upon becoming aware of that event and, if the Lender so requires, the Lender shall, by no less than 10 days' notice to the Borrower declare the Loan, together with accrued interest and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Loan and all such outstanding interest and amounts will become immediately due and payable provided that in the case of Clause 7.6.2 (b) below, the Borrower will first have the option to rectify the Security Cover Ratio within 15 Business Days.

7.6.2         For the purpose of paragraph (a) above, "Change of Control" means:

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(a)         the members of the Nominated Family cease to own directly or indirectly more than 10% of the shares (and the voting rights attaching to those shares) in the Guarantor; or

(b)         the members of the Nominated Family own directly or indirectly between 10.1% to 19.9%, (inclusive) of the shares (and the voting rights attaching to those shares) in the Guarantor and the Security Cover Ratio is equal to or less than 143% of the Loan.

7.6.3         The Borrower shall (and shall procure that the Guarantor shall) promptly notify the Lender of any covenants regarding the Change of Control of the Guarantor agreed with its financiers and if the Lender (acting reasonably) considers that those terms agreed with any other financiers are more favourable than those set out in this Clause 7.6, then the Borrower shall (and shall procure that the Guarantor shall) provide amended terms on equivalent terms to those deemed by the Lender (acting reasonably) to be more favourable and acceptable to the Lender (acting reasonably).

Restrictions Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs (if paid on a date that is not an Interest Payment Date) and subject to Clause 7.2 (Voluntary prepayment of Loan), Clause 7.5 (Mandatory prepayment on sale or Total Loss) and Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), without premium or penalty.

The Borrower shall not repay, prepay or cancel all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement.

No amount of the Loan cancelled under this Agreement may be subsequently reinstated.

Section 5         Costs of Utilisation

Interest

Calculation of interest The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

Margin; and

LIBOR.

Payment of interest The Borrower shall pay accrued interest on the Loan on the last day of each Interest Period (and, if the Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of the Interest Period).

Default Interest In the event of a failure by the Borrower to pay any amount on the date on which such amount is due and payable pursuant to this Agreement and/or any of the other Finance Documents (unless otherwise specifically provided in any Finance Document) and following notice by the Lender to the Borrower in respect of such failure, the Borrower shall pay interest at the rate of two per cent (2%) higher than the rate provided under Clause 8.2 (Payment of Interest) up to the date of actual payment (both before and after judgment), compounded at such intervals as the Lender shall in its discretion determine. Any interest accruing under this Clause 8.3 (Default Interest) in respect of an unpaid amount shall be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount and shall be due and payable at the end of the period by reference to which it is calculated or such other date or dates as the Lender may specify by written notice to the Borrower.

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Notification of rates of interest The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Agreement.

Hedging arrangements

The Borrower:

may enter into and maintain each Hedging Agreement and effect and maintain such trades under it as the Lender shall approve or reasonable require, including but not limited to ensuring that each Hedging Agreement has a term expiring on the Termination Date and has scheduled payment dates that coincide with the Repayment Dates;

may at all times comply with the terms of each Hedging Agreement;

may on request from the Lender reduce the notional amount of the hedging arrangement effected under the Hedging Agreement by an amount and in a manner reasonable satisfactory to the Lender where the Lender considers the nominal amount of such arrangements exceeds the amount of the Loan; and

(subject to clause 8.5.1(a) above) shall not enter into any other hedging or currency management arrangements, options or other derivative transactions without the prior written consent of the Lender.

The Borrower may not assign, amend or waive the terms of any Hedging Agreement without the prior written consent of the Lender.

The Lender may amend or waive any term of the Hedging Agreement in accordance with the terms of the Hedging Agreement if that amendment or waiver does not breach another term of this Agreement.

Interest Periods

Selection of Interest Periods The Borrower may select in a written notice to the Lender the duration of an Interest Period for the Loan subject as follows:

each notice is irrevocable and must be delivered to the Lender by the Borrower not later than 11.00 a.m. on the Quotation Day;

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if the Borrower fails to give a notice in accordance with Clause 9.1.1, the relevant Interest Period will, subject to Clauses 9.2 (Interest Periods to meet Repayment Dates) and 9.3 (Non-Business Days), be three (3) months;

subject to this Clause 9, the Borrower may select an Interest Period of three (3), or six (6) or twelve (12) months or any other period agreed between the Borrower and the Lender;

an Interest Period shall not extend beyond the Termination Date; and

each Interest Period shall start on the Utilisation Date or (if the Loan is already made) on the last day of its preceding Interest Period and end on the date which numerically corresponds to the Utilisation Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

Interest Periods to meet Repayment Dates If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.

Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

Changes to the Calculation of Interest

Absence of quotations Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

Market disruption If a Market Disruption Event occurs for any Interest Period, then the rate of interest on the Loan for that Interest Period shall be the percentage rate per annum which is the sum of:

the Margin; and

the rate notified to the Borrower by the Lender as soon as practicable, and in any event by close of business on the date falling three (3) Business Days after the Quotation Day (or, if earlier, on the date falling three (3) Business Days prior to the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to the Lender of funding the Loan from whatever source it may reasonably select.

In this Agreement "Market Disruption Event" means:

at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Lender to determine LIBOR for dollars and the relevant Interest Period; or

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before close of business in London on the Quotation Day for the relevant Interest Period, the Borrower receives notification from the Lender that the cost to it of funding the Loan from whatever source it may reasonably select would be in excess of LIBOR.

Alternative basis of interest or funding

If a Market Disruption Event occurs and the Lender or the Borrower so requires, the Lender and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.

Any alternative basis agreed pursuant to Clause 10.3.1 shall be binding on all Parties.

Break Costs The Borrower shall, within three (3) Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.

The Lender shall, as soon as reasonably practicable after a demand by the Borrower, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

Fees

Commitment Fee The Borrower shall pay to the Lender a fee computed at the rate of zero point five per cent (0.5%) per annum on the undrawn amount of the Loan for the period commencing on the signing date of the offer letter, namely 1 October 2021 and ending on the earlier of (a) the last date of the Availability Period, (b) the Utilisation Date and (c) (on the cancelled amount of the Loan) at the time the cancellation is effective.

The accrued commitment fee is payable on the last day of each successive period of three months which ends during the Availability Period, on the last day of the Availability Period, on the Utilisation Date and (on the cancelled amount of the Loan) at the time the cancellation is effective.

Arrangement fee The Borrower shall pay to the Lender on the Utilisation Date an arrangement fee in an amount equal to zero point seventy five per cent (0,75%) of the final amount to be advanced to the Borrower by the Lender under this Agreement.         

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Section 6         Additional Payment Obligations

Tax Gross Up and Indemnities

Definitions In this Agreement:

"Protected Party" means the Lender if it is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

"Qualifying Lender" means the Lender if it is beneficially entitled to interest payable to it in respect of an advance under a Finance Document and:

is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

is:

a company resident in the United Kingdom for United Kingdom tax purposes;

a partnership each member of which is:

(A)         a company so resident in the United Kingdom; or

(B)         a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or

is a Treaty Lender.

"Tax Confirmation" means a confirmation by the Lender that the person beneficially entitled to interest payable to the Lender in respect of an advance under a Finance Document is either:

a company resident in the United Kingdom for United Kingdom tax purposes;

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a partnership each member of which is:

a company so resident in the United Kingdom; or

a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.

"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

"Tax Payment" means either the increase in a payment made by an Obligor to the Lender under Clause 12.2 (Tax gross-up) or a payment by the Borrower under Clause 12.3 (Tax indemnity).

"Treaty Lender" means the Lender if it:

is treated as a resident of a Treaty State for the purposes of the Treaty;

does not carry on a business in the United Kingdom through a permanent establishment with which the Loan is effectively connected.

"Treaty State" means a jurisdiction having a double taxation agreement (a "Treaty") with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.

Tax gross-up The Borrower shall (and shall procure that each other Obligor shall) make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:

the Borrower shall promptly upon becoming aware that it or any other Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender accordingly. Similarly, the Lender shall notify the Borrower and any such other Obligor on becoming so aware in respect of a payment payable to the Lender;

if a Tax Deduction is required by law to be made by the Borrower or any other Obligor, the amount of the payment due from the Borrower or that other Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;

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a payment shall not be increased under Clause 12.2.2 by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which the payment falls due:

the payment could have been made to the Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date the Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxing authority; or

the Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a "Direction") under section 931 of the ITA which relates to the payment and that Lender has received from the Borrower or from the other Obligor making the payment a certified copy of that Direction; and

the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

the Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

the Lender has not given a Tax Confirmation to the Borrower; and

the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrower, on the basis that the Tax Confirmation would have enabled the Borrower to have formed a reasonable belief that the payment was an "excepted payment" for the purpose of section 930 of the ITA; or

the Lender is a Treaty Lender and the Borrower or the other Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had the Lender complied with its obligations under Clause 12.2.6 or Clause 12.2.7 (as applicable);

if the Borrower or any other Obligor is required to make a Tax Deduction, the Borrower shall (and shall procure that such other Obligor shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;

within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall (and shall procure that such other Obligor shall) deliver to the Lender a statement under section 975 of the ITA or other evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority;

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1)        Subject to (b), if the Lender is a Treaty Lender, the Lender and the Borrower shall co-operate (and the Borrower shall procure that each other Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate) in completing any procedural formalities necessary for the Borrower or that other Obligor to obtain authorisation to make that payment without a Tax Deduction.

If the Lender is a Treaty Lender which holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, the Lender shall confirm its scheme reference number and its jurisdiction of tax residence to the Borrower, and, having done so, the Lender shall be under no obligation pursuant to (a).

Tax indemnity

The Borrower shall (within three (3) Business Days of demand by the Lender) pay to the Lender, if the Lender is a Protected Party, an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered for or on account of Tax by the Lender in respect of a Finance Document.

Clause 12.3.1 shall not apply:

with respect to any Tax assessed on the Lender:

under the law of the jurisdiction in which the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or

under the law of the jurisdiction in which the Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Lender; or

to the extent a loss, liability or cost:

is compensated for by an increased payment under Clause 12.2 (Tax gross-up);

would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in Clause 12.2.3 (Tax gross-up) applied; or

relates to a FATCA Deduction required to be made by a Party.

If the Lender makes or intends to make a claim under Clause 12.3.1 as a Protected Party, the Lender shall promptly notify the Borrower of the event which will give, or has given, rise to the claim.

Tax Credit If the Borrower or any other Obligor makes a Tax Payment and the Lender determines that:

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a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

the Lender has obtained and utilised that Tax Credit,

the Lender shall pay an amount to the Borrower or to that other Obligor which the Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrower or that other Obligor.

Stamp taxes The Borrower shall pay and, within three (3) Business Days of demand, indemnify the Lender against any cost, loss or liability the Lender incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

VAT

All amounts expressed to be payable under a Finance Document by any Obligor to the Lender which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by the Lender to any Obligor under a Finance Document and the Lender is required to account to the relevant tax authority for the VAT, the Borrower shall (and, in the case of any other Obligor, the Borrower shall procure that such other Obligor will) pay to the Lender (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and the Lender must promptly provide an appropriate VAT invoice to the Borrower).

Where a Finance Document requires any Obligor to reimburse or indemnify the Lender for any cost or expense, the Borrower shall (and, in the case of any other Obligor, the Borrower shall procure that such other Obligor will) reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

Any reference in this Clause 12.6 to any Obligor shall, at any time when such Obligor is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994) or any equivalent person in any jurisdiction other than the United Kingdom.

In relation to any supply made by the Lender to any Obligor under a Finance Document, if reasonably requested by the Lender, the Borrower shall (and, in the case of any other Obligor, the Borrower shall procure that such other Obligor will) promptly provide the Lender with details of that Obligor's VAT registration and such other information as is reasonably requested in connection with the Lender's VAT reporting requirements in relation to such supply.

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FATCA information

Subject to Clause 12.7.3, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

confirm to that other Party whether it is:

a FATCA Exempt Party; or

not a FATCA Exempt Party; and

supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and

supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.

If a Party confirms to another Party pursuant to Clause 12.7.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

Clause 12.7.1 shall not oblige the Lender to do anything, and Clause 12.7.1(c) shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

any law or regulation;

any fiduciary duty; or

any duty of confidentiality.

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause 12.7.1(a) or 12.7.1(b) (including, for the avoidance of doubt, where Clause 12.7.3 applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

If the Borrower is a US Tax Obligor or the Lender reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, the Lender shall, within ten Business Days of:

where the Borrower is a US Tax Obligor, the date of this Agreement; or

where the Borrower is not a US Tax Obligor, the date of a request from the Borrower,

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supply to the Borrower:

a withholding certificate on Form W-8 or Form W-9 or any other relevant form; or

any withholding statement or other document, authorisation or waiver as the Borrower may require to certify or establish the status of the Lender under FATCA or that other law or regulation.

If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Borrower by the Lender pursuant to Clause 12.7.5 is or becomes materially inaccurate or incomplete, the Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrower unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Borrower).

FATCA Deduction

Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment.

Hedging Agreement This Clause 12 shall not apply to any Hedging Agreement.

Increased Costs

Increased costs Subject to Clause 13.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Lender, pay to the Lender the amount of any Increased Costs incurred by the Lender or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation or any request from or requirement of any central bank or other fiscal, monetary or other authority made after the date of this Agreement (including Basel III and CRD IV and any other which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to obligations under this Agreement and/or the Hedging Agreement or (iii) any change in the risk weight allocated by the Lender to the Borrower after the date of this Agreement.

In this Agreement "Increased Costs" means:

a reduction in the rate of return from the Loan or on the Lender's (or its Affiliate's) overall capital;

an additional or increased cost; or

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a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by the Lender or any of its Affiliates to the extent that it is attributable to the Lender having entered into any Finance Document or funding or performing its obligations under any Finance Document.

Increased cost claims

If the Lender intends to make a claim pursuant to Clause 13.1 (Increased costs) the Lender shall promptly notify the Borrower of the event giving rise to the claim.

The Lender shall, as soon as practicable after a demand by the Borrower, provide a certificate confirming the amount of its Increased Costs.

Exceptions Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

attributable to a Tax Deduction required by law to be made by the Borrower;

attributable to a FATCA Deduction required to be made by a Party;

compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of the exclusions in Clause 12.3 applied); or

attributable to the wilful breach by the Lender or its Affiliates of any law or regulation.

Hedging Agreement This Clause 13 shall not apply to any Hedging Agreement.

Other Indemnities

Currency indemnity If any sum due from the Borrower under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of:

making or filing a claim or proof against the Borrower, or

obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Borrower shall as an independent obligation, within three (3) Business Days of demand, indemnify the Lender against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to the Lender at the time of its receipt of that Sum.

The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

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This Clause 14.1 shall not apply to any Hedging Agreement.

Other indemnities

The Borrower shall, within five (5) Business Days of demand, indemnify the Lender against any cost, loss or liability incurred by the Lender as a result of:

the occurrence of any Event of Default which is continuing;

a failure by an Obligor to pay any amount due under a Finance Document on its due date;

funding, or making arrangements to fund, the Loan following delivery by the Borrower of a Utilisation Request but the Loan not being advanced by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by the Lender alone); or

the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

The Borrower shall promptly indemnify the Lender, each Affiliate of the Lender and each officer or employee of the Lender or its Affiliate (each such person for the purposes of this Clause 14.2 an "Indemnified Person") against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, the Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person. Any Affiliate or any officer or employee of the Lender or its Affiliate (subject to the caveats contained herein) may rely on this Clause 14.2 subject to Clause 1.7 (Third party rights) and the provisions of the Third Parties Act.

Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or

in connection with any Environmental Claim.

The Borrower shall promptly indemnify the Lender as holder of any of the Security Documents and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

any failure by the Borrower to comply with its obligations under Clause 16 (Costs and Expenses);

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acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

the taking, holding, protection or enforcement of the Security Documents;

the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Lender and each Receiver and Delegate by the Finance Documents or by law;

any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; to which it is a party; or

acting as holder of any of the Security Documents, Receiver or Delegate or otherwise relating to any of the Charged Property (otherwise, in each case, than by reason of the relevant Lender's, Receiver's or Delegate's gross negligence or wilful misconduct).

Indemnity survival The indemnities contained in this Agreement shall survive repayment of the Loan.

Mitigation by the Lender

Mitigation The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in the Loan ceasing to be available or any amount becoming payable under or pursuant to any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. The above does not in any way limit the obligations of any Obligor under the Finance Documents.

Limitation of liability The Borrower shall promptly indemnify the Lender for all costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation). The Lender is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might be prejudicial to it.

Costs and Expenses

Transaction expenses The Borrower shall on demand and in any event by not later than thirty (30) days following such demand, pay the Lender the amount of all costs and expenses (including, without limitation, all agreed legal fees, VAT, disbursements and correspondent lawyers’ fees provided that the demand for payment is accompanied by the respective invoice) reasonably incurred by by any of them in connection with the negotiation, preparation, printing, execution, syndication and perfection of:

this Agreement and any other documents referred to in this Agreement;

any other Finance Documents executed after the date of this Agreement;

any other document which may at any time be required by the Lender to give effect to any Finance Document or which the Lender is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessel and a Fleet Vessel, subject to Clause 17.15); and

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any discharge, release or reassignment of any of the Security Documents.

Amendment costs If an Obligor requests an amendment, waiver or consent, the Borrower shall, within three Business Days of demand, reimburse the Lender for the amount of all costs and expenses (including legal fees and currency exchange costs) reasonably incurred by the Lender and any Receiver or Delegate in responding to, evaluating, negotiating or complying with that request or requirement provided that no sum shall be payable under this Clause if the relevant request for an amendment, notice, waiver or consent are rejected by the Lender and/or are not granted.

Enforcement and preservation costs The Borrower shall, within three (3) Business Days of written demand, pay to the Lender and each other Secured Party the amount of all costs and expenses (including legal fees) incurred by the Lender and that other Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Lender as a consequence of taking or holding the Security Documents or enforcing those rights including (without limitation) any losses, costs and expenses which the Lender or that other Secured Party may from time to time sustain, incur or become liable for by reason of the Lender or that other Secured Party being mortgagee of the Vessel and/or a lender to the Borrower, or by reason of the Lender or that other Secured Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.

Other costs The Borrower shall, within three (3) Business Days of demand, pay to the Lender and each other Secured Party the amount of all sums which the Lender or that other Secured Party may pay or become actually or contingently liable for on account of the Borrower in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Lender or that other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Lender or that other Secured Party in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, and any sums which the Lender or that other Secured Party may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention.

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Section 7         Security and Application of Moneys

Security Documents and Application of Moneys

Security Documents As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Lender or cause to be executed and delivered to the Lender the following documents in such forms and containing such terms and conditions as the Lender shall require:

first preferred mortgage over the Vessel;

first priority deed or deeds of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation of the Vessel from the Borrower;

guarantee and indemnity from the Guarantor;

first priority charge of all the issued shares of the Borrower from the Chargor;

first priority account security deed in respect of all amounts from time to time standing to the credit of the Earnings Accounts;

first priority account security deed in respect of all amounts from time to time standing to the credit of the Cash Collateral Account;

letters of undertaking, including an assignment of the Vessel's Insurances, from the Managers in respect of the Vessel;

first priority deed of charge over the Hedging Agreement Proceeds; and

first priority assignment of Insurances of the Vessel from the Guarantor.

Accounts The Borrower shall maintain the Earnings Accounts and the Cash Collateral Account with the relevant Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.

Earnings The Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.

Application of the Earnings Account The Borrower shall procure that there is transferred from the Earnings Account to the Lender:-

on each Repayment Date, the amount of the Repayment Instalment then due; and

on each Interest Payment Date, the amount of interest then due

and the Borrower irrevocably authorises the Lender to instruct the relevant Account Holder to make those transfers.

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Borrower's obligations not affected If for any reason the amount standing to the credit of the Earnings Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower's obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.

Release of surplus Any amount remaining to the credit of the Earnings Accounts following the making of any transfer required by Clause 17.4 (Application of the Earnings Accounts) shall (unless a Default shall have occurred and be continuing) be released to or to the order of the Borrower.

Restriction on withdrawal During the Facility Period no sum may be withdrawn from:

the Earnings Accounts without the prior written consent of the Lender (except in accordance with this Clause 17); and

the Cash Collateral Account without the prior written consent of the Lender.

         No Account shall be overdrawn.

Relocation of the Accounts At any time following the occurrence and during the continuation of a Default, the Lender may without the consent of the Borrower instruct the relevant Account Holder to relocate any of the Accounts to any other branch of the relevant Account Holder, without prejudice to the continued application of this Clause 17 and the rights of the Secured Parties under the Finance Documents.

Access to information The Borrower agrees that the Lender (and its nominees) may from time to time during the Facility Period review the records held by the relevant Account Holder (whether in written or electronic form) in relation to the Accounts and irrevocably waives any right of confidentiality which may exist in relation to those records.

Statements Without prejudice to the rights of the Lender under Clause 17.8 (Access to information), the Borrower shall procure that the relevant Account Holder provides to the Lender, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of each of the Accounts during the immediately preceding calendar month.

Application after acceleration From and after the giving of notice to the Borrower by the Lender under Clause 22.2 (Acceleration), the Borrower shall procure that all sums from time to time standing to the credit of either of the Accounts are immediately transferred to the Lender or any Receiver or Delegate for application in accordance with Clause 17.12 (Application of moneys by Lender) and the Borrower irrevocably authorises the Lender to instruct the relevant Account Holder to make those transfers.

Application of moneys by Lender The Borrower irrevocably authorises the Lender or any Receiver or Delegate to apply all moneys which it receives and is entitled to receive:

pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or

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by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or

by way of transfer of any sum from either of the Accounts; or

otherwise under or in connection with any Security Document,

in or towards satisfaction of the Indebtedness in the following order:

first, in or towards payment of any unpaid fees, costs, expenses and default interest due to the Lender and any Receiver or Delegate under all or any of the Finance Documents, such application to be apportioned between the Lender and any Receiver or Delegate pro rata to the aggregate amount of such items due to each of them;

second, in or towards payment of:

any periodical payments (not being payments as a result of termination) due but unpaid under a Hedging Agreement; and

any accrued interest, fee or commission due but unpaid under this Agreement,

on a pro rata basis between paragraph (i) above and paragraph (ii) above and without preference;

third, in or towards payment of:

any sums due to be paid by the Borrower but remaining unpaid as a result of termination under a Hedging Agreement; and

any principal due but unpaid under this Agreement,

on a pro rata basis between paragraph (i) above and paragraph (ii) above and without preference; and

fourth, in or towards payment of any other sum due and payable to the Lender but unpaid under all or any of the Finance Documents,

Provided that the balance (if any) of the moneys received shall be paid to the Obligors from whom or from whose assets those sums were received or recovered or to any other person entitled to them.

Retention on account Moneys to be applied by the Lender or any Receiver or Delegate under Clause 17.12 (Application of moneys by Lender) shall be applied as soon as practicable after the relevant moneys are received by it, or otherwise become available to it.

Additional security Subject to Clause 7.6 (Mandatory Prepayment on change of ownership of Guarantor), if at any time the Market Value of the Vessel is less than:

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(a)        125% (in the event that the Borrower has entered into any transaction and/or any confirmation (and while such transaction(s) and/or confirmation(s) are current) under any Hedging Agreement); or

130% (in all other cases)

of the aggregate of (i) the Loan then outstanding (minus the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Lender (in the case of other charged assets), and determined by the Lender in its reasonable discretion (in all other cases)) for the time being provided to the Lender under this Clause 17.14) and (ii) the amount certified by the Lender (such certificate being always issued absent manifest error) to be the amount which would be payable by the Borrower to the Lender under any Hedging Agreement if an Early Termination Date were to occur at that time (the "VTL Coverages", and each a "VTL Coverage"), the Borrower shall, within 30 days of the Lender's request, at the Borrower's option:

pay to the Lender or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Lender as additional security for the payment of the Indebtedness; or

give to the Lender other additional security in amount and form acceptable to the Lender in its discretion; or

prepay the Loan in the amount of the shortfall.

Clauses 6.3 (Reborrowing), 7.3.3 (Voluntary prepayment of Loan) and 7.7 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 17.14 and the value of any additional security provided shall be determined by the Lender in its discretion.

If, at any time after the Borrower has provided additional security in accordance with the Lender's request under this Clause 17.14, the Lender shall determine when testing compliance with the relevant VTL Coverage that all or any part of that additional security may be released without resulting in a shortfall in the relevant VTL Coverage, then provided that no Default is continuing, the Lender shall effect a release of all or any part of that additional security, but this shall be without prejudice to the Lender's right to make a further request under this Clause 17.14 should the value of the remaining security subsequently merit it.

Valuation certificates The Lender may obtain at the cost and expense of the Borrower:

one valuation from an Approved Shipbroker in order to certify the Initial Market Value of the Vessel for the purposes of determining the Maximum Vessel Loan Amount;

one valuation per year from an Approved Shipbroker (a) for the purposes of determining the relevant percentage referred to in Clause 17.14 (Additional Security) and (b) for the purposes of determining the relevant percentage referred to in Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor);

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one set of valuations from an Approved Shipbroker for the purposes of determining compliance with Clause 20.1 (Guarantor's Covenants); and

following the occurrence of an Event of Default which is continuing, as many sets of valuations per year as may be necessary or desirable to the Lender from the required number of Approved Shipbrokers in order to certify the Market Value of the Vessel and any Fleet Market Value.

Section 8         Representations, Undertakings and Events of Default

Representations

Representations The Borrower makes the representations and warranties set out in this Clause 18 to the Lender:-

Status

Each of the Obligors:

is duly incorporated and validly existing under the law of its jurisdiction of incorporation; and

has the power to own its assets and carry on its business as it is being conducted.

Commencing on 5 May 2022, the Guarantor is in compliance with the Republic of Marshall Islands Economic Substance Regulations 2018.

Binding obligations Subject to the Legal Reservations:

the obligations expressed to be assumed by each of the Obligors in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and

(without limiting the generality of Clause 18.1.2(a)) each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective.

Non-conflict with other obligations The entry into and performance by each of the Obligors of, and the transactions contemplated by, the Relevant Documents do not conflict with:

any law or regulation applicable to such Obligor;

the constitutional documents of such Obligor; or

any agreement or instrument binding upon such Obligor or any of such Obligor's assets or constitute a default or termination event (however described) under any such agreement or instrument.

Power and authority

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Each of the Obligors has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.

No limit on the powers of any Obligor will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.

Validity and admissibility in evidence All Authorisations required or desirable:

to enable each of the Obligors lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party or to enable the Lender to enforce and exercise all its rights under the Relevant Documents; and

to make the Relevant Documents to which any Obligor is a party admissible in evidence in its Relevant Jurisdictions,

have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part II of Schedule 1 (Conditions Subsequent).

Governing law and enforcement

The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Obligor.

Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Obligor.

Insolvency No corporate action, legal proceeding or other procedure or step described in Clause 22.1.7 (Insolvency proceedings) or creditors' process described in Clause 22.1.8 (Creditors' process) has been taken or, to the knowledge of the Borrower, threatened in relation to an Obligor; and none of the circumstances described in Clause 22.1.6 (Insolvency) applies to an Obligor.

No filing or stamp taxes Under the laws of the Relevant Jurisdictions of each relevant Obligor it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except for the registration of the Mortgage at the Ships Registry where title to the Vessel is registered in the ownership of the Borrower and payment of associated fees, which registration and fees will be made and paid promptly after the date of the relevant Finance Document.

Deduction of Tax None of the Obligors is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender which is:

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a Qualifying Lender falling within (a) of the definition of Qualifying Lender; or, except where a Direction has been given under section 931 of the ITA in relation to the payment concerned, a Qualifying Lender falling within (b) of the definition of Qualifying Lender; or

a Treaty Lender and the payment is one specified in a direction given by the Commissioners of Revenue & Customs under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488).

No default

No Event of Default and, on the date of this Agreement and on the Utilisation Date, no Default is continuing or is reasonably likely to result from the advance of the Loan or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.

No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on any of the Obligors or to which its assets are subject which has or is reasonably likely to have a Material Adverse Effect.

No misleading information Save as disclosed in writing to the Lender prior to the date of this Agreement:

all material information provided to the Lender by or on behalf of any of the Obligors or any other member of the Group on or before the date of this Agreement and not superseded before that date is accurate and not misleading in any material respect and all projections provided to the Lender on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and

all other written information provided by any of the Obligors or any other member of the Group (including its advisers) to the Lender was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.

Financial statements

The Original Financial Statements were prepared in accordance with GAAP consistently applied unless expressly disclosed to the Lender in writing to the contrary.

The unaudited Original Financial Statements fairly represent the Guarantor's consolidated financial condition and results of operations for the relevant financial year unless expressly disclosed to the Lender in writing to the contrary prior to the date of this Agreement.

The audited Original Financial Statements give a true and fair view of Guarantor's consolidated financial condition and results of operations during the relevant financial year unless expressly disclosed to the Lender in writing to the contrary prior to the date of this Agreement.

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There has been no material adverse change in any Obligor's assets, business or financial condition since the date of the Original Financial Statements.

The Guarantor's most recent financial statements delivered pursuant to Clause 19.1 (Financial statements):

have been prepared in accordance with GAAP as applied to the Original Financial Statements; and

give a true and fair view of (if audited) or fairly represent (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

Since the date of the most recent financial statements delivered pursuant to Clause 19.1 (Financial statements) there has been no material adverse change in the business, assets or financial condition of any of the Obligors.

No proceedings pending or threatened No litigation, arbitration, or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, are reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any of the Obligors.

No breach of laws None of the Obligors or any other member of the Group has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

Environmental laws

Each of the Obligors and each other member of the Group is in compliance with Clause 21.5 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any of the Obligors or any other member of the Group where that claim has or is reasonably likely, if determined against that Obligor or other member of the Group, to have a Material Adverse Effect.

Taxation

None of the Obligors is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax.

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No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Obligors with respect to Taxes.

Each of the Obligors (other than the Managers) is resident for Tax purposes only in its Original Jurisdiction.

Anti-corruption law None of the Obligors, or any member of the Group nor to the knowledge of the Borrower, any director, officer, agent, employee, Affiliate or other person acting on behalf of the Borrower or an Obligor or any of their Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of any applicable anti-corruption and anti-bribery law, including but not limited to, the UK Bribery Act and the FCPA. Furthermore, the Borrower and, to the knowledge of the Borrower, its Affiliates any member of the Group and each Obligor have conducted their businesses in compliance with the UK Bribery Act, the FCPA and similar laws, rules or regulations and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

No Encumbrance or Financial Indebtedness

No Encumbrance (other than any Permitted Encumbrance) exists over (i) all or any of the present or future assets of the Borrower and (ii) the shares of the Chargor in the Borrower; and

The Borrower has no Financial Indebtedness outstanding other than as permitted by this Agreement.

Pari passu ranking The payment obligations of each of the Obligors under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

No adverse consequences

It is not necessary under the laws of the Relevant Jurisdictions of any of the Obligors:

in order to enable the Lender to enforce its rights under any Finance Document; or

by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

that the Lender should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Obligors.

The Lender is not and will not be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Obligors by reason only of the execution, performance and/or enforcement of any Finance Document.

Ownership of the Borrower The Borrower is a wholly owned subsidiary of the Chargor.

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Disclosure of material facts The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Lender and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.

Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrower to the Lender in accordance with Clause 4 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Lender.

No Immunity No Obligor or any of its assets is immune to any legal action or proceeding.

Money laundering Any borrowing by the Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other Finance Documents, 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 ((EU) 2015/849) of the European Parliament and of the Council of the European Communities (as it forms part of the domestic law of the United Kingdom by virtue of the 2018 Withdrawal Act).

Sanctions

None of the Obligors, none of their Subsidiaries, no director or officer or any employee, agent, or Affiliate of an Obligor nor any of its Subsidiaries:

is a Prohibited Person; or

is acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person, other than to the extent that such representation/warranty would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union) or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

No proceeds of the Loan shall be made available, directly or indirectly, by any Obligor to, or for the benefit of, a Prohibited Person nor shall they be otherwise applied, directly or indirectly, by any Obligor in a manner or for a purpose prohibited by Sanctions.

Valuations

All information supplied by an Obligor or (with an Obligor's knowledge) on its behalf to an Approved Shipbroker for the purposes of a valuation in evidence of the Market Value in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (if any) at which it is stated to be given.

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No Obligor has omitted to supply any information to an Approved Shipbroker in its possession or knowledge which, if disclosed, would adversely affect any such valuation in any material respect.

To the best of each Obligor's knowledge, there has been no change to the factual information supplied in relation to any such valuation between the date such information was supplied and the date of that valuation which renders that information untrue or misleading in any material respect.

US Tax Obligor No Obligor is a US Tax Obligor.

Guarantor The Guarantor is a US NASDAQ listed company. The Lender acknowledges that the Guarantor is a US NASDAQ listed company on the date of this Agreement.

Repetition Each Repeating Representation is deemed to be repeated by the Borrower by reference to the facts and circumstances then existing on the date of the Utilisation Request, on the Utilisation Date, on the first day of each Interest Period and, in the case or those contained in Clauses 18.1.12(d) and 18.1.12(f) (Financial statements) and for so long as any amount is outstanding under the Finance Documents or any part of the Loan is undrawn and available, on each day.

Information Undertakings

The undertakings in this Clause 19 remain in force for the duration of the Facility Period.

Financial statements The Borrower shall procure that the Guarantor supplies to the Lender:

as soon as the same become available, but in any event within 180 days after the end of each of the Guarantor's financial years, the Guarantor's consolidated audited financial statements (including profit and loss accounts and balance sheets) for that financial year; and

as soon as the same become available, but in any event within 90 days after the end of each half year during each of the Guarantor's financial years, the Guarantor's consolidated unaudited semi-annual financial statements for that half year.

Compliance Certificate

The Borrower shall procure that the Guarantor supplies to the Lender, with each set of its annual consolidated financial statements delivered pursuant to Clause 19.1.1 (Financial statements) and each set of its semi-annual consolidated financial statements delivered pursuant to Clause 19.1.2 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial Covenants) as at the date as at which those financial statements were drawn up.

The Compliance Certificate shall be signed by two directors of the Borrower and the Guarantor shall be reported on by the Guarantor's auditors in the form agreed by the Borrower, the Guarantor and the Lender before the date of this Agreement.

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Requirements as to financial statements

Each set of financial statements delivered by the Borrower or the Guarantor (as applicable) under Clause 19.1 (Financial statements):

shall be certified by a director of the Guarantor as giving a true and fair view of (in the case of annual financial statements), or fairly representing (in other cases), its financial condition as at the date as at which those financial statements were drawn up;

shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Lender:

a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to determine whether Clause 20 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements.

Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

Information: miscellaneous The Borrower shall supply to the Lender:

at the same time as they are dispatched, copies of all documents dispatched by the Borrower to its shareholders generally (or any class of them) or dispatched by the Borrower or any other Obligor to its creditors generally (or any class of them);

promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Obligor and which, if adversely determined, are reasonably likely to have a Material Adverse Effect;

promptly, such information as the Lender may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Security Documents including without limitation cash flow analyses and details of the operating costs of the Vessel; and

promptly on request, such further information regarding the financial condition, affairs, commitment, assets and operations of any Obligor or any other member of the Group (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement and an up to date copy of its shareholders' register (or equivalent in its Original Jurisdiction)) as the Lender may reasonably request.

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Notification of default

The Borrower shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

Promptly upon a request by the Lender, the Borrower shall supply to the Lender a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

"Know your customer" checks If:

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

any change in the status of an Obligor after the date of this Agreement; or

a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement; or

any of the Lender's internal compliance rules, policies and procedures,

obliges the Lender (or, in the case of Clause 19.6.3, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower, the Guarantor or any other member of the Group which has a loan with the Lender and has issued registered shares shall promptly upon the request of the Lender, supply, or procure the supply of, such documentation and other evidence as is requested by the Lender at its absolute satisfaction, prior to the date of this Agreement (for itself or, in the case of the event described in Clause 19.6.3, on behalf of any prospective new Lender) in order for the Lender or, in the case of the event described in Clause 19.6.3, any prospective new Lender to carry out and be satisfied it has complied with or has refreshed all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

Financial Covenants

Guarantor's Covenants The Borrower shall procure that the Guarantor shall maintain at all times during the Facility Period:

Maximum Leverage not higher than 75%;

Liquidity of an amount of not less than $200,000 in respect of each Fleet Vessel; and

Net Worth of not less than fifteen million dollars ($15,000,000).

Cash Collateral Amount The Borrower shall maintain at all times during the Facility Period in the Cash Collateral Account an amount of $300,000, such amount to be pledged in favour of the Lender free of any Encumbrances other than in favour of the Lender.

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The expressions used in this Clause shall be construed in accordance with GAAP, and for the purposes of this Agreement:-

"Cash" means, in respect of the Guarantor, cash at bank or in hand which is not subject to any Encumbrance (other than in favour of the Lender or the other financiers of the Group).

"Fleet Market Value" means (a) in respect of the Fleet Market Value of a Vessel (other than the Vessel) the value conclusively determined by one valuation obtained by one Approved Shipbroker selected and appointed by the Borrower on behalf of the Lender and approved by and reporting to the Lender on the basis of a charter free sale for prompt delivery and free of encumbrances for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and evidenced by one valuation of that Fleet Vessel addressed to the Lender certifying a value for that Fleet Vessel and (b) in respect of the Fleet Market Value of the Vessel, the Market Value of the Vessel.

"Fleet Vessels" means any vessel (including the Vessel) from time to time wholly owned by a Subsidiary of the Guarantor (directly or indirectly) and each a "Fleet Vessel".

"Liquidity" means, in respect of each period during which the consolidated financial statements delivered pursuant to Clause 19.1 (Financial statements) are delivered by the Guarantor, Cash, as shown in the applicable financial statements of the Guarantor, for such accounting period and determined in accordance with GAAP.

"Maximum Leverage" means, in respect of each period during which financial statements are required to be delivered pursuant to Clause 19.1 (Financial statements), the ratio of Total Consolidated Liabilities, to Value Adjusted Total Assets, as shown in the applicable consolidated financial statements of the Guarantor for such accounting period and determined in accordance with GAAP.

"Net Worth" means equity payments already advanced in respect of the Fleet Vessel less accumulated dividends plus retained earnings of the Fleet Vessels, as each such term is defined in the applicable consolidated financial statements (as provided in Clause 19.1 (Financial statements)) for the Guarantor determined in accordance with GAAP.

"Total Consolidated Liabilities" means, in respect of the Guarantor at any time on a consolidated basis, the ratio of total indebtedness (long-term debt including the current portion of long-term debt) of the Guarantor which would be included in the applicable consolidated financial statements of the Guarantor as total liabilities in accordance with GAAP.

"Total Assets" means the amount of total assets of the Guarantor at any time on a consolidated basis which would be included in the applicable consolidated financial statements (as provided in Clause 19.1 (Financial statements)) of the Guarantor as total assets determined in accordance with GAAP.

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"Value Adjusted Total Assets" means the Total Assets of the Guarantor as adjusted for the difference of the book value of the Fleet Vessels (as evidenced in the most recent financial statements (pursuant to Clause 19.1 (Financial statements)) and the Fleet Market Value.

General Undertakings

The undertakings in this Clause 21 remain in force for the duration of the Facility Period.

Authorisations The Borrower shall promptly:

obtain, comply with and do all that is necessary to maintain in full force and effect;

supply certified copies to the Lender of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

enable any Obligor to perform its obligations under the Finance Documents to which it is a party;

ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and

enable any Obligor to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

Sanctions

The Borrower will not (and the Borrower shall procure that no Obligor will), directly or indirectly, use the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person:

to fund any activities or business of or with any person, or in any country or territory, that, at the time of such funding, is, or whose government is, the target of Sanctions; or

in any other manner that would result in a violation of Sanctions by any person (including any person participating in the Loan, whether as underwriter, advisor investor or otherwise) other than to the extent that such covenant would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union) or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

The Borrower shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall comply) in all respects with all Sanctions.

Compliance with laws

The Borrower shall (and shall procure that each other Obligor, any member of the Group):

comply, or procure compliance with all laws or regulations to which it may be subject:

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relating to its business generally; and

relating to the Vessel, its ownership, employment, operation, management and registration,

including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the flag of the Vessel;

obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and

without limiting paragraphs 21.3.1 and 21.3.2 above, not employ the Vessel nor allow or suffer its employment, operation or management in any manner that would result in a violation of any law or regulation to which it may be subject, including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions, by any Person (including any Person participating in the Loan, whether as facility agent, security agent, arranger, lender, underwriter, advisor, investor or otherwise), other than to the extent that such undertaking would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union), or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

The Borrower shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall comply), in all respects with all laws to which it may be subject, if (except as regards Sanctions, to which Clause 21.2 applies, and anti-corruption laws to which Clause 21.7 applies) failure so to comply has or is reasonably likely to have a Material Adverse Effect.

Sanctions and Vessel trading

Without limiting Clause 21.3 (Compliance with laws), the Borrower shall not (and the Borrower shall procure that none of its Affiliates shall), directly or indirectly, use the Vessel or permit or suffer the use of the Vessel:

by or for the benefit of a Prohibited Person;

in any activity that involves a country or territory whose government is the target of Sanctions or that, at the time of such use, is the target of comprehensive countrywide or territory wide Sanctions (as of the date hereof, Cuba, Iran, North Korea, Syria and Crimea), including calling at a port located in, or the transport of goods to or from, such a country or territory;

other than to the extent that such undertaking would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union), or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

Without limiting Clause 21.3 (Compliance with laws), the Borrower and its Affiliates shall procure that:

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the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and

each charterparty, including without limitation any Charter (other than the Initial Charter), in respect of the Vessel shall contain, for the benefit of the Borrower and its Affiliates, language which gives effect to the provisions of Clause 21.3.3 (Compliance with laws) as regards Sanctions and of this Clause 21.4 (Sanctions and Vessel trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Obligor).

The Lender acknowledges that the Initial Charter complies with the requirements of Clause 21.4.2 on the date of this Agreement.

Environmental compliance

The Borrower shall (and shall procure that each other Obligor shall):

comply with all Environmental Laws;

obtain, maintain and ensure compliance with all requisite Environmental Approvals; and

implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

where failure to do so has or is reasonably likely to have a Material Adverse Effect.

Environmental Claims

The Borrower shall (and shall procure that each other Obligor shall) promptly upon becoming aware of the same, inform the Lender in writing of:

any Environmental Claim against any of the Obligors or any other member of the Group which is current, pending or threatened; and

any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Obligors or any other member of the Group,

where the claim, if determined against that Obligor or other member of the Group, has or is reasonably likely to have a Material Adverse Effect.

Anti-corruption law

No part of the proceeds of the Loan will be used, directly or indirectly, for any payments that could constitute a violation of any applicable anti-bribery law, including, without limitation the UK Bribery Act, the FCPA or other similar legislation in other jurisdictions.

The Borrower shall (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall):

conduct its businesses in compliance with applicable anti-corruption laws; and

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maintain policies and procedures designed to promote and achieve compliance with such laws.

Taxation

The Borrower shall (and shall procure that each other Obligor shall) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

such payment is being contested in good faith;

adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Lender under Clause 19.1 (Financial statements); and

such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

The Borrower may not (and no other Obligor may) change its residence for Tax purposes.

Evidence of good standing The Borrower will from time to time if requested by the Lender provide the Lender with evidence in form and substance satisfactory to the Lender that the Obligors and all corporate shareholders of any of the Obligors (other than in respect of the Guarantor's corporate shareholders) remain in good standing.

Pari passu ranking The Borrower shall (and shall procure that each other Obligor shall) ensure that at all times any unsecured and unsubordinated claims of the Lender against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

Negative pledge

The Borrower shall:

not create nor permit to subsist any Encumbrance (other than any Permitted Encumbrance) over any of its assets without the prior written consent of the Lender; and

procure that the Chargor will not create nor permit to subsist any Encumbrance over the shares of the Chargor in the Borrower.

The Borrower shall not:

sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor;

sell, transfer or otherwise dispose of any of its receivables on recourse terms;

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enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

Disposals

The Borrower shall not (and shall procure that no other Obligor other than the Guarantor, will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.

The Borrower shall procure that the Chargor shall not enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, transfer or otherwise dispose of its shares in the Borrower.

Arm's length basis

The Borrower shall not enter into any transaction with any person except on arm's length terms and for full market value.

Fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Lender under Clause 4.1 (Initial conditions precedent) or agreed by the Lender shall not be a breach of this Clause 21.13.

Merger The Borrower shall not (and shall procure that no other Obligor will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction without the prior written consent of the Lender.

Change of business The Borrower shall not (and shall procure that no other Obligor will) make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

No other business The Borrower shall not (and shall procure that no other Obligor other than the Guarantor, will) engage in any business other than the ownership, operation, chartering and management of the Vessel.

No acquisitions The Borrower shall not acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company.

No Joint Ventures The Borrower shall not:

enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or

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transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

No borrowings The Borrower shall not incur or allow to remain outstanding any Financial Indebtedness (except for the Loan).

No substantial liabilities Except in the ordinary course of business, the Borrower shall not incur any liability to any third party which is of a substantial nature.

No loans or credit The Borrower shall not, without the Lender's prior written consent, be a creditor in respect of any Financial Indebtedness unless it is a loan made in the ordinary course of business in connection with the chartering, operation or repair of the Vessel.

No guarantees or indemnities The Borrower shall not incur or allow to remain outstanding any guarantee in respect of any obligation of any person.

No dividends The Borrower shall (and the Borrower shall procure that the Guarantor will not):

declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of the Borrower's share capital and the Guarantor's common share capital (or any class of the Borrower's share capital and any class of the Guarantor's common share capital (as applicable));

repay or distribute any dividend or share premium reserve in respect of the Borrower and repay or distribute any dividend or common share premium reserve in respect of the Guarantor (as applicable); or

redeem, repurchase, defease, retire or repay any of the Borrower's share capital and the Guarantor's common share capital (as applicable) or resolve to do so,

following (i) any breach of Clause 17.14 (Additional Security), (ii) the occurrence and during the continuation of an Event of Default or (iii) where the making or payment of such dividend or distribution would result in the occurrence of an Event of Default.

Ownership and management of the Borrower No change in the management or the legal or beneficial ownership of the Borrower shall occur from that advised to the Lender by the Borrower at the date of this Agreement. Subject to Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), for the avoidance of doubt, the Lender consents and agrees to any changes relating to the shareholders of the Guarantor's trading shares in the normal course of business.

No change of CEO The Borrower shall (and shall procure that the Guarantor shall) ensure that throughout the Facility Period no change in the chief executive officer of the board of directors and/or the chairman of the Guarantor shall occur, without the Lender's prior written consent.

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Inspection of records The Borrower will permit the inspection of its financial records and accounts from time to time by the Lender or its nominee.

No change in Relevant Documents Without the prior written consent of the Lender, the Borrower shall (and the Borrower shall procure that no other Obligor will) materially amend (and for the avoidance of doubt, but without limitation, any amendment in respect of the fees (but excluding any amendment in respect of the fees already agreed under the Management Agreements), reduction of hire, duration of a Charter, termination events of a Charter and governing law of any of the Relevant Documents will be considered material), vary, novate, supplement, supersede, waive or terminate any term of, any of the Relevant Documents which are not Finance Documents, or any other document delivered to the Lender pursuant to Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) or Clause 4.3 (Conditions subsequent).

Banking operations The Borrower shall conduct all banking operations in connection with the Vessel through the Athens branch of HSBC Continental Europe or any other branch of the Lender nominated by the Lender.

Vessel’s Trading The Borrower shall not allow the Vessel to trade in areas prohibited by (a) the law applicable to the Vessel's flag, (b) the applicable law of the country of incorporation of the Borrower or (c) the applicable law of the nationality of the officers and crew of the Vessel.

No change of Vessels' ownership or management There shall be no change in the ownership or management of the Vessel, without the Lender's prior written consent.

ISM Code compliance The Borrower shall comply and shall procure that each of the Guarantor and the Manager comply with the ISM Code.

Further assurance

The Borrower shall (and shall procure that each other Obligor shall) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Lender may reasonably specify (and in such form as the Lender may reasonably require in favour of the Lender or its nominee(s)):

to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Lender or the Secured Parties provided by or pursuant to the Finance Documents or by law;

to confer on the Lender or confer on the Secured Parties an Encumbrance over any property and assets of the Borrower (or that other Obligor as the case may be) located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by or pursuant to the Security Documents; and/or

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to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents, in respect of which any Encumbrance has become enforceable following the occurrence of an Event of Default which is continuing.

The Borrower shall (and shall procure that each other Obligor shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbrance conferred or intended to be conferred on the Lender or the Secured Parties by or pursuant to the Finance Documents.

No dealings with Hedging Agreement The Borrower shall not assign, novate or encumber or in any other way transfer any of its rights or obligations under the Hedging Agreement.

Interest Rate Swap The Borrower shall have the right, at its discretion, to enter into an interest rate swap with the Lender under the Hedging Agreement in order to hedge its exposure under the Loan, for a period not exceeding the earlier of (a) date falling 36 months following the Utilisation Date, (b) the date on which the Loan is prepaid in full in accordance with Clause 6.1 (Repayment of Loan) and (c) the Termination Date.

Marshall Islands Economic Substance Regulations 2018 The Borrower shall procure that the Guarantor will comply in all respects with the Republic of the Marshall Islands Economic Substance Regulations 2018 in accordance with the applicable timeframe.

Events of Default

Events of Default Each of the events or circumstances set out in this Clause 22 is an Event of Default.

Non-payment An Obligor does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:-

its failure to pay is caused by:

administrative or technical error; or

a Disruption Event; and

payment is made within three (3) Business Days of its due date.

Other specific obligations

An Obligor does not comply with any obligation in a Finance Document relating to the Insurances or with Clause 17.14 (Additional security).

Other obligations

An Obligor does not comply with any provision of a Finance Document (other than those referred to in Clause 22.1.1 (Non-payment) and Clause 22.1.2 (Other specific obligations).

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No Event of Default under this Clause 22.1.3 will occur if the failure to comply is capable of remedy and is remedied within fifteen (15) Business Days of the earlier of (i) the Lender giving notice to the Borrower and (ii) the Borrower becoming aware of the failure to comply.

Misrepresentation Any representation or statement made or deemed to be repeated by an Obligor in any Finance Document or any other document delivered by or on behalf of an Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.

Cross default Any Financial Indebtedness of an Obligor (other than the Managers):

is not paid when due nor within any originally applicable grace period; or

is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described); or

is capable of being declared by a creditor to be due and payable prior to its specified maturity as a result of such an event.

No Event of Default will occur under this Clause 22.2.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within (a) to (c) is less than USD1,000,000 (or its equivalent in any other currency or currencies).

Insolvency

An Obligor is unable or admits inability to pay its debts as they fall due, is deemed to, or is declared to, be unable to pay its debts under applicable law, suspends or threatens to suspend making payments on any of its debts, or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

The value of the assets of an Obligor (such value in the case of the Borrower being on charter adjusted basis) is less than its liabilities (taking into account contingent and prospective liabilities).

A moratorium is declared in respect of any indebtedness of an Obligor or any other member of the Group. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.

Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken for:

the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of an Obligor;

a composition, compromise, assignment or arrangement with any creditor of an Obligor;

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the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of an Obligor or any of its assets; or

enforcement of any Encumbrance over any assets of an Obligor,

or any analogous procedure or step is taken in any jurisdiction.

This Clause 22.1.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 30 days of commencement.

Creditors' process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the Borrower, the Guarantor or the Chargor.

Ownership of the Borrower The Borrower is not or ceases to be a 100% directly owned Subsidiary of the Chargor.

Change of chairman or CEO of Guarantor Mr Aristeidis J. Pittas ceases to be throughout the Facility Period the chief executive officer of the board of directors and/or the chairman of the Guarantor.

Delisting of Guarantor The Guarantor is delisted for any reason whatsoever from the Nasdaq stock exchange.

Unlawfulness and invalidity

It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents to which it is a party or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be effective.

Any obligation or obligations of any Obligor under any Finance Documents to which it is a party are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lender under the Finance Documents.

Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than the Lender) to be ineffective.

Cessation of business An Obligor ceases, or threatens to cease, to carry on all or a substantial part of its business.

Change in management, ownership or control of the Borrower There is any change in the management, beneficial ownership or control of the Borrower from that advised to the Lender by the Borrower at the date of this Agreement. Subject to Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), for the avoidance of doubt, the Lender consents and agrees to any changes relating to the shareholders of the Guarantor's trading shares in the normal course of business and confirms that such changes do not violate the terms of this Agreement.

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Expropriation The authority or ability of an Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority (excluding requisition of hire not involving requisition of title) or other person in relation to an Obligor or any of its assets.

Repudiation and rescission of agreements

An Obligor rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.

Subject to Clause 22.1.16(c), any party to any of the Relevant Documents that is not a Finance Document rescinds or purports to rescind or repudiates or purports to repudiate that Relevant Document in whole or in part where to do so has or is, in the reasonable opinion of the Lender, likely to have a material adverse effect on the interests of the Lender under the Finance Documents.

Any Management Agreement and/or the Charter is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date and is not immediately replaced by a similar agreement in form and substance reasonably satisfactory to the Lender.

Any material terms (including, without limitation, the charter hire, the brokerage commission applicable to the duration of the sanctions and compliance with laws provisions contained in the Initial Charter) are amended without the prior written consent of the Lender (such consent not be unreasonably withheld).

Conditions subsequent Any of the conditions referred to in Clause 4.3 (Conditions subsequent) is not satisfied within the time reasonably required by the Lender.

Revocation or modification of Authorisation Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Obligors or any other person (except the Lender) to comply with any of their obligations under any Relevant Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Lender considers is, or may be, prejudicial to the interests of the Lender, or ceases to remain in full force and effect.

Reduction of capital An Obligor (other than the Guarantor) reduces its issued or subscribed capital.

Loss of Vessel The Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Lender as security for the payment of all or any part of the Indebtedness, except that a Total Loss (which term shall for the purposes of the remainder of this Clause 22.1.20 include an event similar to a Total Loss in relation to any other vessel) shall not be an Event of Default if:

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the Vessel or other vessel is insured in accordance with the Security Documents and a claim for Total Loss is available under the terms of the relevant insurances; and

no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Lender in its discretion that any such refusal or dispute is likely to occur; and

payment of all insurance proceeds in respect of the Total Loss is made in full to the Lender within 180 days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Lender may in its discretion agree.

Challenge to registration The registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of the Mortgage is contested.

War The country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Lender in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced and the Borrower fails to comply with the Lender’s request to (a) change the flag of its Vessel to a country acceptable to the Lender in its absolute discretion by paying promptly any costs and expenses related to such registration under the new flag, (b) provide any additional documentation including any additional security documents required pursuant to such registration under the new flag and (c) record a substitute mortgage over the Vessel and any additional security required pursuant to such recordation within 20 Business Days.

Hedging Agreement termination A notice is given by the Lender under section 6 (a) of the Hedging Agreement, or by any person under section 6 (b)(iv) of the Hedging Agreement, in either case designating an Early Termination Date for the purpose of the Hedging Agreement, or the Hedging Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect, provided that there will be no Event of Default under this Clause if the Borrower fulfils all its obligations under the Hedging Agreement and no further obligations will arise thereunder.

Notice of determination The Guarantor gives notice to the Lender to determine any obligations under the Guarantee.

Litigation Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to the Relevant Documents or the transactions contemplated in the Relevant Documents or against an Obligor or its assets which have or are reasonably likely to have a Material Adverse Effect.

Material adverse change Any event or circumstance occurs which the Lender reasonably believes has or is reasonably likely to have a Material Adverse Effect.

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Sanctions

The Borrower or any Obligor, directly or indirectly, uses the proceeds of the Loan, or lends, contributes or otherwise makes available such proceeds to any Subsidiary, joint venture partner or other person:

to fund any activities or business of or with any person, or in any country or territory, that, at the time of such funding, is, or whose government is, the target of Sanctions; or

in any other manner that would result in a violation of Sanctions by any person (including any person participating in the Loan, whether as underwriter, advisor investor or otherwise) other than to the extent that such covenant would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union) or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

The Borrower, any Obligor, any member of the Group, or each Affiliate of any of them, does not comply in all respects with all Sanctions.

Sanctions and Vessel trading

The Borrower or any of its Affiliates, directly or indirectly, uses the Vessel or permits or suffers the use of the Vessel:

by or for the benefit of a Prohibited Person;

in any activity that involves a country or territory whose government is the target of Sanctions or that, at the time of such use, is the target of comprehensive countrywide or territory wide Sanctions (as of the date hereof, Cuba, Iran, North Korea, Syria and Crimea), including calling at a port located in, or the transport of goods to or from, such a country or territory,

other than to the extent that such undertaking would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union), or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

The Vessel is traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances.

Each charterparty, including without limitation any Charter (other than the Initial Charter) in respect of the Vessel does not contain, for the benefit of the Borrower and its Affiliates, language which gives effect to the provisions of Clause 21.3.3 (Compliance with laws) as regards Sanctions and of Clause 21.4 (Sanctions and Vessel trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Obligor).

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The Lender acknowledges that the Initial Charter complies with the requirements of Clause 21.4.2 on the date of this Agreement.

Acceleration On and at any time after the occurrence of an Event of Default which is continuing the Lender may:

by notice to the Borrower cancel the availability of the Loan, at which time it shall immediately be cancelled;

by notice to the Borrower declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, at which time they shall become immediately due and payable;

by notice to the Borrower declare that the Loan is payable on demand, at which time it shall immediately become payable on demand by the Lender; and/or

exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

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Section 9         Changes to Parties

Changes to the Lender

Assignments and transfers by the Lender Subject to this Clause 23, the Lender may:

assign any of its rights; or

transfer by novation any of its rights and obligations,

under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the "New Lender").

Conditions of assignment or transfer

23.2.1         The Lender shall not be required to consult with the Borrower or obtain the Borrower's prior consent in connection with an assignment or transfer pursuant to Clause 23.1 (Assignments and transfers by the Lender).

23.2.2         If:

the Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or the Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs),

then the New Lender or the Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Lender or the Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

Limitation of responsibility of Lender

Unless expressly agreed to the contrary, the Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

the financial condition of any Obligor;

the performance and observance by any Obligor of its obligations under the Relevant Documents or any other documents; or

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the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document, and any representations or warranties implied by law are excluded.

23.3.2         Each New Lender confirms to the Lender that it:

has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Lender in connection with any of the Relevant Documents; and

will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any part of the Loan is undrawn and available.

23.3.3         Nothing in any Finance Document obliges the Lender to:

accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 23; or

support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Relevant Documents or otherwise.

22.4         Securitisation The Lender may disclose the size and term of the Loan and the name of each of the Obligors to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of the Lender's rights or obligations under the Finance Documents.

Changes to the Obligors

No assignment or transfer by Obligors No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

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Section 10         The Lender's Business

Conduct of Business by the Lender

No provision of this Agreement will:

interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

oblige the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

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Section 11         Administration

Payment Mechanics

Payments to the Lender On each date on which an Obligor is required to make a payment under a Finance Document other than a Hedging Agreement, that Obligor shall make the same available to the Lender for value on the due date at the time and in such funds, as required by the Finance Documents or, if not specified therein, as specified by the Lender as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

Payment shall be made to such account in the principal financial centre of the country of that currency with such bank as the Lender specifies.

Partial payments

If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents other than a Hedging Agreement, the Lender shall apply that payment towards the obligations of that Obligor under the Finance Documents (other than a Hedging Agreement), in the following order:

first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Lender under the Finance Documents;

second, in or towards payment of:

any periodical payments (not being payments as a result of termination) due but unpaid under a Hedging Agreement; and

any accrued interest, fee or commission due but unpaid under this Agreement;

on a pro rata basis between paragraph (i) above and paragraph (ii) above and without preference;

third, in or towards payment of:

any sums due to be paid by the Borrower but remaining unpaid as a result of termination under a Hedging Agreement; and

any principal due but unpaid under this Agreement

on a pro rata basis between paragraph (i) above and paragraph (ii) above and without preference; and

fourth, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

The Lender may vary the order set out in Clauses 26.2.1(b) to 26.2.1(d).

Clauses 26.2.1 and 26.2.2 will override any appropriation made by an Obligor.

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No set-off by Obligors All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off, counterclaim, taxes, stamp duties, levies of any governmental or other authority.

Business Days Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

Currency of account

Subject to Clauses 26.5.2 to 26.5.5, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.

A repayment or payment of all or part of the Loan or an Unpaid Sum shall be made in the currency in which the Loan or Unpaid Sum is denominated on its due date.

Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.

Control account The Lender shall open and maintain on its books a control account in the name of the Borrower showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrower's obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 26.6 and those entries will, in the absence of manifest error, be conclusive and binding.

Change of currency

Unless otherwise prohibited by any applicable law, if more than one currency or currency units are at the same time recognised by the central bank of any relevant country as the lawful currency of that country, then:

any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Lender (after consultation with the Borrower); and

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any conversion from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Lender (acting reasonably).

If a change in any currency of a country occurs, this Agreement will, to the extent the Lender (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

Disruption to payment systems etc. If either the Lender determines in its discretion that a Disruption Event has occurred or the Lender is notified by the Borrower that a Disruption Event has occurred which negatively affects the ability of the Borrower to repay the Loan and at the same has a Material Adverse Effect:

the Lender may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Loan as the Lender may deem necessary in the circumstances;

the Lender shall not be obliged to consult with the Borrower in relation to any changes mentioned in Clause 26.8 if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to any such changes;

any such changes agreed upon by the Lender and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents; and

the Lender shall not be liable for any damages, costs or losses whatsoever (including, without limitation, for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 26.8.

Effect of Benchmark Transition Event

Upon the occurrence of a Benchmark Transition Event, the Lender may amend this Agreement to replace LIBOR with a Benchmark Replacement. Any such amendment will become effective on the Effective Date without any further action or consent of the Borrower, provided that the Lender has not received written notice of objection to such amendment from the Borrower by 5:00 p.m. (London time) on the twentieth Business Day after the Lender has provided such proposed amendment to the Borrower by written notice. If the Borrower objects the Parties will negotiate in good faith in an effort to reach a mutually acceptable solution.

In connection with the implementation of a Benchmark Replacement, the Lender will have the right to make any consequential changes that the Lender determines are appropriate to reflect the adoption, implementation and administration of such Benchmark Replacement from time to time and any changes to include fallbacks in the event the Benchmark Replacement is not available. Any amendments implementing such changes will become effective after the Lender has provided such amendment to the Borrower without any further action or consent of the Borrower.

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The Lender will promptly notify the Borrower upon becoming aware of any occurrence of a Benchmark Transition Event. Any determination, decision or election that may be made by the Lender pursuant to this Clause will be conclusive and binding absent manifest error and may be made in the Lender’s sole discretion.

The Borrower shall, at the request of the Lender, take such action as is available to it for the purpose of authorising or giving effect to the amendments effected or to be effected pursuant to this Clause and, if any security or guarantee has been granted in respect of this Agreement, to ensure the perfection, protection or maintenance of any such security or guarantee.

This Clause shall apply notwithstanding any other provision of this Agreement.

In this Clause:

"Benchmark Replacement" means the sum of: (a) the alternate benchmark rate that has been selected by the Lender giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by a relevant Governmental body (or committee convened by such body) or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to LIBOR and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.

"Benchmark Replacement Adjustment" means, with respect to the alternate benchmark rate for each applicable Interest Period, the spread adjustment, or method for determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Lender for the purpose of adjusting the alternate benchmark rate to make it comparable to LIBOR giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for determining such spread adjustment, for the replacement of LIBOR with the alternate benchmark rate by a relevant Governmental body (or committee convened by such body) or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, for the replacement of LIBOR with the alternate benchmark rate.

"Benchmark Transition Event" means the occurrence of one or more of the following events with respect to LIBOR:

an official public statement which states that LIBOR has ceased or will cease to be published permanently or indefinitely;

an election is made by the Lender following a public statement by the regulatory supervisor for the administrator of LIBOR announcing that LIBOR is no longer representative, or

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an election is made by the Lender following a determination by it that at least five currently outstanding syndicated or bilateral credit facilities denominated in a relevant currency at such time contain as a benchmark interest rate, in lieu of LIBOR in respect of that currency, a new benchmark interest rate to replace LIBOR.

"Effective Date" means the Business Day and time notified by the Lender to the Borrower as the date and time at which the amendments to be effected pursuant to this Clause become effective and, if there is more than one loan, the Lender may specify Effective Dates for each loan.

Set-Off

Finance Documents The Lender may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by the Lender) against any matured obligation owed by the Lender to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

Hedging Agreement rights The rights conferred on the Lender by this Clause 27 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Lender by the Hedging Agreement.

Notices

Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

in the case of the Borrower, that identified with its name below; and

in the case of the Lender, that identified with its name below,

or any substitute address, fax number, or department or officer as the Party may notify to the other by not less than five Business Days' notice.

Delivery Any communication or document made or delivered by one Party to another under or in connection with the Finance Documents will only be effective:

if by way of fax, when received in legible form; or

if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

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and, if a particular department or officer is specified as part of its address details provided under Clause 28.2 (Addresses), if addressed to that department or officer.

Any communication or document to be made or delivered to the Lender will be effective only when actually received by the Lender and then only if it is expressly marked for the attention of the department or officer identified with the Lender's signature below (or any substitute department or officer as the Lender shall specify for this purpose).

Any communication or document which becomes effective, in accordance with this Clause 28.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

Electronic communication

Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.

Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.

Any electronic communication which becomes effective, in accordance with Clause 28.4.2, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

English language Any notice given under or in connection with any Finance Document must be in English. All other documents provided under or in connection with any Finance Document must be:

in English; or

if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

Calculations and Certificates

Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Lender pursuant to Clause 26.6 (Control account) are, in the absence of manifest error, prima facie evidence of the matters to which they relate.

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Certificates and determinations Any certification or determination by the Lender of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

Day count convention Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

Partial Invalidity

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of the Lender or any Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of the Lender or any Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

Confidentiality

Confidential Information The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 32.2 (Disclosure of Confidential Information) and Clause 32.3 (Disclosure to numbering service providers).

Disclosure of Confidential Information The Lender may disclose:

to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as the Lender shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this Clause 32.2.1 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

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to any person:

to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

appointed by the Lender or by a person to whom Clause 32.2.2(a) or 32.2.2(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 32.2.2(a) or 32.2.2(b);

to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

who is a Party; or

with the consent of the Borrower;

in each case, such Confidential Information as the Lender shall consider appropriate if:

in relation to Clauses 32.2.2(a), 32.2.2(b) and 32.2.2(c), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

in relation to Clause 32.2.2(d), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

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in relation to Clauses 32.2.2(e) and 32.2.2(f), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender, it is not practicable so to do in the circumstances;

to any person appointed by the Lender or by a person to whom Clause 32.2.2(a) or 32.2.2(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 32.2.3 if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking; and

to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors and/or the Group if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.

Disclosure to numbering service providers

The Lender may disclose to any national or international numbering service provider appointed by the Lender to provide identification numbering services in respect of this Agreement, the Loan and/or one or more Obligors the following information:

names of Obligors;

country of domicile of Obligors;

place of incorporation of Obligors;

date of this Agreement;

Clause 34 (Governing law);

date of each amendment and restatement of this Agreement;

amount of the Loan;

currencies of the Loan;

type of Loan;

ranking of the Loan;

Termination Date;

changes to any of the information previously supplied pursuant to (a) to (l); and

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such other information agreed between the Lender and that Obligor,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

The Borrower represents that none of the information set out in Clauses 32.3.1(a) to 32.3.1(m) is, nor will at any time be, unpublished price-sensitive information.

Entire agreement This Clause 32 constitutes the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

Inside information The Lender acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Lender undertakes not to use any Confidential Information for any unlawful purpose.

Notification of disclosure The Lender agrees (to the extent permitted by law and regulation) to inform the Borrower:

of the circumstances of any disclosure of Confidential Information made pursuant to Clause 32.2.2(e) (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that Clause during the ordinary course of its supervisory or regulatory function; and

upon becoming aware that Confidential Information has been disclosed in breach of this Clause 32.

Continuing obligations The obligations in this Clause 32 are continuing and, in particular, shall survive and remain binding on the Lender for a period of 12 months from the earlier of:

the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and the Loan has been cancelled or otherwise ceases to be available; and

the date on which the Lender otherwise ceases to be the Lender.

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Counterparts

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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Section 12         Governing Law and Enforcement

Governing Law

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

Enforcement

Jurisdiction

The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a "Dispute").

Notwithstanding Clause 35.1.1, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.

Service of process

Without prejudice to any other mode of service allowed under any relevant law, the Borrower:

irrevocably appoints Shoreside Agents Ltd of 11, the Timber Yard, Drysdale Street, London N1 6ND, United Kingdom as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the Borrower must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint another agent for this purpose.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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Part I
Conditions Precedent

Obligors

Constitutional documents Copies of the constitutional documents of each Obligor together with such other evidence as the Lender may reasonably require that each Obligor is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.

Certificates of good standing A certificate of good standing in respect of each Obligor (if such a certificate can be obtained).

Board resolutions A copy of a resolution of the board of directors of each Obligor:

approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and

authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or dispatched under those documents) on its behalf.

Specimen signatures or Copy passports A specimen of the signature or copy of the passport of each person authorised by the resolutions referred to in (c).

Shareholder resolutions A copy of a resolution signed by all the holders of the issued shares in each Obligor, (other than the Guarantor and the Manager), approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Obligor (other than the Guarantor and the Manager) is a party.

Extract of Shareholder resolutions A copy of the extract of a resolution signed by the Secretary of the Manager, approving the terms of, and the transactions contemplated by, the Relevant Documents to which the Manager is a party.

Officer's certificates An original certificate of a duly authorised officer of each Obligor:

certifying that each copy document relating to it specified in this Part I of Schedule 1 is correct, complete and in full force and effect;

setting out the names of the directors, officers and shareholders of that Obligor (other than in respect of the shareholders of the Guarantor and the Manager) and the proportion of shares held by each shareholder; and

confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Obligor to be exceeded.

Evidence of registration Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Obligor are duly registered in the companies registry or other registry in the country of incorporation of that Obligor.

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Powers of attorney The original notarially attested and legalised power of attorney of each of the Obligors under which the Relevant Documents to which it is or is to become a party are to be executed or transactions undertaken by that Obligor.

Security and related documents

Vessel documents Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:

the MOA;

the bill of sale transferring title in the Vessel to the Borrower free of all encumbrances, maritime liens or other debts;

the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Vessel by the Seller to the Borrower pursuant to the MOA;

any charterparty or other contract of employment of the Vessel which will be in force on the Utilisation Date including, without limitation, the Initial Charter;

the on hire certificate pursuant to the Initial Charter or any other evidence acceptable to the Lender evidencing that the Vessel has been delivered to the Initial Charterer under the Initial Charter;

the Management Agreement;

the Vessel's current Safety Construction, Safety Equipment, Safety Radio, Oil Pollution Prevention and Load Line Certificates;

evidence of the Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

the Vessel's current SMC;

the ISM Company's current DOC;

the Vessel's current ISSC;

the Vessel's current IAPPC; and

the Vessel's current Tonnage Certificate;

in each case together with all addenda, amendments or supplements.

Evidence of Borrower's title Evidence that on the Utilisation Date (i) the Vessel is provisionally registered under the flag stated in Preliminary (A) in the ownership of the Borrower and (ii) the Mortgage is registered against the Vessel with first priority.

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Evidence of insurance Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Lender) the written approval of the Insurances by an insurance adviser appointed by the Lender.

Confirmation of class A Certificate of Confirmation of Class or Class Certificate (as the case may be) for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessel's of her type with Lloyd's Register or such other classification society as may be acceptable to the Lender free of any overdue recommendations affecting class.

Valuation Not more than 15 days prior to the Utilisation Date, a valuation of the Vessel addressed to the Lender from an Approved Shipbroker certifying the Market Value for the Vessel, acceptable to the Lender.

Security Documents The Security Documents, together with all other documents required by any of them, including, without limitation, (i) all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients and (ii) all share certificates, certified copy share registers or registers of members, transfer forms, proxy forms, letters of resignation and letters of undertaking.

Cash Collateral Amount Evidence that Clause 20.2 (Cash Collateral Amount) has been complied with to the absolute satisfaction of the Lender.

Mandates Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Account, as the Lender may require.

No disputes The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.

Ultimate beneficial owner Evidence of the Borrower’s ultimate beneficial owner(s) in a form and substance acceptable to the Lender prior to the date of this Agreement, noting that the Lender acknowledges that on the date of this Agreement the Guarantor is a listed company trading at the US NASDAQ.

Hedging Agreement The Hedging Agreement.

Other Relevant Documents Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 1.

Legal opinions

The following legal opinions, each addressed to the Lender, or confirmation satisfactory to the Lender that such opinions will be given:

a legal opinion of Stephenson Harwood LLP, legal advisers to the Lender as to English law substantially in the form provided to the Lender prior to signing this Agreement;

86

a legal opinion of Stephenson Harwood LLP, legal advisers to the Lender as to Greek law substantially in the form provided to the Lender prior to signing this Agreement; and

a legal opinion of Hill Dickinson International, legal advisers to the Lender as to Marshall Islands law and Liberian law.

Other documents and evidence

Utilisation Request A duly completed Utilisation Request.

Process agent Evidence that any process agent referred to in Clause 35.2 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

Other Authorisations A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document.

Financial statements A copy of the Original Financial Statements of the Guarantor.

Fees Evidence that the fees, costs and expenses then due from the Borrower under Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date.

"Know your customer" documents Such documentation and other evidence as is reasonably requested by the Lender prior to the execution of this Agreement in order for the Lender to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents including (without limitation) all documents required under any regulation or laws in force in the United Kingdom and the Regulation 281/2009 of the Central Bank of Greece, such documents to be to the absolute satisfaction of the Lender. The Borrower shall provide the Lender with evidence that the Borrower and all its corporate shareholders (if any) have issued registered shares noting that the Lender acknowledges that on the date of this Agreement the Guarantor is a listed company trading at the US NASDAQ.

87

Part II
Conditions Subsequent

Letters of undertaking Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Lender.

Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to the Security Documents (which in the case of any assignment of the Initial Charter, the Borrower must use best its best endeavours to obtain.

Legal opinions Such of the legal opinions specified in Part I of this Schedule 1 as have not already been provided to the Lender.

Evidence of Borrower's title By no later than six (6) months from the delivery date of the Vessel to the Borrower evidence that the Vessel is permanently registered under the flag stated in Preliminary (A) in the ownership of the Borrower.

Republic of the Marshall Islands Economic Substance Regulations 2018 By no later than 5 May 2022, documentary evidence acceptable to the Lender that the Guarantor has complied in all respects and remains in compliance with the Republic of the Marshall Islands Economic Substance Regulations 2018.

Utilisation Request

From: Jonathan Shipowners Ltd

To: HSBC BANK plc

Dated:              2021

Dear Sirs

Jonathan Shipowners Ltd – US$15,000,000 Loan Agreement dated [ ] 2021 (the "Agreement")

We refer to the Agreement. This is the Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

88

We wish to borrow the Loan on the following terms:

Proposed Utilisation Date:         [                  ] (or, if that is not a Business Day, the next Business Day)

Currency of Loan:         dollars

Amount:         [                ]

Interest Period:         [                  ]

We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.

We confirm that the arrangement fee in the amount of $[ ] shall be deducted from the amount of the Loan on the Utilisation Date.

We confirm that the commitment fee in the amount of $[ ] shall be deducted from the amount of the Loan on the Utilisation Date.

We confirm that the Minimum Liquidity Amount in the amount of $300,000 shall be deducted from the amount of the Loan on the Utilisation Date and shall be transferred to the Minimum Liquidity Account – IBAN [ ].

The remaining proceeds of the Loan should be paid towards :

Amount & Currency: USD
Payment to: Borrower
Beneficiary name : [ ]
Beneficiary IBAN: [ ]
Beneficiary Account number: [ ]
Bank of the Beneficiary: HSBC Continental Europe, Greece
Bank of the Beneficiary SWIFT: MIDLGRAA
Cover message required: No

This Utilisation Request is irrevocable.

Yours faithfully

 …………………………………

authorised signatory for

Jonathan Shipowners Ltd

89

Form of Compliance Certificate

To:         HSBC BANK plc

From:         Euroseas Ltd.

Jonathan Shipowners Ltd

Dated:

Dear Sirs

Guarantee dated              2021 between Euroseas Ltd. and HSBC Bank plc (the "Guarantee") in respect of Loan Agreement dated               2021 between Jonathan Shipowners Ltd, as borrower and HSBC Bank plc, as lender (the "Loan Agreement")

We refer to the Loan Agreement and the Guarantee. This is a Compliance Certificate. Terms defined in the Loan Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

We confirm that Euroseas Ltd. maintains:

(a) Maximum Leverage of not higher than 75%;

(b) Liquidity of an amount of not less than $200,000 in respect of each Fleet Vessel; and

(c) Net Worth of not less than fifteen million dollars $15,000,000.

3        We confirm that no Default is continuing.

Signed:	………………………………………………	………………………………………………
	Director	Director
	of Euroseas Ltd.	of Euroseas Ltd.

90

………………………………………….	………………………………………….
Director	Director
of               Jonathan Shipowners Ltd	of              Jonathan Shipowners Ltd

91

Signatures

The Borrower

Jonathan Shipowners Ltd	)
)
By: Marcos Vasilikos	)
)
Address: c/o o Eurobulk Ltd.	)
4     Messogiou & Evropis	)	…../s/ Marcos Vasilikos……
Maroussi, Athens, Greece	)
Fax no.: +30 211 180 4097	)
Department/Officer: Legal department	)

The Lender

HSBC BANK plc	)
)
By: Katerina Eleftheriou	)
)
Address: 8 Canada Square, London E14 5HQ,	)
England	)	…../s/ Katerina Eleftheriou….
Email: darryllcoater@hsbc.com	)
Department/Officer: Darryll Coates	)
Senior Manager European Corporate Banking Centre	)

92

EX-4.30

Exhibit 4.30

Private and Confidential

DATED 26 November 2021

ANTWERP SHIPPING LTD

BUSAN SHIPPING LTD

KEELUNG SHIPPING LTD

and

OAKLAND SHIPPING LTD (1)

- and -

PIRAEUS BANK S.A. (2)

___________________________________

FACILITY AGREEMENT

in respect of revolving credit facility of

up to USD16,500,000

____________________________________

PIRAEUS

Index

Clause		Page
1	Purpose, definitions and construction	1
2	The Commitment and cancellation	17
3	Interest and Interest Periods	19
4	Repayment and prepayment	22
5	Fees and expenses	24
6	Payments and taxes; accounts and calculations	26
7	Representations and warranties	28
8	Undertakings	33
9	Conditions	44
10	Events of Default	45
11	Indemnities	49
12	Unlawfulness, increased costs and bail-in	49
13	Application of moneys, set off, pro-rata payments and miscellaneous	51
14	Accounts	53
15	Assignment, transfer and lending office	54
16	Notices and other matters	55
17	Governing law	57
18	Jurisdiction	57
19	Borrowers’ obligations	59
Schedule 1	Form of Drawdown Notice	62
Schedule 2	Conditions precedent	63
Schedule 3	Form of Compliance Certificate	68
Execution Page		69

THIS AGREEMENT dated           November 2021 is made BY and BETWEEN:

(1)         ANTWERP SHIPPING LTD, BUSAN SHIPPING LTD, KEELUNG SHIPPING LTD and OAKLAND SHIPPING LTD as joint and several Borrowers; and

(2)         PIRAEUS BANK S.A. as Lender.

NOW IT IS HEREBY AGREED AS FOLLOWS:

Purpose, definitions and construction

Purpose

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrowers a revolving credit facility in an amount not exceeding sixteen million five hundred thousand Dollars (USD16,500,000) to meet the general corporate needs of the Borrowers and/or the Corporate Guarantor and/or its Subsidiaries, upon and subject to the terms and conditions of this Agreement.

Definitions

In this Agreement, unless the context otherwise requires:

“Advance” means each borrowing of a proportion of the Available Commitment by the Borrowers or (as the context may require) the principal amount of such borrowing;

"affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;

“Approved Broker” means such second-hand ship sale and purchase broker as the Lender may agree is an Approved Broker for the purposes of this Agreement;

“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms;

“Available Commitment” means:

on the Execution Date, the amount of the Loan Facility as at that date; and

thereafter at any relevant time, the lesser of (i) the total undrawn amount of the Loan Facility (as reduced and/or cancelled under this Agreement and/or as may be re-borrowed pursuant to clause 4.2.2) and (ii) the amount which, when added to the Loan and the Existing Loan, would equal 80% of the aggregate Valuation Amounts at that date;

“Bail-In Action” means the exercise of any Write-down and Conversion Powers;

“Bail-In Legislation” means, in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

1

“Banking Day” means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Piraeus and New York City (or any other relevant place of payment under clause 6);

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

“Borrowers” means each of Antwerp Shipping Ltd (“Antwerp”), Busan Shipping Ltd (“Busan”), Keelung Shipping Ltd (“Keelung”) and Oakland Shipping Ltd (“Oakland”), each a company incorporated in the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands, and in the plural means all of them;

“Break Costs” means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Lender at any time and from time to time as having been incurred by the Lender in maintaining or funding the Loan or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1, or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

the Borrowers failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

“Casualty Amount" means five hundred thousand Dollars (USD500,000) (or the equivalent in any other currency);

“Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

“Charter Assignment” means a second priority specific assignment of any Extended Employment Contract required to be executed hereunder by any Owner in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may require in its sole discretion;

“Classification” means, in relation to each Mortgaged Vessel, the highest class available for a vessel of her type with the relevant Classification Society;

2

“Classification Society” means, in relation to each Mortgaged Vessel, any classification society which is a member of the International Association of Classification Societies which the Lender shall, at the request of the Borrowers, have agreed in writing shall be treated as the classification society in relation to such Mortgaged Vessel for the purposes of the relevant Ship Security Documents;

“Code” means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Commitment” means sixteen million five hundred thousand Dollars (USD16,500,000) which the Lender is obliged to lend to the Borrowers under this Agreement, as such amount may be reduced and/or cancelled under this Agreement;

“Compliance Certificate” means a certificate substantially in the form set out in schedule 3 signed by the chief financial officer of the Corporate Guarantor;

“Compulsory Acquisition” means, in respect of a Mortgaged Vessel, requisition for title or other compulsory acquisition including, if that Mortgaged Vessel is not released therefrom within the Relevant Period, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) by or on behalf of any Government Entity or other competent authority or by pirates, hijackers, terrorists or similar persons; "Relevant Period" means for the purposes of this definition of Compulsory Acquisition either (i) one (1) calendar month or, (ii) in respect of pirates, hijackers, terrorists or similar persons, if relevant underwriters confirm in writing (in terms satisfactory to the Lender) prior to the end of such one (1) month period that such capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation will be fully covered by the Owner’s relevant insurances, the shorter of twelve (12) months after the date upon which the relevant incident occurred and such period at the end of which the relevant cover expires;

“Corporate Guarantee” means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrowers under this Agreement required to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may require;

“Corporate Guarantor” means Euroseas Ltd., a corporation listed on NASDAQ and incorporated in the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Default” means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

“Dollars” and “USD” mean the lawful currency of the USA and in respect of all payments to be made under any of the Security Documents means funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

3

“Drawdown Date” means, in relation to each Advance, any date being a Banking Day falling during the Drawdown Period, on which the relevant Advance is, or is to be, made available;

“Drawdown Notice” means, in relation to each Advance, a notice substantially in the form of schedule 1;

“Drawdown Period” means the period commencing on the Execution Date and ending on the earliest of (i) the date falling one month prior to the Maturity Date and (ii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

“Earnings” means, in respect of a Vessel, all moneys whatsoever from time to time due or payable to its Owner during the Facility Period arising out of the use or operation of that Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to that Owner in event of requisition of that Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) of any charterparty or other contract (including any contract of affreightment) for the employment of that Vessel (including any proceeds under any loss of hire insurance, if applicable);

“Earnings Account” means, in respect of each Borrower, an interest bearing USD current account opened or (as the context may require) to be opened by such Borrower with the Lender and includes any sub-accounts thereof and any other account designated in writing by the Lender to be an Earnings Account for the purposes of this Agreement, and in the plural means all of them;

“Earnings Account Pledge” means, in respect of each Earnings Account, a second priority pledge required to be executed hereunder between the Borrower which is the owner thereof and the Lender in respect of such Borrower’s Earnings Account in such form as the Lender may require, and in the plural means all of them;

“EIAPP Certificate” means the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to a Vessel;

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention having a similar effect, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

“Environmental Affiliate” means any agent or employee of any Borrower, the Manager or any other Group Member or any other person having a contractual relationship with any Borrower, the Manager or any other Group Member in connection with any Mortgaged Vessel or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from any Mortgaged Vessel;

4

“Environmental Approvals” means all authorisations, consents, licences, permits, exemptions or other approvals required under applicable Environmental Laws;

“Environmental Claim” means (i) any claim by, or directive from, any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, “claim” shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

“Environmental Incident” means, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from any Relevant Ship; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship which involves collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, where the Relevant Ship, the Manager and/or the relevant Owner and/or the relevant Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship and where such Relevant Ship is actually or potentially liable to be arrested as a result and/or where the Manager and/or the relevant Owner and/or other Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable;

“Environmental Laws” means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the USA);

“Environmentally Sensitive Material” means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

“Event of Default” means any of the events or circumstances listed in clause 10.1;

“Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

“Existing Loan” means the aggregate principal amount owing to the Lender under the Existing Loan Agreement at any relevant time;

“Existing Loan Agreement” means a loan agreement dated 8 November 2019 (as amended by a supplemental agreement dated 16 July 2020) made between the Borrowers as joint and several borrowers and the Lender as lender in respect of a loan of up to USD32,000,000;

5

“Extended Employment Contract” means, in respect of a Mortgaged Vessel and at any relevant time, any bareboat charterparty (irrespective of the duration of such charterparty) or any time charterparty or other contract of employment of such ship (including the entry of a Vessel in any pool) which has a remaining tenor exceeding nine (9) months (including any options to renew or extend such tenor) at such time;

“Facility Period” means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising, actual or contingent, have been irrevocably paid, performed and/or complied with;

“FATCA” means:

sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

“FATCA Deduction” means a deduction or withholding from a payment under a Security Document required by FATCA;

“FATCA Exempt Party” means a party to a Security Document that is entitled to receive payments free from any FATCA Deduction;

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Bank is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

“Flag State” means in respect of each Vessel, the country, which is acceptable to the Lender, on whose flag such Vessel is or is to be registered in the ownership of her Owner;

“General Assignment” means, in respect of each Mortgaged Vessel, the second priority deed of assignment of its earnings, insurances and requisition compensation executed or to be executed by the relevant Owner in favour of the Lender in such form as the Lender may require, and in the plural means all of them;

“Government Entity” means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

6

“Group” means, at any relevant time, the Corporate Guarantor and its Subsidiaries (including the Borrowers);

“Group Member” means any member of the Group;

“HMT” means Her Majesty’s Treasury;

"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary;

“IAPP Certificate” means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

“Insurances” means, in respect of a Vessel, all policies and contracts of insurance (which expression includes all entries of that Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of its Owner (whether in the sole name of that Owner, or in the joint names of that Owner and the Mortgagee or otherwise) in respect of that Vessel or otherwise howsoever in connection with that Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

“Interest Payment Date” means the last day of an Interest Period and, if an Interest Period is longer than three (3) months, the date falling at the end of each successive period of three (3) months from the start of such Interest Period;

“Interest Period” means each period for the calculation of interest in respect of the Loan ascertained in accordance with clauses 3.2 and 3.3;

“ISM Code” means in relation to its application to the Borrowers, the Vessels and their operation:

‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 December 1993 and incorporated on 19 May 1994 into Chapter IX of the International Convention for Safety of Life at Sea 1974 (SOLAS 1974); and

all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including, without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 December 1995,

7

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” means, in relation to a Mortgaged Vessel, the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to that Mortgaged Vessel within the periods specified by the ISM Code;

“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulations issued pursuant thereto;

“ISSC” means an International Ship Security Certificate issued in respect of a Mortgaged Vessel pursuant to the ISPS Code;

“Latest Accounts” means, in respect of any fiscal year of the Corporate Guarantor, the latest annual audited consolidated accounts of the Corporate Guarantor;

“Lender” means Piraeus Bank S.A. having its registered office at 4 Amerikis Street, 105 64 Athens, Greece, acting through its branch at 170 Alexandras Ave., 115 21 Athens, Greece (fax no. +30 210 373 9783);

“LIBOR” means, in relation to the Loan or any part of the Loan:

the applicable Screen Rate at or about 11.45 a.m. (London time) on the Quotation Day for Dollars and for a period equal in length to the Interest Period then applicable to the Loan or that part of the Loan; or

in case of Screen Rate Replacement Event, the Replacement Benchmark on the Quotation Day for Dollars and for a period equal in length to the Interest Period,

and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;

“Lightweight” means, in respect of each Mortgaged Vessel, the lightweight tonnage of that Mortgaged Vessel as provided in (i) that Mortgaged Vessel’s capacity plan or (ii) at the Lender’s discretion that Mortgaged Vessel’s trim and stability booklet;

“Loan” means the aggregate principal amount in respect of the Loan Facility owing to the Lender under this Agreement at any relevant time;

“Loan Facility” means the revolving credit facility provided by the Lender on the terms and subject to the conditions of this Agreement in an amount equal to the least of (i) sixteen million five hundred thousand Dollars (USD16,500,000) and (ii) an amount equal to, when aggregated with the amount of the Existing Loan as at the Execution Date, 50% of the aggregate Valuation Amounts of the Vessels (to be determined no more than 20 days prior to the Execution Date), as such amount may be reduced in accordance with clause 2.5 and the other terms of this Agreement;

8

“Management Agreement” means, in respect of each Mortgaged Vessel, the agreement between the relevant Owner and the Manager, in a form approved by the Lender, and in the plural means all of them;

“Manager” means Eurobulk Ltd., a corporation incorporated in Liberia with its registered address at 80 Broad Street, Monrovia, Liberia and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, or any other commercial and/or technical manager appointed by the Borrower, with the prior written consent of the Lender, as the manager of the Vessel;

“Manager's Undertaking” means, in respect of each Mortgaged Vessel, the second priority undertaking and assignment of insurances required to be executed hereunder by the Manager in favour of the Lender in such form as the Lender may require and in the plural means all of them;

“Margin” means 2.60% (two point six per cent) per annum;

“Material Adverse Effect” means a material adverse effect on (i) the Lender’s rights under, or the security provided by, any Security Document, (ii) the ability of any Security Party to perform or comply with any of its obligations under any Security Document to which it is a party or (iii) the value or nature of the financial condition of any Security Party (other than the Manager);

“Maturity Date” means the date falling 48 months after the Execution Date;

“MII & MAP Policy” means a mortgagee’s interest and (if required by the Lender) pollution risks insurance policy (including, but not limited to, additional perils (pollution) cover) in respect of each Mortgaged Vessel to be effected by the Lender on or before the Drawdown Date to cover the Mortgaged Vessels as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Lender in its sole discretion, insuring a sum of at least:

one hundred and ten per cent (110%) of

the aggregate of the Loan and the Existing Loan; or

if the Lender has effected a separate cover under the existing Loan Agreement, the Loan,

in respect of mortgagee’s interest insurance cover; and

one hundred and ten per cent (110%) of:

the aggregate of the Loan and the Existing Loan; or

if the Lender has effected a separate cover under the existing Loan Agreement, the Loan,

in respect of additional perils (pollution) cover;

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“Money Laundering” has the meaning given to it in Article 1 of the Directive (EU) 2015/849 of the European Parliament and of the Council of the European Union of 20 May 2015;

“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) 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 such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no the Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage” means:

in relation to each of Vessel A and Vessel B, the second preferred Marshall Islands mortgage of such Vessel required to be executed hereunder by the Owner thereof; and

in relation to each of Vessel C and Vessel D, the second priority Cypriot statutory mortgage and deed of covenant collateral thereto required to be executed hereunder by the Owner thereof,

each of which to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

“Mortgaged Vessel” means, at any relevant time, a Vessel which is at such time subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Vessel shall, for the purposes of this Agreement, be regarded as a Mortgaged Vessel as from the date on which the Mortgage of that Vessel has been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required to be paid to the Lender pursuant to clause 4.3 or 4.4 following the Total Loss or sale respectively of such Vessel and (ii) the end of the Facility Period;

“NASDAQ” means the stock exchange run by the US National Association of Securities Dealers with the main exchange located in the United States of America, originally an acronym for the National Association of Securities Dealers Automatic Quotations;

“Net Worth” means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

“Operator” means any person who is from time to time during the Facility Period concerned in the operation of a Relevant Ship and falls within the definition of “Company” set out in rule 1.1.2 of the ISM Code;

“Owner” means, in respect of each Vessel, the Borrower which is the owner thereof;

“Permitted Encumbrance” means any Encumbrance in favour of the Lender created pursuant to the Security Documents or the Prior Security Documents; any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrowers or any of them are actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

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“Permitted Liens” means any lien on any Mortgaged Vessel for master's, officer's or crew's wages outstanding in the ordinary course of trading, any lien for salvage and any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Lender) exceeding the Casualty Amount any lien arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue (and while such obligations are not overdue) or which are being contested in good faith by bona fide and appropriate proceedings (and for the payment of which adequate, freely-available reserves have been provided) unless such proceedings or the continued existence of such lien makes likely the sale, forfeiture or loss of, or of any interest in, any Mortgaged Vessel, and liens securing liabilities for Taxes against which adequate, freely-available reserves have been provided;

“Pertinent Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment or assets, carries on, or has a place of business or is otherwise howsoever effectively connected;

“Prepayment Ratio” means, in respect of the sale or Total Loss of a Mortgaged Vessel, the Valuation Amount of such Mortgaged Vessel immediately prior to such sale or Total Loss divided by the Security Value immediately prior to such sale or Total Loss;

“Prior Security Document” means any Security Document as defined as such in the Existing Loan Agreement;

“Proceedings” means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

“Quotation Day” means, in relation to any period for which an interest rate is to be determined, the date falling two (2) Banking Days before the first day of that period unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days);

“Reduction Date” means any date on which the amount of the Loan Facility is reduced under the provisions of clause 2.5;

“Registry” means, in relation to each Vessel, the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register such Vessel, the relevant Owner’s title thereto and the relevant Mortgage under the laws and flag of the Flag State;

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“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

“Relevant Ship” means each of the Mortgaged Vessels and any other ship from time to time (whether before or after the date of this Agreement) owned by any Group Member;

“Replacement Benchmark” means a benchmark rate which is:

formally designated, nominated or recommended as the replacement for a Screen Rate by:

the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or

any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Benchmark" will be the replacement under paragraph (ii) above; or

in the opinion of the Lender and the Borrower, generally accepted in the international loan markets as the appropriate successor to a Screen Rate; or

in the opinion of the Lender and the Borrower, an appropriate successor to a Screen Rate;

“Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrowers lawfully to borrow the Loan and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

“Required Security Amount” means the amount in USD (as certified by the Lender) which is at any relevant time one hundred and twenty five per cent (125%) of the aggregate of the Loan and the Existing Loan;

“Requisition Compensation” means, in respect of a Vessel, all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of that Vessel;

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;

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“Restricted Person” means a person that is:

listed on, or directly or indirectly owned or controlled (as such terms are defined by the relevant Sanctions Authority) by a person listed on, any Sanctions List;

located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of, a country or territory that is the target of country or territory -wide Sanctions (“Sanctions Restricted Jurisdiction”); or

otherwise a target of Sanctions;

“Safekeeping Securities Account” means the account opened or to be opened by the Lender with the Shipping Branch located at 137-139 Filonos Street, Piraeus, Greece Lending Office for the safekeeping of the shares held by the Lender in the issued share capital of each Borrower and which shall be pledged in favour of the Lender pursuant to the Shares Pledges;

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

the United States government;

the United Nations;

the European Union or any of its Member States;

the United Kingdom;

any country to which any Security Party or any other member of the Group or any affiliate of any of them is bound; or

the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Sanctions Authorities.

“Sanctions Authorities” means together, the United States Department of State, HMT and OFAC and in the singular means each of them;

“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets in the UK” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

“Sanctions Restricted Jurisdiction” means a country or territory that is the target of country or territory -wide Sanctions;

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower;

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“Screen Rate Replacement Event” means, in relation to a Screen Rate:

the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrower, materially changed;

(i)         

the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

in the opinion of the Lender and the Borrower, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement;

“Security Documents” means this Agreement, the Mortgages, the Corporate Guarantee, the General Assignments, any Charter Assignments, the Earnings Account Pledges, the Shares Pledges, the Manager’s Undertakings, any Tripartite Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrowers pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means the Borrowers, the Corporate Guarantor, the Shareholder, the Manager or any other person who may at any time be a party to any of the Security Documents (other than the Lender);

“Security Value” means the amount in USD (as certified by the Lender) which is, at any relevant time, the aggregate of (a) the Valuation Amounts of the Mortgaged Vessels, as most recently determined in accordance with clause 8.2.2 hereof and (b) the net realizable market value of any additional security for the time being actually provided to the Lender pursuant to clause 8.2.1(b), it being agreed however that in case of additional security in the form of cash in Dollars, the same will be valued on a Dollar for Dollar basis;

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“Shareholder” means Eurocon Ltd., a corporation incorporated in the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Shares Pledge” means the second priority pledge of the shares of and in each Borrower to be executed by the Shareholder in favour of the Lender, to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

“Ship Security Documents” means, in relation to each Mortgaged Vessel, the relevant Mortgage, the relevant General Assignment, any relevant Charter Assignment, any relevant Tripartite Deed and the relevant Manager’s Undertaking;

“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person, and for this purpose “control” means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise;

“Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly);

“Total Assets” and “Total Liabilities” mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by the Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with International Financial Reporting Standards or US GAAP provided that the value of any ship shall be the market value thereof calculated in accordance with clause 8.2.5(i) and not as set out in the Latest Accounts;

“Total Loss” means, in relation to a Mortgaged Vessel:

the actual, constructive, compromised or arranged total loss of such Mortgaged Vessel; or

Compulsory Acquisition; or

any hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Mortgaged Vessel not falling within the definition of Compulsory Acquisition, unless such Mortgaged Vessel be released and restored to the relevant Owner within sixty (60) days after such incident;

“Tripartite Deed” means, if a Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer’s interest in the insurances of that Vessel, required to be executed by Borrower who is the owner thereof and the relevant charterer in favour of the Lender in such form as the Lender may require in its sole discretion and the relevant charterer may agree;

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“Underlying Documents” means, together, any Extended Employment Contracts and the Management Agreements;

“Unlawfulness” means any event or circumstance which is the subject of a notification by the Lender to the Borrowers under clause 12.1;

“USA” means the United States of America;

"US Tax Obligor" means:

(a)         a Borrower if it is resident for tax purposes in the USA; or

(b)         a Security Party some or all of whose payments under the Security Documents          are from sources within the USA for US federal income tax purposes;

“Valuation Amount” means, in respect of each Vessel, the value thereof most recently determined under clause 8.2.2;

“Vessel A” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Busan under the Marshall Islands flag with the name “SYNERGY BUSAN”;

“Vessel B” means the 2008-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Antwerp under the Marshall Islands flag with the name “SYNERGY ANTWERP”;

“Vessel C” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Oakland under the Cypriot flag with the name “SYNERGY OAKLAND”;

“Vessel D” means the 2009-built container vessel of 4,253 TEU and 16,423 lwt registered in the name of Keelung under the Cypriot flag with the name “SYNERGY KEELUNG”;

“Vessels” means, together, Vessel A, Vessel B, Vessel C and Vessel D; and

”Write-down and Conversion Powers” means, in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule.

Construction

In this Agreement, unless the context otherwise requires:

clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

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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 in force for the time being and as duly amended and/or supplemented and/or novated;

references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority;

references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to the Lender shall also include a Transferee Lender;

words importing the plural shall include the singular and vice versa;

references to a time of day are, unless otherwise stated, to Athens time;

references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrowers except for manifest error;

if any document, term or other matter or thing is required to be approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated;

time shall be of the essence in respect of all obligations whatsoever of the Borrowers under this Agreement, howsoever and whensoever arising;

and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible;

a Default and an Event of Default) is "continuing" if it has not been remedied or waived.

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References to currencies

Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

Contracts (Rights of Third Parties Act) 1999

Except for clause 18, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

The Commitment and cancellation

Agreement to lend

The Lender, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrowers upon and subject to the terms of this Agreement, the Loan Facility in one or multiple Advances for the purposes stated in clause 1.1, subject to the terms and conditions contained in this Agreement.

Drawdown

Subject to the terms and conditions of this Agreement, each Advance shall be made available to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 14:00 p.m. on the second Banking Day before the date, which shall be a Banking Day falling within the Drawdown Period, on which the Borrowers propose that Advance is made available.

The Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall, subject as provided in clause 3.5, be irrevocable.

Limitation and application of Advances

The amount of the Loan shall not exceed the amount of the Loan Facility.

The principal amount of any Advance specified in the Drawdown Notice for borrowing on a Drawdown Date shall, subject to the terms of this Agreement, be:

not more than the amount of the Available Commitment as at the relevant Drawdown Date; and

not less than USD100,000 but be an integral multiple of USD100,000.

The Security Value shall remain equal to, or in excess of, the Required Security Amount immediately after the borrowing of any Advance.

Each Advance shall be paid forthwith upon drawdown to such account as the Borrowers shall stipulate in the relevant Drawdown Notice.

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Availability

The Borrowers acknowledge that payment of an Advance referred to in clause 2.3.2 to the account or accounts specified in the Drawdown Notice shall satisfy the obligation of the Lender to lend that Advance to the Borrowers under this Agreement.

Reduction of Facility

Subject to the terms of this Agreement, the Loan Facility shall be reduced by sixteen (16) consecutive reductions, the first four (4) in the amount of one million five hundred thousand Dollars (USD1,500,000) each, the next eleven (11) in the amount of five hundred and sixty thousand (USD560,000) each and the sixteenth (16th) in the amount of four million three hundred and forty thousand (USD4,340,000), with the first such reduction taking place on the date falling three months after the Execution Date and subsequent reductions taking place at quarterly intervals thereafter, with the final reduction taking place on the Maturity Date.

Cancellation

The Borrowers may at any time during the Facility Period by notice to the Lender (effective only on actual receipt) cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, all or part of the undrawn Commitment or the Loan Facility. Any such notice of cancellation, once given, shall be irrevocable and the Commitment or Loan Facility shall be reduced accordingly.

The Borrowers may also at any time during the Facility Period by notice to the Lender (effective only on actual receipt) prepay and/or cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, the whole but not part only, but without prejudice to the Borrowers’ obligations under clauses 3.5, 6.6 and 12, of the Commitment (if any). Upon any notice of such prepayment and cancellation being given, the Commitment shall be reduced to zero, the Borrowers shall be obliged to prepay the Loan and the Lender's related costs (including but not limited to Break Costs, if any) on such date, but always without any premium or penalty if such prepayment is effected on the next Interest Payment Date, and the Lender shall be under no obligation to make available the Loan or any further Advances.

Consequence of reduction or cancellation of Facility

Whenever under the terms of this Agreement the Loan Facility is reduced and/or any part thereof is cancelled the Commitment shall be reduced by the amount of such reduction or cancellation and the reductions to be made on the Reduction Dates thereafter pursuant to clause 2.5 shall be reduced pro rata by an amount equal, in aggregate, to the amount of such reduction or cancellation.

Use of proceeds

Without prejudice to the Borrowers’ obligations under clause 8.1.4, the Lender shall not have any responsibility for the application of the proceeds of any Advance or any part thereof by the Borrowers.

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The Borrowers shall not, and shall procure that each Security Party and each other Group Member and any Subsidiary of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in a Borrower or any other Security Party being in breach of any Sanctions or becoming a Restricted Person.

It is prohibited to use any part of the proceeds of the Loan for the purposes of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (τίτλους υβριδικών κεφαλαίων) of the Lender or other banks and/or financial institutions.

Interest and Interest Periods

Normal interest rate

The Borrowers must pay interest on each Advance and the Loan in respect of each Interest Period relating thereto on each Interest Payment Date at the rate per annum determined by the Lender to be the aggregate of (a) the Margin in respect thereof and (b) LIBOR (or any other applicable rate in accordance with the terms of this Agreement) for such period.

Selection of Interest Periods

Subject to clause 3.3, the Borrowers may by notice received by the Lender not later than 10:00 a.m. on the second Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1), three (3) or six (6) months or such other period as the Borrowers may select and the Lender may agree.

Determination of Interest Periods

Subject to clause 3.3.1 every Interest Period shall be of the duration specified by the Borrowers pursuant to clause 3.2 but so that:

the first Interest Period in respect of the first Advance to be made hereunder shall start on the Drawdown Date in respect thereof, and each subsequent Interest Period relating to the first Advance shall start the day falling the day after the last day of the previous Interest Period;

the first Interest Period in respect of each subsequent Advance to be made hereunder shall commence on its Drawdown Date and terminate simultaneously with the Interest Period which is current for the Loan as at the Drawdown Date in respect of the relevant Advance (from which date such Advance shall be consolidated with the rest of the Loan, which shall be treated as a single Advance for the purposes hereof) and each subsequent Interest Period shall start the day falling the day after the last day of the previous Interest Period;

if any Interest Period would otherwise overrun a relevant Reduction Date, then in the case of the last Interest Period, such Interest Period shall end on the Maturity Date, and in the case of any other Interest Period, the Loan shall be divided into parts so that there is one part in the amount which is to be reduced on such Reduction Date and having an Interest Period ending on the relevant Reduction Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3;

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if the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3, such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.

Default interest

If the Borrowers fail to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents, the Borrowers must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Lender pursuant to this clause 3.4. The period starting on such due date and ending on such date of payment shall be divided into successive periods selected by the Lender each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods. Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Lender and on the day on which all amounts in respect of which interest is being paid under this clause are paid, 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 an amount of principal which became due and payable by reason of a declaration by the Lender under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender 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 of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.5.1, the Lender is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Lender compounded at such intervals as the Lender selects.

Market disruption; non-availability

Market Disruption Event: If and whenever, at any time prior to the commencement of any Interest Period, the Lender (in its discretion) shall have determined (which determination shall be conclusive in the absence of manifest error) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Lender shall forthwith give notice thereof (a “Determination Notice”) to the Borrowers and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of

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the Margin; and

the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan (or the relevant part thereof) from whatever source it may select.

Suspension of drawdown: If the Determination Notice is given before the Commitment (or a part thereof) is advanced, the Lender's obligation to make the Commitment (or a part thereof) available shall be suspended while the circumstances referred to in the Determination Notice continue.

Meaning of “Market Disruption Event”: In this Agreement “Market Disruption Event” means:

at or about noon on the Quotation Day for the relevant Interest Period no Screen Rate is available for Dollars or Replacement Benchmark; and/or

before close of business on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that the cost to it of obtaining matching deposits in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of the Screen Rate or, as the case may be, the Replacement Benchmark for that Interest Period; and/or

before close of business on the Quotation Day for the relevant Interest Period, deposits in Dollars are not available to the Lender in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period.

Alternative basis of interest or funding

If a Market Disruption Event occurs and the Lender or the Borrowers so require, the Lender and the Borrowers shall enter into negotiations (for a period of not more than fifteen (15) days (the “Negotiation Period”)) after the giving of the relevant Determination Notice with a view to agreeing a substitute basis for determining the rate of interest.

Any alternative basis agreed pursuant to paragraph (i) above shall be binding on the Lender and all Security Parties.

Alternative basis of interest in absence of agreement: If the Lender and the Borrowers will not enter into negotiations as provided in clause 3.5.4(a) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set the following Interest Period and an interest rate representing the cost of funding of the Lender in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period; if the relevant circumstances are continuing at the end of the Interest Period so set by the Lender, the Lender shall continue to set the following Interest Period and an interest rate representing its cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period.

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Notice of prepayment: If the Borrowers do not agree with an interest rate set by the Lender under clause 3.5.5 (Alternative basis of interest in absence of agreement), the Borrowers may give the Lender not less than 5 Banking Days’ notice of its intention to prepay the Loan at the end of the interest period set by the Lender.

Prepayment; termination of Commitment: A notice under clause 3.5.6 (Notice of prepayment) shall be irrevocable; and on the last Banking Day of the interest period set by the Lender the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the balance of all other amounts payable under this Agreement and the other Security Documents or, if the Commitment has not been advanced, the Commitment shall be reduced to zero and the Loan shall not be made to the Borrowers under this Agreement thereafter.

Application of prepayment: The provisions of clause 4 (Repayment and Prepayment) shall apply in relation to the prepayment made hereunder.

Replacement of Screen Rate

If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate ; and

aligning any provision of any Security Document to the use of that Replacement Benchmark;

enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

implementing market conventions applicable to that Replacement Benchmark;

providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party hereto to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Lender and the Borrowers.

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Interest Rate Swaps

The Borrowers may not enter into any interest hedging arrangements without the prior written consent of the Lender.

Repayment and prepayment

Repayment

If at any time the amount of the Loan exceeds the amount of the Loan Facility then the Borrower shall forthwith prepay the amount of such excess, together with any other amount payable in respect of such excess.

The Borrowers shall on the Maturity Date also pay to the Lender all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents.

Voluntary prepayment

Subject to clauses 4.3, 4.4, 4.5 and 4.6, the Borrowers may, subject to having given ten (10) days’ prior written notice thereof to the Lender, prepay any specified amount (such part being in an amount of one hundred thousand Dollars (USD 100,000) or any larger sum which is an integral multiple of such amount) of the Loan on any relevant Interest Payment Date without premium or penalty.

Subject as otherwise provided in this Agreement, amounts prepaid in respect of the Loan pursuant to this clause 4.2 may be re-borrowed.

Mandatory Prepayment/Reduction on Total Loss

On the date falling one hundred and eighty (180) days after that on which a Mortgaged Vessel became a Total Loss or, if earlier, on the date upon which the relevant insurance proceeds are, or Requisition Compensation is, received by the Owner thereof (or the Lender pursuant to the Security Documents) the Loan Facility shall be reduced by an amount equal to the greater of:

the Loan Facility on the date on which such reduction is to be made multiplied by the Prepayment Ratio; and

such amount as would be required to ensure that, immediately following such reduction, the Security Value of the remaining Mortgaged Vessels will equal or exceed the Required Security Amount,

and, if the Loan thereafter exceeds such reduced amount of the Loan Facility, then the Borrowers shall forthwith prepay the amount of such excess.

Interpretation

For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:

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in the case of an actual total loss of a Mortgaged Vessel, on the actual date and at the time such Mortgaged Vessel was lost or, if such date is not known, on the date on which such Mortgaged Vessel was last reported;

in the case of a constructive total loss of a Mortgaged Vessel, upon the date and at the time notice of abandonment of such Mortgaged Vessel is given to the then insurers of such Mortgaged Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

in the case of a compromised or arranged total loss of a Mortgaged Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of such Mortgaged Vessel;

in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Mortgaged Vessel (other than within the definition of Compulsory Acquisition) by any Government Entity, or by persons allegedly acting or purporting to act on behalf of any Government Entity, which deprives its Owner of the use of that Mortgaged Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant incident occurred.

Mandatory prepayment on sale of Mortgaged Vessel

On the date of completion of the sale or transfer of ownership of a Mortgaged Vessel the Loan Facility shall be reduced by an amount equal to the greater of:

the Loan Facility on the date on which such reduction is to be made multiplied by the Prepayment Ratio; and

such amount as would be required to ensure that, immediately following such reduction, the Security Value of the remaining Mortgaged Vessels will equal or exceed the Required Security Amount,

and, if the Loan thereafter exceeds such reduced amount of the Loan Facility, then the Borrowers shall forthwith prepay the amount of such excess.

Amounts payable on prepayment

Any prepayment of all or part of the Loan under this Agreement shall be made together with:

accrued interest on the amount to be prepaid to the date of such prepayment;

any additional amount payable under clauses 3.5, 6.6 or 12.2; and

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all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Security Documents including, without limitation any Break Costs and, if the whole Loan is being prepaid, any accrued commitment commission payable under clause 5.2.

Notice of prepayment; reduction Facility

Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.

Upon reduction of the Loan Facility pursuant to clauses 4.3 and 4.4 the amount of each quarterly reduction of the Loan Facility under clause 2.5 shall be reduced pro rata in an amount equal in aggregate to the reduction of the Loan Facility under clauses 4.3 and 4.4.

The Borrowers may not prepay the Loan or any part thereof except as expressly provided in this Agreement.

Any reduction or cancellation of the Loan Facility under this clause 4 (other than under clause 4.2) shall be permanent and irrevocable.

Fees and expenses

Arrangement fee

The Borrower agrees to pay to the Lender on the Execution Date a non-refundable arrangement fee of USD115,500.

Commitment fee

The Borrower shall pay to the Lender a fee computed at the rate of 0.50% (zero point five per cent.) per annum on the Available Commitment from time to time during the Drawdown Period.

The accrued commitment fee is payable on the last day of each successive period of three Months (beginning on the Execution Date) which ends during the Drawdown Period, on the last day of the Drawdown Period and, if cancelled, on the cancelled amount of the Available Commitment at the time the cancellation is effective,

Provided that, for sake of clarification, any commitment fee payable on any part of the Available Commitment representing an amount which was prepaid and became available for re-borrowing pursuant to clause 4.2.2 is payable on (a) the last day of each successive period of three Months (beginning on the date on which such amount was prepaid) which ends during the Drawdown Period and (b) on the earlier of (i) the last day of the Drawdown Period and (ii) in respect any amount prepaid pursuant to clause 4.2.2 which the Borrowers confirm in writing to the Lender that they do not wish to exercise their right to re-borrow, thereby cancelling such part of the Available Commitment, the date such cancellation is effective and no commitment fee shall be payable on the part of the Available Commitment so cancelled.

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Expenses

The Borrowers agree to reimburse the Lender on a full indemnity basis within ten (10) days of demand all reasonable expenses and/or disbursements whatsoever (including without limitation legal, printing and out of pocket expenses) certified by the Lender as having been incurred by them from time to time:

in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any contemplated or actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees) (but excluding any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under the Security Documents);

in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Lender’s rights thereunder or any action proposed or taken following the occurrence of a Default or otherwise in respect of the moneys owing under any of the Security Documents; and

in connection with obtaining a written report from a maritime insurance consultant or broker acceptable to the Lender in relation to the Insurances of each Mortgaged Vessel (which the Lender may obtain not more than once a year, and at any time when there has been a change of insurer or terms of cover for any Mortgaged Vessel, other than in respect of the insured value of that Mortgaged Vessel),

together with interest at the rate referred to in clause 3.4 from the date on which reimbursement of such expenses and/or disbursements were due following demand to the date of payment (as well after as before judgment).

Value added tax

All fees and expenses payable pursuant to this Agreement must be paid together with value added tax or any similar tax (if any) properly chargeable thereon in any jurisdiction. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

Stamp and other duties

The Borrowers must pay all stamp, documentary, registration or other like duties or taxes, but excluding any FATCA Deduction (except for any such Taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under any of the Security Documents) (including any duties or taxes payable by the Lender) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loan and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.

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Payments and taxes; accounts and calculations

No set-off or counterclaim

All payments to be made by any Borrower under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am (London time) on the due date in freely available funds to such account at the Lender and in such place as the Lender may from time to time specify for this purpose.

Payment by the Lender

All sums to be advanced by the Lender to the Borrowers under this Agreement shall be remitted in USD on the Drawdown Date to the account specified in the Drawdown Notice.

Non-Banking Days

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

Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

Currency of account

If any sum due from a Borrower under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against such Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrowers undertake to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from a Borrower under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

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Grossing-up for Taxes - by the Borrowers

If at any time a Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or otherwise from any payment due under any of the Security Documents for the account of the Lender or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from such Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), 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 Borrowers must indemnify the Lender against any losses or costs incurred by it by reason of any failure of a Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

6.7         Claw back of Tax benefit

If, following any such deduction or withholding as is referred to in clause 6.6 from any payment by a Borrower, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, and to the extent that it can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the relevant Borrower with such amount as Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by such Borrower as aforesaid. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the Lender to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this clause 6.7, be entitled to enquire about the Lender’s tax affairs.

Loan account

The Lender shall maintain, in accordance with its usual practice, an account or accounts (as the Lender may deem necessary) evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Lender shall maintain a control account or accounts (as the Lender may deem necessary) showing the Loan and other sums owing by the Borrowers under the Security Documents and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrowers under the Security Documents.

Partial payments

If, on any date on which a payment is due to be made by any Borrower under any of the Security Documents, the amount received by the Lender from such Borrower falls short of the total amount of the payment due to be made by such Borrower on such date then, without prejudice to any rights or remedies available to the Lender under any of the Security Documents, the Lender must apply the amount actually received from that Borrower in or towards discharge of the obligations of the Borrowers under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by any Borrower:

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first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

fifthly, in or towards payment to the Lender of any due but unpaid principal in respect of the Loan; and

sixthly, in or towards payment to the Lender, on a pro rata basis, of any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid.

The order of application set out in clauses 6.9.1 to 6.9.6 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

Representations and warranties

Continuing representations and warranties

Each Borrower represents and warrants to the Lender that:

Due incorporation

each of the corporate Security Parties is duly incorporated, validly existing and in good standing under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own its respective property and other assets, to which it has unencumbered legal and beneficial title except as disclosed to the Lender, and the shares of the Borrower are in registered form;

Corporate power

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the Security Documents to which it is a party; all necessary corporate, shareholder (if applicable) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrowers to borrow or any other Security Party to howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loan;

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Binding obligations

the Underlying Documents and the Security Documents, when executed, will constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;

No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party or other member of the Group is 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 any Security Party or other member of the Group is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any Security Party or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties, it being always understood that the rights of the Lender under the Prior Security Documents will always have preference;

No default

no Event of Default has occurred;

No litigation or judgments

no Proceedings are current, pending or threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Security Parties under the Security Documents to which they are a party;

No filings required

except for the registration of the Mortgages in the relevant register under the laws of the relevant Flag State through the relevant Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

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Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected or waived by the person requiring the same and, to the extent no such waiver exists, are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation (including all such as relate to Money Laundering) to which such Security Party is subject;

Choice of law

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages and the Earnings Account Pledges), the choice of the law of the Flag State to govern the Mortgages, the choice of Greek law to govern the Earnings Account Pledges and the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

No immunity

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

Financial statements correct and complete

the latest audited consolidated accounts of the Corporate Guarantor in respect of the relevant financial year as delivered to the Lender present or will present fairly and accurately the consolidated financial position of the Corporate Guarantor as at the date thereof and the results of the operations of the Corporate Guarantor and, as at such date, the Corporate Guarantor does not have any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

Pari passu

the obligations of the Borrowers under this Agreement are direct, general and unconditional obligations of the Borrowers and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrowers except for obligations incurred under the Prior Security Documents or obligations which are mandatorily preferred by operation of law and not by contract;

Information

all information, whatsoever provided by any Security Party to the Lender in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading in any (in the reasonable opinion of the Lender) material respect;

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No withholding Taxes

no Taxes anywhere are imposed whatsoever by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents to which such Security Party is or is to be a party or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

No Default under Underlying Documents

except as disclosed in writing by the Borrowers to the Lender, no Security Party is in material default of any of its obligations under any relevant Underlying Document;

Use of proceeds

the Borrowers shall apply the Advances only for the purposes specified in clause 2.1;

Copies true and complete

the Certified Copies of the Underlying Documents delivered or to be delivered to the Lender pursuant to clause 9.1 are, or will when delivered be, true and complete copies or, as the case may be, originals of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

Ownership of Borrowers

all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

No Indebtedness

no Borrower has incurred any Borrowed Moneys save as envisaged by this Agreement or the Existing Loan Agreement or as otherwise disclosed to the Lender or incurred in the ordinary course of its business of owning, operating and chartering the Vessel owned by it;

Tax returns

the Borrowers and the Corporate Guarantor have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject;

Freedom from Encumbrances

none of the Vessels nor their Earnings, Insurances or Requisition Compensation nor the Earnings Accounts nor any Extended Employment Contract in respect of a Vessel nor any shares of and in any Borrower nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

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Environmental Matters

except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:

the Borrowers, the Manager and the other Group Members and, to the best of the Borrowers’ knowledge and belief (having made due enquiry), their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;

the Borrowers, the Manager and the other Group Members and, to the best of the Borrowers’ knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals;

no Environmental Claim has been made or threatened or pending against any of the Borrowers, the Manager, any other Group Member or, to the best of the Borrowers’ knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and

there has been no Environmental Incident;

ISM and ISPS Code

the Owners have complied with and continue to comply with and have procured that the Manager of the Vessels has complied with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to their business and in particular they or the Manager have obtained and maintain a valid DOC, IAPP Certificate, EIAPP Certificate (if applicable) and SMC for the Vessels and that they and the Manager have implemented and continue to implement an ISM SMS;

Accounting reference date

the Borrowers’ and the Corporate Guarantor’s accounting reference date is 31 December;

Office

no Borrower has an office in England or the United States of America;

Restricted Persons, unlawful activity

none of the shares in any Borrower, in (to the best of its knowledge) the Corporate Guarantor, or in any other Security Party or any Vessel are or will be at any time during the Facility Period legally or beneficially owned or controlled by a Restricted Person;

no Restricted Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Borrowers, (to the best of its knowledge) the Corporate Guarantor, or any other Security Party or any Vessel;

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Sanctions

(to the best of its knowledge only in respect of an agent) no Security Party nor any  director, officer, agent, employee of any Security Party or any person acting on behalf of any Security Party, is a Restricted Person nor acts directly or indirectly on behalf of a Restricted Person;

FATCA

none of the Security Parties is a FATCA FFI or a US Tax Obligor; and

Equal treatment of lenders

The financial covenants described in clause 8.1.8 are no less favourable (taken as a whole) to financial covenants granted by the Corporate Guarantor under existing lending facilities extended by banks, financiers or other financial institutions to the Corporate Guarantor and its Subsidiaries on or before 11 October 2021 (PROVIDED THAT, for the avoidance of doubt, for the purpose of this clause any covenant regarding the provision of cash collateral or restricted cash of any sort granted to other banks, financiers or other financial institutions shall not constitute a financial covenant under this clause).

Repetition of representations and warranties

On each day throughout the Facility Period, the Borrowers shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day and in clause 7.1.11 as if made with reference to the Latest Account at any relevant time.

Undertakings

General

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

Notice of Event of Default and Proceedings

promptly inform the Lender of (a) any Event of Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents to which it is a party and (b) as soon as the same is commenced or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of any of the Mortgaged Vessels (including, but not limited to any Total Loss of a Vessel or the occurrence of any Environmental Incident) and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing unremedied and unwaived and no such Proceedings have been commenced or threatened;

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Authorisation

to the extent a waiver has not been obtained, obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

Corporate Existence

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

Use of proceeds

use the Advances exclusively for the purposes specified in clauses 1.1 and 2.1;

Pari passu

ensure that its obligations under this Agreement shall, without prejudice to the provisions of clause 8.3, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations incurred under the Prior Security Documents or obligations which are mandatorily preferred by law and not by contract;

Financial statements

as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) financial statements of each Borrower (commencing with the financial year ending 31 December 2021), together with updated details (in a form acceptable to the Lender) of all off-balance sheet and time-charter hire commitments of the Vessels;

Compliance Certificates

deliver to the Lender on the date on which the audited consolidated accounts are delivered under clause 8.1.6 a Compliance Certificate together with such supporting information as the Lender may reasonably require;

Financial Covenants

procure that

the Net Worth of the Group will at all times exceed USD15,000,000; and

the Total Liabilities divided by the Total Assets (each net of cash balance) shall at all times be no more than 75%;

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Reimbursement of MII & MAP Policy premiums

reimburse the Lender on the Lender’s written demand the amount of the premium payable by the Lender for the inception or, as the case may be, extension and/or continuance of the MII & MAP Policy (including any insurance tax thereon);

Provision of further information

provide the Lender, and procure that the Corporate Guarantor (including its Subsidiaries), shall provide the Lender with such financial or other information (including, but not limited to, financial standing, Indebtedness, balance sheet, off-balance sheet commitments, repayment schedules, operating expenses, charter arrangements) concerning the Borrowers, the Corporate Guarantor (including its Subsidiaries), the Group and their respective affairs, activities, financial standing, Indebtedness and operations and the performance of the Mortgaged Vessels as the Lender may from time to time reasonably require save for any information which is confidential in relation to arms-length third parties or is not disclosable by law, convention or regulatory requirements;

Obligations under Security Documents, etc.

duly and punctually perform each of the obligations expressed to be imposed or assumed by them under the Security Documents and any Extended Employment Contact and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and any Extended Employment Contract to which it is a party;

Compliance with ISM Code

and will procure that any Operator will, comply with and ensure that the Mortgaged Vessels and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Facility Period;

Withdrawal of DOC and SMC

immediately inform the Lender if there is any actual withdrawal of its or any Operator’s DOC, IAPP Certificate, EIAPP Certificate or the SMC of any Mortgaged Vessel;

Issuance of DOC and SMC

and will procure that any Operator will promptly inform the Lender of the receipt by any Owner or any Operator of notification that its application for a DOC or any application for an SMC or IAPP Certificate or EIAPP Certificate for any Mortgaged Vessel has been refused;

ISPS Code Compliance

and will procure that the Manager or any Operator will:

maintain at all times a valid and current ISSC in respect of each Mortgaged Vessel;

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immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or material modification of the ISSC in respect of a Mortgaged Vessel; and

procure that each Mortgaged Vessel will comply at all times with the ISPS Code;

Compliance with Laws and payment of taxes

comply with all relevant Environmental Laws, laws, statutes and regulations applicable to it and pay all taxes for which it is liable as they fall due; and

comply in all respects with, and will procure that each Security Party and each other Group Member will comply in all respects with, all Sanctions;

Inspection

ensure that the Lender, by independent marine surveyors or other persons appointed by it for such purpose, may board each Mortgaged Vessel, once per calendar year or whenever the Lender deems necessary after the occurrence of an Event of Default which is continuing, provided in each case that the Lender shall use reasonable endeavours to ensure that such inspections or surveys shall not interfere with the operation of such Mortgaged Vessel, for the purpose of inspecting or surveying her and will afford all proper facilities for such inspections or survey and for this purpose will give the Lender reasonable advance notice of any intended drydocking of each Mortgaged Vessel (whether for the purpose of classification, survey or otherwise) and will pay the costs in respect of each such inspection or survey effected after the occurrence of an Event of Default which is continuing (otherwise such inspection or survey shall be at the Lender’s expense) and will provide the Lender with or ensure that the Lender receives on request all reports of such inspections, to be in such form as the Lender may approve, and, if a Mortgaged Vessel shall not be in a condition and state which complies with the requirements of this Agreement and the other Security Documents, will effect such repairs as in the opinion of the Lender be desirable to ensure such compliance;

The Mortgaged Vessels

ensure that throughout the Facility Period, each Mortgaged Vessel will at all times after her delivery (except as the Lender may otherwise permit) be:

in the absolute sole, legal and beneficial ownership of the relevant Owner, free of Encumbrances except Permitted Encumbrances, and not held on trust for any third party;

registered through the offices of the relevant Registry as a ship under the laws and flag of the relevant Flag State;

in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

classed with the Classification free of all overdue requirements and recommendations of the Classification Society affecting the Classification;

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insured in accordance with the Ship Security Documents relating thereto; and

managed by the Manager in accordance with the terms of the Management Agreement, which shall be acceptable to the Lender;

Charters

deliver to the Lender, a Certified Copy of each Extended Employment Contract upon its execution, forthwith on the Lender’s request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and use reasonable efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer (provided that any failure to procure the acknowledgement shall not constitute an Event of Default) and (c) (if any Mortgaged Vessel is subject to a bareboat charter) procure execution by the relevant Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and will provide evidence acceptable to the Lender that such notice has been given to the relevant charterer and the Borrowers shall pay all legal and other costs incurred by the Lender in connection with any such Charter Assignments and Tripartite Deed, forthwith following the Lender’s demand;

Chartering

not without the prior written consent of the Lender and, if such consent is given, only subject to such conditions as the Lender may impose (and in the case of (b) only, such consent not to be unreasonably withheld), to let any Vessel:

on demise charter for any period; or

by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed nine (9) months' duration; or

on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance;

Sanctions

(to the best of its knowledge only in respect of an agent) not be, and shall procure that any Security Party and other Group Member, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person;

, and shall procure that each Security Party and each other Group Member shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Lender;

procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with the Lender in its name or in the name of any other member of the Group;

take, and shall procure that each Security Party and each other Group Member has taken, reasonable measures to ensure compliance with Sanctions;

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, and shall procure that each Security Party and each other Group Member shall, to the extent permitted by law promptly upon becoming aware of them, supply to the Lender details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority;

not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting clause 8.1.21(b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by any Borrower, any other Security Party or any other Group Member in accordance with this Agreement;

Ownership

ensure that all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

Unencumbered liquidity

procure that at all times during the Facility Period, the Corporate Guarantor or the Borrowers shall maintain in an account or accounts with the Lender free deposit cash which is (other than the Earnings Account Pledge) free of any Encumbrance in an average aggregate amount of not less than USD100,000 multiplied by the number of Mortgaged Vessels for the preceding twelve-months period, to be tested first on 30 November 2022 and annually thereafter;

Listing

procure that the Corporate Guarantor shall maintain its listing as a public limited company on NASDAQ or any other stock exchange acceptable to the Lender and comply with all of the listing rules, laws and regulations applicable to public companies listed on NASDAQ or such other acceptable stock exchange and shall take no steps to de-list without the prior consent of the Lender (such consent not to be unreasonably withheld);

Shipping activities

procure that the Corporate Guarantor shall at all times remain the ultimate holding company of shipowning companies engaged in shipping activities acceptable to the Lender;

Executive management

procure that at all times throughout the Facility Period:

Mr Aristeidis Pittas shall be the Chief Executive Officer or Chairman of the Corporate Guarantor; and

the Manager shall be managed and/or controlled by Mr Aristeidis Pittas or any other person acceptable to the Lender.

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FATCA Information

(a)         Subject to paragraph (c) below each party to any Security Document shall, within 10 Banking Days of a reasonable request by the other party to that Security Documents:

(i)         confirm to that other party whether it is:

(A)                  a FATCA Exempt Party; or

(B)                  not a FATCA Exempt Party; and

(ii)         supply to that other party such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the purposes of that other party’s compliance with FATCA;

(iii)        supply to that other party such forms, documentation and other information relating to its status as that other party reasonably requests for the purposes of that other party's compliance with any other law, regulation, or exchange of information regime;

if a party to any Security Document confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify the other party reasonably promptly;

paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion constitute a breach of:

any law or regulation;

any policy of the Lender;

any fiduciary duty; or

any duty of confidentiality;

paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion cause it to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this paragraph (d);

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if a party to any Security Document fails to confirm whether or not it is a FATCA Exempt Party, or to supply forms, documentation or other information requested in accordance with paragraph  (a) (i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Security Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as that party provides the requested confirmation, forms, documentation or other information.

FATCA Deduction

A party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

A party to any Security Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate

or the basis of such FATCA Deduction) notify the party to whom it is making the payment and, in addition, shall notify the Borrowers and the Lender.

Security value maintenance

Security shortfall

If at any time throughout the Facility Period the Security Value shall be less than the Required Security Amount, the Lender shall give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers must within 30 days of receipt of the Lender’s said notice, either:

prepay such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or

constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in accordance with clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date.

The provisions of clauses 4.5 and 4.6 shall apply to prepayments under clause 8.2.1(a) provided that the Lender shall apply such prepayments in pro rata reduction of the reduction instalments under clause 2.5 and the amount of the Loan prepaid hereunder shall not be available to be re-borrowed.

Valuation of Mortgaged Vessels

Each Mortgaged Vessel shall, for the purposes of this Agreement, be valued (at the Borrowers’ expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuations to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant Mortgaged Vessel, at any time as the Lender shall require and at least once a year.

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The Approved Broker’s valuations for each Mortgaged Vessel on each such occasion shall constitute the Valuation Amount of such Mortgaged Vessel for the purposes of this Agreement until superseded by the next such valuation.

Information

The Borrowers undertake with the Lender to supply to the Lender and to the Approved Broker such information concerning the relevant Mortgaged Vessel and its condition as such shipbrokers may require for the purpose of determining any Valuation Amount.

Costs

The Borrowers shall pay all costs in connection with any determination of the Valuation Amount (i) on or prior to each Drawdown Date pursuant to clauses 9.1.2 and 9.1.3, (ii) prior to the occurrence of an Event of Default which is continuing, once a year, and (iii) after the occurrence of an Event of Default which is continuing, at all times.

Valuation of additional security

For the purposes of this clause 8.2, the market value (i) of any additional security over a ship (other than the Vessels) shall be determined (at the Borrowers’ expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuation to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant ship and (ii) of any other additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Lender shall be entitled to receive (at the Borrowers’ expense) such evidence and documents of the kind referred to in schedule 2 as may in the Lender’s opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.

8.2.7         Release of Security

If the Security Value shall at any time exceeds the Required Security Amount, and the Borrowers shall previously have provided further security to the Lender pursuant to clause 8.2.1, the Lender shall, as soon as reasonably practicable after notice from the Borrowers to do so and subject to being indemnified to its reasonable satisfaction against the cost of doing so, release any such further security specified by the Borrowers provided that the Lender is satisfied that, immediately following such release, the Security Value will equal or exceed the Required Security Amount.

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Negative undertakings relating to the Borrowers

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will procure that, except with the prior written consent of the Lender (and such consent in respect of any change of name of a Vessel or the sale or transfer of ownership of a Vessel not to be unreasonably withheld), it will not:

Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of their respective present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Group Member or any other person;

No merger or transfer

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of their shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

Disposals

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

Other business or manager

undertake any type of business other than the ownership and operation of the Vessels or (without the prior consent of the Lender) employ anyone other than the Manager as commercial and technical manager of the relevant Vessel;

Acquisitions

acquire, any assets other than the Vessels and rights arising under contracts entered into by or on behalf of the Owners in the ordinary course of their business of owning, operating and chartering the Vessels;

Other obligations

incur, any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of their business of owning, operating and chartering the Vessels;

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No borrowing

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents or the Prior Security Documents or incurred in the ordinary course of its business of owning, operating and chartering the Vessel;

Repayment of borrowings

repay or prepay the principal of, or pay interest on or any other sum in connection with any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents or the Prior Security Documents;

Guarantees

issue any guarantees or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees from time to time required in the ordinary course of business or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees required for the salvage of a Vessel;

Loans

make any loans or grant any credit (save for normal trade credit in the ordinary course of business) to any person or agree to do so;

Sureties

permit any Indebtedness of any Borrower to any person (other than to the Lender pursuant to the Security Documents) to be guaranteed by any person (except for guarantees from time to time required in the ordinary course of business or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Vessel); or

Flag, Class etc.

permit:

any change in the name or flag of a Vessel;

any change of Classification or Classification Society in respect of a Vessel;

any change of Manager in respect of a Vessel; or

any change in the ownership (including ultimate beneficial ownership) or control of a Borrower from that existing as at the date hereof and shall procure that there is no change in the ownership (including ultimate beneficial ownership) or control of the Manager (if other than the Corporate Guarantor) from that existing as at the date hereof (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

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Underlying Documents

terminate or materially amend or vary an Extended Employment Contract or a Management Agreement (and for the avoidance of doubt, material amendments include, but are not limited to, reductions of rate of hire, increase of management fees not already provided for in the Management Agreement and termination rights); or

Lay-up

de-activate or lay up a Vessel; or

Place of business

own or operate and will procure that no Security Party shall own or operate a place of business situate in England or the United States of America (save that the Lender acknowledges and agrees that the Corporate Guarantor is listed as a public limited company on NASDAQ); or

Share capital and distribution

declare or pay any dividends if an Event of Default has occurred and is continuing or would occur as a result of such declaration or payment or distribute any of its present or future assets, undertakings, rights or revenue;

Sharing of Earnings

permit there to be any agreement or arrangement whereby the Earnings of a Vessel may be shared or pooled howsoever with any other person except for customary profit sharing arrangements under a charterparty;

Lawful use

permit a Vessel to be employed:

in any way or in any activity with a Restricted Person or in any Sanctions Restricted Jurisdiction or which is (i) unlawful under international law or the domestic laws of any relevant country or (ii) contrary to any Sanctions;

to the best of its knowledge, in carrying illicit or prohibited goods;

in a way which may make that Vessel liable to be condemned by a prize court or destroyed, seized or confiscated;

in any part of the world where there are hostilities (whether war has been declared or not), unless such employment has been notified to, and approved by, the relevant insurers of that Vessel; or

to the best of its knowledge, in carrying contraband goods,

and the Borrowers shall procure that the persons responsible for the operation of such Vessel shall take all necessary and proper precautions to ensure that this does not happen, including participation in industry or other voluntary schemes available to that Vessel and in which leading operators of ships operating under the same flag or engaged in similar trades generally participate at the relevant time;

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FATCA

become a FATCA FFI or a US Tax Obligor and shall procure that no Security Party shall do so;

Sale or transfer of ownership of Vessel

sell, or otherwise transfer its ownership of, the Vessel owned by it.

Conditions

Availability of the Advances

The obligation of the Lender to make available any Advance is conditional upon:

the Lender, or its authorised representative, having received, not later than two (2) Banking Days before the day on which the first Drawdown Notice is given, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Lender; and

the Lender, or its authorised representative, having received, on or prior to the first Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Lender; and

the Lender, or its authorised representative, having received, on or prior to each subsequent Drawdown Date, the documents and evidence specified in Part 3 of schedule 2 in form and substance satisfactory to the Lender; and

the representations and warranties contained in clause 7 being then true and correct as if each was made with respect to the facts and circumstances existing at such time and the same being unaffected by the drawdown of the Loan; and

no Default having occurred and being continuing and there being no Default which would result from the lending of the Advances; and

nothing having occurred having a Material Adverse Effect in respect of any Borrower and/or the Corporate Guarantor as at the relevant Drawdown Date.

9.2         Advance of the Advances

9.2.1         the obligation of the Lender to make available an Advance is conditional upon the Lender, or its authorised representative, having received, on or prior to the relevant Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Lender.

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9.3         Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

Further conditions precedent

Not later than five (5) Banking Days prior to a Drawdown Date the Lender may request and the Borrowers must, not later than two (2) Banking Days prior to such date, deliver to the Lender (at the Borrowers’ expense) on such request further favourable certificates and/or opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

Events of Default

Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Lender within three (3) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or

Breach of Insurance and certain other obligations: a Borrower or, as the context may require, the Manager or any other person fails to obtain and/or maintain the Insurances for any of the Mortgaged Vessels or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of a Borrower or any other person or a Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 8 or clause 14; or

Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within fifteen (15) days of the occurrence thereof; or

Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or

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Cross-default: any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by a Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of a Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to a Borrower or the Corporate Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned, and such Indebtedness of a Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within fifteen (15) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within twenty (20) days; or

Insolvency: any Security Party is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or has negative net worth (taking into account contingent liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or

Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party unless the Borrowers can demonstrate to the satisfaction of the Lender, by providing an opinion of leading counsel that such corporate action, Proceedings or other steps are frivolous, vexatious or an abuse of the process of the court or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or an administration order is made in relation to any Security Party; or

Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any material part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of any Security Party; or

Compositions: any corporate action, legal proceedings or other procedures or steps are taken or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or a substantial part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors (excluding always negotiations with holders of preferred shares); or

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Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.11 (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior consent of the Lender; or

Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity and the same are not returned to the relevant Security Party within 45 days of such seizure, nationalisation, expropriation or compulsory acquisition; or

Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or

Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Lender to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

Encumbrances enforceable: any Encumbrance (other than Permitted Encumbrances) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or

Arrest: a Mortgaged Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of its Owner and that Owner shall fail to procure the release of such Mortgaged Vessel within a period of fifteen (15) days thereafter; or

Registration: the registration of any Mortgaged Vessel under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Lender; or

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Unrest: the Flag State of a Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Owner of the Vessel registered in such Flag State shall have transferred its Vessel onto a new flag acceptable to the Lender within thirty (30) days of the Lender’s written request to the Borrowers to effect such transfer; or

Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Lender be expected to have a Material Adverse Effect (i) on the financial condition of any Security Party or the Group taken as a whole or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

P&I: an Owner or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which a Mortgaged Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where such Mortgaged Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or

Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents or (iii) the value or nature of the financial condition of any Security Party (other than the Manager); or

Required Authorisations: to the extent it has not been waived, any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;

Money Laundering: any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat Money Laundering; or

Management Agreement: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the prior consent of the Lender; or

Change of Ownership: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of a Borrower or the Shareholder from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause); or

Sanctions: a Security Party fails to comply with clauses 7.1.26 (Restricted Persons, unlawful activity), 7.1.27 (Sanctions) or 8.1.21 (Sanctions) of this Agreement.

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Acceleration

The Lender may at any time after the occurrence of an Event of Default, and only while the same is continuing and has not been remedied or waived, by notice to the Borrowers declare that:

the obligation of the Lender to make its Commitment available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or

the Loan and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

Demand Basis

If, under clause 10.2.2, the Lender has declared the Loan to be due and payable on demand, at any time thereafter the Lender shall by written notice to the Borrowers (a) demand repayment of the Loan on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

Indemnities

General indemnity

Each Borrower agrees to indemnify the Lender on demand, without prejudice to any of the Lender's other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs) which the Lender shall certify as sustained by it as a consequence of any Default, any prepayment of the Loan being made under clauses 4.3, 4.4, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; and/or the Loan not being made for any reason (excluding any default by the Lender) after the Drawdown Notice has been given.

Environmental indemnity

The Borrowers shall indemnify the Lender on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against the Lender which would not have been, or been capable of being, made or asserted against the Lender had it not entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

Capital adequacy and reserve requirements indemnity

The Borrowers shall promptly indemnify the Lender on demand against any cost incurred or loss suffered by the Lender as a result of its complying with (i) the minimum reserve requirements from time to time of the European Central Bank (ii) any capital adequacy directive of the European Union and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to the Commitment and/or the Loan or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by the Lender under clause 12.2.

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Unlawfulness, increased costs and bail-in

Unlawfulness

If it is or becomes contrary to any law, directive or regulation for the Lender to contribute to the Loan or to maintain its Commitment or fund the Loan, the Lender shall promptly give notice to the Borrowers whereupon (a) the Loan and Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay the Loan either (i) forthwith (without premium or penalty) or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement.

Provided that if circumstances arise which would result in a notification under this clause 12.1 then, prior to giving such notice, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office of the Lender not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

have an adverse effect on its business, operations or financial condition; or

involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

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increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or

reduce the amount payable or the effective return to the Lender under any of the Security Documents; and/or

reduce the Lender's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or

require the Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or

require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes,

then and in each such case (subject to clause 12.3):

the Lender shall notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and

the Borrowers shall on demand made at any time whether or not the Loan has been repaid, pay to the Lender the amount which the Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , forgone return or loss.

For the purposes of this clause 12.2 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.

Exception

Nothing in clause 12. shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

Contractual recognition of bail-in

Notwithstanding any other term of any Security Document or any other agreement, arrangement or understanding between the parties to this Agreement, each such party acknowledges and accepts that any liability of any party to this Agreement to any other party to this Agreement under or in connection with the Security Documents may be subject to any applicable Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

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any applicable Bail-In Action in relation to any such liability, including (without limitation):

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

a cancellation of any such liability; and

a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability

Application of moneys, set off, pro-rata payments and miscellaneous

Application of moneys

All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Lender’s discretion, shall be applied in the following manner:

first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

fifthly, in or towards payment to the Lender of any due but unpaid principal in respect of the Loan;

sixthly, in or towards payment to the Lender in application in repayment of the Loan in accordance with clause 4.6.2;

seventhly, in or towards payment for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and

eighthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may then be entitled to receive such surplus.

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The order of application set out in clauses 13.1.1 to 13.1.8 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

Set-off

Each Borrower irrevocably authorises the Lender (without prejudice to any of the Lender’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing, and without notice to the Borrowers, to apply any credit balance to which any Borrower is then entitled standing upon any account of any Borrower with any branch of the Lender in or towards satisfaction of any sum due and payable from any Borrower to the Lender under any of the Security Documents. For this purpose, the Lender is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

The Lender shall not be obliged to exercise any right given to it by this clause 13.2. The Lender shall notify the Borrowers forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto.

Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

Further assurance

Each Borrower undertakes with the Lender that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of the Lender thereunder, are enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary for perfecting the security contemplated or constituted by the Security Documents.

Conflicts

In the event of any conflict between this Agreement and any of the other Security Documents, the provisions of this Agreement shall prevail.

No implied waivers, remedies cumulative

No failure or delay on the part of the Lender to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender 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 in the Security Documents are cumulative and are not exclusive of any remedies provided by law. No waiver by the Lender shall be effective unless it is in writing.

Severability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

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Force Majeure

Regardless of any other provision of this Agreement, the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism or (v) any other circumstances whatsoever outside the Lender’s control.

Amendments

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied, at the Lender’s request, by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

Accounts

General

Each Borrower undertakes with the Lender that it will ensure that:

it will on or before the Drawdown Date, open an Earnings Account in its name; and

all moneys payable to any Borrower in respect of the Earnings of its Mortgaged Vessel shall, unless and until the Lender directs to the contrary pursuant to the provisions of the relevant Mortgage, be paid to the Earnings Account in the name of that Borrower, Provided however that if any of the moneys paid to such Earnings Account are payable in a currency other than USD, they shall be paid to a sub-account of that Earnings Account denominated in such currency (except that if the relevant Borrower fails to open such a sub-account, the Lender shall then convert such moneys into USD at the Lender’s spot rate of exchange at the relevant time for the purchase of USD with such currency and the term “spot rate of exchange” shall include any premium and costs of exchange payable in connection with the purchase of USD with such currency).

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Earnings Account: withdrawals

Any sums standing to the credit of an Earnings Account may be applied by the Borrowers from time to time, subject to no Event of Default having occurred which is continuing unremedied and unwaived, in (i) making the payments required under this Agreement, (ii) the supply, crewing, management, maintenance, repair, insurance, operation and trading of the Mortgaged Vessels and (iii) payment of dividends to their shareholders annually.

Application of accounts

At any time after the occurrence of an Event of Default and while the same is continuing unwaived and unremedied, the Lender may, without prior notice to the Borrowers, apply all moneys then standing to the credit of the Earnings Account (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to Lender under the Security Documents at the time of such applications in the manner specified in clause 13.1. Following such application, the Lender shall give notice thereof to the Borrowers.

Assignment, transfer and lending office

Benefit and burden

This Agreement shall be binding upon, and ensure for the benefit of, the Lender and the Borrowers and their respective successors in title.

No assignment by Borrowers

No Borrower may assign or transfer any of its rights or obligations under this Agreement.

Transfer by Lender

The Lender may at any time (i) change its office through which the Loan is made available or (ii) cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be transferred or assigned without the consent of the Borrowers to a wholly-owned banking subsidiary or associated company of the Lender or to any third party (in either case a “Transferee Lender”) provided always that any such Transferee Lender, by delivery of such undertaking as the Lender may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, relevant part of the Lender’s obligations under this Agreement the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim.

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Documenting transfers

If the Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, each Borrower undertakes, immediately on being requested to do so by the Lender and at the cost of the Transferee Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferee Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of the Lender’s interest in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests. For the avoidance of doubt there will be no expense for the Borrower in connection with an assignment or transfer, as provided in clauses 15.3 and 15.5

Sub-Participation

The Lender may sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, or notice to, the Borrowers. Any such sub-participation shall have no effect on the Lender’s rights under the Security Documents and shall not affect the Borrowers at all.

Disclosure of information

The Lender may disclose to a prospective assignee, transferee or to any other person (a “Prospective Assignee”) who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrowers and/or the other Security Parties as the Lender shall consider appropriate, but only if the Prospective assignee has first undertaken to the Borrowers to keep secret and confidential and, not without the prior written consent of the Borrowers, disclose to any third party, any of the information, reports or documents to be supplied by the Lender.

No additional costs

If at the time of, or immediately after, any assignment or transfer by the Lender of all or any part of its rights or benefits or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrowers would be obliged to pay to the Lender or, as the case may be, the Transferee Lender under clause 3.5, 6.6 or clause 12.2 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender or the Transferor Lender, as the case may be, under the relevant clause in the absence of such assignment, transfer or change, the Borrowers shall not be obliged to pay that excess.

Notices and other matters

Notices

unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or transmitted electronically;

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in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

Addresses for communications, effective date of notices

Subject to clause 16.2.2 and clause 16.2.5 notices to the Borrowers shall be deemed to have been given and shall take effect when received in full legible form by the Borrowers at the address and/or the fax number and/or email address appearing below (or at such other address or fax number or email address as the Borrowers may hereafter specify for such purpose to the Lender by notice in writing);

Address:         c/o Euroseas Ltd.

4 Messogiou & Evropis Street

151 24 Maroussi

Greece

Fax:                   +30 211 1804097

Attn:                  Anastasios Aslidis

Email:          aha@euroseas.gr

notwithstanding the provisions of clause 16.2.1 or clause 16.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrowers shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrowers to the address or fax number or email address referred to in clause 16.2.1;

subject to clause 16.2.5, notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the fax number and/or email address appearing below (or at any such other address or fax number or email address as the Lender may hereafter specify for such purpose to the Borrowers in writing);

Address:         170 Alexandras Ave.

11521 Athens

Greece

Fax No.          +30 210 3739783

Attention:          The Manager

Email:          Shipping@piraeusbank.gr

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subject to clause 16.2.5, notices to the Lender shall be deemed to be given and shall take effect when received in full legible form by the Lender at its address and/or fax number and/or email address specified in the definition of “Lender” (or at any other address or fax number or email address as the Lender may hereafter specify for such purpose); and

if under clause 16.2.1 or clause 16.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

Electronic Communication

Any communication to be made by and/or between the Lender and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

notify each other of any change to their electronic mail address or any other such information supplied by them.

Any electronic communication made by and/or between the Lender and the Security Parties or any of them will be effective only when actually received in readable form.

The Lender and the Borrowers further agree that information may be sent via email to (or from) third parties involved in the provision of services. In particular, the Borrowers are aware that:

the unencrypted information is transported over an open, publicly accessible network and can, in principle, be viewed by others, thereby allowing conclusions to be drawn about a banking relationship;

the information can be changed and manipulated by a third party;

the sender's identity (sender of the e-mail) can be assumed or otherwise manipulated;

the exchange of information can be delayed or disrupted due to transmission errors, technical faults, disruptions, malfunctions, illegal interventions, network overload, the malicious blocking of electronic access by third parties, or other shortcomings on the part of the network provider. In certain situations, time-critical orders and instructions might not be processed on time;

the Lender assumes no liability for any loss incurred as a result of manipulation of the e-mail address or content nor is it liable for any loss incurred by the Borrowers and any other Security Party due to interruptions and delays in transmission caused by technical problems.

The Lender is entitled to assume that all the orders and instructions, and communications in general, received from the Borrowers or a third party are from an authorized individual, irrespective of the existing signatory rights in accordance with the commercial register (or any other applicable equivalent document) or the specimen signature provided to the Lender. The Borrowers shall further procure that all third parties referred to herein agree with the use of emails and are aware of the above terms and conditions related to the use of email.

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Governing law

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

Jurisdiction

Exclusive Jurisdiction

For the benefit of the Lender, and subject to clause 18.4 below, each Borrower hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction:

to settle any disputes or other matters whatsoever arising under or in connection with this Agreement or any non-contractual obligation arising out of or in connection with this Agreement and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

to grant interim remedies or other provisional or protective relief.

Submission and service of process

Each Borrower accordingly irrevocably and unconditionally submits to the jurisdiction of the English courts. Without prejudice to any other mode of service each Borrower:

irrevocably empowers and appoints Messrs Shoreside Agents Ltd at present of 11 The Timber Yard, London N1 6ND, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

agrees that failure by a process agent to notify the Borrowers of service of process will not invalidate the proceedings concerned;

without prejudice to the effectiveness of service of process on its agent under clause 18.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 16.2; and

agrees that if the appointment of any person mentioned in clause 18.2.1 ceases to be effective, the Borrowers shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by the Borrowers in those circumstances to appoint such person by notice to the Borrowers.

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Forum non conveniens and enforcement abroad

Each Borrower:

waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 18.1; and

agrees that a judgment or order of an English court in a dispute or other matter falling within clause 18.1 shall be conclusive and binding on the Borrowers and may be enforced against it in the courts of any other jurisdiction.

Right of Lender, but not Borrowers, to bring proceedings in any other jurisdiction

Nothing in this clause 18 limits the right of the Lender to bring Proceedings, including third party proceedings, against the Borrowers or any of them, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

Enforceability despite invalidity of Agreement

Without prejudice to the generality of clause 13.6, the jurisdiction agreement contained in this clause 18 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

Effect in relation to claims by and against non-parties

For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by the Lender pursuant thereto or which would, if brought by the Borrowers or any of them against the Lender, have been required to be brought in the English courts.

No Borrower shall bring or pursue any Foreign Proceedings against the Lender and each Borrower shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against the Lender.

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If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party (including but not limited to any shareholder of any Borrower) brings or pursues against the Lender any Foreign Proceedings, the Borrowers shall indemnify the Lender on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which the Lender certifies as having been incurred by it.

The Lender and the Borrowers hereby agree and declare that the benefit of this clause 18 shall extend to and may be enforced by any officer, employee, agent or business associate of the Lender against whom any Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of the Lender pursuant thereto or which, if it were brought against the Lender, would fall within the material scope of clause 18.1. In those circumstances this clause 18 shall be read and construed as if references to the Lender were references to such officer, employee, agent or business associate, as the case may be.

Borrowers’ obligations

Joint and several

Regardless of any other provision in any of the Security Documents, all obligations and liabilities whatsoever of the Borrowers herein contained are joint and several and shall be construed accordingly. Each of the Borrowers agrees and consents to be bound by the Security Documents to which it becomes a party notwithstanding that the other Borrowers may not do so or be effectually bound and notwithstanding that any of the Security Documents may be invalid or unenforceable against the other Borrowers, whether or not the deficiency is known to the Lender.

Borrowers as principal debtors

Each Borrower acknowledges that it is a principal and original debtor in respect of all amounts which may become payable by the Borrowers in accordance with the terms of any of the Security Documents and agrees that the Lender may continue to treat it as such, whether or not the Lender is or becomes aware that such Borrower is or has become a surety for the other Borrowers.

Indemnity

The Borrowers undertake to keep the Lender fully indemnified on demand against all claims, damages, losses, costs and expenses arising from any failure of any Borrower to perform or discharge any purported obligation or liability of that Borrower which would have been the subject of this Agreement or any other Security Document had it been valid and enforceable and which is not or ceases to be valid and enforceable against the other Borrowers on any ground whatsoever, whether or not known to the Lender including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the other Borrowers (or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding up, administration, receivership, amalgamation, reconstruction or any other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Security Party)).

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Liability unconditional

None of the obligations or liabilities of the Borrowers under any Security Document shall be discharged or reduced by reason of:

the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Borrower or any other person liable;

the Lender granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, any Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting, varying any compromise, arrangement or settlement or omitting to claim or enforce payment from any Borrower or any other person liable; or

anything done or omitted which but for this provision might operate to exonerate the Borrowers or any of them.

Recourse to other security

The Lender shall not be obliged to make any claim or demand or to resort to any security or other means of payment now or hereafter held by or available to them for enforcing any of the Security Documents against any Borrower or any other person liable and no action taken or omitted by the Lender in connection with any such security or other means of payment will discharge, reduce, prejudice or affect the liability of the Borrowers under the Security Documents to which any of them is, or is to be, a party.

Waiver of Borrowers' rights

Each Borrower agrees with the Lender that, throughout the Facility Period, it will not, without the prior written consent of the Lender:

exercise any right of subrogation, reimbursement and indemnity against the other Borrowers or any other person liable under the Security Documents;

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demand or accept repayment in whole or in part of any Indebtedness now or hereafter due to such Borrower from the other Borrower or from any other person liable for such Indebtedness or demand or accept any guarantee against financial loss or any document or instrument created or evidencing an Encumbrance in respect of the same or dispose of the same;

take any steps to enforce any right against the other Borrowers or any other person liable in respect of any such moneys; or

claim any set-off or counterclaim against the other Borrowers or any other person liable or claim or prove in competition with the Lender in the liquidation of the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the other Borrowers or any other person liable or any security granted under any Security Document now or hereafter held by the Lender for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Lender, it will prove for the whole or any part of its claim in the liquidation of the other Borrowers or other person liable on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Lender and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Lender shall require.

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Schedule 1
Form of Drawdown Notice

To:         Piraeus Bank S.A.

170 Alexandras Ave.

11521 Athens

Greece

[●] November 2021

Dear Sirs

Re:         Facility agreement dated [        ] November 2021 in respect of a loan of up to USD16,500,000 (the “Loan Agreement”) made between (1) Antwerp Shipping Ltd, Busan Shipping Ltd, Keelung Shipping Ltd and Oakland Shipping Ltd as Borrowers and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.

We hereby give you notice that we wish to draw the sum of USD[         ] on [      ] November 2021 in respect of the Loan Facility and select a first Interest Period in respect of such drawing of [●] months. The funds should be credited to the account of [     ] and numbered [       ] with [        ] of [        ].

We confirm that:

(a)         no Default has occurred and is continuing;

(b)         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;

(c)         the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

(d)         there has been no material adverse change in our financial position or in the consolidated financial position of the Borrowers or the Corporate Guarantor from that described by us to the Lender in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Lender in connection therewith;

(e)         there are no Required Authorisations;

(f)         there has occurred nothing which would have a Material Adverse Effect; and

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(g)          no part of the proceeds of the Loan shall be used for the purpose of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (τίτλους υβριδικών κεφαλαίων) of the Lender or other banks and/or financial institutions.

By         ………………………………..

Authorised Signatory

ANTWERP SHIPPING LTD

BUSAN SHIPPING LTD

KEELUNG SHIPPING LTD

OAKLAND SHIPPING LTD

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Schedule 2
Conditions precedent

Part 1

(referred to in clause 9.1)

Corporate documents

Certified Copies of all documents which evidence or relate to the constitution of each Security Party and its current corporate existence;

Corporate authorities

Certified Copies of resolutions of the directors of each Security Party and shareholders of each Borrower approving such of the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party’s obligations thereunder, additionally certified by an officer of such Security Party, as having been duly adopted by the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and

an original of any power of attorney issued by each Security Party pursuant to such resolutions;

Required Authorisations

a certificate (dated no earlier than 5 Banking Days prior to the Drawdown Date) that there are no Required Authorisations or that there are no Required Authorisations except those described in such certificate and Certified Copies of which as duly executed (including any conditions and/or documents ancillary thereto) are appended thereto.

Certificate of incumbency

a list of directors, shareholders and officers of each Security Party specifying the names and positions of such persons, certified by an officer of the relevant Security Party to be true, complete and up to date;

Shareholders

evidence acceptable to the Lender that all of the issued shares of and in each Borrower are issued in registered form and legally owned by the Shareholder and ultimately beneficially owned and controlled by the Corporate Guarantor;

Security Documents

the Corporate Guarantee, the Earnings Account Pledges and the Shares Pledges duly executed and delivered, and all documents to be executed and delivered thereunder;

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Declaration of compliance / “know your customer”

written confirmation (in a form acceptable to the Lender) that:

each Borrower has complied at all times and in all respects with (i) any relevant employment legislation and employment regulations applicable to it, (ii) all documentation required by the Lender in relation to the Lender’s “know your customer” requirements and (iii) all documentation required by the Lender for the opening of its Earnings Account with the Lender; and

the Guarantor and the Shareholder have complied at all times and in all respects with all documentation required by the Lender in relation to the Lender’s “know your customer” requirements; and

Bank accounts

evidence that:

(i)          the Earnings Accounts have been opened by Antwerp, Busan, Keelung and Oakland respectively and duly completed mandates in relation thereto have been delivered to the Lender;

(ii)         the Safekeeping Securities Account has been opened by the Shareholder, and duly completed mandates in relation thereto have been delivered to the Lender; and

(iii)        all mandate forms and other legal documents required for the opening of an account under any applicable law, such as the account for the securitization of the Shares Pledge as well as signature cards and properly adopted authorizations have been duly delivered to and have been accepted by the compliance department of the Lender;

process agent

a letter from the agent for receipt of service of proceedings referred to in clause 18.2.1 accepting its appointment under the said clause and under each of the other Security Documents in which it is or is to be appointed as the agent for any Security Party.

Part 2

Copies of Underlying Documents

a Certified Copy of the Management Agreement, any Extended Employment Contract and all ISM Code Documentation for the relevant Vessel;

Evidence satisfactory to the Lender that the relevant Vessel:

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Registration and Encumbrances

is registered in the name of the relevant Owner through the relevant Registry and that such Vessel, her Earnings, Insurances and Requisition Compensation are free of Encumbrances except Permitted Encumbrances (such evidence to include relevant certificates issued by the relevant Flag State and results of searches carried out against the said Registry by the Lender or its lawyers);

Classification

maintains the Classification free of all overdue recommendations and requirements of the Classification Society affecting the Classification;

Insurance

is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, receipt by the Lender of customary brokers’ letters of undertaking regarding the placing of hull and machinery and war risks cover and confirmation from the protection and indemnity association or other insurer with which such Vessel is, or is to be, entered for insurance or insured against protection and indemnity risks, that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to such Vessel ); and

Management

is managed by the Manager on terms in all material respects acceptable to the Lender;

Security Documents

the Mortgage, the General Assignment, any Charter Assignment in respect of any existing Extended Employment Contract and the Manager’s Undertaking in respect of the relevant Vessel duly executed and delivered;

Notices of assignment and acknowledgements

counterpart originals of duly executed notices of assignment and acknowledgments (where relevant) required by the terms of the Security Documents referred to in (c) above in the forms prescribed by those Security Documents and any other documents required to be delivered pursuant thereto;

Mortgage registration

evidence that the relevant Mortgage has been duly registered against the relevant Vessel in accordance with the laws of the relevant Registry;

Laws of Liberia: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Liberia;

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Laws of Marshall Islands: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Marshall Islands;

Laws of Cyprus: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Cyprus;

ISPS Code

evidence satisfactory to the Lender that each Vessel is subject to a ship security plan which complies with the ISPS Code and a copy of the ISSC for each Vessel;

DOC and Application for SMC

Certified Copies of the DOC, ISSC, (if applicable) IAPP and EIAPP Certificates in respect of each Vessel and a Certified Copy of the SMC therefor and evidence that each Vessel and the Manager are in compliance with the ISM Code;

Additional Vessels’ Certificates

Certified Copies of Classification Certificate, Safety Radio Equipment Certificate, Safety Equipment Certificate, International Oil Pollution Certificate, International Loadline Certificate, Safety Construction Certificate, International Tonnage Certificate, Minimum Safety Manning Certificate and Continuous Synopsis Record for the relevant Vessel;

Lightweight

evidence satisfactory to the Lender of the Lightweight tonnage of the relevant Vessel;

Manager’s confirmation

written confirmation addressed by the Manager to the Lender that the representations and warranties set out in clause 7.1.22 (Environmental Matters) and clause 7.1.23 (ISM Code) are true and correct;

Insurance Report

a written report from a maritime insurance consultant or broker acceptable to the Lender in a form and content acceptable to the Lender (at the cost of the Borrowers) in respect of the insurances on each Vessel which report shall certify that such insurances are placed through or with insurance brokers and clubs, in amounts, covering risks and on terms acceptable to the Lender and that the same are in accordance with the terms of the relevant Mortgage in respect of the relevant Vessel;

Valuation

a satisfactory, in the opinion of the Lender, Valuation (at the cost of the Borrowers) of the Vessels addressed to the Lender from an Approved Broker dated no more than 20 days before the Drawdown Date;

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Fees

evidence that all fees due and payable have been paid in full;

Material Adverse Effect

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

MII and MAP Policy premium

evidence that the Borrowers have reimbursed the Lender in the amount of the first annual premium or, as the case may be, any additional premium for the MII and MAP Policy;

Prepayment of Existing Loan

evidence satisfactory to the Lender that the Borrowers have prepaid part of the Existing Loan in the amount of USD1,500,000, to be applied in accordance with the terms of the Existing Loan Agreement to cancel any cash sweep obligations existing under the Existing Loan Agreement; and

Further conditions precedent

such further evidence or opinions as may reasonably be required by the Lender.

Part 3

Valuation

a satisfactory, in the opinion of the Lender, Valuation (at the cost of the Borrowers) of the Vessels addressed to the Lender from an Approved Broker dated no more than 20 days before the Drawdown Date;

Fees

evidence that all fees due and payable have been paid in full;

Material Adverse Effect

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

Further conditions precedent

such further evidence or opinions as may reasonably be required by the Lender.

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Schedule 3
Form of Compliance Certificate

To:         Piraeus Bank S.A.

From:     Euroseas Ltd.

                                                                                 Date [                  ]

200 [          ]

Dear Sirs

Facility agreement dated [      ] November 2021 in respect of a loan of up to USD16,500,000 (the “Loan Agreement”) made between (1) Antwerp Shipping Ltd, Busan Shipping Ltd, Keelung Shipping Ltd and Oakland Shipping Ltd as joint and several Borrowers and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan Agreement shall have the same meanings when used herein.

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge and belief after due inquiry:-

1.         all the Borrowers’ financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us:

the Net Worth of the Group is USD [        ];

the Total Liabilities are USD [         ] and the Total Assets (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) are USD [         ]; and

the Total Liabilities divided by the Total Assets (each net of cash balance) (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) is [         ]%;

2.         no Default has occurred which is continuing;

3.         the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect.

[State any exceptions/qualifications to the above statements]

Yours faithfully

Euroseas Ltd.

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By________________________                           

Chief Financial Officer: Euroseas Ltd.

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Execution Page

IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written.

SIGNED by	Stefania Karmiri	)
attorney-in-fact for and on behalf of		)
ANTWERP SHIPPING LTD		)
pursuant to a Power of Attorney		)         .../s/ Stefania Karmiri..............
dated	November 2021	)         Attorney-in-fact

SIGNED by	Stefania Karmiri	)
attorney-in-fact for and on behalf of		)
BUSAN SHIPPING LTD		)
pursuant to a Power of Attorney		)         ... .../s/ Stefania Karmiri.............
dated	November 2021	)         Attorney-in-fact

SIGNED by	Stefania Karmiri	)
attorney-in-fact for and on behalf of		)
KEELUNG SHIPPING LTD		)
pursuant to a Power of Attorney		)         .../s/ Stefania Karmiri..............
dated	November 2021	)         Attorney-in-fact

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SIGNED by	Stefania Karmiri	)
attorney-in-fact for and on behalf of		)
OAKLAND SHIPPING LTD		)
pursuant to a Power of Attorney		)         .../s/ Stefania Karmiri..............
dated	November 2021	)         Attorney-in-fact

SIGNED by	Athanasios Doudoulas	)        .../s/ Athanasios Doudoulas.............
and by Konstantinos Kontopoulos		)        .../s/ Konstantinos Kontopoulos......
for and on behalf of		)
PIRAEUS BANK S.A.		)        ............................
		Authorised signatories

Witness to all the above signatures         )

Name:Foteini Apalaki         ) /s/ Foteini Apalaki

Address:          )

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EX-4.31

Exhibit 4.31

THIS AGREEMENT is made on the 14th day of December 2021

BETWEEN:

(1)         MARCOS SHIPPING LTD, a corporation incorporated in accordance with the laws of the Republic of the Marshall Islands whose registered office is situated at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 as borrower (the “Borrower”);

(2)         THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “Lenders”);

(3)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as arranger through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Arranger”);

(4)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as account bank through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Account Bank”);

(5)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as agent through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Agent”); and

(6)         EUROBANK S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece acting as security trustee through its branch at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece (the “Security Trustee”).

AND IT IS HEREBY AGREED as follows:

1.         PURPOSE, DEFINITIONS AND INTERPRETATION

1.1       Purpose

This Agreement sets out the terms and conditions upon and subject to which it is agreed that the Lenders will make available to the Borrower a secured term loan of up to the lesser of (a) $34,000,000 and (b) 52% of the charter-free market value of the Ship, by way of one (1) advance for the purpose of:

(a)         financing part of the acquisition cost of the Ship; or

(b)         refinancing part of the Borrower’s equity for the acquisition cost of the Ship, in case the Borrower has paid the Purchase Price of the Ship with its own funds.

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1.2         Definitions.

In this Agreement, unless the context otherwise requires each term or expression defined in the recital of the parties and in this Clause shall have the meaning given to it in the recital of the parties, in this Clause:

“Account” means (a) each of the Earnings Account(s) and the Retention Account and (b) any other account opened, made or established for the purposes of this Agreement;

“Account Bank” means, in relation to any of the Earnings Account(s) or the Retention Account, Eurobank S.A., acting through its Shipping Division at 83, Akti Miaouli, 185 38 Piraeus, Greece, or any other branch or financial institution designated by the Agent from time to time at its sole discretion;

“Accounting Information” means the annual audited accounts for the Guarantor to be provided to the Agent in accordance with Clause 11.6 (a) of this Agreement (as the context may require);

“Accounts Pledges” means, together, the deed or deeds of pledge creating security over the Earnings Account and the Retention Account, to be executed by the Borrower in favour of the Lenders and/or Security Trustee and/or the Account Bank, in such form as the Agent may approve or require in compliance always with the laws governing same;

“Affected Lender” has the meaning given in Clause 5.5;

“Affiliate” means a subsidiary of that person or a parent company of that person or any other subsidiary of that parent company;

“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrower, the Lenders, the Arranger, the Account Bank, the Agent and the Security Trustee, in such form as the Agent may approve or require, as the same may from time to time be amended and/or supplemented;

“Agent” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;

"Approved Existing Charter" means, in relation to the Ship, the time charter dated 9 September 2021 and entered into by and between the Borrower and the Approved Existing Charterer;

“Approved Existing Charterer” means Maersk A/S of Esplanaden 50, 1263 Copenhagen K, Denmark;

“Approved Flag” means the flag of the Republic of Panama or such other flag as the Agent may, in its sole and absolute discretion, approve as the flag on which the Ship shall be registered;

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“Approved Flag State” means the Republic of Panama or any other country in which the Agent may, in its sole and absolute discretion, approve that the Ship be registered;

“Approved Manager” means for the time being EUROBULK LTD, a company lawfully incorporated in, and validly existing under the laws of, the Republic of Liberia, whose registered office is at 80, Broad Street, Monrovia, Liberia and having an office established in Greece (at 4, Messogiou & Evropis Street, 151 24, Maroussi, Greece) pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) or any other company appointed by the Borrower with the prior written consent of the Agent (such consent not to be unreasonably withheld) from time to time as the commercial, technical and operational manager of the Ship;

“Approved Manager’s Undertaking-Assignment” means, in relation to the Ship, a letter of undertaking executed or (as the context may require) to be executed by the Approved Manager in favour of the Security Trustee for the Ship in the terms reasonably required by the Security Trustee, agreeing certain matters in relation to the Approved Manager and subordinating the rights of the Approved Manager against the Ship and the Borrower to the rights of the Creditor Parties under the Finance Documents and incorporating also a first priority assignment of all the rights which the Approved Manager may have in the Insurances relating to the Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule), in such form as the Agent, acting on the instructions of the Majority Lenders, may approve or require, as the same may from time to time be amended and/or supplemented;

“Arranger” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83 Akti Miaouli & 1, Flessa Street, Piraeus 185 38, Greece;

“Asset Cover Ratio” means one hundred and twenty per cent (120%) of any outstanding balance of the Loan;

         “Availability Period” means the period commencing on the date of this Agreement and ending on:

the Latest Permissible Drawdown Date or such later date as the Lenders may agree with the Borrower; or

if earlier, the date on which the Commitment is fully borrowed, cancelled or terminated;

“Bail-In Action” means the exercise of any Write-down and Conversion Powers;

“Bail-In Legislation” means:

(a)         in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

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(b)         in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation;

   “Basel II” means:

(a)         the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel II: International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 as amended, supplemented or restated; and

(b)         any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel II";

   “Basel III” means:

(a)          the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

(b)          the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

(c)          any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III";

   “Borrower” means the Borrower as specified in the beginning of this Agreement;

   “Business Day” means a day other than a Saturday or Sunday on which banks are open in New York, London, Athens, Piraeus and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

“Charged Property” means all of the assets of the Borrower or any other Security Party which from time to time are, or are expressed or intended to be, the subject of the Finance Documents.

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“Charter” means any charter or other contract of employment whether already in existence, like the Existing Approved Charter, or not, of more than twelve months’ duration in respect of the employment of the Ship acceptable to the Agent.

“Charter Assignment” means the first priority assignment of any rights granted by the Borrower in favour of the Security Trustee, in such form as the Agent, acting on the instructions of the Majority Lenders, may approve or require, as the same may from time to time be amended and/or supplemented and respective notices of assignment and acknowledgements thereof.

"Charterer" in respect of any Charter, means the Approved Existing Charterer or any other first class charterer in the opinion of the Agent and acceptable to the Agent in its discretion, the Agent’s approval not to be unreasonably withheld;

“Classification Society” means in respect of the Ship, NKK or such other classification society which the Agent shall, at the request of the Borrower, have agreed in writing and shall be treated as the Classification Society of the Ship for the purpose of the Finance Documents;

“Code” means the United States Internal Revenue Code of 1986 (as amended);

“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Commitment Fee” means the fee to be paid by the Borrower to the Agent pursuant to Clause 20.1 (b);

“Commitment Letter” means the commitment letter dated 1st December 2021 addressed by the Agent to the Guarantor duly accepted by the Borrower and the Guarantor on the same day;

 “Compliance Certificate” means a certificate referring to a compliance date in the form set out in Schedule 5 (or in any other form which the Agent approves) to be provided together with the financial accounts provided in accordance with Clauses 11.6 and 12.8;

“Compliance Date” means 31 December of each calendar year (or such other dates as the Agent may agree pursuant to Clause 12.8);

“Contractual Currency” has the meaning given in Clause 21.5;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

"CRD IV" means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC;

“Creditor Party” means the Agent, the Security Trustee, the Arranger, the Account Bank and any Lender, whether as at the date of this Agreement or at any later time;

“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.

5

“Default Rate” means that rate of interest per annum which is determined in accordance with the provisions of Clause 7.2;

“Delivery” means the delivery of the Ship from the Seller thereof to, and the acceptance of the Ship by, the Borrower pursuant to the MOA;

“Delivery Date” means the date upon which the Delivery of the Ship occurs;

“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the ISM Code;

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means the date, being a Business Day falling not later than the Latest Permissible Drawdown Date on which the Loan is or, as the context may require, shall be advanced to the Borrower;

“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means, in relation to the Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or (as the case may be) to the Security Trustee pursuant to the General Assignment or the Charter Assignment and which arise out of the use or operation of the Ship, including (but not limited to):

all freight, hire and passage moneys, compensation payable to the Borrower or (as the case may be) to the Security Trustee pursuant to the General Assignment in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

all moneys which are at any time payable under Insurances in respect of loss of earnings;

contributions of any nature whatsoever in respect of general average; and

if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

“Earnings Account” means, in relation to the Ship, the Account opened or to be opened in the name of the Borrower with the Account Bank, which is designated by the Agent, as an Earnings Account for the Ship for the purposes of this Agreement;

"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway;

“Environmental Approval” means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to the Ship or her operation or the carriage of cargo and/or passengers thereon and/or provisions of goods and/or services on or from the Ship required under any Environmental Law;

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“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 Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Material of Environmental Concern from the Ship;

“Environmental Laws” means all national, international and state laws, rules, regulations, treaties and conventions applicable to any vessel owned, managed or crewed by or chartered to any Relevant Party pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern from the Ship;

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

“Evaluation Costs and Expenses” means the amounts to be paid by the Borrower under Clause 20.1 (a) hereof;

“Event of Default” means any of the events or circumstances described in Clause 19.1;

“FATCA” means:

sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

any agreement pursuant to the implementation of any treaty, law, regulation or other official guidance referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;         

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA;

“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction;

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

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“Final Maturity Date” means the date falling on the earlier of (a) the fourth anniversary of the Drawdown Date and (b) 31 January 2026;

“Finance Documents” means:

this Agreement;

the Agency and Trust Deed;

the Guarantee;

the Accounts Pledges;

the Mortgage;

the General Assignment;

the Charter Assignment in connection with the Approved Existing Charter and any other future Charter Assignment;

the Approved Manager’s Undertaking;

the Guarantor’s Undertaking-Assignment; and

any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the documents referred to in this definition;

“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

under any loan stock, bond, note or other security issued by the debtor;

under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

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“Financial Year” means, in relation to the Borrower, each period of 1 year commencing on 1 January thereof in respect of which its accounts are or ought to be prepared;

“GAAP” means generally accepted accounting principles as from time to time in effect in the United States of America;

“General Assignment” means, in relation to the Ship, a first priority deed of assignment collateral to the Mortgage registered or to be registered thereon, executed or (as the context may require) to be executed by the Borrower in favour of the Security Trustee, whereby the Borrower shall assign to the Security Trustee the Insurances, the Earnings and any Requisition Compensation of the Ship, in such form as the Agent (acting on the instructions of the Majority Lenders) may approve or require, as the same may from time to time be amended and/or supplemented and respective notices of assignment and acknowledgements thereof;

“Group” means the Guarantor and its subsidiaries (including the Borrower);

"Guarantee" means the guarantee and indemnity given or, as the context may require, to be given by the Guarantor in favour of the Security Trustee in form and substance satisfactory to the Agent, as security for the Secured Liabilities and any and all obligations of the Borrower under this Agreement;

“Guarantor” means EUROSEAS LTD. being a company incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other legal entity nominated by the Borrower and accepted by the Agent which have, or as the context may require, shall or may at any time guarantee the obligations of the Borrower under this Agreement and/or those of the other Security Parties to the Lenders and/or any other Creditor Party;

“Guarantor’s Undertaking-Assignment” means, in relation to the Ship, an undertaking to the Security Trustee in respect of the Ship executed or (as the context may require) to be executed by the Guarantor, being nominated as co-assured in the insurance policies for the Ship whereby the Guarantor would undertake throughout the Security Period, to subordinate any and all claims it may have against the Borrower and/or the Ship to the claims of the Lenders under the Loan Agreement and the Finance Documents and would incorporate also a first priority assignment of all the rights which the Guarantor may have in the Insurances relating to the Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule);

“IACS” means the International Association of Classification Societies;

“Insurances” means, in relation to the Ship:

all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, the Earnings or otherwise in relation to the Ship whether before, on or after the date of this Agreement; and

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all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

“Interbank Market” means the London interbank market;

“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which a separate Interest Period is fixed the last day of the relevant Interest Period and in case of any Interest Period longer than three (3) months the date(s) falling at successive three (3) monthly intervals during such longer Interest Period and the last day of such Interest Period;

“Interest Period” means in relation to the Loan or any part thereof, each period for the calculation of interest in respect of the Loan ascertained in accordance with Clause 6.;

“Interpolated Screen Rate” means in relation to LIBOR for the Loan (or any part of it), the rate which results from interpolating on a linear basis between:

(a)         the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period for the Loan (or the relevant part of it); and

(b)         the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period for the Loan (or the relevant part of it),

each as of 11:00 am (London time) on the relevant Quotation Day;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) (as amended by MSC 104 (73)) and A.913(22) (superseding Resolution A.788(19)), as the same may be amended, supplemented or superseded from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended, supplemented or superseded from time to time);

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Latest Permissible Drawdown Date” means the 31st January 2022, being the latest date for drawdown of the Loan pursuant to Clause 2 hereof;

“Lender” means, subject to Clause 26.6:

a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrower under Clause 26.14), its successor or assign, unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

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the holder for the time being of a valid Transfer Certificate;

“LIBOR” means, for an Interest Period:

(a)         the applicable Screen Rate; or

(b)         if no Screen Rate is available for the relevant Interest Period, the Interpolated Screen Rate for the Loan (or the relevant part of it); or

(c)         if:

   (i)         no Screen Rate is available for the currency of the Loan; or

   (ii)         no Screen Rate is available for the relevant Interest Period and it is not possible to calculate an Interpolated Screen Rate for the Loan (or the relevant part of it),

the Reference Bank Rate, as of 11:00 a.m. (London time) on the Quotation Day for the offering of deposits in dollars for a period comparable to the Interest Period for the Loan or relevant part of it, and if (in any of the above cases) that rate is less than zero (0), then LIBOR shall be deemed to be zero (0);

“Major Casualty” means, in relation to the Ship, any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $750,000 or the equivalent in any other currency;

“Majority Lenders” means:

before the Loan has been made, Lenders whose Commitments are equal to or greater than 66 ⅔ per cent. of the Total Commitments; and

after the Loan has been made, Lenders whose Contributions are equal to or greater than 66 ⅔ per cent. of the Loan;

“Management Agreement” means the agreement made between the Borrower and the Manager providing (inter alia) for the Manager to manage the Ship);

“Mandatory Costs” shall have the meaning given to it in Clause 21.8;

“Margin” means two point eighty per cent (2.80%) per annum;

“Market Value” means, in relation to the Ship, the market value of the Ship determined not earlier than one month prior to the Drawdown Date and at least once a year thereafter by one separate, independent and reputable first class sale and purchase broker, appointed by and reporting to the Agent certifying the market value of the Ship on the basis set out in Clause 15.4 at the expense of the Borrower in accordance with Clause 15.4 and 15.9 hereof;

“Material Adverse Change” means any event or series of events which, in the reasonable opinion of the Majority Lenders, has or will have a Material Adverse Effect;

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“Material Adverse Effect” means, in the reasonable opinion of the Majority Lenders, a material adverse effect on:

the business, operations, property, condition (financial or otherwise) or prospects of the Borrower or any other Security Party (other than the Approved Manager); or

the ability of the Borrower or any other Security Party (other than the Approved Manager) to perform its respective obligations under the Finance Documents to which it is a party; or

the validity or enforceability of, or the effectiveness or ranking of, any Security Interest granted pursuant to any of the Finance Documents or the rights or remedies of any Creditor Party under any of the Finance Documents;

“Maximum Facility Amount” means an amount equal to the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship;

“Minimum Liquidity” means, at any time, free and unencumbered (other than in favour of the Lenders or the Agent or the Account Bank) minimum liquidity balances in aggregate of at least One million Dollars ($1,000,000) which is to be held during the Security Period in an account or accounts opened or to be opened with the Lenders or the Agent or the Account Bank in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent to be assessed on an annual average basis;

“MOA” means the memorandum of agreement dated 17 September 2021 together with a nomination letter dated 2 November 2021, as amended by Addendum No 1 thereto dated 22 November 2021 entered into between the Sellers, as sellers, and the Borrower as buyers, in respect of the sale by such Sellers and the purchase by the Borrower of the Ship and any and all further Addenda thereto;

“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided 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 such next calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage” means, in relation to the Ship, the first priority or first preferred ship mortgage (as the case may be) on the Ship executed or to be executed by the Borrower in favour of the Security Trustee under an Approved Flag (and Deed of Covenant collateral thereto if applicable), in such form as the Security Trustee may approve or require, as the same may from time to time be amended and/or supplemented;

“Negotiation Period” has the meaning given in Clause 5.8;

“Net Worth” means the value of the total assets of the Guarantor minus total liabilities, as expressed in its financial statements;

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“Notifying Lender” has the meaning given in Clause 23.1;

“Operator” means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of “Company” set out in rule 1.1.2. of the ISM Code;

“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union;

“Party” means a party to this Agreement or a Finance Document (together the “Parties”).

“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199);

“Payment Currency” has the meaning given in Clause 21.5;

“Permitted Security Interests” means:

Security Interests created by the Finance Documents;

liens for unpaid crew’s wages in accordance with usual maritime practice;

liens for salvage;

liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(h);

any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Borrower is prosecuting or defending such action in good faith by appropriate steps; and

Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time and/or the satisfaction of any other condition, would constitute an Event of Default;

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“Purchase Price” means in relation to the Ship, the price to be paid by the Borrower to the Sellers pursuant to the terms of the MOA or such other sum as is determined in accordance with the terms and conditions of the MOA;

“Quotation Day” means, in relation to any Interest Period for which an interest rate is to be determined, two London Business Days before the first day of that period unless market practice differs in the Interbank Market for a currency, in which case the Quotation Day for that currency shall be determined by the Agent in accordance with market practice in the Interbank Market (and if quotations would normally be given by leading banks in the Interbank Market on more than one (1) day, the Quotation Day will be the last of those days);

“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by each Reference Bank as the rate at which the relevant Reference Bank could borrow funds in the Interbank Market, in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period;

“Reference Banks” means, in respect of LIBOR, such banks as may be appointed by the Agent in consultation with the Borrower;

“Relevant Jurisdiction” means, in relation to the Borrower or any other Security Party:

(a)       its jurisdiction of incorporation;

(b)       any jurisdiction where any Charged Property owned by it is situated;

(c)       any jurisdiction where it conducts its business; and

(d)       any jurisdiction whose laws govern the perfection of any of the Finance Documents entered into by it.

“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them.

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by the Borrower on a Repayment Date pursuant to Clause 8;

"Replacement Benchmark" means a benchmark rate which is:

(a)      formally designated, nominated or recommended as the replacement for the Screen Rate by:

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   (i)         the administrator of the Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by the Screen Rate); or

   (ii)        any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Benchmark" will be the replacement under paragraph (ii) above; and

(b)         in the opinion of the Majority Lenders and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to the Screen Rate; or

(c)         in the opinion of the Majority Lenders and the Borrower, an appropriate successor to the Screen Rate.

  “Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;         

“Restricted Party” means a person that is:

(a)         listed on, owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; or

(b)         located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organised under the laws of a Sanctioned Country; or

(c)         otherwise a target of Sanctions ("target of Sanctions" signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities or against whom Sanctions are otherwise directed);

“Retention Account” means an interest bearing account in the name of the Borrower with the Lenders and/or the Account Bank, or any other account which is designated by the Agent as the Retention Account at its discretion for the purposes of this Agreement;

“Sanctioned Country” means a country or territory that is, or whose government is, the target of Sanctions broadly prohibiting dealings with such government, country or territory (currently including, without limitation, Cuba, Iran, North Korea Crimea, and Syria).

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or other restrictive measures adopted, administered, enacted or enforced by any Sanctions Authority, or otherwise imposed by any law or regulation to which the Borrower, any other Security Party and the Lenders are subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America);

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“Sanctions Authorities” means together:

(a)       the United States government;

(b)       the United Nations;

(c)       the European Union;

(d)       the United Kingdom; or

(e)       the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury (OFAC), the United States Department of State, and Her Majesty's Treasury (HMT);

“Sanctions List” means the "Specially Designated Nationals and Blocked Persons" list maintained by OFAC, any list maintained by OFAC within its “the Consolidated Sanctions List”, the Consolidated List of Financial Sanctions Targets maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities;

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars and the relevant period displayed (before any correction, recalculation or republication by the administrator) on pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate), or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower;

“Screen Rate Replacement Event" means, in relation to a Screen Rate:

(a)          the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Majority Lenders and the Borrower, materially changed; or

(b)         any of the following applies:

    (i)         either:

(aa)        the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

(bb)        information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

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provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate; or

    (ii)          the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

    (iii)         the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

    (iv)         the administrator of the Screen Rate or its supervisor announces that the Screen Rate may no longer be used; or

(c)         the administrator of the Screen Rate determines that the Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:

(i)         the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Majority Lenders and the Borrower temporary; or

(ii)        that Screen Rate is calculated in accordance with any such policy or arrangements for a period no less that ten Business Days; or

(d)        in the opinion of the Majority Lenders and the Borrower, the Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

“Secured Liabilities” means all liabilities which any Security Party, at the date of this Agreement or at any later time or times, has under or by virtue of any Finance Document and in the case of the Approved Manager under or by virtue of the Approved Manager’s Undertaking-Assignment or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a)       any mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b)       the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and

(c)       any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution.

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“Security Party” means the Borrower, the Guarantor, the Approved Manager, and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within paragraph (j) of the definition of “Finance Documents”;

“Security Period” means the period commencing on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Finance Documents whensoever arising have been irrevocably paid, performed and/or complied with;

“Security Trustee” means EUROBANK S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;         

“Sellers” means the entity specified as “Sellers” in the MOA;

“Ship” means m.v “Leo Paramount” a bulk carrier of 71,892 gross tons, built in 2005 in Japan, with IMO 9307059, currently registered under the Panama flag in the ownership of the Sellers, which upon acquisition by the Borrower shall be registered in its ownership under the laws and flag of the Republic of Panama under the name “MARCOS V”;

“Total Loss” means:

actual, constructive, compromised, agreed or arranged total loss of the Ship;

any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire unless she is within 40 days redelivered to the full control of the Ship’s owner;

any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 40 days redelivered to the full control of the Ship’s owner;

“Total Loss Date” means:

(a)         in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

(b)         in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

(i)          the date on which a notice of abandonment is given to the insurers; and

(ii)         the date of any compromise, arrangement or agreement made by or on behalf of the Borrower, with the Ship's insurers in which the insurers agree to treat the Ship as a total loss; and

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(c)         in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred, provided that the Agent shall notify the Borrower of such date as soon as practicable;

   “Transfer Certificate” has the meaning given in Clause 26.2;

   “Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed; and         

“UK Bail-In Legislation” means (to the extent that the United Kingdom is not an EEA Member Country which has implemented, or implements, Article 55 BRRD) Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their Affiliates (otherwise than through liquidation, administration or other insolvency proceedings);

“US Tax Obligor” means:

(a)         the Borrower which is resident for tax purposes in the United States of America; or

(b)         a Security Party some or all of whose payments under the Finance Documents are from sources within the United States for US Federal income tax purposes.

“Write-down and Conversion Powers” means:

(a)         in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;

(b)         in relation to any other applicable Bail-In Legislation:

(i)         any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

(ii)         any similar or analogous powers under that Bail-In Legislation; and

(c)                  in relation to any UK Bail-In Legislation:

(i)         any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers; and

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(ii)         any similar or analogous powers under that UK Bail-In Legislation.

1.3         Construction of certain terms. In this Agreement:

   “approved” means, for the purposes of Clause 13, approved in writing by the Agent;

   “asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

   “company” includes any corporation, partnership, joint venture and unincorporated association;

   “consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

   “document” includes a deed; also a letter, fax or electronic mail;

   “excess risks” means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of her insured value being less than the value at which the Ship is assessed for the purpose of such claims;

   “expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any value added or other tax applicable thereon;

   “law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

   “legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

   “months” shall be construed in accordance with Clause 1.4;

   “obligatory insurances” means all insurances effected, or which the Borrower is obliged to effect, under Clause 13 below or any other provision of this Agreement or another Finance Document;

   “parent company” has the meaning given in Clause 1.5;

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   “person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

   “policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

   “protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision in the Norwegian Marine Insurance Plan;

“regulation” includes any regulation, rule, official directive, request or guideline (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self‑regulatory or other authority or organisation;

   “subsidiary” has the meaning given in Clause 1.5;

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

  “tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

1.4      Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a)      on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b)      on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day;

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and “month” and “monthly” shall be construed accordingly.

1.5     Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a)     a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b)     P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; or

(c)     P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d)     P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.6     General Interpretation.

(a)     In this Agreement:

references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and

words denoting the singular number shall include the plural and vice versa.

(b)         Clauses 1.1 to 1.5 and paragraph (a) of this Clause 1.6 apply unless the contrary intention appears.

(c)         References in Clause 1.2 to a document being in the form of a particular Schedule or Appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires.

(d)         The clause headings shall not affect the interpretation of this Agreement.

(e)         This Agreement contains the entire agreement of the parties and its provisions supersede the provisions of the Commitment Letter any and all other prior correspondence and oral negotiation by the parties in respect of the matters regulated by this Agreement.

1.7         Event of Default. A Potential Event of Default and/or an Event of Default are “continuing” if either of them has not been remedied or waived.

2.           LOAN

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2.1         Amount of loan. Subject to the satisfaction of all conditions precedent and in reliance on the representations and warranties made in or in accordance with them and furthermore subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower in one (1) advance a principal amount being the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship.

2.2         Lenders' participations in Loan. Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

2.3         Purpose of Loan. The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in Clause 1.1 to this Agreement.

2.4         Application of Proceeds. The Lenders shall have no responsibility for the application of the proceeds of the Loan (or any part thereof) by the Borrower.

2.5         Duration of Lenders’ commitment. The Lenders will be under no liability to advance their respective Commitments or any part of them after the date of the expiry of the Availability Period, whereas any part of the Commitment undrawn and not cancelled at close of business on the date of expiry of the Availability Period shall automatically be cancelled.

2.6          Borrower’s right of cancellation

2.6.1       The Borrower shall be entitled to cancel the Loan under this Agreement upon giving the Lender not less than ten (10) days’ notice in writing to that effect.

2.6.2       Any notice of cancellation once given by the Borrower shall be irrevocable whereas any amount cancelled may not be drawn.

2.6.3       Notwithstanding any cancellation pursuant to sub-clause 2.6.1, the Borrower shall continue to be liable for any and all amounts due to the Lenders under this Agreement, including without limitation any amounts due under Clause 24 (Increased Costs).

3.           POSITION OF THE LENDERS

3.1         Interests of Lenders several. The rights of the Lenders under this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) are several; accordingly each Lender shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender and/or any other Creditor Party to be joined as an additional party in any proceedings for this purpose.

3.2         Independent action by a Lender. None of the Lenders shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Finance Documents without the prior written consent of the Majority Lenders but, provided such consent has been obtained, it shall not be necessary for any other Lender to be joined as an additional party in any proceedings for this purpose.

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3.3         Obligations of Lenders several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement to which it is a party shall not result in:

(a)         the obligations of the other Lenders being increased; nor

(b)         the Borrower, any Security Party, any other Lender being discharged (in whole or in part) from its obligations under any Finance Document,

    and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

3.4         Parties bound by certain actions of Majority Lenders. Every Lender and any other Creditor Party, the Borrower and each Security Party shall be bound by:

(a)         any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

(b)         any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document;

(c)         any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

3.5         Reliance on action of Agent. The Borrower and each Security Party shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take.

3.6         Construction. In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

4.           DRAWDOWN

4.1         Request for Loan. Subject to the following conditions, the Borrower may request the Loan to be advanced by ensuring that the Agent receives the Drawdown Notice not later than 11.00 a.m. (London time) two (2) Business Days prior to the intended Drawdown Date.

4.2         Availability. The conditions referred to in Clause 4.1 are that:

(a)         the Drawdown Date has to be a Business Day up to and including the Latest Permissible Drawdown Date; and

(b)         the amount of the Loan shall not exceed the lesser of (i) $34,000,000 and (ii) 52% of the charter-free market value of the Ship as determined up to thirty days prior to the Drawdown Date; and

(c)         the Borrower has complied with the provisions of Clause 9.1 with respect to the Loan.

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4.3         Notification to Lenders of receipt of the Drawdown Notice. The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of:

(a)         the amount of the Loan drawn down and the Drawdown Date;

(b)         the amount of that Lender's participation in the Loan; and

(c)         the duration of the first Interest Period.

4.4         Drawdown Notice irrevocable. The Drawdown Notice shall specify the amount of the Loan and Business Day upon which same is required to be advanced as well as the proposed duration of the first Interest Period, shall give full details of the place and account to which the proceeds of the Loan are to be paid, which must both be acceptable to the Lenders and shall be signed by a director or an authorised attorney-in-fact of the Borrower, and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

4.5         Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on the Drawdown Date under Clause 2.2.

4.6         Disbursement of Loan.

4.6.1      Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrower shall be made          to the account which the Borrower specifies in the Drawdown Notice and in the same funds as the Agent received the payments from the Lenders.

4.6.2      In the event that the Loan is required to be drawn down prior to the satisfaction of the conditions precedent set out in Clause 9.1 and be remitted to the Sellers’ bank or any other bank (the “Relevant Bank”), the Agent may in its absolute discretion agree to remit such amount to the Relevant Bank prior to satisfaction of the requirements of Clause 9.1, on the condition that:

(a)         the amount remitted shall be held by the Relevant Bank in an account of any type whatsoever in the Agent’s name and to the order of the Agent;

(b)         such amount will only be released to the Sellers upon receipt by the Relevant Bank of (i) a copy of the protocol of delivery and acceptance for the Ship in the form agreed between the Sellers and the Borrower, duly signed on behalf of the Sellers and the Borrower and/or (as the case may be), countersigned on behalf of the Agent by a person named in the Agent’s remittance instructions, and (ii) written instructions in a form approved by the Relevant Bank, specifying the amount to be released, signed on behalf of the Agent by a person named in the Agent’s remittance instructions;

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(c)         such amount so released may be used only for payment in satisfaction of the balance of the Purchase Price and any other amount payable to the Sellers in respect of the acquisition of the Ship;

(d)         in the event the amount so remitted is not released to the Sellers in accordance with the Agent’s instructions or any part thereof is not so released by the time set out in the swift payment instructions to the Relevant Bank, the money held by the Relevant Bank is returned to the account specified in the Agent’s remittance instructions, in accordance with the swift payment instructions to the Relevant Bank; and

(e)         the requirements of Clause 9.1 shall be satisfied simultaneously with any release to the Sellers pursuant to sub paragraph (b) above.

4.7         Satisfaction of Conditions Precedent. Notwithstanding the giving of the Drawdown Notice pursuant to Clause 4.1, the Lenders shall not be obliged to disburse any funds until all the conditions precedent set out in Clause 9.1 have been satisfied, save as provided in Clause 9.2.

4.8         Deemed Indebtedness. The relevant payment by the Agent under Clause 4.6 shall constitute the advancement of the Loan and the Borrower shall thereupon become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's Contribution.

5.           INTEREST

5.1         Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

5.2         Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the Margin and LIBOR for that Interest Period.

5.3         Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4         Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrower and each Lender of:

(a)         each rate of interest; and

(b)         the duration of each Interest Period;

    as soon as reasonably practicable after each is determined.

5.5         Market disruption. The following provisions of this Clause 5.5 apply if:

(a)         at least one Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 40 per cent. of the Loan (or, if the Loan or part thereof has not been advanced, Commitments amounting to more than 40 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period (provided always that any such notifications by any such Lenders shall be duly substantiated); or

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(b)         at least one Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

5.6         Notification of market disruption. The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.5 which have caused its notice to be given.

5.7         Suspension of drawdown. If the Agent's notice under Clause 5.6 is served before the Loan is advanced:

(a)         in a case falling within paragraph (a) of Clause 5.5, the Lenders' obligations to advance the Loan;

(b)         in a case falling within paragraph (b) of Clause 5.5, the Affected Lender's obligation to participate in the Loan;

    shall be suspended while the circumstances referred to in the Agent's notice continue.

5.8         Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.6 is served after the Loan is advanced, the Borrower, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within 30 Business Days after the date on which the Agent serves its notice under Clause 5.6 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

5.9         Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.10       Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin; and the procedure provided for by this Clause 5.10 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

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5.11        Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.10, the Borrower may give the Agent not less than 15 Business Days' notice of their intention to prepay the Loan or, as the case may be, the Affected Lender's Contribution at the end of the interest period set by the Agent.

5.12        Prepayment; termination of Commitments. A notice under Clause 5.11 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

(a)          on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the relevant Contribution of the Affected Lender shall be cancelled; and

(b)         on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

5.13       Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

6.           INTEREST PERIODS

6.1         Commencement of Interest Periods. The initial Interest Period in respect of the Loan shall commence on the date on which the Commitment is advanced and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period;

6.2         Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

(a)         3 or 6 months as notified by the Borrower to the Agent not later than 11.00 am (London time) 2 (two) Business Days before the commencement of the initial Interest Period or, at the sole discretion of the Lenders of longer than 6 months at the Borrower’s request; or

(b)         3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or

(c)         such other period longer that 6 months as the Agent may, with the Majority Lenders' authority, agree with the Borrower.

6.3         Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date. No Interest Period shall extend beyond the final Repayment Date.

6.4         Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed to an Interest Period, any Lender notifies the Agent by 11:00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, then that Interest Period shall have such duration as the Agent after having consulted with the Borrower may determine.

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7.           DEFAULT INTEREST

7.1         Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or any other Creditor Party does not receive on or before the relevant due date for payment thereunder, that is:

(a)         the date on which such Finance Documents provide that such amount is due for payment; or

(b)         if a Finance Document provides that such amount is payable on demand, three (3) days following the date on which the demand is served; or

(c)         if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2         Default rate of interest and its calculation. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be two point fifty per cent (2.50%) per annum above the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i)          LIBOR; or

(ii)         if the Agent determines that Dollar deposits for any such period are not being made available to a Lender or (as the case may be) Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Agent from such other sources as the Agent may from time to time determine.

7.3         Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.2 and of each period selected by the Agent for the purposes of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent's notification.

7.4         Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

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7.5         Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

8.           REPAYMENT AND PREPAYMENT

8.1         Amount of repayment instalments. The Borrower shall repay the Maximum Facility Amount by sixteen (16) consecutive equal quarterly instalments, the first twelve (12) instalments in the amount of two million Dollars ($2,000,000) each, followed by four (4) instalments in the amount of seven hundred fifty thousand Dollars($750,000) each and by a balloon payment of seven million Dollars ($7,000,000) (the “Balloon Instalment”).

8.2         Repayment Dates. The first instalment of the Loan shall be repaid on the date falling three (3) months after the Drawdown Date and each subsequent instalment shall be repaid at three monthly intervals thereafter and the Balloon Instalment shall be repaid concurrently with the sixteenth (16th) and final repayment instalment, which shall be repaid on the final Repayment Date being the date falling on the Final Maturity Date,

Provided always that if the amount of the Loan drawn down hereunder is less than $34,000,000 then the amount of the repayment instalments and of the Balloon Instalment shall be reduced on a pro rata basis.

8.3         Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to the Lenders all other sums then accrued or owing under any Finance Document.

8.4         Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or part of the Loan on the last day of an Interest Period.

8.5         Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a)         a partial prepayment shall be in the minimum amount of Dollars Five Hundred Thousand ($500,000) or a multiple thereof;

(b)         the Agent has received from the Borrower at least ten (10) Business Days prior written confirmative and irrevocable notice specifying the amount to be prepaid in connection with the Loan and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

(c)         the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

8.6         Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

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8.7         Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

8.8         Mandatory prepayment. The Borrower shall be obliged to prepay the Loan in full together with accrued interest to the date of prepayment and all other sums payable by the Borrower to the Lenders pursuant to this Agreement and the other Finance Documents (and if the Commitment or any portion thereof has not been drawn yet, it shall be reduced to zero) if the Ship is sold (provided that no Event of Default has occurred and is continuing and then, subject to the prior written consent of the Agent, not to be unreasonably withheld), refinanced by another bank or financial institution or becomes a Total Loss:

(a)         in the case of a sale of the Ship (whether for further trading or scrapping), on the earlier of (i) the date on which the sale is completed by delivery of the Ship to the buyer and (ii) the date of receipt by the Borrower of the sale proceeds; or

(b)         in the case of a refinancing of the Ship, on or before the date on which the refinancing takes place; or

(c)         in the case of a Total Loss of the Ship, on the earlier of (i) the date falling one hundred eighty (180) days after the Total Loss Date and (ii) the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

8.9         Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the Loan and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 21.2 but without premium or penalty).

8.10       Application of partial prepayment. Each partial prepayment shall be applied against the repayment instalments of the Loan specified in Clause 8.1 (including the Balloon Instalment) on a pro rata basis.

8.11       No reborrowing. No amount prepaid or repaid may be re-borrowed.

9.           CONDITIONS PRECEDENT

9.1         Documents, fees and no default. Each Lender's obligation to contribute to the Loan is subject to the following conditions precedent:

(a)         that, on or before the date of signing of this Agreement, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

(b)         that, on or before the date of drawdown of the Loan, the Lender receives the documents described in Part B in Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

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(c)         that, on or before the service of the Drawdown Notice, the Agent receives the fees payable pursuant to Clause 20.(a) (i) and has received payment of the expenses referred to in Clause 20.2;

(d)         that at the date of the Drawdown Notice, at the Drawdown Date and on the first day of each Interest Period and on the date of each Compliance Certificate:

(i)          no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

(ii)         the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading in any material respect if repeated on each of those dates with reference to the circumstances then existing;

(iii)        none of the circumstances contemplated by Clause 5.5 has occurred and is continuing;

(iv)        there has not been a Material Adverse Change in the financial position or state of affairs of the Borrower and/or the Group from that disclosed to the Agent prior to the date of this Agreement;

(e)         that, if the ratio set out in Clause 15.1 were applied immediately following the advancement of the Loan, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(f)          that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent (acting reasonably) may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

9.2         Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Loan to be advanced before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).

10.           REPRESENTATIONS AND WARRANTIES

10.1         General. The Borrower represents and warrants to each Creditor Party as follows:

10.2         Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands and in compliance with the Republic of the Marshall Islands Economic Substance Regulation 2018 in accordance with its terms and time frame once the same becomes applicable; neither the Borrower nor any Security Party is a FATCA FFI or a US Tax Obligor.

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10.3         Share capital and ownership. The Borrower has an authorised share capital divided into 500 registered shares and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim by the Guarantor.

10.4         Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a)            to execute the Finance Documents to which it is a party; and

(b)            to borrow under this Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which the Borrower is a Party.

10.5         Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

10.6         Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a)           constitute the Borrower's legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b)           create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate, subject to any relevant insolvency laws affecting creditors' rights generally.

10.7         No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

(a)           the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b)           no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8         No conflicts. The execution by the Borrower of each Finance Document to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a)           any law or regulation in any Relevant Jurisdiction; or

(b)           the constitutional documents of the Borrower; or

(c)           any contractual or other obligation or restriction which is binding on the Borrower or any of its assets, and will not have a Material Adverse Effect.

10.9        No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Relevant Jurisdiction.

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10.10         No default. No Event of Default or Potential Event of Default has occurred and is continuing.

10.11         Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.6; all audited and consolidated accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no Material Adverse Change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts which constitutes a Material Adverse Effect.

10.12         No litigation. No legal or administrative action involving the Borrower or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case and if determined adversely, would be likely to have a Material Adverse Effect.

10.13         Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.5, 11.9, 11.11 and 11.17.

10.14         Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to it and its business.

10.15         ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship have been complied with.

10.16         No Money Laundering. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of their obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms that (i) it is acting for its own account, (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement and (iii) that the foregoing will not involve or lead to contravention of any law, official requirements or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

10.17         Patriot Act. To the extent applicable to the Borrower, the Borrower is in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

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10.18         Social law matters. The Borrower is in compliance in all material respects with any employment law or relevant regulation applicable to it.

10.19         MOA valid. the copy of the MOA and any document related to the Ship’s acquisition to be delivered to the Agent shall be a true and complete copy of such document constituting valid and binding obligations of the parties thereto enforceable in accordance with its terms and no amendments thereto or variations thereof shall have been (or will be) agreed nor shall any action been taken by the parties thereto which would in any way render such document inoperative or unenforceable.

10.20         The Ship. The Ship will upon her delivery to the Borrower and at any time thereafter be:

(a)             in the absolute and unencumbered (other than in favour of the Lenders or any other Creditor Party) ownership of the Borrower who will on and after the Ship’s delivery be the sole, legal and beneficial owner of the Ship;

(b)             registered in the name of the Borrower under the laws and flag of the Flag State;

(c)            operationally seaworthy and in every way fit for service, provided that the Borrower will not be in violation of this sub-clause 10.20 (c) in cases of (i) small off hire incidents occurring during the normal course of trading of the Ship or (ii) in cases of normal maintenance/repairs or (iii) in cases of damage to the Ship by causes for which it is insured under the Ship’s Insurances and all necessary steps have been taken to repair such damage to the satisfaction of any requirements set by the Ship’s Classification;

(d)            classed with the relevant Classification free of all qualifications and overdue recommendations of the relevant Classification Society affecting class;

10.21 Ship’s employment. The Ship is not subject to any Charter other than the Approved Existing Charter and will not be subject to any other charter or contract of employment or to any other agreement to enter into any charter or contract which, if entered into after the date of the Mortgage/General Assignment would have required the consent of any Creditor Party and on the date of her delivery to the Borrower and any time thereafter there will not be any agreement or arrangement whereby the Earnings (as defined in the Mortgage/General Assignment) of the Ship may be shared with any other person.

10.22         No Security Interests. Neither the Ship, nor her Earnings, Insurances or Requisition Compensation (each as defined in the Mortgage/General Assignment) nor the Accounts or any of them nor any other properties or rights which are, or are to be, the subject of any of the Finance Documents will be, on the date the Ship will be delivered to the Borrower subject to any Security Interest other than Permitted Security Interests.

10.23         No immunity. Neither the Borrower nor any of its respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement).

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10.24        Valid choice of Law. The choice of law agreed to govern this agreement and/or any other finance document and the submission to the jurisdiction of the courts agreed in each of the finance documents are or will be, on execution of the respective finance documents, valid and binding on the Borrower and any other security party which is or is to be a party thereto.

11.            GENERAL UNDERTAKINGS

11.1          General. The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

11.2          Title; negative pledge; pari passu. The Borrower will:

(a)            ensure that the Ship upon her delivery to the Borrower will maintain its ownership, management, control and ultimate beneficial ownership and the Borrower will hold the legal title to, and own the entire beneficial interest in the Ship’s Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and except for Permitted Security Interests. For the avoidance of doubt the Lenders consent and agree to any changes relating to the shareholders of the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement;

(b)           not create or permit to arise any Security Interest (except for Permitted Security Interests) over any of its asset, present or future; and

(c)           procure that its liabilities under the Finance Documents to which it is a party to will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

11.3        No disposal of assets. The Borrower will not (without the prior written consent of the Agent, acting with authority from the Majority Lenders) transfer, lease or otherwise dispose of:

(a)          all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b)         any debt payable to them or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

11.4       No other liabilities or obligations to be incurred. The Borrower will not incur any liability or obligation except (i) liabilities and obligations under the Finance Documents to which it is a party and (ii) liabilities or obligations incurred in the ordinary course of their business of operating and chartering the Ship.

11.5       Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document to which it is a party will be true and not misleading in any material respect and will not omit any material fact or consideration.

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Provision of financial statements. The Borrower will:

(a)         procure that the Guarantor furnishes the Agent, with annual, audited and consolidated financial statements of the Guarantor within 180 days after the end of the financial year concerned, and prepared in accordance with GAAP consistently applied, such obligation commencing from the 1st January 2022;

(b)         send to the Agent, together with the Accounting Information referred to in paragraph (a) above, a Compliance Certificate; and

(c)         provide the Agent from time to time as the Agent may reasonably request and in form and substance satisfactory to the Agent with any information on the financial condition, commitments, business and operations of the Borrower and any other Security Party.

11.7       Form of financial statements. All financial statements delivered under Clause 11.6 will:

(a)         give a true and fair view of the state of affairs of the Guarantor, or as the case may be, of the Borrower at the date of those accounts and of the profit for the period to which those accounts relate; and

(b)         fully disclose or provide for all significant liabilities of the Guarantor, or as the case may be, of the Borrower for the period to which those accounts relate,

to the Agent’s satisfaction.

11.8       Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a)         for the Borrower and any Security Party to perform their respective obligations under each of the Finance Documents to which each of them is a party;

(b)         for the validity or enforceability of any Finance Document to which each of the Borrower and any Security Party is party,

and the Borrower will comply (and will ensure that each Security Party will comply) with the terms of all such consents.

11.9       Maintenance of Security Interests. The Borrower will:

(a)         at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b)         without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the reasonable opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

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11.10         Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, the Approved Manager and any other Security Party or the Ship, its Earnings or its Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered as having a Material Adverse Effect on the business, assets or financial condition of them or as affecting the validity or enforceability of any Finance Document.

11.11         Principal place of business. The Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

11.12         Confirmation of no default. The Borrower will, not more than once per quarter and within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by at least one (1) director of the Borrower and which:

(a)             states that no Event of Default or Potential Event of Default has occurred; or

(b)             states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

11.13         Notification of default. The Borrower will notify the Agent as soon as the Borrower becomes aware of:

(a)             the occurrence of an Event of Default or a Potential Event of Default which is continuing; or

(b)            any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will thereafter keep the Agent fully up‑to‑date with all developments.

11.14        Provision of further information. The Borrower will inform the Agent of all major financial developments in the Group such as new loans, refinancing/restructuring of existing loans, new acquisitions and sales, contracts for term employment of the Ship and furthermore will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(a)            the Borrower, the Ship, her Insurances or her Earnings; or

(b)            any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by any Creditor Party at any time.

11.15        Provision of customer information. The Borrower will produce such documents and evidence as the Lenders shall from time to time require, based on applicable laws and regulations from time to time and the Lenders’ own internal guidelines from time to time, relating to the Lenders’ knowledge of its customers.

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11.16        Ownership. The Borrower or, as the case may be, any other corporate Security Party shall ensure that, throughout the Security Period without the prior written consent of the Agent, which shall not be unreasonably withheld, there shall be no change in the Directors and Officers in the Borrower and in the Chief Executive Officer(s) of the Guarantor and moreover the Borrower shall ensure that no change shall be made directly or indirectly in the ownership of the Borrower, the beneficial ownership of the Guarantor, or the control of the Borrower, as disclosed to the Agent prior to the date of this Agreement, without the prior written consent of the Agent, which shall not be unreasonably withheld. For the avoidance of doubt the Lenders consent and agree to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement.

11.17       Sanctions         

(a)           The Borrower undertakes to comply (and shall procure that each other Security Party shall comply) in all respects with all Sanctions.

(b)           The Borrower undertakes not to use (and shall procure that no other Security Party shall use) any revenue or benefit derived from any activity or dealing with a Restricted Party in discharging any obligation due or owing to the Creditor Parties.

(c)           The Borrower undertakes to ensure (and shall procure that each other Security Party shall ensure) that no proceeds to the best of its knowledge (after reasonable enquiry) from any activity or dealing with a Restricted Party are credited to any bank account held with any Creditor Party in its name.

(d)          The Borrower undertakes (and shall procure that each other Security Party shall), to the extent permitted by law, promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority.

11.18       Use of proceeds. The Borrower shall not (and shall procure that no other Security Party and no Affiliate of any of them shall) permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Party; or (ii) in any other manner that could result in the Borrower or any other Security Party or any Creditor Party being in breach of any Sanctions or becoming a Restricted Party.

11.19       Anti-Corruption.

(a)           The Borrower shall not (and shall procure that no other Security Party r will) directly or indirectly use the proceeds of the Loan for any purpose which would breach or might breach applicable anti-corruption laws, including but not limited to the UK Bribery Act of 2010 and the United States Foreign Corrupt Practices Act of 1977, each as amended.

(b)          The Borrower shall (and shall procure that each other Security Party will):

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(i)           conduct its business in compliance with applicable anti-corruption laws and regulations; and

(ii)          maintain effective policies and procedures designed to promote and achieve compliance with such laws and regulations.

11.20      Social law matters. The Borrower shall (and shall procure that each other Security Party shall) comply in all respects with with any employment law or relevant regulation applicable to it.

11.21      Compliance with other laws. The Borrower shall (and shall procure that each other Security Party shall) comply in all respects with          all laws and regulations to which it may be subject including without limitation (i) the Trading with the Enemy Act and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) and any other enabling legislation or executive order thereto) and (ii) the PATRIOT Act; and

11.22      Marshall Islands Economic Substance Regulations 2018. The Borrower shall (and shall procure that each other Security Party incorporated in the Republic of the Marshall Islands shall) comply in all respects with the Republic of the Marshall Islands Economic Substance Regulations 2018 (including submission to the Agent of documentary evidence of such compliance) always in accordance with its terms and time frame once the same becomes applicable.

11.23      ANNEX VI. The Borrower shall, upon the request of any Lender and at the cost of the Borrower, on or before 31st July in each calendar year, supply or procure the supply to the Agent, of all ship fuel oil consumption data required to be collected and reported by the Borrower in accordance with Regulation 22A of Annex VI and any Statement of Compliance, together with a Carbon Intensity and Climate Alignment Certificate (if the same becomes mandatory), in each case relating to the Ship for the preceding calendar year and in accordance with the terms and time frame relevant applicable regulations of Annex VI may from time to time come in force and effect; and

For the purposes of this Clause 11.23:

"Annex VI" means Annex VI of the Protocol of 1997 (as subsequently amended from time to time) to amend the International Convention for the Prevention of Pollution from Ships 1973 ("MARPOL"), as modified by the Protocol of 1978 relating thereto;

"Carbon Intensity and Climate Alignment Certificate" means a certificate from a Recognised Organisation relating to the Ship and a calendar year setting out:

(a)         the average efficiency ratio of the Ship for all voyages performed by it over that calendar year using ship fuel oil consumption data required to be collected and reported in accordance with regulation 22A of Annex VI in respect of that calendar year; and

(b)         the climate alignment of the Ship for such calendar year,

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"Recognised Organisation" means, in respect of the Ship, the Ship’s flag state or an organisation which is likely to be RINA representing the Ship’s flag state and duly authorised to determine whether the Borrower has complied with regulation 22A of Annex VI.

"Statement of Compliance" means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.

11.25     Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide one (1) copy for each Creditor Party.

12.         CORPORATE UNDERTAKINGS

12.1       General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

12.2       Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of its incorporation.

12.3       Negative undertakings. The Borrower will not:

(a)         carry on any type of business other than the ownership, chartering and operation of the Ship in accordance with its constitutional documents;

(b)         make any form of distribution (other than payment of a dividend pursuant to Clause 12.4) or effect any form of redemption, purchase, reduction or return of share capital or issue, allot or grant any person a right to any shares in its capital; or

(c)         without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any debt or provide any form of credit or issue any guarantee to any person, except in the ordinary course of business; or

(d)         without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), open or maintain any account with any bank or financial institution except accounts with the Account Bank for the purposes of the Finance Documents and accounts notified to the Agent prior to the date of this Agreement; or

(e)         acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

(f)         enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation, or change its name; or

(g)         purchase any further assets (other than the Ship), either directly or indirectly (through subsidiaries); or

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(h)           without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any other Financial Indebtedness. Any shareholder loans, inter company loans, affiliate loans and third party loans to the Borrower shall be fully subordinated to the rights of the Creditor Parties under the Loan Agreement and the Finance Documents, on terms satisfactory to the Agent in its sole discretion.

12.4         Dividends. The Borrower may declare or pay any dividends or other distribution as long as no Event of Default has occurred which is continuing and such declaration of payment would not result to an Event of Default.

12.5         Liquidity. The Borrower will ensure that throughout the Security Period the Borrower or the Guarantor or any other entity acceptable to the Lender maintain with the Lenders or the Agent or the Account Bank the Minimum Liquidity.

12.6         Debt to equity ratio. The Borrower will ensure that the Guarantor’s total debt net of cash will not exceed 75% of the total market value of its assets.

12.7         Minimum Net Worth. The Borrower will ensure that the Guarantor’s minimum Net Worth listed in Nasdaq will be at least Dollars fifteen million ($15,000,000).

12.8         Compliance Check. On each Compliance Date, compliance with the undertakings contained in Clause 15.1 shall be determined by reference to the Accounting Information for the twelve month period in each Financial Year of the Borrower (commencing with the twelve month period commencing on 1 January 2022) delivered to the Agent pursuant to the Agreement. At the same time as they deliver that Accounting Information, the Borrower shall deliver to the Agent a Compliance Certificate signed by a director of the Borrower. If, prior to the delivery of a Compliance Certificate, the Borrower become aware that such undertakings will not be complied with, the Borrower shall immediately notify the Agent thereof.

12.9         Application of FATCA The Borrower shall not become (and shall procure that no Security Party shall become) a FATCA FFI or a US Tax Obligor, without the prior written consent of the Lenders.

12.10 Republic of the Marshall Islands Economic Substance Regulations 2018. The Borrower will ensure that each of the Security Parties incorporated in the Republic of the Marshall Islands shall comply in all respects and remain in compliance with the Republic of the Marshall Islands Economic Substance Regulations 2018 in accordance with its terms and time frame once the same becomes applicable.

13.           INSURANCE

13.1         General. The Borrower undertakes with each Creditor Party to comply (and to the extent applicable to procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will comply) with the following provisions of this Clause 13 at all times during the Security Period, except as the Agent may (with the authority of the Majority Lenders), otherwise permit.

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13.2       Maintenance of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) keep the Ship insured at its or at the relevant Security Party’s expense against:

(a)         fire and usual marine risks (including hull and machinery and excess risks);

(b)         war risks (including war protection and indemnity liabilities, terrorism, piracy and confiscation); and

(c)         protection and indemnity risks (including cover for oil pollution liability risks); and

(d)         any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for the Borrower and/or the relevant Security Party to insure and which are specified by the Security Trustee by notice to the Borrower.

13.3       Terms of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each Security Party other entity if named as co-assured in the insurance policies will) effect such insurances:

(a)         in Dollars;

(b)         in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) 120% of the amount of the Loan and (ii) the Market Value of the Ship;

(c)         in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

(d)         in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship;

(e)         on approved terms; and

(f)         through approved brokers and with approved insurance companies and/or underwriters and/or war risks associations, and protection and indemnity risks shall be placed with a member of the International Group of P&I Clubs.

13.4      Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrower will:

(a)         procure that the obligatory insurances shall be in the name of the Borrower and/or any other entity named as co-assured in the insurance policies of the Ship or whenever the Security Trustee so requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

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(b)         procure that the insurers shall note the Security Trustee’s interest and endorse the relevant notices of assignment and loss payable clause on the relevant certificates of entry or policies and shall furnish the Security Trustee with a copy of such certificates of entry or policies;

(c)         use its best endeavors to provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set‑off, counterclaim or deductions or condition whatsoever;

(d)         provide that following an Event of Default which is continuing the Security Trustee may make proof of loss if the Borrower fails to do so.

13.5       Renewal of obligatory insurances. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will):

(a)         at least 21 days before the expiry of any obligatory insurance:

(i)          notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that insurance and of the proposed terms of renewal; and

(ii)         in case of any material change in insurance cover, obtain the Majority Lenders' approval to the matters referred to in paragraph (i) above;

(b)         at least 14 days before the expiry of any obligatory insurance, renew the insurance; and

(c)         procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall before the expiry of the current insurances notify the Security Trustee in writing of the terms and conditions of the renewal.

13.6      Copies of policies; letters of undertaking. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

(a)         they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

(b)         they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

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(c)         they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

(d)         they will notify the Security Trustee, not less than 7 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e)         if the insurances form part of a fleet cover, they will not set off any claims on the Ship against premiums due for other vessels under the fleet cover not mortgaged to the Agent or against premiums due for other insurances; neither will they cancel the insurance cover of the Ship for reason of non-payment of such premiums; and they will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

13.7      Copies of certificates of entry. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will)ensure that, from any protection and indemnity and/or war risks associations in which the Ship is entered, the Security Trustee is provided with:

(a)           a certified copy of the certificate of entry for the Ship;

(b)           a letter or letters of undertaking in such form as may be required by the Security Trustee; and

(c)           a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

13.8        Deposit of original policies. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

13.9        Payment of premiums. The Borrower shall (and to the extent applicable shall procure in all cases that each other Security Party if named as co-assured in the insurance policies will) punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

13.10      Guarantees. The Borrower shall (and to the extent applicable shall procure that each other Security Party or other entity if named as co-assured in the insurance policies will) ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11      Restrictions on employment. The Borrower shall not employ the Ship, nor permit same to be employed, outside the cover provided by any obligatory insurances.

13.12      Compliance with terms of insurances. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

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(a)         the Borrower shall (and shall procure in all cases that each other Security Party or other entity if named as co-assured in the insurance policies will) take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b)         the Borrower shall not (and shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances; and

(c)         the Borrower shall not (and shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) employ any, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.13         Alteration to terms of insurances. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) make or agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee (not to be unreasonably withheld).

13.14         Settlement of claims. The Borrower shall not (and to the extent applicable shall procure in all cases that no other Security Party or other entity if named as co-assured in the insurance policies will) settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without the prior written consent of the Security Trustee (which consent will not be unreasonably withheld),, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances in accordance with the Finance Documents.

13.15         Provision of copies of communications. The Borrower shall (and to the extent applicable shall procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will), if required by the Security Trustee, provide the Security Trustee, at the time of each such communication, copies of all material written communications between the Borrower and:

(a)         the approved brokers; and

(b)         the approved protection and indemnity and/or war risks associations; and

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(c)         the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i)         the Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii)        any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances .

13.16    Provision of information. In addition, the Borrower shall (and to the extent applicable shall procure in all cases that any other Security Party or other entity if named as co-assured in the insurance policies will) promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably requests for the purpose of:

(a)         obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b)         effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances,

and the Borrower and/or (as the case may be) any other Security Party or other entity, in all cases if named as co-assured in the insurance policies shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above (it being understood however that prior to the occurrence of an Event of Default which is continuing the Borrower will only bear the costs of such insurance reports once per year).

13.17         Mortgagees’ interest. The Agent shall be entitled from time to time to effect, maintain and renew a mortgagees’ interest insurance in an amount equal to 110% of the Loan and otherwise on such terms, through such insurers and generally in such manner as the Lenders may from time to time consider appropriate and the Borrower shall upon demand against appropriate vouchers/invoices fully indemnify the Lenders in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.18         Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the reasonable opinion of the Majority Lenders, significant and capable of affecting the Borrower and/or to the extent applicable any other Security Party or other entity in all cases if named as co-assured in the insurance policies or the Ship and her insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower and/or (as the case may be) any other Security Party or other entity in all cases if named as co-assured in the insurance policies may be subject), and, prior to the occurrence of an Event of Default which is continuing, may appoint insurance consultants in relation to this review at the cost of the Borrower and/or any other Security Party or other entity in all cases if named as co-assured in the insurance policies, subject to such appointment taking place once per year.

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13.19         Modification of insurance requirements. The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders (acting reasonably) consider appropriate in the circumstances.

13.20         Compliance with instructions. The Security Trustee shall be entitled but will not be bound to (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to effect the insurances of the Ship in the amount and in terms acceptable to the Security Trustee from time to time at the cost and on behalf of the Borrower and/ to the extent applicable or any other Security Party or other entity in all cases if named as co-assured in the insurance policies.

14.         SHIP’S COVENANTS

14.1         General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period, except as the Agent (with the authority of the Majority Lenders) may otherwise permit.

14.2         Ship's name and registration. The Borrower shall keep the Ship registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry or flag of the Ship without the prior written consent of the Agent (acting on the authority of the Majority Lenders), such consent not to be unreasonably withheld.

14.3         Repair and classification. The Borrower shall keep the Ship in a good and safe condition and state of repair:

(a)         consistent with first‑class ship ownership and management practice;

(b)         so as to maintain the Ship with the highest classification available for vessels of the same age, type and specification as the Ship with Lloyd’s Register of Shipping (or such other first class classification society being a member of IACS and as may be approved by the Security Trustee), free of overdue recommendations and conditions affecting the Ship’s class; and

(c)         so as to comply with all laws and regulations applicable to vessels registered at ports in the Approved Flag State or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

14.4         Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on her which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce her value.

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14.5         Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lenders and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the Mortgage Provided that the Borrower may install leased equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

14.6         Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes, at the cost and expense of the Borrower. The Agent shall have the right to request one or more technical survey reports of the Ship by surveyors appointed to by the Agent at the cost of the Borrower, provided that the frequency of such reports shall be limited to one per year (unless an Event of Default shall have occurred and is continuing).

14.7         Inspection. The Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times, but without interference to the Ship’s trading and operations, to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. Provided that the Ship is found to be in satisfactory condition, the cost of such inspections shall be borne by the Borrower not more than once per year.

14.8         Prevention of and release from arrest. Unless contested in good faith by appropriate proceedings, the Borrower shall promptly discharge:

(a)         all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, her Earnings or her Insurances; and

(b)         all taxes, dues and other amounts charged in respect of the Ship, her Earnings or her Insurances;

and, forthwith upon receiving notice of the arrest of the Ship, or of her detention in exercise or purported exercise of any lien or claim, the Borrower shall procure her prompt release by providing bail or otherwise as the circumstances may require.

14.9         Compliance with laws etc. The Borrower shall:

(a)         comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of the Borrower (including, without limitation, the obtaining of all relevant certificates of financial responsibility and any other matters required for entering United States territorial waters or calling at any United States Port);

(b)         comply (and procure that each Security Party and each Affiliate of any of them shall comply) in all aspects with all Sanctions;

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(c)         not employ the Ship nor allow her employment in any manner contrary to any Sanctions;

(d)         in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship's war risks insurers unless the prior written consent of the Majority Lenders has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Majority Lenders may require.

14.10         Provision of information. The Borrower shall promptly provide the Security Trustee with any information which the Majority Lenders reasonably request regarding:

(a)         the Ship, her employment, position and engagements;

(b)         the Earnings and payments and amounts due to the master and crew of the Ship;

(c)         any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

(d)         any towages and salvages;

(e)         its compliance, the Approved Manager’s compliance or the compliance of the Ship with the ISM Code

and, upon the Security Trustee's request, provide copies of any current charter relating to the Ship and of any current charter guarantee, and copies of the ISM Code and ISPS Code documentation.

14.11         Notification of certain events. The Borrower shall immediately notify the Security Trustee by letter of:

(a)         any casualty which is or is likely to be or to become a Major Casualty;

(b)         any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c)         any requirement or recommendation made by any insurer or classification society (or any withdrawal of class) or by any competent authority which is not complied with in accordance with its terms;

(d)         any arrest or detention of the Ship which is not lifted within forth eight (48) hours, any exercise or purported exercise of any lien on the Ship or her Earnings or any requisition of the Ship for hire;

(e)         any intended dry docking of the Ship;

(f)         any Environmental Claim made against the Borrower or in connection with the Ship or any Environmental Incident;

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(g)         any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, the Approved Manager or otherwise in connection with the Ship; or

(h)         any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower’s, the Approved Manager’s or any other person's response to any of those events or matters.

14.12         Restrictions on chartering, appointment of managers, etc. The Borrower shall not without the prior written consent of the Agent (acting on the authority of the Majority Lenders):

(a)         let the Ship on demise charter for any period;

(b)         except for the Existing Approved Charter, enter into any time charter or bareboat charter or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

(c)         enter into any charter in relation to the Ship under which more than 2 months' hire (or the equivalent) is payable in advance;

(d)         charter the Ship otherwise than on bona fide arm's length terms at the time when the Ship is fixed;

(e)         appoint a commercial, technical or operational manager of the Ship (other than the Approved Manager) or agree to any material alteration to the terms of the Approved Manager's appointment (and in respect of which, the consent of the Agent shall not be unreasonably withheld);

(f)         de‑activate or lay up the Ship;

(g)         change the legal ownership of the shares in the Ship;

(h)         put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed Seven Hundred Fifty Thousand Dollars ($750,000) (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or her Earnings for the cost of such work or otherwise; or

(i)         change the classification society with which the Ship is classed (and in respect of which, the consent of the Agent and the authority of the Majority Lenders shall not be unreasonably withheld).

14.13         Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a valid first priority mortgage, carry on board the Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Lenders.

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14.14         Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings other than a profit sharing agreed at arm’s length under a charter party provided that it is not a part of any pool arrangement, in which case the Agent’s prior written consent will be required (such consent not to be unreasonably withheld).

14.15         ISPS Code. The Borrower shall comply with the ISPS Code and in particular, without limitation, shall:

(a)         procure that the Ship and the company responsible for the Ship’s compliance with the ISPS Code, comply with the ISPS Code; and

(b)         maintain for the Ship an ISSC; and

(c)         notify the Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

14.16         Charter Assignment. in the case of the Existing Approved Charter and/or if the Borrower enters into any other time charter or contract of affreightment in respect of the Ship which is of twelve (12) months or more in duration, or is capable of exceeding twelve (12) months in duration, the Borrower shall execute in favour of the Security Trustee a Charter Assignment and notice of assignment (and shall use its best endeavours to obtain an acknowledgement of the same from the relevant charterer or counterparty) of such time charter or contract of affreightment in such form and on such terms as the Agent may reasonably require, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 2, 3, 4 and 5 of Schedule 3, Part A hereof as the Agent may reasonably require.

15.         ASSET COVER RATIO SHORTFALL - ship’s valuation

15.1         Minimum Security Cover; Provision of additional security cover; prepayment of Loan. In the event the Agent (acting on the instructions of the Majority Lenders) notifies the Borrower that:

(a)         the Market Value (determined as provided below) of the Ship; plus

(b)         the net realisable value of any additional security previously provided under this Clause 15 (but always excluding any amounts standing to the credit of the Earnings Account and the Retention Account),

is during the Security Period below the Asset Cover Ratio, the Borrower undertakes that it will, within thirty (30) days after the date on which the Agent's notice is served, either:

(i)         provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which consists of either (aa) cash pledged to the Security Trustee or any other Creditor Party which when in the form of cash in Dollars, will be valued on a Dollar for Dollar basis or (bb) a Security Interest (including, but not limited to, a first priority mortgage over another vessel), covering such asset or assets and documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require; or

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(ii)         prepay in accordance with Clause 8 such part of the Loan as will eliminate the shortfall, such prepayment to be applied against repayment instalments of the Loan (including the payment of the Balloon Instalment) on a pro rata basis.

15.2         Meaning of additional security. In Clause 15.1 “security” means a Security Interest over an asset or assets (whether securing the Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower’s liabilities under the Finance Documents, in each case in a form and substance acceptable to the Agent in its sole discretion.

15.3         Requirement for additional documents. The Borrower shall not be deemed to have complied with Clause 15.1(i) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 2, 3, 4 and 5 of Schedule 3 (Part A) and such legal opinions in terms acceptable to lawyers selected by the Agent in its sole discretion.

15.4         Valuation of Ship. Subject to the following provisions of this Clause 15.4, the Market Value of the Ship shall be determined:

(a)         in Dollars, as at the date of (or no earlier than 30 days prior to) such valuation;

(b)         by an independent shipbroker selected by or acceptable to the Agent and reporting to the Agent;

(c)         with or without physical inspection of the Ship (as the Agent may require);

(d)         on the basis of a sale for prompt delivery for cash, charter adjusted or free of charter at the Lender’s reasonable option and free of encumbrances on normal arm's length commercial form as between a willing seller and a willing buyer.

15.5         Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.1 (i) and which consists of a Security Interest over a vessel other than the Ship shall be that shown by way of a valuation complying with the requirements of Clause 15.4.

15.6         Valuations binding and conclusive. Any valuation under Clause 15.1(i), 15.4 or 15.5 shall be binding and conclusive evidence of the Market Value of the Ship or of the other assets it refers to at the date of such valuation.

15.7         Provision of information. The Borrower shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.4 or Clause 15.5 with any information which the Agent or the shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent.

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15.8         Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, subject to the provisions of Clause 15.9, on demand, pay the Agent the amount of the fees and expenses of any shipbrokers or experts instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.

15.9         Frequency of valuations. The Agent shall be entitled to obtain written valuations of the Ship prior to the drawdown of the Loan and any time during the Security Period, provided that after drawdown of the Loan the costs and expenses of such shall only be borne by the Borrower once per year (unless an Event of Default has occurred and is continuing, in which case the Agent shall be entitled to obtain a valuation at any time, at the cost and expense of the Borrower).

16.         PAYMENTS AND CALCULATIONS

16.1         Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(i)         by not later than 11.00 a.m. (New York City time) on the due date;

(ii)         in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

(iii)         if in Dollars, to the account of the Agent with such corresponding bank in New York as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

(iv)         in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

16.2         Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a)         the due date shall be extended to the next succeeding Business Day; or

(b)         if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

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16.3         Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

16.4         Distribution of payments to Creditor Parties. Subject to Clauses 16.5, 16.6 and 16.7:

(a)         any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, or the Security Trustee shall be made available by the Agent to that Lender, or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such Account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b)         amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

16.5         Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

16.6         Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.

16.7         Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrower or a Lender, without first having received that sum, the Borrower or (as the case may be) the Lender concerned shall, on demand:

(a)         refund the sum in full to the Agent; and

(b)         pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

16.8         Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

16.9         Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

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16.10         Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

16.11         Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that that amount is owing to that Creditor Party.

17.         APPLICATION OF RECEIPTS

17.1         Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:‑

(a)         FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

(i)         first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

(ii)         secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents but shall have failed to pay or deliver to the Creditor Parties at the time of application or distribution under this Clause 17); and

(iii)         thirdly, in or towards satisfaction pro rata of the Loan;

(b)         SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its reasonable opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and

(c)         THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

17.2         Variation of order of application. The Agent may, following the occurrence of an Event of Default or a Potential Event of Default which is continuing, with the authorisation of the Majority Lenders by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

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17.3         Appropriation rights overriden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

18.         APPLICATION OF EARNINGS

18.1         Payment and application of Earnings. The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignment), as long as no Event of Default has occurred which is continuing, all the Earnings of the Ship are credited to the Earnings Account and shall be applied as follows:

(a)         first, towards payment of all sums other than principal and interest due to the Lenders under this Agreement and the other Finance Documents;

(b)         secondly, towards payment of the next instalment of principal and the next payment of interest due to the Lenders in accordance with the provisions of Clause 18.2; and

(c)         thirdly, any surplus shall (subject always to the other provisions of this Clause 18 and provided no Event of Default is continuing) be available to the Borrower, and

it is expressly agreed that so long as no Event of Default shall have occurred and is continuing, the Borrower shall be entitled to withdraw from the Earnings Account any amount provided, however, that if in the opinion of the Agent or the Security Trustee (as the case may be) there will be insufficient sums standing to the credit of the Earnings Account to meet payments under (a) and (b) above, the Agent or the Security Trustee (as the case may be) shall be entitled to refuse any withdrawal from the Earnings Account.

18.2         Monthly retentions. The Borrower undertakes with each Creditor Party to ensure that, in each calendar month of the Security Period commencing one month after the Drawdown Date, on such dates as the Agent may from time to time specify, there is transferred to the Retention Account out of the Earnings received in the Earnings Account during the preceding calendar month:

(a)         one‑third of the amount of the repayment instalment falling due under Clause 8 on the next Repayment Date; and

(b)         the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement.

The “relevant fraction” is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or, if the period is shorter, the number of months from the later of the commencement of the current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).

18.3         Shortfall in Earnings. If the aggregate Earnings received in the Earnings Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrower shall make up the amount of the insufficiency on demand from the Agent; but, without thereby prejudicing the Agent’s right to make such demand at any time, the Agent may permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 18.2 from the Earnings received in the next or subsequent months.

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18.4         Application of retentions. Until an Event of Default occurs, the Lenders shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with the payment details set out in Clause 16.1 so much of the balance on the Retention Account as equals:

(a)         the repayment instalment due on that Repayment Date; or

(b)         the amount of interest payable on that interest payment date;

in discharge of the Borrower’s liability for that repayment instalment or that interest.

18.5         Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Account Bank to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balance appears to the Account Bank likely to remain on the Retention Account.

18.6         Location of accounts. The Borrower and each other holder of an Account shall maintain the Accounts with the Account Bank, free of Security Interest and rights of set-off (other than as created under the Accounts Pledges), until no amount remains outstanding under this Agreement or any other Finance Documents and shall procure that transfers are made from each Account (and irrevocably authorises the Agent following the occurrence of an Event of Default which is continuing to instruct the Account Bank to transfer from each Account) in order to facilitate the payment of amounts required and/or contemplated by this Agreement and the other Finance Documents and shall promptly:

(a)         comply with any requirement of the Agent as to the location or re‑location of any of the Accounts;

(b)         execute any documents which the Lenders specify to create or maintain in execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) each Account.

18.7         Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account with prior notice to the Borrower in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which a Creditor Party has become entitled to demand under Clause 20 or 21.

18.8         Borrower’s obligations unaffected. The provisions of this Clause 18 do not affect:

(a)         the liability of the Borrower to make payments of principal and interest on the due dates; or

(b)         any other liability or obligation of the Borrower or any Security Party under any Finance Document.

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19.         EVENTS OF DEFAULT

19.1         Events of Default. An Event of Default occurs if:

(a)         the Borrower or any Security Party fail to pay when due or (if payable on demand) three (3) days following the date on which the written demand is served any sum payable under a Finance Document or under any document relating to a Finance Document, unless such failure to pay is caused by an administrative or technical error or any disruption event in the payment/communication system which is beyond the control of the Borrower, in which case the Borrower shall rectify such error within three (3) Business Days; or

(b)         any breach occurs of Clauses 9.2, 10.12, 11.2, 11.11, 11.17, 12.2, 12.3, 13 or 15.1, and in case any such breach (other than those referred to in Clauses 9.2. 13 and 15.1 hereinabove to which other grace periods are applicable, as therein provided) is in the opinion of the Security Trustee, capable of remedy, if it will continue un-remedied for seven (7) Business Days after its occurrence; or

(c)         any breach of the obligations set out in Clause 11.20 occurs which in the reasonable opinion of the Majority Lenders could have a Material Adverse Effect.

(d)         any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues un-remedied ten (10) days after written notice from the Agent requesting action to remedy the same; or

(e)         (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or

(f)         any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading in a material way when it is made; or

(g)         any of the following occurs in relation to any Financial Indebtedness of the Borrower:

(i)         any Financial Indebtedness of the Borrower is not paid when due or, if payable on demand, three (3) days following the date on which the written demand is served; or

(ii)         any Financial Indebtedness of the Borrower becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii)         a lease, hire purchase agreement or charter creating any Financial Indebtedness of the Borrower is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

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(iv)         any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of the Borrower ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v)         any Security Interest securing any Financial Indebtedness of the Borrower becomes enforceable; or

(h)         any of the following occurs in relation to the Borrower:

(i)         the Borrower becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

(ii)         any assets of the Borrower are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency unless such execution, attachment, arrest, sequestration or distress is being contested in good faith and on substantial grounds and is discussed or withdrawn within thirty (30) days of the occurrence thereof; or

(iii)         any administrative or other receiver is appointed over any asset of the Borrower; or

(iv)         the Borrower makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to the Borrower, or the members or directors of the Borrower pass a resolution to the effect that it should be wound up, placed in administration; or

(v)         a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of the Borrower unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi)         the Borrower petitions a court, or present any proposal for, any form of judicial or non‑judicial suspension or deferral of payments, reorganisation of its debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii)         any meeting of the members or directors of the Borrower is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii)         in a Relevant Jurisdiction other than England, any event occurs or any procedure is commenced which, in the reasonable opinion of the Majority Lenders, is similar to any of the foregoing; or

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(i)         the Borrower ceases or suspends carrying on its business or a part of their business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(j)         it becomes unlawful in any Relevant Jurisdiction or impossible:

(i)         for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

(ii)         for the Agent, the Security Trustee, the Account Bank or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(k)         any consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders (acting reasonably) consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(l)         it appears to the Majority Lenders that, without their prior consent, a change has occurred after the date of this Agreement in the beneficial ownership of the shares in the Borrower as declared to the Agent prior to the execution of this Agreement. For the avoidance of doubt the Agent consents and agrees to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement; or

(m)         any provision which the Majority Lenders (acting reasonably) consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another third party claim or interest; or

(n)         the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(o)         If any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) is not paid when due or any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) becomes due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party of a voluntary right of prepayment), or any creditor of any Security Party becomes entitled to declare its claim (which in the case of the Guarantor exceeds an aggregate amount of $1,000,000) due and payable, or any facility or commitment available to any Security Party is withdrawn, suspended or cancelled by reason of any default (however described) of such Security Party, and such debt is not discharged within seven (7) Business Days; or

(p)         any of the following occurs in relation to the Ship:

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(i)         the Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Ship within a period of forty (40) days thereafter; or

(ii)         the registration of the Ship under the laws and flag of the Approved Flag State is cancelled or terminated without the prior written consent of the Agent or, if the Ship is only provisionally registered on the Drawdown Date of the Loan and is not permanently registered under the laws and flag of Approved Flag State at least five (5) days prior to the deadline for completing such permanent registration; or

(iii)         an Approved Flag State, becomes involved in hostilities or civil war or there is a seizure of power in the relevant Approved Flag State by unconstitutional means if, in any such case, such event could in the opinion of the Majority Lenders reasonably be expected to have a Material Adverse Effect on the security constituted by any of the Finance Documents and the Borrower fails to register the Ship under another Approved Flag State as and when requested by the Majority lenders or do such other action as the Agent may reasonably require to ensure that such event or circumstance will not have a Material Adverse Effect within 30 days of notice from the Agent or such longer period as the Agent may in its discretion agrees; or

(q)         any other event occurs or any other circumstances arise or develop including, without limitation:

(i)         a Material Adverse Effect; or

(ii)         any accident or other event involving the Ship,

in the light of which the Majority Lenders (acting reasonably) consider that there is a significant risk that the Borrower is, or will later become, unable to discharge their liabilities under the Finance Documents as they fall due.

19.2         Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default which is continuing:

(a)         the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i)         serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or

(ii)        serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(iii)       take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

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(b)         the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law.

19.3         Termination of Commitments. On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate.

19.4         Acceleration of Loan. On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

19.5         Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

19.6         Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, the Account Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

19.7         Creditor Parties’ rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 and Clause 3.2.

19.8         Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

(a)         for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b)         as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset; except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.

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19.9         Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

20.         FEES AND EXPENSES

20.1         Evaluation Costs and Expenses – Commitment Fee

(a)         The Borrower shall irrevocably and unconditionally pay to the original Lender specified in Schedule 1 (The lenders and their Commitments) of this Agreement, a non-refundable amount equal to three hundred thousand Dollars ($300,000) on the Drawdown Date of the Loan representing the cost and expenses for the evaluation of the Commitment and the terms on which it shall be made available (as outlined in this Agreement) and the arrangement of the drawdown of the Loan, whether in whole or in part.

(b)         The Borrower shall pay to the Agent a commitment fee at the rate of zero point fifty per cent (0.50%) per annum on the Maximum Facility Amount, such fee accruing from the date hereof and being payable quarterly in arrears to the Agent on account of the Lenders on the earliest of:

(i)         the date upon which the Loan is drawn by the Borrower;         or

(ii)         the date upon which the Borrower shall have given written notification to the Agent as to its intention not to make use of the Loan.

(c)         The Evaluation Costs and Expenses and Commitment Fee referred to in this Clause 20.1 shall not be refundable.

20.2         Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses (including, but not limited to, all legal expenses and VAT, if applicable) incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, other than any syndication costs/expenses.

20.3         Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent's demand, the amount of all expenses incurred by a Lender in connection with:

(a)         any amendment or supplement to a Finance Document;

(b)         any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document;

(c)         the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

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(d)         any step taken by the Agent or the Security Trustee concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

20.4         Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

20.5         Certification of amounts. A notice which is signed by at least one officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

21.         INDEMNITIES

21.1         Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent's written demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a)         the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

(b)         the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c)         any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if payable on demand, three (3) days following the date on which the written demand is served (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7);

(d)         the occurrence and/or continuance of an Event of Default or a Potential Event of Default (including, but not limited to, a breach of Clauses 11.17 or 11.18) and/or the acceleration of Loan under Clause 19.4;

and in respect of any tax (other than tax on its overall net income or which relates to a FACTA Deduction) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

21.2         Breakage costs. Without limiting its generality, Clause 21.1 covers any liability, expense or loss, incurred by a Lender:

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(a)         in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

(b)         in terminating, or reversing or otherwise in connection with, any open position arising under this Agreement.

21.3         Miscellaneous indemnities. The Borrower shall fully indemnify the Agent and the Security Trustee severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, the Agent or the Security Trustee, in any country, in relation to:

(a)         any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

(b)         any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document;

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the Agent's or (as the case may be) the Security Trustee's own officers or employees.

Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

21.4         Extension of indemnities; environmental indemnity. Without prejudice to its generality, Clause 21.3 covers:

(a)         any matter which would be covered by Clause 21.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

(b)         any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment if such liability items would not have arise or asserted against the Lender or Agent or the Security Trustee (as the case may be) if any of them had not entered into any of the Finance Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Finance Documents.

21.5         Currency indemnity. If any sum due from the Borrower or any other Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

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(a)         making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b)         obtaining an order or judgment from any court or other tribunal; or

(c)         enforcing any such order or judgment;

the Borrower or such other Security Party shall indemnify the Creditor Party concerned against any loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 21.5 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

21.6         Certification of amounts. A notice which is signed by 1 officer of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

21.7         Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

21.8         Mandatory Costs. The Borrower shall, on demand by the Agent, pay to the Agent for the account of a Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with:

(a)         in the case of a Lender lending from a lending office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that lending office; and

(b)         in the case of any Lender lending from a lending office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions), which, in each case, is referable to that Lender's participation in the Loan.

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22.         NO SET-OFF OR TAX DEDUCTION

22.1         No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a)         without any form of set‑off, cross-claim or condition; and

(b)         free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

22.2         Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a)         the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b)         the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c)         the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

22.3         Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrower shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

22.4         Exclusion of tax on overall net income. In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party's overall net income.

FATCA Information.

(a)         Subject to paragraph (c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

(i)         confirm to that other Party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party;

(ii)         supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and

(iii)         supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation or exchange of information regime.

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(b)         If a Party confirms to another Party pursuant to paragraph (a) (i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

(c)         Paragraph (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such party for purposes of this paragraph (c).

(d)         If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

22.6         FATCA Deduction

(a)         Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b)         Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notify the other Creditor Parties.

22.7         Contractual recognition of Bail-In.

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

any Bail-In Action in relation to any such liability applicable to such Party, including (without limitation):

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

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a cancellation of any such liability; and

(b)         a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability applicable to such Party.

23.         ILLEGALITY, ETC

23.1         Illegality. This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

(a)         unlawful or prohibited (including, without limitation, due to a breach of Clauses 11.17 or 11.18) as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b)         contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

23.2         Notification of illegality. The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

23.3         Prepayment; termination of Commitment. On the Agent notifying the Borrower under Clause 23.2, the Notifying Lender's Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender's Contribution in accordance with Clause 8.

23.4         Mitigation. If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a)         have an adverse effect on its business, operations or financial condition; or

(b)         involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c)         involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

24.         INCREASED COSTS

24.1         Increased costs. This Clause 24 applies if the Notifying Lender notifies the Agent that as a result of:

(a)         the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or

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(b)         complying with any regulation (including any regulation which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement (including, but not limited to, Basel II, Basel III, CRD IV and CRR),

the Notifying Lender considers that it (or any of its Affiliates) has incurred or will incur an “increased cost”, that is to say:

(i)         an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or any Finance Document or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or

(ii)         a reduction in the amount of any payment to the Notifying Lender under this Agreement or any Finance Document or in the effective return which such a payment represents to the Notifying Lender or on its capital;

(iii)         an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender's Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender (or any of its Affiliates) under this Agreement or any Finance Document,

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or any of its Affiliates) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or which is attributable to a FATCA Deduction.

For the purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

24.2         Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

24.3         Payment of increased costs. The Borrower shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

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24.4         Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrower may give the Agent not less than 14 days' notice of its intention to prepay the Notifying Lender's Contribution at the end of an Interest Period.

24.5         Prepayment; termination of Commitment. A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

(a)         on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b)         on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

24.6         Application of prepayment. Clause 8 shall apply in relation to the prepayment.

25.         SET‑OFF

25.1         Application of credit balances. Each Creditor Party may without prior notice at any time after the occurrence of an Event of Default which is continuing:

(a)         apply any balance (whether or not then due) which at any time stands to the credit of any Account in the name of the Borrower and/or the Guarantor at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower and/or the Guarantor to that Creditor Party under any of the Finance Documents; and

(b)         for that purpose:

(i)         break, or alter the maturity of, all or any part of a deposit of the Borrower and/or the Guarantor;

(ii)         convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii)         enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

25.2         Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set‑off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

25.3         Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrower and/or the Guarantor to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

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25.4         No Security Interest. This Clause 25 gives the Lenders a contractual right of set off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower and/or the Guarantor.

25.5         No Borrower’s/Guarantor’s set off. The Borrower and/or the Guarantor shall not have a right of set off in relation to sums that may be due from any Creditor Party under this Agreement or any of the other Finance Documents.

26.         TRANSFERS AND CHANGES IN LENDING OFFICES

26.1         Transfer by the Borrower. The Borrower may not:

(a)         without the prior written consent of the Agent (given on the instructions of all of the Lenders), transfer any of its rights or obligations under any Finance Document;

(b)         without the prior written consent of the Agent (given on the instructions of all the Lenders), enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

26.2         Transfer by a Lender. Subject to Clause 26.4, a Lender (the “Transferor Lender”) may, at its sole discretion and at its own expense, without the consent of and/or the prior consultation with the Borrower (but with notice to the Borrower) and/or any Security Party, at any time assign or transfer by novation (as applicable):

(a)         its rights in respect of all or part of its Contribution; or

(b)         its obligations in respect of all or part of its Commitment; or

(c)         a combination of (a) and (b);

to be (in the case of its rights) assigned or transferred to, or (in the case of its obligations) assumed by and novated to, another bank or financial institution, or by a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender and should the Transfer Certificate alone be not sufficient in the Transferor Lender’s or Transferee Lender's jurisdiction for a Transferor Lender to transfer all or a proportionate share of the Transferor Lender's interest in the security constituted by the Finance Documents, the Borrower hereby undertakes, immediately on being requested to do so by the Agent and at the cost of the Transferor Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferor Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of such Lender’s interest in the Finance Documents and all relevant references in this Agreement to such Lender shall thereafter be construed as a reference to the Transferor Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests.

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However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee shall be dealt with separately in accordance with the Agency and Trust Deed.

26.3         Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a)         sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee, the Arranger, the Account Bank and each of the Lenders;

(b)         on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes or electronic mail notifying them of the Transfer Certificate and attaching a copy of it;

(c)         send to the Transferee Lender copies of the letters or faxes or electronic mail sent under paragraph (b) above.

26.4         Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

26.5         No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

26.6         Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender. In addition, where security rights (such as pledge and mortgage rights) created in the interest of the Lender concerned were transferred to the successor as a result of such a merger, de-merger or other reorganisation, then such rights will serve as if they were created in the interest of the successor.

26.7         Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows:

(a)         to the extent specified in the Transfer Certificate, all rights, interests and/or obligations (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned and/or transferred by novation (as applicable) to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

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(b)         the Transferor Lender's Commitment is discharged to the extent specified in the Transfer Certificate;

(c)         the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

(d)         the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro‑rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

(e)         any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

(f)         the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 21, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

(g)         in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross‑claim.

26.8         Maintenance of register of Lenders. During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice.

26.9         Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

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26.10         Authorisation of Agent to sign Transfer Certificates. The Borrower, the Arranger, the Account Bank, the Security Trustee, each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

26.11         Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender. Such fees will not burden any of the Security Parties under any circumstances.

26.12         Sub-participation; subrogation assignment. A Lender may sub‑participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

26.13         Disclosure of information to a Transferee Lender. A Lender may disclose to a potential Transferee Lender or sub‑participant any information necessary to effect the relevant transaction which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, provided that the Lender shall ensure that such person shall have entered into an undertaking of confidentiality with the Lender.

26.14         Change of lending office. A Lender may change its lending office without consultation with the Borrower by giving notice to the Agent and the change shall become effective on the later of:

(a)         the date on which the Agent receives the notice; and

(b)         the date, if any, specified in the notice as the date on which the change will come into effect.

26.15         Notification. On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

26.16 Security over Lenders’ rights. In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from, the Borrower or any other Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

(a)         any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

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(b)          in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;

except that no such charge, assignment or Security Interest shall:

(i)         release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for Lender as a party to any of the Finance Documents; or

(ii)         require any payments to be made by the Borrower or any other Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

26.17         Disclosure of information to a service provider. Further to Clause 26.13 and without limiting the foregoing, the Borrower authorises any of the Lenders to disclose all information related or connected to:

(a)         the Ship or any other vessel owned or operated by a Security Party;

(b)         the negotiation, drafting and content of this Agreement and the Finance Documents;

(c)         the Loan; or

(d)         any Security Party,

to any service provider (included but not limited to professional advisers, auditors, lawyers, accountants, surveyors, valuers, insurers, insurance advisers and brokers) which any of the Lenders may in its discretion deem necessary or desirable in connection with this Agreement or any other Finance Documents and/or the protection or enforcement of its rights thereunder, provided that the recipient has agreed to treat the information as confidential.

27.         VARIATIONS AND WAIVERS

27.1         Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax or electronic mail, by the Borrower, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

27.2         Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

(a)         a reduction in the Margin or in the definition of LIBOR;

(b)         a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees, or other sums payable under this Agreement;

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(c)         an increase in any Lender's Commitment;

(d)         an extension of the Availability Period;

(e)         a change to the definition of “Majority Lenders”, “Finance Documents”, “Restricted Party”, “Sanctions”, “Sanctions Authority” or “Sanctions List”;

(f)         a change to the preamble or to Clause 2, 3, 4, 5.1, 11.17, 11.18, 17, 19 or 30;

(g)         a change to Clause 3 or this Clause 27;

(h)         any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(i)         any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.

27.3         Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a)         a provision of this Agreement or another Finance Document; or

(b)         an Event of Default; or

(c)         a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

(d)         any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

27.4         Notification of Variation or Waiver. No variation or waiver may be made before the date falling ten (10) Business Days after the terms of that variation or waiver have been notified by the Agent to the Lenders. The Agent shall notify the Lenders reasonably promptly of any variations or waivers proposed by the Borrower.

27.5         Variation or Waiver: FATCA.

Notwithstanding the foregoing, if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrower and the Agent accordingly, that amendment or waiver may, subject to paragraph (b) below, not be effected without the consent of the Agent or that Lender (as the case may be).

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27.6         Replacement of Screen Rate.

27.6.1         If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

(a)         providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate; and

(b)         all or any of the following:

(i)         aligning any provision of any Finance Document to the use of that Replacement Benchmark;

(ii)         enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

(iii)         implementing market conventions applicable to that Replacement Benchmark;

(iv)         providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

(v)         adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrower.

27.6.2         If any Lender fails to respond to a request for an amendment or waiver described in, or for any other vote of Lenders in relation to, Clause 27.6.1 within ten Business Days (or such longer period in relation to any request which the Borrower and the Agent may agree) of that request being made:

(a)         its Commitment(s) shall not be included for the purpose of calculating the Total Commitments under the Loan when ascertaining whether any relevant percentage of Total Commitments has been obtained to approve that request; and

(b)         its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

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28.         NOTICES

28.1         General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax or electronic mail; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

Addresses for communications. A notice shall be sent:

(a)         to the Borrower: c/o Euroseas Ltd

4, Messogiou & Evropis Street

151 24, Maroussi

Athens, Greece

Fax No: +30 2111 804097

Email: aha@euroseas.gr

Attn: Mr. Tassos Aslidis/Simos Pariaros

(b)         to a Lender:  At the address below its name in

Schedule 1 or (as the case may require) in the relevant Transfer Certificate;

(c)         to the Arranger, Account Bank and EUROBANK S.A.

Security Trustee: 83 Akti Miaouli & 1, Flessa Street

185 38 Piraeus

Greece

Fax No: +30 210 4587877;

(d)         to the Agent: EUROBANK S.A.

83 Akti Miaouli & 1, Flessa Street

185 38 Piraeus

Greece

Fax: +30 210 4587877

Email: ShippingLoansAdministration@eurobank.gr                                                      

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or to such other person, address or fax number as is notified by the Borrower or any Security Party or the Agent, the Security Trustee or a Lender (as the case may be) to the other parties to this Agreement in writing and, in the case of any such change of address or fax number notified to the Agent, the Security Trustee or a Lender, the same shall not become effective until notice of such change is actually received by the Agent, the Security Trustee or such Lender..

28.3         Effective date of notices. Subject to Clauses 28.4 and 28.5:

(a)         a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

(b)         a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed;

(c)         a notice which is sent by e-mail shall be deemed to be effective in accordance with paragraphs (c) and (d) of Clause 28.7.

28.4         Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

(a)         on a day which is not a business day in the place of receipt; or

(b)         on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

28.5         Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

28.6         Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if,

in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

28.7         Electronic communication.

(a)         Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website), if those two Parties:

(i)         notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and

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(ii)         notify each other of any change to their respective addresses or any other such information supplied to them by not less than five (5) Business Day’s notice .

(b)         Any such electronic communication as specified in paragraph (a) above to be made between a Security Party and the Agent or any other Creditor Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.

(c)         Any such electronic communication as specified in paragraph (a) above made between any two Parties will be effective only when actually received (or made available) in readable form and, in the case of any electronic communication made by a Party to the Agent or any other Creditor Party, only if it is addressed in such a manner as the Agent or such other Creditor Party shall specify for this purpose.

(d)                  Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day.

(e)         Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 28.7.

28.8         English language. Any notice under or in connection with a Finance Document shall be in English.

28.9         Meaning of “notice”. In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

29.         SUPPLEMENTAL

29.1         Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a)         cumulative;

(b)         may be exercised as often as appears expedient; and

(c)         shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2         Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3         Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

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29.4         Counterparts. A Finance Document may be executed in any number of counterparts.

29.5         PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies the Borrower and each Security Party, which information includes the name and address of the Borrower and each Security Party and such other information that will allow the Agent and each of the Lenders to identify the Borrower and each Security Party in accordance with the PATRIOT Act.

30.         Governing LAW AND JURISDICTION

30.1         Governing Law. This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

30.2         Jurisdiction.

(a)         The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement) (a "Dispute").

(b)         The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c)         This Clause 30.2 is for the benefit of the Creditor Parties only. As a result, no Creditor Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Creditor Parties may take concurrent proceedings in any number of jurisdictions.

30.3         Service of process.

(a)         Without prejudice to any other mode of service allowed under any relevant law, the Borrower (and the Borrower shall procure that each other Security Party, other than a Security Party incorporated in England and Wales):

(i)         irrevocably appoint Shoreside Agents Ltd at11 The Timber Yard, Drysdale Street, London, N1 6ND, England (Tel.: +44 (0)203771 8869, fax: +44 (0)203771 8870, attention of: Mr. Andrew Johnson) as its agent for service of process in relation to proceedings of any kind, including an application for a provisional or protective measure (“proceedings”) before the English courts in connection with this Agreement and any other Finance Document; and

(ii)         agrees that (on the understanding that process has first duly been served upon the process agent) failure by a process agent to notify the Borrower or the relevant Security Party of the process will not invalidate the proceedings concerned.

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(b)         If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the Borrower must immediately (and in any event within seven (7) days of such event taking place) appoint another agent on terms reasonably acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose and will duly notify the Borrower on the contact details of the same.

30.5         Creditor Parties’ rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the settlement of any Dispute, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

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SCHEDULE 1

THE LENDERS AND THEIR COMMITMENTS

Name of Lender	Lending Office and contact details	Total Commitments ($)
Eurobank S.A.	Lending office 83 Akti Miaouli & 1, Flessa Street,185 38 Piraeus, Greece Contact details 83 Akti Miaouli & 1, Flessa Street,185 38 Piraeus, Greece Fax No: +30 210 4587877 Attn: Loans Administration	34,000,000

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SCHEDULE 2
DRAWDOWN NOTICE

To: EUROBANK S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

Attention: [Loans Administration]                                             [●] 2021

We refer to the loan agreement (the “Loan Agreement”) dated [●] December 2021 and made between (1) ourselves as Borrower, (2) the Lenders referred to therein and (3) yourselves as Arranger, Account Bank, Agent and as Security Trustee in connection with a secured term loan of up to $34,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

We request to draw the Loan as follows:

Amount: $ [●];

Drawdown Date: [●] 2021;

Duration of the first Interest Period shall be [●] months;

Payment instructions: Please credit account of [●] and numbered [●] held in our name with the Shipping Branch EUROBANK S.A. with the amount of [●], for onward remittance [along with Borrower’s equity funds plus extra funds for lubs/oils/expenses etc, under separate instructions value [●] to [●] swift code [●], to be released as per MT 199 swift message, attached to this Drawdown Notice as Appendix 1].We represent and warrant that:

the representations and warranties in Clause 10 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at this date;

there has been no Material Adverse Change since the date of the accounts referred to in Clause 11.6 of the Loan Agreement;

the said Loan will be used for our own benefit and under our full responsibility and exclusively for the purposes specified in the preamble of the Loan Agreement; and

no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the said Loan.

This notice cannot be revoked without the prior consent of the Majority Lenders.

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This notice is governed by English law.

Yours faithfully

--------------------------------------

[●]

authorised signatory for

MARCOS SHIPPING LTD         

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SCHEDULE 3
CONDITION PRECEDENT DOCUMENTS

PART A

The following are the documents referred to in Clause 9.1(a):

A duly executed original of this Agreement, the Agency and Trust Deed, the Guarantee and the Accounts Pledge.

Copies of the certificate of incorporation and constitutional documents of the Borrower, the Guarantor and the Approved Manager, together with up to date evidence of the good standing.

Originals of resolutions of the directors and shareholders of the Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents referred to at 1 above to which the Borrower and/or any other Security Party is a party and authorising named officers of the Borrower to give the Drawdown Notice and other notices under this Agreement.

The original of any power of attorney under which any Finance Document referred to at 1 above is executed on behalf of the Borrower, the Guarantor and the Approved Manager.

Copies of all consents which the Borrower or any other Security Party requires to enter into, or make any payment under, any Finance Document.

All documentation required by the Agent in respect of the Borrower and any other Security Party pursuant to any Lender’s “Know your customer” requirements based on applicable laws and regulations from time to time and the Agent’s own internal guidelines from time to time, together with such other documents or evidence as such Lender may reasonably require with respect to money laundering regulations.

A copy of the Approved Existing Charter (and all addenda thereto), together with evidence of authorisation with respect to the execution thereof by the Borrower and by the Approved Existing Charterer.

Documentary evidence that the agent for service of process named in Clause 30 of this Agreement has accepted its appointment.

Favourable legal opinions from lawyers appointed by the Agent on such matters concerning English law or the laws of Panama and/or Liberia and/or the Marshall Islands and such other Relevant Jurisdictions as the Agent may require.

A certificate in a form and substance satisfactory to the Lenders confirming the legal ownership and the beneficial ownership of the shares in the Borrower, in a form and substance satisfactory to the Agent in its sole discretion.

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The originals of any mandates or other documents required in connection with the opening and operation of the Earnings Account and the Retention Account.

If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

PART B

The following are the documents referred to in Clause 9.1(b):

The following delivery documents in respect of the Ship:

(a)         evidence that the twenty per cent (20%) deposit in respect of the Ship has been duly paid and all other sums of money (other than the Loan where applicable) required to be paid by the Borrower to the Seller pursuant to the MOA have been duly paid on the Delivery Date;

(b)         evidence proving the Sellers’ title to the Ship free of any Security Interests, debts or claims of any nature whatsoever;

(c)         copies of the corporate documentation of the Seller proving the legal existence of the Seller and the due authorization of the sale of the Ship;

(d)         the Bill of Sale;

(e)         the Protocol of Delivery and Acceptance;

each duly executed and delivered;

On the Delivery Date and/or (as the case may be) immediately prior to the Drawdown Date, a duly executed original of:

the Mortgage;

the General Assignment;

the Approved Manager’s Undertaking-Assignment;

the Guarantor’s Undertaking-Assignment;

the Charter Assignment in connection with the Approved Existing Charter,

together with (if not already delivered pursuant to Schedule 3, Part A, paragraph 3) up to date evidence of the good standing, originals resolutions of the directors and shareholders of the Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents with respect to the execution of such Finance Documents, and all other documents required by any of such Finance Documents, including, without limitation, all notices of assignment and/or charge;

Documentary evidence that as from the Delivery Date and/or (where applicable) as from the Drawdown Date:

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the Ship is provisionally registered in the name of the Borrower under the Approved Flag;

the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents related to the Ship;

the Ship is classed with the highest available class with NKK or such any other first class classification society which is a member of IACS acceptable to the Agent, free of all overdue recommendations and conditions of such classification society affecting Class;

the Mortgage in respect of the Ship has been duly registered against the Ship as a valid first priority ship mortgage in accordance with the laws of the Approved Flag State; and

the Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances shall have been complied with; and

a signed copy of the Approved Existing Charter and evidence of the due execution thereof by the parties thereto and acceptance of the Ship thereunder and/or a copy of the recap agreement containing the terms of the relevant fixture;

Documents establishing that the Ship is, as from the Drawdown Date, managed by the Approved Manager on terms acceptable to the Agent, together with:

a copy of the ship management agreement for the Ship;

copies of the Document of Compliance and Safety Management Certificate and ISSC;

copies of such other ISM Code or ISPS Code documentation as the Agent may by written notice to the Borrower have requested not later than 2 days before the Drawdown Date, certified as true and complete in all material respects by the Borrower and the Approved Manager;

Subordination letters from any other co-assureds named in the insurance policies for the Ship (other than the Borrower and the relevant Approved Manager), in the form required by the Agent;

A valuation of the Ship addressed to the Agent (at the Borrower’s expense) prepared in accordance with Clause 15.4 of this Agreement and not older than thirty (30) days prior to the Drawdown Date of the Loan, in a form satisfactory to the Agent;

Evidence that an aggregate sum of $1,000,000 is standing to the credit of the Earnings Account in Greece or any other account or accounts held with the Account Bank in Greece in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent by way of required minimum liquidity pursuant to the provisions of Clause 12.5 of this Agreement;

A favourable opinion from an independent insurance consultant appointed by the Agent on such matters relating to the insurances for the Ship as the Agent may require, and at the cost and expense of the Borrower;

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Favourable legal opinions from lawyers appointed by the Lenders on such matters concerning the laws of England, the laws of Liberia, the laws of the Marshall Islands, the laws of the Approved Flag State (if different) and such other Relevant Jurisdiction as the Agent may require;

Receipt by the original Lender specified in Schedule 1 (The lenders and their Commitments) of this Agreement of the amount of three hundred thousand Dollars ($300,000) referred to in Clause 20.1 (a) (i) representing the Evaluation Costs and Expenses and of any other fees, costs and expenses due under Clause 20 of this Agreement;

On the Delivery Date or as soon as practicable thereafter an extract of the trim and stability booklet certifying the lightweight of the Ship;

A signed confirmation in writing from the Borrower, confirming that all trading certificates for the Ship are up to date and in full force.

PART C

Conditions Subsequent

Letters of undertaking. Letters of undertaking in respect of the Insurances as required by the Finance Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Creditor Parties.

Service of notices and acknowledgements of notices to the Approved Existing Charterer. Service of all notices of assignment and/or charge given pursuant to any Finance Documents by the Agent pursuant to Part A or Part B of this Schedule 3 and (on an effort basis) an acknowledgement by the Approved Existing Charterer of any notice of assignment executed in connection with the relevant Charter Assignment, in any case provision of same is not delayed or denied by the Approved Existing Charterer.

Legal opinions. Such of the legal opinions specified in Part B of this Schedule 3 as have not already been provided to the Agent.

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SCHEDULE 4

TRANSFER CERTIFICATE

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

To:         EUROBANK S.A. for itself and for and on behalf of the Borrower, each other Security Party, the Arranger, the Account Bank, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below.                                                                                                                                                                                             [●]

This Certificate relates to the loan agreement dated [●] December 2021 (the “Loan Agreement”) and made between (1) MARCOS SHIPPING LTD as borrower (the “Borrower”), (2) the banks and financial institutions named therein as Lenders, (3) EUROBANK S.A. as Arranger, Account Bank, Agent and Security Trustee, for a secured term loan of up to $34,000,000.

In this Certificate:

“the Relevant Parties” means the Agent, the Borrower, each other Security Party, the Security Trustee, the Arranger, the Account Bank and each Lender;

“the Transferor” means [full name] of [lending office];

“the Transferee” means [full name] of [lending office].

Terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate.

3.         The effective date of this Certificate is [●] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

4.         The Transferor [transfers by novation to the Transferee all rights, interests and obligations] or upon transfer of rights only [assigns to the Transferee absolutely all rights and interests] (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [●] per cent of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below:

Contribution Amount transferred

5.         By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[●]] [from [●] per cent. of its Commitment, which percentage represents $[●]] and the Transferee acquires a Commitment of $[●].

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6.         The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect. [For the avoidance of doubt the Transferor shall remain as [●] under the Loan Agreement and the Finance Documents].

7.         The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

8.         The Transferor:

warrants to the Transferee and each Relevant Party:

that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

that this Certificate is valid and binding as regards the Transferor;

warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the [transfer] [assignment] in paragraph 4 above;

undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any Relevant Jurisdiction the Transferee's title under this Certificate or for a similar purpose.

9.         The Transferee:

confirms that it has received a copy of the Loan Agreement and each other Finance Document;

agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Arranger, the Account Bank, the Security Trustee or any Lender in the event that:

the Finance Documents prove to be invalid or ineffective,

the Borrower or any other Security Party fails to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents;

it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or any other Security Party under the Finance Documents;

agrees that it will have no rights of recourse on any ground against the Agent, the Arranger, the Account Bank, the Security Trustee or any Lender in the event that this Certificate proves to be invalid or ineffective;

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warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and

confirms the accuracy of the administrative details set out below regarding the Transferee; and

agrees to be responsible for all legal and other costs (including without limitation, notarial fees, breakage costs and, if applicable, VAT) incurred by the Transferor with respect to documenting the transfer and perfecting any security.

10.         The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross negligence or dishonesty of the Agent's or the Security Trustee's own officers or employees.

11.         The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it.

12.         This Certificate (and any non-contractual obligations connected with it) shall be governed by and construed in accordance with English law, and may be executed in any number of counterparts, each of which shall be deemed an original).

[Name of Transferor]   By: [●]   Date: [●]  [Name of Transferee]   By: [●]    Date: [●]

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Agent

Signed for itself and for and on behalf of itself

as Agent and for every other Relevant Party

Eurobank S.A.

By: [●]

Date: [●]

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Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person:

(Loan Administration Department):

Telephone:

Fax:

Email:

Contact Person

(Credit Administration Department):

Telephone:

Fax:

Email:

Account for payments:

Note:         This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

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SCHEDULE 5
FORM OF COMPLIANCE CERTIFICATE

To: EUROBANK S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

Attn:         Loans Administration                                                               [date]

Dear Sirs

Loan Agreement dated [●] December 2021 (the “Loan Agreement”) made between (i) the Borrower referred to therein, (ii) the Lenders referred to therein and (iii) EUROBANK S.A. as Arranger, Account Bank, Agent and Security Trustee in connection with a loan facility of up to $34,000,000.

Terms defined in the Loan Agreement have their defined meanings when used in this Compliance Certificate.

We enclose with this certificate a copy of the annual audited consolidated financial statements of the Guarantor referred to in the Loan Agreement (the “Guarantor”) for the financial year commencing on the 1st January 2022. The accounts (i) have been prepared in accordance with all applicable laws and GAAP consistently applied, (ii) give a true and fair view of the state of affairs of the Borrower and the Guarantor at the date of the accounts and of its profit for the period to which the accounts relate and (iii) fully disclose or provide for all significant liabilities of the Borrower and the Guarantor.

We also enclose copies of the valuation of the Ship which is used in calculating the asset cover ratio under Clause 15.1 of the Loan Agreement as at [●].

The Borrower represents that no Event of Default has occurred as at the date of this certificate [(except for the following matter or event [set out all material details of mater or event]).]

We now certify that, as at [●].

(a)         minimum liquidity balances in aggregate of $1,000,000 have been maintained on an annual average basis in an Account or Accounts held with the Lenders or the Agent or the Account Bank in the name of the Borrower or the Guarantor or any other entity acceptable to the Agent;

(b)         the asset cover ratio under Clause 15.1 of the Loan Agreement is [●]%.

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We hereby repeat the representations and warranties set out in Clause 10 of the Loan Agreement and confirm that they remain true and correct by reference to the facts and circumstances existing on the date of this Compliance Certificate.

This certificate shall be governed by, and construed in accordance with, English law.

Signed

____________________

authorised signatory for

MARCOS SHIPPING LTD         

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EXECUTION PAGES

THE BORROWER

Signed by   Stefania Karmiri    for and on behalf of  MARCOS SHIPPING LTD ) ) /s/ Stefania Karmiri )  )

in the presence of                           

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

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THE LENDERS

Signed by   Stavros Yagos   And Nikoletta Mitropoulou  for and on behalf of  EUROBANK S.A. ) ) /s/ Stavros Yagos ) /s/ Nikoletta Mitropoulou ) )

in the presence of          

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

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THE ARRANGER

Signed by   Stavros Yagos   And Nikoletta Mitropoulou  for and on behalf of  EUROBANK S.A. ) ) /s/ Stavros Yagos ) /s/ Nikoletta Mitropoulou ) )

in the presence of 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

THE ACCOUNT BANK

Signed by   Stavros Yagos   And Nikoletta Mitropoulou  for and on behalf of  EUROBANK S.A. ) ) /s/ Stavros Yagos ) /s/ Nikoletta Mitropoulou ) )

in the presence of 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

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THE AGENT

Signed by   Stavros Yagos   And Nikoletta Mitropoulou  for and on behalf of  EUROBANK S.A. ) ) /s/ Stavros Yagos ) /s/ Nikoletta Mitropoulou ) )

in the presence of 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

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THE SECURITY TRUSTEE

Signed by   Stavros Yagos   And Nikoletta Mitropoulou  for and on behalf of  EUROBANK S.A. ) ) /s/ Stavros Yagos ) /s/ Nikoletta Mitropoulou ) )

in the presence of 

Witness:         _________/s/ _ Aikaterini Maria Avramidou ________________________

Name:              Aikaterini Maria Avramidou

Address:          13, Defteras Merarchias Street Piraeus, Greece

Occupation:     Attorney-at-law

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EX-4.32

Exhibit 4.32

EUROSEAS LTD.
2021 EQUITY INCENTIVE PLAN

ARTICLE I
General

1.1. Purpose

The Euroseas Ltd. 2021 Equity Incentive Plan (the "Plan") is designed to provide certain Key Persons (as defined below), whose initiative and efforts are deemed to be important to the successful conduct of the business of Euroseas Ltd. (the "Company"), with incentives to (a) acquire a proprietary interest in the success of the Company, (b) maximize their performance in respect of the provision of their services to the Company, a Subsidiary (as defined below) and/or an Affiliate (as defined below) and (c) enhance the long-term performance of the Company.

1.2. Administration

(a)    Administration.  The Plan shall be administered by the Company's Board of Directors (referred to herein as the "Board") or such committee of the Board as may be designated by the Board to administer the Plan (the Board or such committee, as applicable, being referred to herein as the "Administrator"); provided that (i) in the event the Company is subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act"), the Administrator shall be composed of two or more directors, each of whom is a "Non-Employee Director" (a "Non-Employee Director") under Rule 16b-3 (as promulgated and interpreted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, or any successor rule or regulation thereto as in effect from time to time ("Rule 16b-3")), and (ii) the Administrator shall be composed solely of two or more directors who are "independent directors" under the rules of any stock exchange on which the Company's Common Stock (as defined below) is traded; provided further, however, that, (A) the requirement in the preceding clause (i) shall apply only when required to exempt an Award (as defined below) intended to qualify for an exemption under the applicable provisions referenced therein, (B) the requirement in the preceding clause (ii) shall apply only when required pursuant to the applicable rules of the applicable stock exchange and (C) if at any time the Administrator is not so composed as required by the preceding provisions of this sentence, that fact will not invalidate any grant made, or action taken, by the Administrator hereunder that otherwise satisfies the terms of the Plan.  Subject to the terms of the Plan, applicable law and the applicable rules and regulations of any stock exchange on which the Common Stock is listed for trading, and in addition to other express powers and authorizations conferred on the Administrator by the Plan, the Administrator shall have the full power and authority to: (1) designate the Key Persons to receive Awards under the Plan; (2) determine the types of Awards granted to a participant under the Plan; (3) determine the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards; (4) determine the terms and conditions of any Awards; (5) determine whether, and to what extent, and under what circumstances, Awards may be settled or exercised in cash, shares, other securities, other Awards or other property, or cancelled, forfeited or suspended, and the methods by which Awards may be settled, exercised, cancelled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances cash, shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred, either automatically or at the election of the holder thereof or the Administrator; (7) construe, interpret and implement the Plan and any Award Agreement (as defined below); (8) prescribe, amend, rescind or waive rules and regulations relating to the Plan, including rules governing its operation, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (9) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award Agreement; and (10) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.  Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Administrator, may be made at any time and shall be final, conclusive and binding upon all Persons (as defined below).

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(b)    General Right of Delegation.  Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or any charter, by-laws or other agreement governing the Administrator, the Administrator may delegate all or any part of its responsibilities to any Person or Persons selected by it; provided, however, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (i) individuals who are subject to Section 16 of the 1934 Act, to the extent applicable, or (ii) officers of the Company to whom authority to grant or amend Awards has been delegated hereunder or directors of the Company; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under applicable securities laws (including, without limitation, Rule 16b-3, to the extent applicable) and the rules of any applicable stock exchange.  Any delegation hereunder shall be subject to the restrictions and limits that the Administrator specifies at the time of such delegation, and the Administrator may at any time rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under this Section 1.2(b) shall serve in such capacity at the pleasure of the Administrator.

(c)    Indemnification.  No member of the Board, the Administrator or any officer or employee of the Company or any Subsidiary or any Affiliate or any of their agents (each such Person, a "Covered Person") shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder.  Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys' fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company's approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company's choice.  The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person's bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company's articles of incorporation or bylaws, in each case as may amended and/or restated from time to time.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company's articles of incorporation or bylaws, in each case as may be amended and/or restated from time to time, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such Persons or hold them harmless.

(d)    Delegation of Authority to Senior Officers.  The Administrator may, in accordance with and subject to the terms of Section 1.2(b), delegate, on such terms and conditions as it determines, to one or more senior officers of the Company the authority to make grants of Awards to Key Persons who are employees of the Company or any Subsidiary (including any such prospective employee) and consultants or service providers to (including Persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company or any Subsidiary.

(e)    Awards to Non-Employee Directors.  Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Non-Employee Directors or administer the Plan with respect to such Awards.  In any such case, the Board shall have all the authority and responsibility granted to the Administrator herein with respect to such Awards.

1.3. Persons Eligible for Awards

The Persons eligible to receive Awards under the Plan are those directors, officers and employees (including any prospective officer or employee) of the Company or a Subsidiary or an Affiliate and consultants and service providers to (including Persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company or a Subsidiary or an Affiliate (collectively, "Key Persons") as the Administrator shall select.

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1.4. Types of Awards

Awards may be made under the Plan in the form of (a) non-qualified stock options (i.e., stock options that are not “incentive stock options” for purposes of Section 421 and 422 of the Code (as defined below)), (b) stock appreciation rights, (c) restricted stock, (d) restricted stock units, (e) phantom stock units, (f) unrestricted stock, (g) dividend equivalents, (h) other equity-based or equity-related awards and (i) cash awards, all as more fully set forth in the Plan.  The term "Award" means any of the foregoing that are granted under the Plan.

1.5. Shares Available for Awards; Adjustments for Changes in Capitalization

(a)    Maximum Number.  Subject to adjustment as provided in Section 1.5(c):

(i)    the maximum aggregate number of shares of common stock of the Company, par value $0.03 ("Common Stock"), that may be delivered pursuant to Awards granted under the Plan shall be 225,000.  The following shares of Common Stock shall again become available for Awards under the Plan: (i) 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; (ii) any shares of restricted stock forfeited pursuant to the Plan or the applicable Award Agreement; provided that any dividend equivalent rights with respect to such shares that have not theretofore been directly remitted to the grantee are also forfeited; and (iii) any shares in respect of which an Award is settled for cash without the delivery of shares to the grantee.  Any shares that are held back to satisfy the exercise price or tax withholding obligation pursuant to any stock options or stock appreciation rights granted under the Plan shall again become available to be delivered pursuant to Awards under the Plan. Awards that are payable solely in cash shall not be counted against the aggregate number of shares of Common Stock available for Awards under the Plan; and

(ii)    no non-employee director of the Company may be granted options, stock appreciation rights, restricted stock, restricted stock units, phantom stock units, dividend equivalents, unrestricted stock or other equity-based or equity-related Awards for more than 5,000 shares of Common Stock during any calendar year or cash Awards under the Plan in excess of $200,000 during any calendar year, inclusive of Board, committee or other service fees.

(b)    Source of Shares.  Shares issued pursuant to the Plan may be authorized but unissued Common Stock or treasury shares.  The Administrator may direct that any stock certificate or book entry interest evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.

(c)    Adjustments.

(i)    In the event that any dividend or other distribution (whether in the form of cash, Company shares, other securities or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase or exchange of Company shares or other securities of the Company, issuance of warrants or other rights to purchase Company shares or other securities of the Company, or other similar corporate transaction or event, affects the Company shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then, subject to the provisions of Section 1.5(c)(iv) below, the Administrator shall, in such manner as it may deem equitable, adjust any or all of the number of shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan.

(ii)    The Administrator shall make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or infrequently occurring events (including the events described in Section 1.5(c)(i) or the occurrence of a Change in Control (as defined below), subject to the provisions of Section 1.5(c)(iv) below) affecting the Company, a Subsidiary or an Affiliate, or the financial statements of the Company, a Subsidiary or an Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, including providing for (A) adjustment to (1) the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price (as defined below) with respect to any Award and (B) a substitution or assumption of Awards, accelerating the exercisability or vesting of, or lapse of restrictions on, Awards, or accelerating the termination of Awards by providing for a period of time for exercise prior to the occurrence of such event, or, if deemed appropriate or desirable, providing for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award (it being understood that, in such event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value (as defined below) of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor); provided, however, that with respect to options and stock appreciation rights, unless otherwise determined by the Administrator, such adjustment shall be made in accordance with the provisions of Section 424(h) of the Code.

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(iii)    In the event of (A) a dissolution or liquidation of the Company, (B) a sale of all or substantially all the Company's assets or (C) a merger, reorganization or consolidation involving the Company or a Subsidiary, the Administrator shall have the power to:

(1)    provide that outstanding options, stock appreciation rights, phantom stock units and/or restricted stock units (including any related dividend equivalent right) and/or other Awards granted under the Plan shall either continue in effect, be assumed or an equivalent award shall be substituted therefor by the successor entity or a parent or subsidiary entity;

(2)    cancel, effective immediately prior to the occurrence of such event, options, stock appreciation rights, phantom stock units and/or restricted stock units (including each dividend equivalent right related thereto) and/or other Awards granted under the Plan outstanding immediately prior to such event (whether or not then exercisable) and, in full consideration of such cancellation, pay to the holder of such Award a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the shares subject to such Award (or the value of such Award, as determined by the Administrator, if not based on the Fair Market Value of shares) over the aggregate Exercise Price of such Award (or the grant price of such Award, if any, if applicable)(it being understood that, in such event, (x) any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor and (y) any phantom stock unit that by its terms may be cancelled without payment therefor may be cancelled and terminated without any payment or consideration therefor to the extent so provided in the applicable Award Agreement); or

(3)    notify the holder of an option or stock appreciation right in writing or electronically that each option and stock appreciation right shall be fully vested and exercisable for a period of 30 days from the date of such notice, or such shorter period as the Administrator may determine to be reasonable, and the option or stock appreciation right shall terminate upon the expiration of such period (which period shall expire no later than immediately prior to the consummation of the corporate transaction).

(iv)    In connection with the occurrence of any Equity Restructuring (as defined below), and notwithstanding anything to the contrary in this Section 1.5(c):

(A) The number and type of securities or other property subject to each outstanding Award and the Exercise Price or grant price thereof, if applicable, shall be equitably adjusted; and

(B) The Administrator shall make such equitable adjustments, if any, as the Administrator may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustment of the limitation set forth in Section 1.5(a)).  The adjustments provided under this Section 1.5(c)(iv) shall be nondiscretionary and shall be final and binding on the affected participant and the Company.

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1.6. Definitions of Certain Terms

(a)    "Affiliate" shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Administrator.

(b)    Unless otherwise specifically set forth in the applicable Award Agreement, in connection with a termination of employment or consultancy/service relationship, for purposes of the Plan, the term "for Cause" shall be defined as follows:

(i)    if there is an employment, severance, consulting, service, change in control or other agreement governing the relationship between the grantee, on the one hand, and the Company or a Subsidiary or an Affiliate, on the other hand, that contains a definition of "cause" (or similar phrase), for purposes of the Plan, the term "for Cause" shall mean those acts or omissions that would constitute "cause" under such agreement; or

(ii)    if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term "for Cause" shall mean any of the following:

(A) any failure by the grantee substantially to perform the grantee's employment or consulting/service 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 to whom the grantee reports;

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

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

(F) the grantee's gross negligence that is injurious to the Company, any Subsidiary or any Affiliate, whether monetarily, reputationally or otherwise;

(G) the grantee's material violation of any of the policies of the Company, any Subsidiary or any Affiliate, as applicable, including, without limitation, those policies relating to discrimination or sexual harassment;

(H) the grantee's material breach of his or her employment or service contract with the Company, any Subsidiary or any Affiliate;

(I) the grantee's unauthorized (1) removal from the premises of the Company, any Subsidiary or any Affiliate of any document (in any medium or form) relating to the Company, any Subsidiary or any Affiliate or the customers or clients of the Company, any Subsidiary or any Affiliate or (2) disclosure to any Person of any of the Company's, any Subsidiary's or any Affiliate's, confidential or proprietary information;

(J) the grantee's being convicted of, or entering a plea of guilty or nolo contendere to, any crime that constitutes a felony or involves moral turpitude; and

(K) the grantee's commission of any act involving dishonesty or fraud.

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Any rights the Company, any Subsidiary or any Affiliate may have under the Plan in respect of the events giving rise to a termination "for Cause" shall be in addition to any other rights the Company, any Subsidiary or any Affiliate may have under any other agreement with a grantee or at law or in equity.  Any determination of whether a grantee's employment or consultancy/service relationship is (or is deemed to have been) terminated "for Cause" shall be made by the Administrator.  If, subsequent to a grantee's voluntary termination of employment or consultancy/service relationship or involuntary termination of employment or consultancy/service relationship without Cause, it is discovered that the grantee's employment or consultancy/service relationship could have been terminated "for Cause", the Administrator may deem such grantee's employment or consultancy/service relationship to have been terminated "for Cause" upon such discovery and determination by the Administrator.

(c)    "Code" shall mean the Internal Revenue Code of 1986, as amended.

(d)    Unless otherwise specifically set forth in the applicable Award Agreement, "Disability" shall mean the grantee's being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or the grantee's, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the grantee's employer.  The existence of a Disability shall be determined by the Administrator.

(e)    "Equity Restructuring" shall mean a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price thereof and causes a change in the per share value of the shares underlying outstanding Awards.

(f)    "Exercise Price" shall mean (i) in the case of options, the price specified in the applicable Award Agreement as the price-per-share at which such share can be purchased pursuant to the option or (ii) in the case of stock appreciation rights, the price specified in the applicable Award Agreement as the reference price-per-share used to calculate the amount payable to the grantee.

(g)    The "Fair Market Value" of a share of Common Stock on any day shall be the closing price on the Nasdaq Capital Market (or the Over-the-Counter Bulletin Board or such other market on which the Common Stock is trading, if not trading on the Nasdaq Capital Market), as reported for such day in The Wall Street Journal (or, if not reported in The Wall Street Journal, such other reliable source as the Administrator may determine), 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 for the next preceding trading day.  Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, or if otherwise deemed necessary or appropriate by the Administrator, the Fair Market Value of a share of Common Stock on any day shall be determined by such methods and procedures as shall be established from time to time by the Administrator.  The "Fair Market Value" of any property other than Common Stock shall be the fair market value of such property determined by such methods and procedures as shall be established from time to time by the Administrator.

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

(i)    "Repricing" shall mean (i) lowering the Exercise Price of an option or a stock appreciation right after it has been granted, (ii) the cancellation of an option or a stock appreciation right in exchange for cash or another Award when the Exercise Price exceeds the Fair Market Value of the underlying shares subject to the Award and (iii) any other action with respect to an option or a stock appreciation right that is treated as a repricing under (A) generally accepted accounting principles or (B) any applicable stock exchange rules.

(j)    "Subsidiary" shall mean any entity in which the Company, directly or indirectly, has a 50% or more equity interest.

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ARTICLE II
    Awards Under The Plan

2.1. Agreements Evidencing Awards

Each Award granted under the Plan shall be evidenced by a written certificate ("Award Agreement"), which shall contain such provisions as the Administrator may deem necessary or desirable and which may, but need not, require execution or acknowledgment by a grantee.  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 and Stock Appreciation Rights

(a)    Stock Option Grants.  The Administrator may grant 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, subject to the provisions of the Plan.  No option will be treated as an "incentive stock option" for purposes of the Code.  It shall be the intent of the Administrator to not grant an Award in the form of stock options to any Key Person who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A.  Furthermore, it shall be the intent of the Administrator, in granting options to Key Persons who are subject to Sections 409A and/or 457A of the Code, to structure such options so as to comply with the requirements of Sections 409A and/or 457A of the Code, to the extent applicable.

(b)    Option Exercise Price.  Each Award Agreement with respect to an option shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of an option shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (i) the Fair Market Value of a share of Common Stock on the date of grant and (ii) the par value of a share of Common Stock. Repricing of options granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Section 409A or 457A of the Code, to the extent applicable, or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of an option shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.

(c)    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, subject to the provisions of the Plan.  The terms of a stock appreciation right may provide that it shall be automatically exercised for a 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.  It shall be the intent of the Administrator to not grant an Award in the form of stock appreciation rights to any Key Person (i) who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A or (ii) if such Award would create adverse tax consequences for such Key Person under Section 457A of the Code.  Furthermore, it shall be the intent of the Administrator, in granting stock appreciation rights to Key Persons who are subject to Sections 409A and/or 457A of the Code, to structure such stock appreciation rights so as to comply with the requirements of Sections 409A and/or 457A of the Code, to the extent applicable.

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(d)    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 Exercise Price of the stock appreciation right, multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised.  Each Award Agreement with respect to a stock appreciation right shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of a stock appreciation right shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (A) the Fair Market Value of a share of Common Stock on the date of grant and (B) the par value of a share of Common Stock.  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 any combination of both, all as the Administrator shall determine.  Repricing of stock appreciation rights granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Section 409A or 457A of the Code, to the extent applicable, or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of a stock appreciation right shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.  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.

2.3. Exercise of Options and Stock Appreciation Rights

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

(a)    Timing and Extent of Exercise.  Options and stock appreciation rights shall be exercisable at such times and under such conditions as determined by the Administrator and set forth in the corresponding Award Agreement, but in no event shall any portion of such Award be exercisable subsequent to the tenth anniversary of the date on which such Award was granted.  Unless the applicable Award Agreement otherwise specifically provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such Award is then exercisable.

(b)    Notice of Exercise.  An option or stock appreciation right 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 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; (ii) with the consent of the Administrator, which consent shall be given or withheld in the sole discretion of the Administrator, by withholding 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 sole 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), or by any combination of the foregoing payment methods.

(d)    Delivery of Certificates Upon Exercise.  Subject to Sections 3.2, 3.4 and 3.13, promptly after receiving payment of the full option Exercise Price, or after receiving notice of the exercise of a stock appreciation right for which the Administrator determines payment will be made partly or entirely in shares, the Company or its Exchange Agent shall (i) 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 or, in the case of stock appreciation rights, for which the Administrator determines will be made in shares or (ii) establish an account evidencing ownership of the stock in uncertificated form for the shares of Common Stock for which the Award has been exercised or, in the case of stock appreciation rights, for which the Administrator determines will be made in shares.  If the method of payment employed upon an 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.

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(e)    No Stockholder Rights.  No grantee of an option or stock appreciation right (or other Person having the right to exercise such Award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such Award until the issuance of a stock certificate to such Person for such shares or an account in the name of the grantee evidences ownership of stock in uncertificated form.  Except as otherwise provided in Section 1.5(c), 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 or the date an account evidencing ownership of the stock in uncertificated form notes receipt of such stock.

2.4. Termination of Employment/Service; Death Subsequent to a Termination of Employment/Service

(a)    General Rule.  Except to the extent otherwise provided in paragraphs (b), (c), (d), (e) or (f) of this Section 2.4 or Section 3.5(b)(iii), a grantee who incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates 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 date of termination of employment or consultancy/service relationship, as applicable; and (ii) exercise must occur within three months after termination of employment or consultancy/service relationship but in no event after the original expiration date of the Award; it being understood that then outstanding options and stock appreciation rights shall not be affected by a change of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service provider to (or a Person employed by or providing services to any entity that is itself a consultant or service provider to), the Company or any Subsidiary or any Affiliate.

(b)    Termination "for Cause".  If a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates “for Cause”, all options and stock appreciation rights not theretofore exercised (whether vested or unvested) shall immediately terminate upon such termination of employment or consultancy/service relationship.

(c)    Retirement.  If a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her retirement (as defined below), then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such retirement, remain exercisable for a period of three years after such retirement; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.  For this purpose, unless otherwise specifically set forth in the applicable Award Agreement, "retirement" shall mean a grantee's resignation of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates, with the Company's or its applicable Subsidiary's or Affiliate's prior consent, on or after (i) his or her 65th birthday, (ii) the date on which he or she has attained age 60 and completed at least five years of service with the Company or one or more of its Subsidiaries or Affiliates (using any method of calculation the Administrator deems appropriate) or (iii) if approved by the Administrator, on or after his or her having completed at least 20 years of service with the Company or one or more of its Subsidiaries or Affiliates (using any method of calculation the Administrator deems appropriate).

(d)    Disability.  If a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates by reason of a Disability, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such termination, remain exercisable for a period of one year after such termination; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.

(e)    Death.

(i)    Termination of Employment/Service as a Result of Grantee's Death.  If a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such death, remain exercisable for a period of one year after such death; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.

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(ii)    Restrictions on Exercise Following Death.  Any 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.

(f)    Administrator Discretion.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.4, subject to Section 3.1(c).

2.5. Transferability of Options and Stock Appreciation Rights

Except as otherwise specifically provided in this Plan or the applicable Award Agreement evidencing an option or stock appreciation right, during the lifetime of a grantee, each such Award granted to a grantee shall be exercisable only by the grantee, and no such Award may be sold, assigned, transferred, pledged or otherwise encumbered or disposed of other than by will or by the laws of descent and distribution.  The Administrator may, in any applicable Award Agreement evidencing an option or stock appreciation right, permit a grantee to transfer all or some of the options or stock appreciation rights 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.  Following any such transfer, any transferred options and stock appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

2.6. 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, subject to the provisions of 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 Award Agreement in such form as the Administrator shall determine.

(b)    Issuance of Stock Certificate.  Promptly after a grantee accepts a restricted stock Award in accordance with Section 2.6(a), subject to Sections 3.2, 3.4 and 3.13, 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 certificates, or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provisions described in the Plan (including paragraphs (d) and (e) of this Section 2.6); (ii) in the Administrator's sole discretion, a requirement, as set forth in the Award Agreement, that any dividends paid on such shares shall be held in escrow and , unless otherwise determined by the Administrator, shall remain forfeitable until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.

(c)    Custody of Stock Certificate.  Unless the Administrator shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company (or such other custodian as may be designated by the Administrator) until such shares are free of any restrictions specified in the applicable Award Agreement.  The Administrator may direct that such stock certificates 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 prior to the lapsing of all restrictions thereon, 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 restricted stock shall lapse.

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(e)    Consequence of Termination of Employment/Service.  Unless otherwise specifically set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability 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 or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death or Disability, all shares of restricted stock that have not yet vested as of the date of such termination shall immediately vest as of such date; it being understood that then outstanding restricted stock Awards shall not be affected by a change of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service provider to (or a Person employed by or providing services to any entity that is itself a consultant or service provider to), the Company or any of its Subsidiaries or Affiliates.  All dividends paid on shares forfeited under this Section 2.6(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.6(e), subject to Section 3.1(c).

2.7. Grant of Restricted Stock Units

(a)    Restricted Stock Unit Grants.  The Administrator may 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, 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, conditioned upon the occurrence of such vesting event as shall be determined by the Administrator and specified in the Award Agreement, the number of such grantee's restricted stock units that vest upon the occurrence of such vesting event multiplied by the Fair Market Value of a share of Common Stock on the date of vesting.  Payment upon vesting of a restricted stock unit shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of vesting) or both, all as the Administrator shall determine, and such payments shall be made to the grantee at such time as provided in the Award Agreement, which the Administrator shall intend to be (i) if Section 409A of the Code is applicable with respect to Awards granted to the grantee, within the period required by Section 409A such that it qualifies as a "short-term deferral" pursuant to Section 409A and the Treasury Regulations issued thereunder, unless the Administrator shall provide for deferral of the Award intended to comply with Section 409A, (ii) if Section 457A of the Code is applicable with respect to Awards granted to the grantee, within the period required by Section 457A(d)(3)(B) such that it qualifies for the exemption thereunder, or (iii) if Sections 409A and 457A of the Code are not applicable with respect to Awards granted to the grantee, at such time as determined by the Administrator.

(b)    Dividend Equivalents.  The Administrator may include in any Award Agreement with respect to a restricted stock unit 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 unvested, and/or, if payment of the vested Award is deferred, during the period of such deferral following such vesting event, on the shares of Common Stock underlying such Award if such shares were then outstanding.  In the event such a provision is included in a Award Agreement, the Administrator shall determine whether such payments shall be (i) paid to the holder of the Award, as specified in the Award Agreement, either (A) at the same time as the underlying dividends are paid, regardless of the fact that the restricted stock unit has not theretofore vested, (B) at the time at which the Award's vesting event occurs, conditioned upon the occurrence of the vesting event, (C) once the Award has vested, at the same time as the underlying dividends are paid, regardless of the fact that payment of the vested restricted stock unit has been deferred, and/or (D) at the time at which the corresponding vested restricted stock units are paid, (ii) made in cash, shares of Common Stock or other property and (iii) subject to such other vesting and forfeiture provisions and other terms and conditions as the Administrator shall deem appropriate and as shall be set forth in the Award Agreement.

(c)    No Stockholder Rights.  No grantee of a restricted stock unit shall have any of the rights of a stockholder of the Company with respect to such Award unless and until a stock certificate is issued with respect to such Award upon the vesting of such Award or an account in the name of the grantee evidences ownership of stock in uncertificated form (it being understood that the Administrator shall determine whether to pay any vested restricted stock unit in the form of cash or Company shares or both), which issuance shall be subject to Sections 3.2, 3.4 and 3.13.  Except as otherwise provided in Section 1.5(c), no adjustment to any restricted stock unit 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, if any, is issued or the date an account evidencing ownership of the stock in uncertificated form notes receipt of such stock.

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(d)    Nontransferability.  No restricted stock unit granted under the Plan may be sold, assigned, transferred, pledged or otherwise encumbered or disposed of, except as otherwise specifically provided in this Plan or the applicable Award Agreement.

(e)    Consequence of Termination of Employment/Service.  Unless otherwise specifically set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death or Disability, all restricted stock units that have not yet vested as of the date of such termination shall immediately vest as of such date; it being understood that then outstanding restricted stock units shall not be affected by a change of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service provider to (or a Person employed by or providing services to any entity that is itself a consultant or service provider to), the Company or any of its Subsidiaries or Affiliates.  All dividend equivalent rights on any restricted stock units forfeited under this Section 2.7(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.7(e), subject to Section 3.1(c).

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.  Shares may be thus granted or sold in respect of past services or other valid consideration.

2.9. Grant of Phantom Stock Units

(a)    Phantom Stock Unit Grants.  The Administrator may grant phantom stock units 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, subject to the provisions of the Plan.  Each phantom stock unit shall represent a notional share of Common Stock.  No grantee of a phantom stock unit shall have any rights of stockholder of the Company with respect to such Award unless and until the Award is cancelled in exchange for shares of Common Stock, which issuance of shares shall be subject to Sections 3.2, 3.4 and 3.13.  Holders of phantom stock units shall not (i) be entitled to any voting rights with respect to any phantom stock units and (ii) be entitled, by reason of holding any phantom stock unit, to any distributions payable to shareholders of Common Stock; provided, however, that the Administrator may provide that the phantom stock unit shall be entitled to receive dividend equivalent rights, on such terms and conditions as the Administrator shall determine.  The Administrator may determine that the phantom stock unit may be cancelled on such terms and conditions as set forth in the applicable Award Agreement, including (1) for no payment, (2) in exchange for a cash payment or (3) in exchange for shares of Common Stock.

(b)    Other Provisions.  Phantom stock units may be made independently of or in connection with any other Award under the Plan.  A grantee of a phantom stock unit 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 phantom stock unit Award Agreement in such form as the Administrator shall determine.

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(c)    Nontransferability.  Phantom stock units 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.

(d)    Grants to U.S. Taxpayers.  No grant of a phantom stock unit Award to an individual who is then subject to the requirements of Sections 409A and/or 457A of the Code shall be made under the Plan unless the Award, by its terms, is exempt from Sections 409A and/or 457A of the Code, as applicable, or otherwise complies with such sections of the Code.

2.10. Other Equity-Based or Equity-Related Awards

Subject to the provisions of the Plan (including, without limitation, Section 3.16), the Administrator shall have the sole and complete authority to grant to Key Persons other equity-based or equity-related Awards in such amounts and subject to such terms, conditions, restrictions and forfeiture provisions as the Administrator shall determine; provided that any such Awards must comply with applicable law and, to the extent deemed desirable by the Administrator, Rule 16b-3.

2.11. Dividend Equivalents

Subject to the provisions of the Plan (including, without limitation, Section 3.16), in the discretion of the Administrator, an Award, other than an option or stock appreciation right, may provide the Award recipient with dividends or dividend equivalents, payable in cash, shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Administrator, including, without limitation, payment directly to the Award recipient, withholding of such amounts by the Company subject to vesting of the Award, or reinvestment in additional shares, restricted shares or other Awards.

2.12. Grant of Cash Awards

The Administrator may grant Awards that are payable solely in cash to such Key Persons and in such amounts and subject to such terms, conditions, restrictions and forfeiture provisions as the Administrator shall determine. Cash Awards may be thus granted in respect of past services or other valid consideration.

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 suspension, discontinuation, revision or 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 rights to 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)    Stockholder Approval Requirement.  If required by applicable rules or regulations of a national securities exchange or the SEC, the Company shall obtain stockholder approval with respect to any amendment to the Plan that (i) expands the types of Awards available under the Plan, (ii) materially increases the aggregate number of shares which may be issued under the Plan, except as permitted pursuant to Section 1.5(c), (iii) materially increases the benefits to participants under the Plan, including any material change to (A) permit, or that has the effect of, a Repricing of any outstanding Award, (B) reduce the price at which shares or options to purchase shares may be offered or (C) extend the duration of the Plan, or (iv) materially expands the class of Persons eligible to receive Awards under the Plan.

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(c)    Modification of Awards.  The Administrator may cancel any Award under the Plan.  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, vested or may be exercised; (ii) waive or amend any goals, restrictions or conditions set forth in the Award Agreement; or (iii) waive or amend the operation of Section 2.4, 2.6(e) or 2.7(e) with respect to the termination of the Award upon termination of employment or consultancy/service relationship; provided, however, that no such amendment shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Award.  However, any such cancellation or amendment (other than an amendment pursuant to Section 1.5, 3.5 or 3.16) 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 rights to the Award).  In making any modification to an Award (e.g., an amendment resulting in a direct or indirect reduction in the Exercise Price or a waiver or modification under Section 2.4(f), 2.6(e) or 2.7(e)), the Administrator may consider the implications, if any, of such modification under the Code with respect to Sections 409A and 457A of the Code in respect of Awards granted under the Plan to individuals subject to such provisions of the Code.

3.2. Consent Requirement

(a)    No Plan Action Without Required Consent.  If the Administrator shall at any time determine that any Consent (as defined below) 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 or any other Person.

3.3. Nonassignability; Successors

Except as provided in Section 2.4(e), 2.5, 2.6(d), 2.7(d) or 2.9(c), (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 or the grantee's permissible successors or assigns (as authorized and determined by the Administrator).  The rights, duties and obligations under the Plan and any applicable Award Agreement shall be assignable by the Company to any successor entity, including any entity acquiring all, or substantially all, of the assets of the Company. All terms and conditions of the Plan and the applicable Award Agreements will be binding upon any permitted successors or assigns.

3.4. Taxes

(a)    Withholding.  A grantee or other Award holder under the Plan shall be required to pay, in cash, to the Company, and the Company, its Subsidiaries and Affiliates shall have the right and are hereby authorized to withhold from any Award, from any cash or other payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to such grantee or other Award holder, the amount of any applicable withholding taxes in respect of an Award, its grant, its exercise, its vesting, or any payment or transfer under an Award or under the Plan, up to the maximum statutory rates in the applicable jurisdiction with respect to the Award, as determined by the Company, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for payment of such taxes.  Whenever shares of Common Stock are to be delivered pursuant to an Award under the Plan, 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 the applicable withholding taxes as determined in accordance with this Section 3.4(a).  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 as may be approved by the Administrator in its sole discretion.

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(b)    Liability for Taxes.  Grantees and holders of Awards are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including, without limitation, any taxes arising under Sections 409A and 457A of the Code) and the Company shall not have any obligation to indemnify or otherwise hold any such Person harmless from any or all of such taxes.  The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or, notwithstanding anything to the contrary in the Plan or any Award Agreement, to unilaterally modify any Award in a manner that (i) conforms with the requirements of Sections 409A and 457A of the Code (to the extent applicable), (ii) voids any participant election to the extent it would violate Section 409A or 457A of the Code (to the extent applicable) and (iii) for any distribution event or election that could be expected to violate Section 409A of the Code, make the distribution only upon the earliest of the first to occur of a "permissible distribution event" within the meaning of Section 409A of the Code or a distribution event that the participant elects in accordance with Section 409A of the Code, all in such a way so as to retain, to the maximum extent possible, the originally intended economic and tax benefits under the Award.  The Administrator shall have the sole discretion to interpret the requirements of the Code, including, without limitation, Sections 409A and 457A, for purposes of the Plan and all Awards.

3.5. Change in Control

(a)    Change in Control Defined.  Unless otherwise specifically set forth in the applicable Award Agreement, for purposes of the Plan, "Change in Control" shall mean the occurrence of any of the following:

(i)    any "person" (as defined in Section 13(d)(3) of the 1934 Act), company or other entity acquires "beneficial ownership" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company; provided, however, that no Change in Control shall have occurred in the event of such an acquisition by (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary or Affiliate, (C) any company or other entity owned, directly or indirectly, by the holders of the voting stock ordinarily entitled to elect directors of the Company in substantially the same proportions as their ownership of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such acquisition or (D) Aristides J. Pittas or the Pittas family or any entity which Aristides J. Pittas or the Pittas family directly or indirectly "controls" (as defined in Rule 12b-2 under the 1934 Act);

(ii)    the sale of all or substantially all the Company's assets in one or more related transactions to any "person" (as defined in Section 13(d)(3) of the 1934 Act), company or other entity; provided, however, that no Change in Control shall have occurred in the event of such a sale (A) to a Subsidiary which does not involve a material change in the equity holdings of the Company, (B) to an entity (the "Acquiring Entity") which has acquired all or substantially all the Company's assets if, immediately following such sale, 50% or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity) is beneficially owned by the holders of the voting stock ordinarily entitled to elect directors of the Company immediately prior to such sale in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale or (C) to Aristides J. Pittas or the Pittas family or an entity which Aristides J. Pittas or the Pittas family directly or indirectly "controls" (as defined in Rule 12b-2 under the 1934 Act);

(iii)    any merger, consolidation, reorganization or similar event of the Company or any Subsidiary; provided, however, that no Change in Control shall have occurred in the event 50% or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity) is beneficially owned by the holders of the voting stock ordinarily entitled to elect directors of the Company immediately prior to such event in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such event;

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(iv)    the approval by the Company's stockholders of a plan of complete liquidation or dissolution of the Company; or

(v)    during any period of 12 consecutive calendar months, individuals:

(A) who were directors of the Company on the first day of such period, or

(B) whose election or nomination for election to the Board was recommended or approved by at least a majority of the directors then still in office who were directors of the Company on the first day of such period, or whose election or nomination for election were so approved,

shall cease to constitute a majority of the Board.

A Change of Control shall not be deemed to have occurred for purpose of the Plan as a result of an Exempted Transaction (as such term is defined in that certain Shareholders Rights Agreement, dated as of May 27, 2019, between Euroseas Ltd., a Marshall Islands corporation, and American Stock Transfer and Trust Company, LLC, as rights agent, as amended from time to time).

Notwithstanding the foregoing, unless otherwise specifically set forth in the applicable Award Agreement, for each Award subject to Section 409A of the Code, a Change in Control shall be deemed to have occurred under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code, provided that such limitation shall apply to such Award only to the extent necessary to avoid adverse tax effects under Section 409A of the Code.

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

(i)    any Award then outstanding shall become fully vested and any forfeiture provisions thereon imposed pursuant to the Plan and the applicable Award Agreement shall lapse and any Award in the form of an option or stock appreciation right shall be immediately exercisable;

(ii)    to the extent permitted by law and not otherwise limited by the terms of the Plan, the Administrator may amend any Award Agreement in such manner as it deems appropriate; and

(iii)    a grantee who incurs a termination of employment or consultancy/service relationship for any reason, other than a voluntary termination or resignation by the grantee or a termination "for Cause", concurrent with or within one year following the Change in Control may exercise any outstanding option or stock appreciation right, but only to the extent that the grantee was entitled to exercise the Award on the date of his or her termination of employment or consultancy/service relationship, 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 2.4 without reference to this Section 3.5(b)(iii) and (y) the first anniversary of the grantee's termination of employment or consultancy/service relationship.

(c)    Miscellaneous.  Whenever deemed appropriate by the Administrator, any action referred to in paragraph (b)(ii) of this Section 3.5 may be made conditional upon the consummation of the applicable Change in Control transaction.

3.6. Operation and Conduct of Business

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Nothing in the Plan or any Award Agreement shall be construed as limiting or preventing the Company, any Subsidiary or any Affiliate from taking any action with respect to the operation and conduct of its business that it deems appropriate or in its best interests, including any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the capital structure of the Company, any Subsidiary or any Affiliate, any merger or consolidation of the Company, any Subsidiary or any Affiliate, any issuance of Company shares or other securities or subscription rights, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or other securities or rights thereof, any dissolution or liquidation of the Company, any Subsidiary or any Affiliate, any sale or transfer of all or any part of the assets or business of the Company, any Subsidiary or any Affiliate, or any other corporate act or proceeding, whether of a similar character or otherwise.

3.7. No Rights to Awards

No Key Person or other Person shall have any claim to be granted any Award under the Plan.

3.8. Right of Discharge Reserved; Service Relationship

(a)    Right of Discharge Reserved.  Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to continue his or her employment with the Company, any Subsidiary or any Affiliate, his or her consultancy/service relationship with the Company, any Subsidiary or any Affiliate, or his or her position as an officer or director of the Company, any Subsidiary or any Affiliate, or affect any right that the Company, any Subsidiary or any Affiliate may have to terminate such employment or consultancy/service relationship.

(b)    Service Relationship.  For the avoidance of doubt, for purposes of the Plan, reference to (i) a service relationship shall include service as a director or officer and (ii) a termination of a service relationship shall include a removal or resignation as a director or officer.

3.9. Non-Uniform Determinations

The Administrator's determinations and the treatment of Key Persons and grantees and their beneficiaries under the Plan need not be uniform and may be made and determined by the Administrator 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, (b) the types of Awards granted under the Plan, (c) the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards and (d) the terms and conditions of Awards.

3.10. Other Payments or Awards

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

3.11. 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 section, subsection, paragraph or subdivision.

3.12. Effective Date and Term of Plan

(a)    Adoption; Stockholder Approval.  The Plan was approved and adopted by the Board on November 4, 2021. The Board may, but need not, make the granting of any Awards under the Plan subject to the approval of the Company's stockholders.

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(b)    Termination of Plan.  The Board may terminate the Plan at any time.  All 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.  No Awards may be granted under the Plan following the tenth anniversary of the date on which the Plan was adopted by the Board.

3.13. 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.  Notwithstanding anything to the contrary in the Plan or any Award Agreement, at the time of the exercise of any Award, at the time of vesting of any Award, at the time of payment of shares of Common Stock in exchange for, or in cancellation of, any Award, or at the time of grant of any unrestricted shares under the Plan, the Company and the Administrator may, if either shall deem it necessary or advisable for any reason, require the holder of an Award (a) to represent in writing to the Company that it is the Award holder's then-intention to acquire the shares with respect to which the Award is granted for investment and not with a view to the distribution thereof or (b) to postpone the date of exercise until such time as the Company has available for delivery to the Award holder a prospectus meeting the requirements of all applicable securities laws; and no shares shall be issued or transferred in connection with any Award 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 and the Administrator.  The Company and the Administrator shall have the right to condition any issuance of shares to any Award holder hereunder on such Person's undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company or the Administrator shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and all share certificates delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Company or the Administrator may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, any stock exchange upon which such shares are listed, and any applicable securities or other laws, and certificates representing such shares may contain a legend to reflect any such restrictions.  The Administrator may refuse to issue or transfer any shares or other consideration under an Award if it determines that the issuance or transfer of such shares or other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the 1934 Act, and any payment tendered to the Company by a grantee or other Award holder in connection with the exercise of such Award shall be promptly refunded to the relevant grantee or other Award holder.  Without limiting the generality of the foregoing, no Award granted under the Plan shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Administrator has determined that any such offer, if made, would be in compliance with all applicable requirements of any applicable securities laws.

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

If an Award recipient, in connection with the acquisition of Company shares under the Plan, makes an election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code), the grantee shall notify the Administrator of such election within ten days of filing notice of the election with the U.S. Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.

3.15. Severability

If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws or, if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

18

3.16. Sections 409A and 457A

To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Sections 409A and 457A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  Notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, in the event that the Administrator determines that any Award may be subject to Section 409A or 457A of the Code, the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Plan and Award from Sections 409A and 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Sections 409A and 457A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Sections 409A and 457A of the Code, all in such a way so as to retain, to the maximum extent possible, the originally intended economic and tax benefits under the Award.

3.17. Forfeiture; Clawback

The Administrator may, in its sole discretion, specify in the applicable Award Agreement that any realized gain with respect to options or stock appreciation rights and any realized value with respect to other Awards shall be subject to forfeiture or clawback, in the event of (a) a grantee's breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants with respect to the Company or any Subsidiary or any Affiliate, (b) a grantee's breach of any employment or consulting agreement with the Company or any Subsidiary or any Affiliate, (c) a grantee's termination of employment or consultancy/service relationship for Cause or (d) a financial restatement that reduces the amount of compensation under the Plan previously awarded to a grantee that would have been earned had results been properly reported.

3.18. No Trust or Fund Created

Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company, any Subsidiary or any Affiliate and an Award recipient or any other Person.  To the extent that any Person acquires a right to receive payments from the Company, any Subsidiary or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company, Subsidiary or Affiliate.

3.19. No Fractional Shares

No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Administrator shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

3.20. Governing 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.

19

EX-8.1

Exhibit 8.1

List of Subsidiaries

Subsidiary	Country of Incorporation
Joanna Maritime Ltd.	Liberia
Gregos Shipping Ltd.	Liberia
Diamantis Shipowners Ltd.	Liberia
Hydra Shipowners Ltd.	Liberia
Spetses Shipowners Ltd.	Liberia
Kea Shipowners Ltd.	Liberia
Jonathan Shipowners Ltd.	Liberia
Monica Shipowners Ltd.	Liberia
Stephania Shipping Ltd.	Liberia
Pepi Shipping Ltd.	Liberia
Manolis Shipping Ltd.	Marshall Islands
Noumea Shipping Ltd.	Marshall Islands
Jonathan John Shipping Ltd.	Marshall Islands
Athens Shipping Ltd.	Marshall Islands
Corfu Navigation Ltd.	Marshall Islands
Oinousses Navigation Ltd.	Marshall Islands
Bridge Shipping Ltd.	Marshall Islands
Antwerp Shipping Ltd.	Marshall Islands
Keelung Shipping Ltd.	Marshall Islands
Oakland Shipping Ltd.	Marshall Islands
Busan Shipping Ltd.	Marshall Islands
Marcos Shipping Ltd.	Marshall Islands
Gregos Maritime Ltd.	Marshall Islands
Terataki Shipping Ltd.	Marshall Islands
Tender Soul Shipping Ltd.	Marshall Islands
Leonidas Shipping Ltd.	Marshall Islands
Allendale Investment S.A.	Panama
Alterwall Business Inc.	Panama

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Aristides J. Pittas, certify that:

1. I have reviewed this annual report on Form 20-F of Euroseas Ltd. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April   22  , 2022

/s/ Aristides J. Pittas                 

Aristides J. Pittas

Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Anastasios Aslidis, certify that:

1. I have reviewed this annual report on Form 20-F of Euroseas Ltd. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April   22  , 2022

/s/ Anastasios Aslidis     

Dr. Anastasios Aslidis

Chief Financial Officer

EX-13.1

Exhibit 13.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Euroseas Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Aristides J. Pittas, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April   22  , 2022

  /s/ Aristides J. Pittas       

Aristides J. Pittas

Chief Executive Officer

EX-13.2

Exhibit 13.2

CHIEF FINANCIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Euroseas Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Anastasios Aslidis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April   22  , 2022

/s/ Anastasios Aslidis                     

Dr. Anastasios Aslidis

Chief Financial Officer

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-237128 on Form F-3 of our report dated April 22, 2022, relating to the consolidated financial statements of Euroseas Ltd. appearing in this Annual Report on Form 20-F for the year ended December 31, 2021.

/s/ Deloitte Certified Public Accountants S.A.

Athens, Greece

April 22, 2022

XML

Document And Entity Information	12 Months Ended
	Dec. 31, 2021 shares
Document Information [Line Items]
Entity Central Index Key	0001341170
Entity Registrant Name	EUROSEAS LTD.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Document Type	20-F
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Document Transition Report	false
Entity File Number	001-33283
Entity Incorporation, State or Country Code	1T
Entity Address, Address Line One	4 Messogiou & Evropis Street
Entity Address, Postal Zip Code	151 24
Entity Address, City or Town	Maroussi
Entity Address, Country	GR
Title of 12(b) Security	Common shares, $0.03 par value
Trading Symbol	ESEA
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding	7,294,541
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Document Accounting Standard	U.S. GAAP
Auditor Name	Deloitte Certified Public Accountants S.A.
Auditor Location	Athens, Greece
Auditor Firm ID	1163
Document Shell Company Report	false
Document Registration Statement	false
Business Contact [Member]
Document Information [Line Items]
Entity Address, Address Line One	11 Canterbury Lane
Entity Address, Postal Zip Code	07069
Entity Address, City or Town	Watchung
City Area Code	908
Local Phone Number	301-9091
Entity Address, State or Province	NJ
Contact Personnel Name	Tasos Aslidis

XML

Consolidated Balance Sheets - USD ($)		Dec. 31, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents		$ 26,530,944	$ 3,559,399
Restricted cash		167,285	345,010
Trade accounts receivable, net		1,274,729	2,013,023
Other receivables		1,722,885	1,866,624
Inventories		2,274,454	1,662,422
Prepaid expenses		382,729	244,315
Derivatives		540,753	0
Total current assets		32,893,779	9,690,793
Long-term assets:
Vessels, net		176,111,486	98,458,447
Advances for vessels under construction		7,615,958	0
Restricted cash		4,800,000	2,433,768
Total assets		221,421,223	110,583,008
Current liabilities
Long-term bank loans, current portion		29,034,049	20,645,320
Related party loan, current	[1]	0	2,500,000
Trade accounts payable		2,804,194	2,854,377
Accrued expenses		1,702,925	1,300,420
Accrued preferred dividends		0	168,676
Deferred revenues		3,293,986	949,364
Due to related company		309,970	24,072
Derivative		0	203,553
Total current liabilities		37,145,124	28,645,782
Long-term liabilities
Long-term bank loans, net of current portion		89,004,951	46,220,028
Derivatives		952,666	362,195
Fair value of below market time charters acquired		17,461,586	0
Total long-term liabilities		107,419,203	46,582,223
Total liabilities		144,564,327	75,228,005
Commitments and contingencies
Mezzanine Equity
Preferred shares (par value $0.01, 20,000,000 shares authorized, 8,365 and nil issued and outstanding, respectively)		0	8,019,636
Shareholders’ equity
Common stock (par value $0.03, 200,000,000 shares authorized, 6,708,946 and 7,294,541 issued and outstanding)		218,836	201,268
Additional paid-in capital		264,609,233	257,467,980
Accumulated deficit		(187,971,173)	(230,333,881)
Total shareholders’ equity		76,856,896	27,335,367
Total liabilities, mezzanine equity and shareholders’ equity		$ 221,421,223	$ 110,583,008

[1] On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd. (“Colby”), a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as supplemented on December 20, 2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan was 8% per annum and was payable quarterly. The loan was payable in four repayment installments of a principal amount of $625,000 each, maturing by November 2020. The first repayment instalment was paid on May 15, 2020 and the remaining three installments, which were payable on a quarterly basis, were rescheduled to be paid at the maturity of the loan in November 2020. Under certain limited circumstances, the Company could pay principal in equity, and the loan was convertible in common stock of the Company at the option of the lender at certain times. The Company paid $51,111 and $160,035 on interest for the years ended December 31, 2019 and 2020, respectively. On November 24, 2020, Colby exercised its right to convert the outstanding balance of the loan of $1,875,000 into the Company’s common shares as per the terms of the loan agreement. As a result, on November 25, 2020, the Company issued 702,247 shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan, amounting to approximately $2.67 per share. The Company incurred a loss on the extinguishment of the above debt of $491,571, deriving from the difference between the conversion price and the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of approximately $3.37 per share. The specific amount was recorded under “Loss on debt extinguishment” in the consolidated statement of operations for the year ended December 31, 2020. On November 1, 2019, Euroseas signed a second agreement with Colby, as supplemented on November 15, 2020, to draw another $2.5 million loan to finance working capital needs. Interest on the loan was 8% per annum and was payable quarterly. This loan was fully repaid upon its maturity on March 31, 2021. The Company paid $33,333, $201,248 and $50,000 on interest for this loan for the years ended December 31, 2019, 2020 and 2021, respectively.

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	8,365
Preferred stock, shares outstanding (in shares)	0	8,365
Common stock, par value (in dollars per share)	$ 0.03	$ 0.03
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	7,294,541	6,708,946
Common stock, shares outstanding (in shares)	7,294,541	6,708,946

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Time charter revenue	$ 97,977,389	$ 55,681,124	$ 41,769,278
Commissions (including $493,341, $504,892 and $1,075,274, respectively, to related party)	(4,085,717)	(2,378,007)	(1,745,599)
Net revenue	93,891,672	53,303,117	40,023,679
Operating expenses/ (income)
Voyage expenses	624,734	1,334,259	1,055,408
Vessel operating expenses (including $249,081, $304,515 and $233,635, respectively, to related party)	29,739,437	32,219,689	23,983,282
Dry-docking expenses	4,094,693	536,199	2,714,662
Vessel depreciation	7,203,198	6,605,976	4,178,886
Related party management fees	4,294,789	5,293,199	3,671,335
General and administrative expenses (including $1,344,250, $2,000,000 and $2,460,000, respectively, to related party)	3,491,120	3,041,435	2,444,495
Net (gain) / loss on sale of vessels (including $0, $153,750 and $0, respectively, to related party)	9,417	(2,453,736)	0
Other operating income	(1,298,318)	(2,687,205)	0
Loss on write-down of vessel held for sale	0	121,165	0
Total operating expenses, net	48,159,070	44,010,981	38,048,068
Operating income	45,732,602	9,292,136	1,975,611
Other (expenses)/ income
Interest and other financing costs (including $84,444, $361,283 and $50,000, respectively, to related party)	(2,779,729)	(4,125,150)	(3,424,969)
Loss on debt extinguishment	0	(491,571)	(328,291)
Loss on derivatives, net	(27,141)	(587,988)	(2,885)
Foreign exchange gain / (loss)	34,418	(63,007)	2,024
Interest income	3,510	17,011	95,839
Other expenses, net	(2,768,942)	(5,250,705)	(3,658,282)
Net (loss) / income	42,963,660	4,041,431	(1,682,671)
Dividends to Series B preferred shares	(255,324)	(693,297)	(1,271,782)
Preferred deemed dividend	(345,628)	0	(504,577)
Net (loss) / income attributable to common shareholders	$ 42,362,708	$ 3,348,134	$ (3,459,030)
Weighted average number of shares outstanding during the year, basic (in shares)	6,976,905	5,753,917	2,861,928
(Loss) / earnings per share attributable to common shareholders - basic (in dollars per share)	$ 6.07	$ 0.58	$ (1.21)
Weighted average number of shares outstanding during the year, diluted (in shares)	6,993,405	5,753,917	2,861,928
(Loss) / earnings per share attributable to common shareholders - diluted (in dollars per share)	$ 6.06	$ 0.58	$ (1.21)

XML

Consolidated Statements of Operations (Parentheticals) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Commissions, related party	$ 1,075,274	$ 504,892	$ 493,341
Vessel operating expenses, related party	233,635	304,515	249,081
General and administrative expenses, related party	2,460,000	2,000,000	1,344,250
Net gain on sale of vessels, related party	0	153,750	0
Interest and other financing costs, related party	$ 50,000	$ 361,283	$ 84,444

XML

Consolidated Statements of Shareholders' Equity - USD ($)		Private Placement [Member] Common Stock [Member]	Private Placement [Member] Additional Paid-in Capital [Member]	[1]	Private Placement [Member] Retained Earnings [Member]	Private Placement [Member]	Common Stock [Member]		Additional Paid-in Capital [Member]		Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2018							1,564,456
Balance at Dec. 31, 2018							$ 46,934		$ 233,996,669	[1]	$ (230,222,985)	$ 3,820,618
Net (loss) / income							0		0	[1]	(1,682,671)	(1,682,671)
Dividends to Series B preferred shares							0		0	[1]	(1,271,782)	(1,271,782)
Preferred deemed dividend							$ 0		0	[1]	(504,577)	(504,577)
Issuance of shares (in shares)		1,056,338					144,727
Issuance of shares		$ 31,690	$ 5,968,310		$ 0	$ 6,000,000	$ 4,342		771,190	[1]	0	775,532
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)							15,444
Issuance of restricted shares for stock incentive award and share-based compensation							$ 463		97,456	[1]	0	97,919
Shares issued in connection with acquisition of vessels (in shares)							2,816,901
Shares issued in connection with acquisition of vessels							$ 84,507		13,134,155	[1]	0	13,218,662
Rounding of stock split (in shares)							2,393
Rounding of stock split							$ 72		(72)	[1]	0	0
Balance (in shares) at Dec. 31, 2019							5,600,259
Balance at Dec. 31, 2019							$ 168,008		253,967,708	[1]	(233,682,015)	20,453,701
Net (loss) / income							0		0	[1]	4,041,431	4,041,431
Dividends to Series B preferred shares							$ 0		0	[1]	(693,297)	(693,297)
Issuance of shares (in shares)							200,000
Issuance of shares							$ 6,000		490,718	[1]	0	496,718
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)							45,900
Issuance of restricted shares for stock incentive award and share-based compensation							$ 1,377		120,254	[1]	0	121,631
Issuance of shares in connection with related party loan converted to equity (in shares)							702,247
Issuance of shares in connection with related party loan converted to equity							$ 21,067		2,345,504	[1]	0	2,366,571
Issuance of shares for contingent consideration in connection with acquisition of vessels (Note 5) (in shares)							161,357
Issuance of shares for contingent consideration in connection with acquisition of vessels (Note 5)							$ 4,841		543,771	[1]	0	548,612
Shares forfeited (in shares)							(817)
Shares forfeited							$ (25)		25	[1]	0	0
Balance (in shares) at Dec. 31, 2020	[1]						6,708,946
Balance at Dec. 31, 2020							$ 201,268	[1]	257,467,980	[1]	(230,333,881)	27,335,367
Net (loss) / income							0	[1]	0		42,963,660	42,963,660
Dividends to Series B preferred shares							0	[1]	0		(255,324)	(255,324)
Preferred deemed dividend							$ 0	[1]	0		(345,628)	(345,628)
Issuance of shares (in shares)	[1]						82,901
Issuance of shares							$ 2,487	[1]	608,746		0	611,233
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)	[1]						49,650
Issuance of restricted shares for stock incentive award and share-based compensation							$ 1,490	[1]	180,834		0	182,324
Issuance of shares in connection with related party loan converted to equity (in shares)	[1]						453,044
Issuance of shares in connection with related party loan converted to equity							$ 13,591	[1]	6,351,673		0	6,365,264
Balance (in shares) at Dec. 31, 2021	[1]						7,294,541
Balance at Dec. 31, 2021							$ 218,836	[1]	$ 264,609,233		$ (187,971,173)	$ 76,856,896

[1] Adjusted to reflect the 1-for-8 reverse stock split effected at the close of trading on December 18, 2019.

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net (loss) / income	$ 42,963,660	$ 4,041,431	$ (1,682,671)
Adjustments to reconcile net (loss) / income to net cash provided by operating activities:
Vessel depreciation	(7,203,198)	(6,605,976)	(4,178,886)
Gain on hull & machinery claim	0	(2,687,205)	0
Loss on write-down of vessel held for sale	0	121,165	0
Amortization and write off of deferred charges	223,492	288,163	205,590
Amortization of debt discount	0	0	95,214
Net (gain) / loss on sale of vessels	9,417	(2,453,736)	0
Amortization of fair value of below market time charters acquired	(230,112)	(1,714,370)	(857,945)
Share-based compensation	182,324	121,631	97,919
Change in the fair value of derivatives	(153,835)	565,748	(41,435)
Loss on debt extinguishment	0	491,571	328,291
Trade accounts receivable	738,294	(1,297,926)	243,608
Prepaid expenses	(138,414)	282,216	(304,195)
Other receivables	143,739	47,479	460,909
Inventories	(612,032)	226,742	(184,773)
Due to related company	285,898	(771,490)	(1,877,333)
Trade accounts payable	(740,664)	(1,008,707)	1,539,553
Accrued expenses	393,352	(424,901)	482,671
Deferred revenues	2,344,622	(24,410)	556,140
Net cash provided by operating activities	52,612,939	2,409,377	3,240,429
Cash flows from investing activities:
Cash paid for vessels under construction	(7,615,958)	0	0
Cash paid for capitalized expenses and acquisition of vessels including attached time charter agreements	(66,474,058)	(647,069)	(55,720,226)
Insurance proceeds	0	2,343,606	0
Net proceeds from sale of vessels	(9,417)	14,622,770	0
Net cash (used in) / provided by investing activities	(74,099,433)	16,319,307	(55,720,226)
Cash flows from financing activities:
Redemption of Series B preferred shares	(2,000,000)	0	(11,686,000)
Proceeds from issuance of common stock, net of commissions paid	743,553	715,550	6,853,101
Preferred dividends paid	(424,000)	(320,877)	(1,031,827)
Offering expenses paid	(123,167)	(184,321)	(136,724)
Loan arrangement fees paid	(758,000)	0	(566,500)
Proceeds from long-term bank loans	75,500,000	0	60,167,680
Repayment of long-term bank loans and vessel profit participation liability	(23,791,840)	(17,905,920)	(13,401,460)
Proceeds from related party loan	0	0	5,000,000
Repayment of related party loan	(2,500,000)	(625,000)	0
Net cash provided by / (used in) financing activities	46,646,546	(18,320,568)	45,198,270
Net (decrease) / increase in cash, cash equivalents and restricted cash	25,160,052	408,116	(7,281,527)
Cash, cash equivalents and restricted cash at beginning of year	6,338,177	5,930,061	13,211,588
Cash, cash equivalents and restricted cash at end of year	31,498,229	6,338,177	5,930,061
Cash breakdown
Cash and cash equivalents	26,530,944	3,559,399	985,418
Restricted cash, current	167,285	345,010	610,376
Restricted cash, long term	4,800,000	2,433,768	4,334,267
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	31,498,229	6,338,177	5,930,061
Supplemental cash flow information
Cash paid for interest, net of capitalized expenses	2,447,089	4,253,625	3,100,049
Financing, and investing activities fees:
Offering expenses accrued	84,510	75,357	40,846
Payment-in-kind dividends	0	365,059	78,640
Capital expenditures included in liabilities	690,481	0	71,890
Accrued preferred dividends	0	168,676	161,315
Shares issued as consideration for acquisition of vessels	0	548,612	13,218,662
Issuance of shares in connection with Series B Preferred Shares converted to equity	6,365,264	0	0
Conversion of Related Party Loan to Equity [Member]
Financing, and investing activities fees:
Shares issued in connection with related party loan converted to equity	$ 0	$ 2,366,571	$ 0

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Note 1 - Basis of Presentation and General Information

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. Basis of Presentation and General Information

Euroseas Ltd. (the “Company” or “Euroseas”) was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of certain ship-owning companies. On June 28, 2005, the beneficial owners exchanged all their shares in the ship-owning companies for shares in Friends Investment Company Inc., a newly formed Marshall Islands company. On June 29, 2005, Friends Investment Company Inc. then exchanged all the shares in the ship-owning companies for shares in Euroseas Ltd., thus becoming the sole shareholder of Euroseas Ltd. at that time. In January 2007, the Company pursued a public offering and its common shares started trading on the Nasdaq Capital Market under the ticker symbol “ESEA” on January 31, 2007.

The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family. Eurobulk has an office in Greece located at 4 Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note 8).

The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co., which, in turn, collectively own 54.7% of the Company’s shares as of December 31, 2021.

On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “COVID-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, implemented measures to combat the outbreak, such as social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes and closure of non-essential businesses. Such measures have and will likely continue to cause severe trade disruptions, significant reduction in global economic activity and extreme volatility in the global financial markets. Although to date there has not been any significant effect on the Company’s operating activities due to COVID-19, other than the decrease in market rates during 2020, which have recovered since the final quarter of 2020 and continuing into 2021 and 2022, and increased crew cost, there continues to be a high level of uncertainty relating to how the pandemic will evolve, including the new Omicron variant of COVID-19, which appears to be the most transmissible variant to date, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. Accordingly, an estimate of the future impact of COVID-19 on the Company’s operational and financial performance cannot be made at this time, as it may take some time to materialize and may not be fully reflected in the results for 2020 and 2021.

The Company effected an 8-for-1 reverse stock split of its issued and outstanding common shares, effective at the close of trading on December 18, 2019 (Note 18).  All share and per share amounts disclosed in the consolidated financial statements give effect to this reverse stock split retroactively, for all periods presented.

The Company is engaged in the ocean transportation of containers through ownership and operation of container carrier ship-owning companies. Details of the Company’s wholly owned subsidiaries are set out below:

● Allendale Investment S.A., incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons (“DWT”) / 1,169 twenty-foot equivalent (“TEU” – a measure of carrying capacity in containers) container carrier M/V “Kuo Hsiung”, which was built in 1993 and acquired on May 13, 2002. The vessel was sold on July 30, 2020.

● Alterwall Business Inc., incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V “Ninos” (previously named M/V “Quingdao I”) which was built in 1990 and acquired on February 16, 2001. The vessel was sold on September 30, 2020.

● Manolis Shipping Ltd., incorporated in the Republic of Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V “Manolis P”, which was built in 1995 and acquired on April 12, 2007. The vessel was sold on July 2, 2020.

● Noumea Shipping Ltd, incorporated in the Republic of Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V “Evridiki G” (previously named “Maersk Noumea”), which was built in 2001 and acquired on May 22, 2008.

● Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna”, which was built in 1999 and acquired on July 4, 2013.

● Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.

● Gregos Shipping Ltd., incorporated in the Republic of Liberia on May 25, 2017, owner of the Liberian flag 35,600 DWT / 2,788 TEU container carrier M/V “EM Astoria”, which was built in 2004 and acquired on June 20, 2017.

● Athens Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Athens”, which was built in 2000 and acquired on September 29, 2017. The vessel was sold on November 9, 2020.

● Corfu Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 34,654 DWT / 2,556 TEU container carrier M/V “EM Corfu”, which was built in 2001 and acquired on October 29, 2017.

● Oinousses Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Oinousses”, which was built in 2000 and acquired on October 23, 2017. The vessel was sold on July 17, 2020.

● Bridge Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 71,366 DWT / 5,610 TEU container carrier M/V “Akinada Bridge”, which was built in 2001 and acquired on December 21, 2017.

● Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier M/V “Diamantis P”, which was built in 1998 and acquired on August 2, 2019.

● Hydra Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,351 DWT / 1,740 TEU container carrier M/V “EM Hydra”, which was built in 2005 and acquired on August 2, 2019.

● Spetses Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,224 DWT / 1,740 TEU container carrier M/V “EM Spetses”, which was built in 2007 and acquired on August 7, 2019.

● Kea Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 42,165 DWT / 3,100 TEU container carrier M/V “EM Kea”, which was built in 2007 and acquired on August 7, 2019.

● Antwerp Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Antwerp”, which was built in 2008 and acquired on November 19, 2019.

● Keelung Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,969 DWT / 4,253 TEU container carrier M/V “Synergy Keelung”, which was built in 2009 and acquired on November 18, 2019.

● Oakland Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,787 DWT / 4,253 TEU container carrier M/V “Synergy Oakland”, which was built in 2009 and acquired on November 19, 2019.

● Busan Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Busan”, which was built in 2009 and acquired on November 21, 2019.

● Jonathan Shipowners Ltd., incorporated in the Republic of Liberia on August 25, 2021, owner of the Liberian flag 23,357 DWT / 1,740 TEU container carrier M/V “Jonathan P”, which was built in 2006 and acquired on October 18, 2021.

● Marcos Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 27, 2021, owner of the Panamanian flag 72,968 DWT / 6,350 TEU container carrier M/V “Marcos V”, which was built in 2005 and acquired on December 14, 2021.

● Gregos Maritime Ltd., incorporated in the Republic of the Marshall Islands on December 14, 2020, entered on June 29, 2021, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4201). The vessel is expected to be delivered in the first quarter of 2023.

● Terataki Shipping Ltd., incorporated in the Republic of the Marshall Islands on June 25, 2021, entered on June 29, 2021, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4202). The vessel is expected to be delivered in the second quarter of 2023.

● Tender Soul Shipping Ltd., incorporated in the Republic of the Marshall Islands on January 27, 2022, entered on January 28, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4236). The vessel is expected to be delivered in the fourth quarter of 2023.

● Leonidas Shipping Ltd., incorporated in the Republic of the Marshall Islands on January 27, 2022, entered on January 28, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 2,800 TEU container carrier (Hull No. 4237). The vessel is expected to be delivered in the first quarter of 2024.

● Monica Shipowners Ltd., incorporated in the Republic Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4248). The vessel is expected to be delivered in the first quarter of 2024.

● Stephania Shipping Ltd., incorporated in the Republic of Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4249). The vessel is expected to be delivered in the second quarter of 2024.

● Pepi Shipping Ltd., incorporated in the Republic of Liberia on March 15, 2022, entered on March 18, 2022, into a shipbuilding contract with Hyundai Mipo Dockyard Co., Ltd. for the construction of a 1,800 TEU container carrier (Hull No. 4250). The vessel is expected to be delivered in the second quarter of 2024.

During the years ended December 31, 2019, 2020 and 2021, the following charterers individually accounted for more than 10% of the Company’s revenues as follows:

	Year ended December 31,
Charterer	2019			2020			2021
CMA CGM, Marseille		24	%		17	%		24	%
Maersk Line A/S		11	%		19	%		21	%
Vasi Shipping Pte. Ltd., Singapore		-			-			15	%
MSC Geneva		15	%		18	%		-
New Golden Sea Shipping Pte. Ltd., Singapore		21	%		10	%		-
Hapag-Lloyd AG, Hamburg		16	%		-			-

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Note 2 - Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. The following are the significant accounting policies adopted by the Company:

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries. Inter-company balances and transactions are eliminated on consolidation.

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other comprehensive income / (loss)

The Company has no other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such, no statement of comprehensive income / (loss) has been presented.

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of three months or less.

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling price less reasonably predictable costs of disposal and transportation. Inventories are valued using the FIFO (First-In First-Out) method.

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses to prepare the vessel for her initial voyage, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Vessels Held for Sale 

The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies a vessel as being held for sale when the following criteria are met: (i) management has committed to a plan to sell the vessel; (ii) the vessel is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; (iv) the sale of the vessel is probable, and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; (v) the vessel is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell. The resulting difference, if any, is recorded under “Loss on write-down of vessel held for sale” in the consolidated statements of operations. The vessels are no longer depreciated once they meet the criteria to be classified as held for sale.

Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of 25 years from the completion of their construction. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is $250 per light weight ton as of December 31, 2020 and 2021.

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is not subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue and expense recognition

Revenues are generated from time charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified fixed or index-linked daily charter hire rate.

On January 1, 2019, the Company adopted ASC 842 Leases (“ASC 842”), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842 provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease.

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily fixed or index-linked charter hire rate, which is generally payable 15 or 30 days in advance as determined in the charter party agreement. The duration of the contracts that the Company enters into depends on the market conditions, with the duration decreasing during weak market conditions. During 2019, 2020 and 2021 the duration of the Company’s time charter contracts ranged from 20 days to 3 years and certain time charter contracts included renewal options up to 12 months. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC 842, because (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

The Company, making use of the practical expedient for lessors, elected not to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with ASC 842.

Both the lease component and non-lease component are earned by the passage of time. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and are recorded in “Time charter revenue” in the consolidated statements of operations for the years ended December 31, 2019, 2020 and 2021. Time charter agreements may include ballast bonus payments made by the charterer which serve as compensation for the ballast trip of the vessel to the delivery port, which are deferred and also recognized on a straight-line basis over the charter period.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning may be recovered from the charterer; such amounts recovered are recorded as other income within “Time charter revenue” in the consolidated statements of operations.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to 9 months). Accordingly, they are not liable for any pension or post-retirement benefits.

Financing costs

Fees paid to lenders or required to be paid to third parties on the lenders’ behalf for obtaining new loans or for refinancing or amending existing loans, are presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, similar to debt discounts. These costs are amortized as interest and other financing costs over the duration of the underlying loan using the effective interest method. Any unamortized balance of costs relating to debt repaid or refinanced that meet the criteria for Debt Extinguishment pursuant to the provisions of Subtopic 470-50, is expensed in the period in which the repayment is made or refinancing occurs. Any unamortized balance of costs relating to debt refinanced that do not meet the criteria for Debt Extinguishment, are amortized over the term of the refinanced debt.

Offering expenses

Expenses directly attributable to an equity offering are deferred and are either presented against proceeds from the offering within paid-in capital or are written-off and charged to “General and administrative expenses” in the consolidated statements of operations when it is probable that the offering will be aborted.

Fair value of above/below market time charters acquired

The Company values any asset or liability arising from the market value of any time charter assumed when a vessel is acquired. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the market rate for a charter of equivalent duration prevailing at the time the vessels are delivered. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary. The cost of the acquisition is allocated to the vessel and the in-place time charter attached on the basis of their relative fair values. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. The shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do not contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Further, the Company accounts for restricted share award forfeitures upon occurrence.

Impairment of vessels

The Company reviews its vessels held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related vessels. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company records an impairment loss to the extent the vessel’s carrying value exceeds its fair market value. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

In developing its estimates of future undiscounted net operating cash flows, the Company makes assumptions and estimates about vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessel operating expenses, drydocking costs, vessels’ residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations.

The Company determines the rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years and on inflation-unadjusted historical average rates for similar size vessels, from the third year onwards. As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels. As of December 31, 2020, the Company calculated the historical average rates over a 19-year period for 2020, excluding peak periods, which starts in 2002 and takes into account complete market cycles. These rates are used for the period a vessel is not under a charter contract; if there is a contract, the charter rate of the contract is used for the period of the contract. Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company's past experience in finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company's data for its own vessels. Specifically, the Company’s management uses the Company’s internal budget for operating expenses escalated by 1.5% per annum and the Company’s budgeted drydocking costs, assuming a five-year special survey cycle. The estimated salvage value of each vessel is $250 per light weight ton, in accordance with the Company’s vessel depreciation policy. The Company uses a probability weighted approach for developing estimates of future cash flows used to test its vessels for recoverability when alternative uses are under consideration (i.e. sale or continuing operation of a vessel).

If the Company’s estimate of future undiscounted net operating cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down to the vessel’s fair market value with a charge recorded under “Impairment loss” in the consolidated statements of operations.

Derivative financial instruments

Derivative instruments are recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to “Derivatives and Hedging” or in earnings if hedging criteria are not met.

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Business Combinations (Topic 805): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. To be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of December 31, 2020 and 2021, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment reporting

The Company reports financial information and evaluates its operations by total charter revenues and not by the type of vessel, length of vessel employment, customer or type of charter. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment, that of operating container carriers. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

Recent accounting pronouncements

In January 2021, the FASB issued Accounting Standard Update (“ASU”) 2021-01 (Topic 848), which amends and clarifies the existing ASU issued in March 2020, the ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Reference rates such as LIBOR, are widely used in a broad range of financial instruments and other agreements. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). The ASU 2020-04 is effective for adoption at any time between March 12, 2020 and December 31, 2022, for all entities and the ASU 2021-01 is effective for all entities as of January 7, 2021 through December 31, 2022. The Company is still evaluating the timing of the adoption and the optional expedients and exceptions it may adopt, as well as the effect of the adoption on its consolidated financial statements.

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Note 3 - Inventories

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Inventory Disclosure [Text Block]

3. Inventories

Inventories consisted of the following:

	2020		2021
Lubricants		1,558,484		1,851,508
Victualing		103,938		105,527
Bunkers		-		317,419
Total		1,662,422		2,274,454

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Note 4 - Advances for Vessels Under Construction

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Advances for Vessel Under Construction [Text Block]

4. Advances for vessels under construction

On  June 29, 2021, the Company has signed a contract for the construction of two Eco design fuel efficient containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in Korea. The two newbuildings are scheduled to be delivered during the first and second quarter of 2023, respectively. The total consideration for these two newbuilding contracts is about $76.1 million which will be financed with a combination of debt and own cash. Within the year ended  December 31, 2021 the Company paid the first instalment of $3.8 million per vessel related to the construction of the vessels. The total balance of $7.6 million as of  December 31, 2021 is included under “Advances for vessels under construction” in the consolidated balance sheet. See Note 11 for schedule of outstanding payments to the yard.

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Note 5 - Vessels, Net

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

5. Vessels, net

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

	Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2020		132,863,067			(16,632,734	)		116,230,333
- Depreciation for the year		-			(6,605,976	)		(6,605,976	)
- Sale of vessels		(17,655,916	)		5,365,717			(12,290,199	)
- Contingent consideration for the Synergy Vessels acquisition		548,612			-			548,612
- Capitalized expenses		575,677			-			575,677
Balance, December 31, 2020		116,331,440			(17,872,993	)		98,458,447
- Depreciation for the year		-			(7,203,198	)		(7,203,198	)
- Delivery of M/V “Jonathan P”		25,771,926			-			25,771,926
- Delivery of M/V “Marcos V”		58,215,173			-			58,215,173
- Capitalized expenses		869,138			-			869,138
Balance, December 31, 2021		201,187,677			(25,076,191	)		176,111,486

Capitalized expenses for the year ended December 31, 2020 mainly refer to smart bunkers monitoring systems (“Flow meters”) installed on all of the Company’s vessels. During the year ended December 31, 2021, two vessels completed the installation of the Water Ballast Treatment (“WBT”) systems with a total cost of $0.47 million. The Company also spent another $0.40 million installing smart monitoring systems onboard the Company’s vessels. All these installations qualified as vessel improvements and were therefore capitalized.

Vessels acquired / delivered

On September 2, 2021, Jonathan Shipowners Ltd., signed a memorandum of agreement to purchase M/V “Piraeus Trader II” a 23,357 DWT / 1,740 TEU, 2006-built feeder container carrier, for a purchase price of $25,500,000 plus costs to make the vessel available for use of $271,926, resulting in a total cost of 25,771,926. The vessel was delivered to the Company on October 18, 2021 and was renamed to “Jonathan P”.

On November 11, 2021, Marcos Shipping Ltd., signed a memorandum of agreement to purchase M/V “Leo Paramount” a 72,968 DWT / 6,350 TEU, 2005-built intermediate container carrier and its attached time charter, for a purchase price of $40,000,000, from which $57,691,698 was allocated to the vessel plus costs to make the vessel available for use of $523,475, resulting in a total amount of $58,215,173 presented within “Vessels, net” in the consolidated balance sheet. In addition, an amount of $17,691,698 was allocated to the in-place attached time charter on the date of the transfer and was recorded as liability within “Fair value of below market time charters acquired” in the consolidated balance sheet (see Note 7). The vessel was delivered to the Company on December 14, 2021 and was renamed to “Marcos V”.

Contingent consideration for Synergy Vessels Acquisition

On November 7, 2019, Euroseas Ltd. and Synergy Holdings Limited, as part of the agreement for the acquisition of the vessels M/V “Synergy Busan”, M/V “Synergy Keelung”, M/V “Synergy Oakland” and M/V “Synergy Antwerp” (“the Synergy Vessels Acquisition”) agreed that Euroseas will issue certain shares of its common stock to Synergy Holdings Limited under the following terms: If the 12-month New ConTex index for a 4,250 TEU vessel (as published on https://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers’ Association) (the “Index Value”) is higher on November 16, 2020 at 4:00 p.m. New York time than the Index Value on November 15, 2019 at 4:00 p.m. New York time, then, on November 16, 2020, Euroseas shall issue to Synergy Holdings Limited, $500,000 divided by the 20-day volume weighted average price of the Company’s common shares calculated on November 16, 2020 at 4:00 p.m. New York time, allocated equally to the four vessels. The specific contingency was resolved on November 16, 2020 with the Index Value as of that date being higher than the Index Value on November 15, 2019. Based on the above agreement the Company issued on November 16, 2020 161,357 shares to Synergy Holdings Limited based on the 20-day volume weighted average price of the Company’s common Shares calculated on November 16, 2020 which was $3.09871. The supplementary contingent payment was recorded as part of the acquisition cost of the abovementioned vessels, using the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of $3.40 per share.

Sale of vessels

The Company considers the potential sale of its vessels, for scrap or further trading, depending on a vessel’s age, any additional capital expenditures required, the expected revenues from continuing to own the vessel and the overall market prospects.

In January 2020, M/V “EM Oinousses”, experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The Company agreed with the Hull & Machinery (“H&M”) underwriters to sell the vessel for scrap as is without effecting permanent repairs (see Note 19). As of June 30, 2020 M/V “EM Oinousses” was classified as vessel held for sale and was written down to its fair market value less costs to sell amounting to $3.7 million, resulting in a non-cash loss of $0.1 million compared to its net book value of $3.8 million. This amount is presented in the "Loss on write-down of vessel held for sale" line in the "Operating Expenses" section of the consolidated statement of operations for the year ended December 31, 2020. On July 6, 2020 the Company agreed to sell for scrap M/V “EM Oinousses”, for a net price of $3.6 million. The vessel was delivered to its buyers on July 17, 2020. The Company recorded a loss on sale of approximately $0.1 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

Following a strategy of disposing of older vessels the Company entered into the following vessel sale agreements:

In February 2020, the Company entered into an agreement to sell for scrap M/V “Manolis P”. The vessel reached her destination port on April 7, 2020, but the sale was not completed due to complications during its delivery to the buyers related to COVID-19 restrictions and port lockdowns in the territory of arrival (Alang, India). A dispute with the buyers was in arbitration. The advance received from the buyers amounting to $1,133,817 was transferred from the Company’s bank account to an escrow account following this dispute. The court dismissed the opponents claim in June 2021. The Company recognized other operating income of $1.0 million in the year ended  September 30, 2021, after accounting for estimated expenses for the arbitration (see Note 19). On June 19, 2020 the Company agreed to sell for scrap M/V “Manolis P.”, for a net price of $2.0 million. The vessel was delivered to its buyers on July 2, 2020. The Company recorded a gain on sale of approximately $0.3 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

On July 13, 2020 the Company agreed to sell for scrap M/V “Kuo Hsiung”, for a net price of $1.9 million. The vessel was delivered to its buyers on July 30, 2020. The Company recorded a gain on sale of approximately $0.3 million, presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

On September 17, 2020 the Company agreed to sell for scrap M/V “Ninos”, for a net price of $2.3 million. The vessel was delivered to its buyers on September 30, 2020. The Company recorded a gain on sale of approximately $0.8 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

On October 29, 2020 the Company agreed to sell for further trading M/V “EM Athens”, for a net price of $4.9 million, in line with the Company’s strategy to dispose older vessels, combined with the increased drydocking expenses required. The vessel was delivered to its buyers on November 9, 2020. The Company recorded a gain on sale of approximately $1.2 million presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2020.

No vessel sales took place during the year ended December 31, 2021. The amount of $9,417 presented in the “Net gain / (loss) on sale of vessels” line in the “Operating Expenses” section of the consolidated statement of operations for the year ended December 31, 2021, refers to minor expenses associated with the vessel sales concluded during 2020.

Impairment analysis

In light of the economic downturn and the prevailing conditions in the shipping industry caused primarily by Covid-19 disruptions, as of December 31, 2020, the Company performed the undiscounted cash flow test for those operating vessels whose carrying values were above their respective market values and determined that the net book value of its vessels held for use was recoverable. As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels.

As of December 31, 2021, fourteen of the Company’s vessels are used as collateral under the Company’s loan agreements (refer Note 9), while two of the Company’s vessels, M/V “Akinada Bridge” and M/V “Joanna” are unencumbered.

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Note 6 - Accrued Expenses

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

6. Accrued Expenses

The accrued expenses consisted of:

	December 31, 2020		December 31, 2021
Accrued payroll expenses		339,004		604,761
Accrued interest expense		173,576		282,724
Accrued general and administrative expenses		187,311		119,750
Accrued commissions		76,130		239,313
Other accrued expenses		524,399		456,377
Total		1,300,420		1,702,925

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Note 7 - Fair Value of Below Market Time Charters Acquired

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Below Market Time Charters Acquired [Text Block]

7. Fair Value of Below Market Time Charters Acquired

As part of the Trinity / Diamantis Vessel Acquisition (see Note 8) in August 2019 and with respect to the vessels “EM Hydra”, “EM Kea” and “EM Spetses”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $778,287, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

As part of the Synergy Vessels Acquisition in November 2019 and with respect to the vessels “Synergy Keelung”, “Synergy Oakland” and “Synergy Busan”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $1,794,028, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

In addition, as part of the acquisition of M/V “Marcos V”, in December 2021, which was acquired by the Company with time charter agreement attached, the Company recognized a liability of $17,691,698, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

For the years ended December 31, 2019, 2020 and 2021, the amortization of fair value of the below market acquired time charters analyzed above was $857,945, $1,714,370 and $230,112, respectively, and is included under “Time charter revenue” in the consolidated statements of operations.

The unamortized balance of this intangible liability as of December 31, 2021 of $17,461,586 will be amortized by the end of September 2025 as per the table below.

As of December 31, 2021, the remaining carrying amount of unamortized below market acquired time charter will be amortized in future years as follows:

For the year ending December 31,	Below market acquired charters
2022	$	(4,940,640	)
2023		(4,940,640	)
2024		(4,954,176	)
2025		(2,626,130	)
Total	$	(17,461,586	)

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Note 8 - Related Party Transactions

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

8. Related Party Transactions

The Company’s vessel owning companies are parties to management agreements with the Manager (see Note 1) which is controlled by members of the Pittas family, whereby the Manager provides technical and commercial vessel management for a fixed daily fee of Euro 685 per vessel for each of 2019, 2020 and 2021, under the Company’s Master Management Agreement. An additional fixed management fee (see below) is paid to the Manager for the provision of management executive services.

The Company’s Master Management Agreement (“MMA”) with Eurobulk provides for an annual adjustment of the daily vessel management fee due to inflation to take effect January 1 of each year. The vessel management fee for laid-up vessels is half of the daily fee for the period they are laid-up. The MMA, as periodically amended and restated, will automatically be extended after the initial five-year period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the MMA, each ship owning company has signed – and each future ship owning company when a vessel is acquired will sign - with the Manager, a management agreement with the rate and term of these agreements set in the MMA effective at such time.

The MMA was amended and restated as of January 1, 2012 to reflect a 5% discount of the daily vessel management fee for the period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by the Manager is greater than 20 (“volume discount”). The daily vessel management fee was set at Euro 685 per day per vessel in operation and 342.5 Euros per day per vessel in lay-up after the 5% discount.

The MMA was further renewed on January 1, 2018 for an additional five-year term until January 1, 2023 with the 5% volume discount permanently incorporated in the daily management fee. The daily management fee remained unchanged at Euro 685 for the years ended December 31, 2019, 2020 and 2021 and will be adjusted annually for inflation in the Eurozone. From January 1, 2022, the vessel fixed management fee was adjusted for inflation at Euro 720 per day per vessel in operation and Euro 360 per day per vessel in lay-up.

Vessel management fees paid to the Manager amounted to $3,671,335, $5,293,199 and $4,294,789 in 2019, 2020 and 2021, respectively, and are recorded under “Related party management fees” in the consolidated statements of operations.

In addition to the vessel management services, the Manager provides executive services to the Company. On November 15, 2019, the Company signed an addendum adjusting the fixed annual executive compensation to $2,000,000 to compensate the Manager for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company following the Synergy Vessels Acquisition, as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated on $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and on $2,000,000 for the period of November 16, 2019 until December 31, 2019. The Company incurred costs of $1,344,250, $2,000,000 and $2,460,000 in 2019, 2020 and 2021, respectively, which are recorded in “General and administrative expenses” in the consolidated statements of operations. The amount of fixed costs reported for the year ended December 31, 2021, includes an amount of $0.46 million paid as a special bonus to the Manager’s employees and consultants.

Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company during the normal course of operations for which a right of off-set exists. As of December 31, 2020 and 2021, the amounts due to related company were $24,072 and $309,970, respectively. Based on the MMA between Euroseas Ltd. and Euroseas’ ship owning subsidiaries and the Manager an estimate of the quarter’s operating expenses, expected dry-dock expenses, vessel management fee and fee for management executive services are to be advanced by the Company’s ship-owning subsidiaries in the beginning of each quarter to the Manager.

In August 2019, the Company completed the acquisition of the four feeder containerships, owned by affiliates of the Pittas family including the Company’s Chief Executive Officer for a consideration of $28.2 million that included a cash payment of $15 million and the issuance of 2,816,901 common shares to the sellers ("the Trinity / Diamantis Vessel Acquisition”). The four vessels are M/V EM Hydra and M/V EM Spetses, both 1,740 teu feeder containerships built in 2005 and 2007, respectively, M/V EM Kea, a 3,100 teu feeder containership built in 2007, and M/V Diamantis P, a 2,008 teu feeder containership built in 1998. On August 2, 2019, the Company took delivery of M/V Diamantis P and M/V EM Hydra, and, on August 7, 2019, the Company took delivery of M/V EM Spetses and M/V EM Kea. The Company financed the cash portion of the acquisition price via the arrangement of two bank loans described below (refer Note 9-b and 9-c), drawing a total of $16,167,680 with the excess amount used for general corporate purposes. The cash portion of the acquisition price was used to repay the existing indebtedness of the vessels, with the sellers receiving only payment in Euroseas common shares.  The common shares issued to the sellers represented at that time approximately 64.3% of Euroseas’ outstanding common shares.  The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

On September 30, 2019, the Company reached an agreement with a related party, Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, to draw a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. The interest rate applied was 8% per annum. Interest on the loan was payable quarterly. Within the second quarter of 2020 the Company repaid $625,000 of the above loan. In November 2020, the outstanding amount of the loan was converted into Company’s common shares. For further details refer to Note 9-h.

On November 1, 2019, the Company entered into a second agreement with Colby Trading Ltd., to draw another $2.5 million loan to finance working capital needs. The interest rate applied was 8% per annum. Interest on the loan was payable quarterly. The loan was repaid in March 2021. For further details refer to Note 9-h.

The Company uses brokers for various services, as is industry practice. Eurochart S.A. (“Eurochart”), an affiliated company controlled by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of 1% of the vessel sales price and 1.25% of charter revenues. Commissions to Eurochart for vessel sales were nil, $153,750 and nil in 2019, 2020 and 2021, respectively, recorded in “Net gain / (loss) on sale of vessels” in the consolidated statements of operations. A commission of 1% of the purchase price is also paid to Eurochart by the seller of the vessel for the acquisitions the Company makes using Eurochart’s services. For the acquisition of M/V “Marcos V” the Company also paid Eurochart a commission of $0.4 million, equaling to 1% of the purchase price of the vessel. In October 2021, the Company withheld the amount of $255,000 from the sellers of the M/V “Jonathan P”, on behalf of Eurochart, as a 1% commission in connection with the acquisition of the vessel. Commissions to Eurochart for chartering services were, $493,341, $504,892 and $1,075,274 in 2019, 2020 and 2021, respectively, recorded in “Commissions” in the consolidated statements of operations.

Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker Sentinel Maritime Services Inc. (“Sentinel”). Technomar Crew Management Services Corp (“Technomar”) is a company owned by certain members of the Pittas family, together with two other unrelated ship management companies, which provides crewing services. Sentinel is paid a commission on insurance premiums not exceeding 5%; Technomar is paid a fee of about $50 per crew member per month. Total fees charged by Sentinel and Technomar were $106,749 and $142,332 in 2019, $100,837 and $203,678 in 2020, and $77,896 and $155,739 in 2021, respectively. These amounts are recorded in “Vessel operating expenses” in the consolidated statements of operations.

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Note 9 - Long-term Bank Loans

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Long-term Debt [Text Block]

9. Long-Term Bank Loans

These consist of bank loans of the ship-owning companies and are as follows:

Borrower		December 31, 2020			December 31, 2021
Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		24,625,000			-
Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		-			9,375,000
Diamantis Shipowners Ltd.	(b)		3,026,300			2,384,460
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(c)		11,150,000			8,450,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(d)		28,500,000			40,300,000
Jonathan John Shipping Ltd. / Corfu Navigation Ltd.	(e)		-			9,500,000
Jonathan Shipowners Ltd.	(f)		-			15,000,000
Marcos Shipping Ltd.	(g)		-			34,000,000
			67,301,300			119,009,460
Less: Current portion			(20,891,840	)		29,284,460
Long-term portion			46,409,460			89,725,000
Deferred charges, current portion			246,520			250,411
Deferred charges, long-term portion			189,432			720,049
Long-term bank loans, current portion net of deferred charges			20,645,320			29,034,049
Long-term bank loans, long-term portion net of deferred charges			46,220,028			89,004,951
Loan from related party, current
Euroseas Ltd.	(h)		2,500,000			-

The future annual loan repayments are as follows:

To December 31:
2022	29,284,460
2023	51,765,000
2024	18,440,000
2025	19,520,000
Total	119,009,460

(a) On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A. (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 to fully refinance all of the Company’s existing facilities with this bank and provide working capital. As of December 31, 2020, and following the sale of five vessels used as collateral during 2020 (see below) the borrowers of the specific tranche were Joanna Maritime Ltd., Jonathan John Shipping Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. The revolving tranche was available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and could be renewed subject to the bank’s approval and a fee to be determined. The loan was payable in 12 equal consecutive quarterly principal installments of $900,000 followed by a balloon amount of $19,200,000 to be paid together with the last principal installment in November 2021. The interest rate margin was 3.90% over LIBOR, reduced from 4.40% as described below.   Each quarterly principal instalment paid was added to the revolving tranche and could be redrawn. The remaining $7,350,000 of the revolving facility, after including principal repayments up to December 31, 2019, remained available to the Company in order to finance up to 55% of the market value of post 2001-built ships. The undrawn amount available under the revolving facility incurred an annual commitment of 0.40% and any amount drawn would incur a 1% underwriting fee. On June 26, 2020, the Lender signed with the borrower a second supplement letter according to which the undrawn committed amount under the abovementioned credit facility agreement was cancelled upon the borrower’s request. Additionally, the Lender agreed to defer the amount of $2,700,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in November 2021.   Within the third and the fourth quarter of 2020 the Company sold five vessels used as collateral under the abovementioned credit facility agreement (M/V “Manolis P.”, M/V “EM Oinousses”, M/V “Kuo Hsiung”, M/V “Ninos” and M/V “EM Athens”). An aggregate amount of $11,750,000 was prepaid and all aforementioned vessels were released from their mortgages. Following the above prepayment, the quarterly principal installments were reduced to $400,000 and the balloon payment was reduced to $12,150,000 with the repayment of the loan resuming in February 2021.   On September 9, 2021 and November 19, 2021, Bridge Shipping Ltd. and Joanna Maritime Ltd., respectively, repaid their full amount of outstanding indebtedness amounting to $7.03 million by using the Company’s own funds and became unencumbered. At the same date Jonathan John Shipping Ltd. and Corfu Navigation Ltd. repaid also their indebtedness to the Lender using a new loan facility by Sinopac Capital International (HK) Limited as explained in note (f) below.

On May 30, 2019, the Lender made available to the Company two new ship-related (M/V “EM Astoria” and M/V “Evridiki G”) advances totaling $12.0 million or 55% of the aggregate market value of the two aforementioned vessels, with a simultaneous reduction of the margin of the loan, from 4.40% to 3.90% per annum. The Lender also agreed, during the remaining facility period, to reduce the amount held as cash collateral from $5.0 million to $1.0 million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shipping Ltd. and to provide working capital. The loan is payable in 16 equal consecutive quarterly principal installments of $375,000 followed by a balloon amount of $6,000,000 to be paid together with the last principal installment in May 2023. On June 26, 2020, the Lender agreed to defer the amount of $1,125,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in May 2023, increasing the balloon amount to $7,125,000. The loan is secured with (i) first priority mortgages over M/V “Evridiki G” and M/V “EM Astoria”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this tranche. The security cover ratio covenant for the facility is set to 140%.

(b)

On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. (“Piraeus”) for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value of M/V “Diamantis P”. On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V “Diamantis P”. The loan is payable in twelve equal consecutive quarterly installments of $160,460 plus a balloon amount of $1,742,160 to be paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Diamantis P”, (ii) first assignment of earnings and insurance of M/V “Diamantis P”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter. On July 29, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $160,460, representing half of the installments of the third and the fourth quarter of 2020 to be repaid together with the balloon payment in July 2022, increasing the balloon amount to $1,902,620.

(c) On July 30, 2019, the Company signed a term loan facility with HSBC Bank Plc. (“HSBC”) for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019. The loan is payable in fourteen consecutive equal quarterly installments of $450,000 plus a balloon payment of $6,200,000 to be paid together with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%. On September 30, 2020, the Company signed a supplemental agreement with HSBC under which it was agreed to defer the amount of $900,000, representing the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in February 2023, increasing the balloon amount to $7,100,000.

(d) On November 8, 2019, the Company signed a term loan facility with Piraeus for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 to paid together with the last instalment in November 2023. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%. On July 7, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $1,500,000 from the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in November 2023, increasing the balloon amount to $18,900,000. On November 23, 2021, the Company paid the amount of $1,500,000 that was deferred according to the latest supplemental agreement reducing again the balloon of the loan to $17,400,000.   On November 26, 2021, the Company signed a new facility agreement with Piraeus in respect to the existing revolving facility and on November 29, 2021 drew the amount of $16,500,000 in order to finance general corporate needs of the Company. The loan is payable in sixteen consecutive quarterly instalments, the first four in the amount of $1,500,000 each, the next eleven in the amount of $560,000 each and a last instalment of $4,340,000. The loan bears interest at LIBOR plus a margin of 2.60%. The Company paid loan arrangement fees of $115,000 within 2021 for this loan. The security cover ratio covenant for the facility was set to 125%, the same with the existing facility.

(e) On September 6, 2021, the Company signed a term loan facility with Sinopac Capital International (HK) Limited (“Sinopac”) for an amount of up to $10,000,000, in order to refinance the existing indebtedness of M/V “Aegean Express” and M/V “EM Corfu.”, amounting to $5,525,000 as of the date of refinancing, and for working capital purposes. The facility was available in two advances. Both advances of $3,500,000 and $6,500,000 were drawn on September 9, 2021 by Jonathan John Shipping Ltd. and Corfu Navigation Ltd. as the borrowers. The loan is payable in sixteen consecutive quarterly installments of $500,000 each, followed by a balloon payment of $2,000,000 to be paid together with the last installment in September 2025. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with the following: (i) first priority mortgages over M/V “Aegean Express” and M/V “EM Corfu”, (ii) first assignment of earnings and insurance of the abovementioned vessels and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $225,000 for this loan.

(f) On October 22, 2021, the Company signed a term loan facility with HSBC, and on October 26, 2021, a loan of $15,000,000 was drawn by Jonathan Shipowners Ltd. in order to post-delivery finance part of the acquisition cost of M/V “Jonathan P” and to finance general corporate purposes of the Company. The loan is payable in twelve consecutive quarterly installments of $1,100,000 followed by a balloon payment of $1,800,000 payable together with the last installment in October 2024. The loan bears interest at LIBOR plus a margin of 2.35%. The loan is secured with the following: (i) first priority mortgage over M/V “Jonathan P”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 130%. The Company paid loan arrangement fees of $117,500 for this loan.

(g) On December 14, 2021, the Company signed a term loan facility with Eurobank Ergasias S.A., and a loan of $34,000,000 was drawn by Marcos Shipping Ltd. in order to finance part of the acquisition cost of M/V “Marcos V”. The loan is payable in sixteen consecutive quarterly installments, comprising twelve installments of $2,000,000 followed by four installments of $750,000 each and by a balloon payment of $7,000,000 payable together with the last installment in December 2025. The loan bears interest at LIBOR plus a margin of 2.80%. The loan is secured with the following: (i) first priority mortgage over M/V “Marcos V”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $300,000 for this loan.

(h) On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd. (“Colby”), a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as supplemented on December 20, 2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan was 8% per annum and was payable quarterly. The loan was payable in four repayment installments of a principal amount of $625,000 each, maturing by November 2020. The first repayment instalment was paid on May 15, 2020 and the remaining three installments, which were payable on a quarterly basis, were rescheduled to be paid at the maturity of the loan in November 2020. Under certain limited circumstances, the Company could pay principal in equity, and the loan was convertible in common stock of the Company at the option of the lender at certain times. The Company paid $51,111 and $160,035 on interest for the years ended December 31, 2019 and 2020, respectively. On November 24, 2020, Colby exercised its right to convert the outstanding balance of the loan of $1,875,000 into the Company’s common shares as per the terms of the loan agreement. As a result, on November 25, 2020, the Company issued 702,247 shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan, amounting to approximately $2.67 per share. The Company incurred a loss on the extinguishment of the above debt of $491,571, deriving from the difference between the conversion price and the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of approximately $3.37 per share. The specific amount was recorded under “Loss on debt extinguishment” in the consolidated statement of operations for the year ended December 31, 2020.   On November 1, 2019, Euroseas signed a second agreement with Colby, as supplemented on November 15, 2020, to draw another $2.5 million loan to finance working capital needs. Interest on the loan was 8% per annum and was payable quarterly. This loan was fully repaid upon its maturity on March 31, 2021. The Company paid $33,333, $201,248 and $50,000 on interest for this loan for the years ended December 31, 2019, 2020 and 2021, respectively.

In addition to the terms specific to each bank loan described above, all the above bank loans are secured with a pledge of all the issued shares of each borrower.

The bank loan agreements also contain covenants such as minimum requirements regarding the security cover ratio covenant (the ratio of fair value of vessel to outstanding loan less cash in retention accounts), restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (i.e. not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of the Company’s subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash). The loan agreements also require the Company to make deposits in retention accounts with certain banks that can only be used to pay the current loan installments. Minimum cash balance requirements are in addition to cash held in retention accounts. These cash deposits amounted to $2,245,010 and $4,967,285 as of December 31, 2020 and 2021, respectively, and are included in “Restricted cash” under “Current assets” and “Long-term assets” in the consolidated balance sheets. As of December 31, 2021, all the debt covenants are satisfied.

Interest expense for the years ended December 31, 2019, 2020 and 2021 amounted to $3,219,471, $3,836,985 and $2,556,237 respectively.

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Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10. Income Taxes

Under the laws of the countries of the companies’ incorporation and/or vessels’ registration, the companies are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in “Vessel operating expenses” in the consolidated statements of operations.

Under the United States Internal Revenue Code of 1986, as amended (the "Code"), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

For the taxable years 2019, 2020 and 2021 the Company believes that it was exempt from U.S. federal income tax of 4% on U.S. source shipping income, as it believes that it was subject to the 5% Override Rule, but nonetheless satisfied the Publicly Traded Test for the respective years, because the non-qualified 5% shareholders did not own more than 50% of the Company’s common stock for more than half of the days during the taxable years.

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Note 11 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

11. Commitments and Contingencies

There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company’s business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.

As of December 31, 2021, future gross minimum revenues under non-cancellable time charter agreements total $281.9 million. The amount of $122.4 million is due in the year ending December 31, 2022, $91.0 million due in the year ending December 31, 2023 and another $68.5 million due in the year ending December 31, 2024. In arriving at the future gross minimum revenues, the Company has deducted an estimated one off-hire day per quarter. Such off-hire estimate may not be reflective of the actual off-hire in the future. In addition, the actual revenues could be affected by early delivery of the vessel by the charterers or any exercise of the charterers’ options to extend the terms of the charters, which however cannot be estimated and hence not reflected above.

As of  December 31, 2021, the Company had under construction two container carriers with a total contracted amount of $76.1 million. In the third quarter of 2021, the Company paid an amount of $7.6 million for the first instalment of the contract. An amount of $19.0 million is payable in the year ending  December 31, 2022 and $49.5 million is payable in the year ending  December 31, 2023. The Company intends to finance these commitments with bank financing and own cash.

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Note 12 - Stock Incentive Plan

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

12. Stock Incentive Plan

On July 31, 2014, the Board of Directors approved the Company’s 2014 Stock Incentive Plan (the “2014 Plan”). On May 5, 2018, the Board of Directors approved a new equity incentive plan (the “2018 Plan”) to replace the 2014 Plan. The 2018 Plan is administered by the Board of Directors which can make awards totaling in aggregate up to 75,000 shares, over 10 years after the 2018 Plan’s adoption date. The persons eligible to receive awards under the 2018 Plan are officers, directors, and executive, managerial, administrative and professional employees of the Company or Eurobulk or Eurochart (collectively, “key persons”) as the Board, in its sole discretion, shall select based upon such factors as the Board shall deem relevant.  Awards may be made under the 2018 Plan in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares. Details of awards granted under the 2014 Plan and the 2018 Plan during the three year period ended December 31, 2021 are noted below.

a)	On November 2, 2017 an award of 12,534 non-vested restricted shares, was made to 18 key persons of which 50% vested on July 1, 2018 and 50% vested on July 1, 2019; awards to officers and directors amounted to 7,213 shares and the remaining 5,321 shares were awarded to employees of Eurobulk.
b)	On November 21, 2018 an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% vested on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk.
c)	On November 4, 2019 an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% vested on July 1, 2020 and 50% vested on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk.
d)	On November 5, 2020 an award of 45,900 non-vested restricted shares, was made to 16 key persons of which 50% vested on November 16, 2021 and the remaining 50% will vest on November 16, 2022; awards to officers and directors amounted to 27,100 shares and the remaining 18,800 shares were awarded to employees of Eurobulk.
e)	On November 19, 2021 an award of 49,650 non-vested restricted shares, was made to 21 key persons of which 50% will vest on July 1, 2022 and 50% will vest on July 1, 2023; awards to officers and directors amounted to 27,700 shares and the remaining 21,950 shares were awarded to employees of Eurobulk.

All non-vested restricted shares are conditional upon the grantee’s continued service as an employee of the Company or Eurobulk or as a director of the Company until the applicable vesting date. The grantee does not have the right to vote on such non-vested restricted shares until they vest or exercise any right as a shareholder of these shares, however, the non-vested shares will accrue dividends as declared and paid which will be retained by the Company until the shares vest at which time they are payable to the grantee. As non-vested restricted share grantees accrue dividends on awards that are expected to vest, such dividends are charged to retained earnings.

The Company accounts for restricted share awards forfeitures as they occur. During the year ended December 31, 2020, 817 shares were forfeited with a weighted-average grant-date fair value of $8.39 per share. No forfeitures occurred in the years ended December 31, 2019 and 2021.

The compensation cost that has been charged against income for awards was $97,919, $121,631 and $182,324, for the years ended December 31, 2019, 2020 and 2021, respectively and is included within “General and administrative expenses” in the consolidated statements of operations. The Company has used the straight-line method to recognize the cost of the awards.         

A summary of the status of the Company’s non-vested shares as of December 31, 2019, 2020 and 2021, and the movement during these years, is presented below:

Non-vested Shares	Number of shares			Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019		21,948			10.16
Granted		15,444			8.13
Vested		(14,108	)		11.01
Non-vested on December 31, 2019		23,284			8.28
Non-vested on January 1, 2020		23,284			8.28
Granted		45,900			2.71
Vested		(15,064	)		8.34
Forfeited		(817	)		8.39
Non-vested on December 31, 2020		53,303			3.46
Non-vested on January 1, 2021		53,303			3.46
Granted		49,650			26.26
Vested		(30,360	)		3.47
Non-vested on December 31, 2021		72,593			19.05

As of December 31, 2021, there was $1,265,365 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2018 Plan and is expected to be recognized over a weighted-average period of 0.86 years. The total fair value at grant-date of shares granted during the years ended December 31, 2019, 2020 and 2021 was $125,560, $124,389 and $1,303,809 respectively.

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Note 13 - Earnings (Loss) Per Share

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

13. Earnings / (Loss) Per Share

Basic and diluted loss per common share is computed as follows:

	2019			2020			2021
Income:
Net (loss) / income		(1,682,671	)		4,041,431			42,963,660
Dividends to Series B preferred shares		(1,271,782	)		(693,297	)		(255,324	)
Preferred deemed dividend		(504,577	)		-			(345,628	)
Net (loss) / income attributable to common shareholders		(3,459,030	)		3,348,134			42,362,708
Weighted average common shares –outstanding, basic		2,861,928			5,753,917			6,976,905
Basic (loss) / earnings per share		(1.21	)		0.58			6.07
Effect of dilutive securities:
Dilutive effect of non-vested shares		-			-			16,500
Weighted average common shares –outstanding, diluted		2,861,928			5,753,917			6,993,405
Diluted (loss) / earnings per share		(1.21	)		0.58			6.06

For the years ended December 31, 2019 and 2020, the effect of 23,284 and 53,303 non-vested stock awards, respectively, and of 8,000 and 8,365 Series B Convertible Perpetual Preferred Shares ("Series B Preferred Shares"), respectively, was anti-dilutive. The number of dilutive securities was nil shares in 2019 and 2020. Hence for the years ended December 31, 2019 and 2020, “Basic (loss)/ earnings per share” equals “Diluted (loss) / earnings per share”. For the year ended December 31, 2021, the denominator of the diluted earnings per share calculation includes 16,500 common shares, being the number of incremental shares assumed issued under the treasury stock method.

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Note 14 - Voyage Expenses and Vessel Operating Expenses

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Vessel Voyage and Operating Expenses [Text Block]

14. Voyage Expenses and Vessel Operating Expenses

These consisted of:

	Year ended December 31,
	2019		2020		2021
Voyage expenses
Port charges and canal dues		251,197		451,586		253,855
Bunkers		804,211		882,673		370,879
Total		1,055,408		1,334,259		624,734
Vessel operating expenses
Crew wages and related costs		13,111,682		17,866,847		15,961,904
Insurance		1,844,088		2,947,937		2,917,042
Repairs and maintenance		1,110,995		1,316,864		1,247,176
Lubricants		2,029,230		2,609,647		2,471,994
Spares and consumable stores		4,758,290		6,245,518		5,784,004
Professional and legal fees		259,311		255,948		212,108
Other		869,686		976,928		1,145,209
Total		23,983,282		32,219,689		29,739,437

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Note 15 - Derivative Financial Instruments

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

15. Derivative Financial Instruments

Interest rate swaps

On October 17, 2014, the Company entered into one interest rate swap contract with Eurobank – Ergasias S.A. (“Eurobank”) for a notional amount of $10.0 million, with inception date on October 14, 2014 and maturity date on May 28, 2019, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank made a quarterly payment to the Company equal to the 3-month LIBOR while the Company paid an adjustable rate averaging 1.97% (more specifically, the Company paid the fixed rate of 0.50% until November 28, 2016, then 0.95% until November 28, 2017 and then 3.55% until May 28, 2019) based on the relevant notional amount.

On April 16, 2020, the Company entered into one interest rate swap contract with Eurobank for a notional amount of $30.0 million, with inception date on April 24, 2020 and maturity date on April 24, 2025. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 0.78% based on the relevant notional amount.

On October 12, 2021, the Company entered into one interest rate swap contract with Eurobank for a notional amount of $10.0 million, with inception date on November 1, 2021 and maturity date on November 1, 2025. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 1.09% based on the relevant notional amount.

The interest rate swap contracts did not qualify for hedge accounting as of December 31, 2020 and 2021.

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2020		December 31, 2021
Interest rate swap contracts	Current assets – Derivatives		-		540,753
Total derivative assets			-		540,753
Interest rate swap contract	Current liabilities – Derivative		203,553		-
Interest rate swap contracts	Long-term liabilities – Derivatives		362,195		952,666
Total derivative liabilities			565,748		952,666

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2019			Year Ended December 31, 2020			Year Ended December 31, 2021
Interest rate swap contract– Unrealized (loss) / gain	Loss on derivatives, net		-			(565,748	)		153,835
Interest rate swap contract- Realized loss	Loss on derivatives, net		(2,885	)		(22,240	)		(180,976	)
Total net (loss) / gain on interest rate swap contract			(2,885	)		587,988			(27,141	)

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Note 16 - Preferred Shares

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Preferred Stock [Text Block]

16. Preferred shares

	Number of Shares			Preferred Shares Amount			Dividends paid-in-kind			Total
Balance, January 1, 2019		19,605			14,500,000			4,257,361			18,757,361
Dividends declared		81			-			78,639			78,639
Redemption of Preferred shares		(11,686	)		(8,155,055	)		(3,530,945	)		(11,686,000	)
Preferred deemed dividend		-			504,577			-			504,577
Balance, December 31, 2019		8,000			6,849,522			805,055			7,654,577
Dividends declared		365			-			365,059			365,059
Balance, December 31, 2020		8,365			6,849,522			1,170,114			8,019,636
Redemption of Preferred shares		(2,000	)		(2,000,000	)		-			(2,000,000	)
Preferred shares converted to common shares		(6,365	)		(5,195,150	)		(1,170,114	)		(6,365,264	)
Preferred deemed dividend		-			345,628			-			345,628
Balance, December 31, 2021		-			-			-			-

On January 27, 2014, the Company entered into an agreement to sell 25,000 Series B Preferred Shares to a fund managed by Tennenbaum Capital Partners, LLC ("TCP") and 5,700 Series B Preferred Shares to Preferred Friends Investment Company Inc, an affiliate of the Company, for total net proceeds of approximately $29 million. The redemption amount of the Company’s Series B Preferred Shares is $1,000 per share. The Company used the proceeds for the acquisition of vessels and general corporate purposes. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5%.

The dividend rate increased to 12% for the two years following January 29, 2019 and would increase to 14% thereafter and is payable only in cash. Cash dividends were declared at each quarter and actual payments were made within the following quarter. If a cash dividend was paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares should receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares could be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones were met. Each Series B Preferred Share was convertible into common stock at a conversion price of $15.58 (as adjusted in September 2015 following the shareholders’ rights offering of the Company) subject to further adjustment for certain events. The Series B Preferred Shares were redeemable in cash by the Company at any time after the fifth anniversary of the original issue date. Holders of the Series B Preferred Shares could require the Company to redeem their shares only upon the occurrence of certain corporate events.

Following the close of trading on the Nasdaq Capital Market on May 30, 2018, the Company completed the spin-off (the “Spin-off”) of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd ("EuroDry"). Shareholders of the Company received one EuroDry common share for every five common shares of the Company they owned as of May 23, 2018. Shares of EuroDry commenced trading on May 31, 2018 on the Nasdaq Capital Market under the symbol "EDRY."

At the Spin-off date Euroseas distributed EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares, representing 50% of Euroseas Series B Preferred Stock, i.e. $14,500,000 of the initial preferred shares amount of the Company and $3,692,131 of dividends paid in kind. Euroseas contributed to EuroDry its interests in seven of its drybulk subsidiaries and related intercompany debts and obligations in exchange for approximately 2,254,830 of EuroDry common shares and 19,042 of EuroDry Series B Preferred Shares (representing all of the EuroDry's issued and outstanding stock as of that time). Euroseas made a special dividend of 100% of EuroDry's outstanding common shares to holders of Euroseas' common stock as of the record date of the special dividend. In addition, Euroseas distributed 100% of EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares as described above.

On June 10, 2019 the Company proceeded with the redemption of $11.7 million of value, or about 59.4%, of its outstanding Series B Preferred Shares at that time with simultaneous reduction by 4% of the dividend rate for the $8 million value of preferred shares remaining outstanding until January 29, 2021. After that date the dividend rate would increase to 14%. The difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs) amounted to $504,577, and was recorded as preferred deemed dividend.

In January 2021, the Company agreed to redeem 2,000 of the outstanding balance of its Series B Preferred Shares and paid $2,000,000 to the Series B Preferred Shares shareholders. In connection with the redemption, the Company agreed with its Series B Preferred Shares shareholders to set the dividend rate of its Series B Preferred Shares to 8% per annum if paid in cash and 9% if paid in-kind at the Company’s option until   January 29, 2023, after which date the dividend rate would increase to 14%, and would be payable only in cash. In June 2021, the Company converted the remaining amount of 6,365 Series B Preferred Shares into common shares. The difference between (1) the fair value of the consideration transferred to the holders of the Euroseas Series B Preferred Shares (comprising the cash payment and the shares offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption and the conversion (net of issuance costs) amounted to $345,628, and was recorded as preferred deemed dividend.

For the year ended December 31, 2019 the Company declared four consecutive dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in the first quarter of 2020. For the year ended December 31, 2020, the Company declared four consecutive dividends totaling $0.69 million, of which $0.37 were paid in kind, $0.15 million were paid in cash and another $0.17 million were accrued as of December 31, 2020 and paid in February 2021. For the year ended December 31, 2021, the Company declared dividends totaling $0.26 million, all of which were paid in cash during 2021.

Subject to certain ownership thresholds, holders of Series B Preferred Shares had the right to appoint one director to the Company's board of directors and TCP also had consent rights over certain corporate actions. In addition, the holders of Series B Preferred Shares voted as one class with the Company's common stock on all matters on which shareholders are entitled to vote, with each Series B Preferred Share having a number of votes equal to 50% of the numbers of shares of common stock of the Company into which such Series B Preferred Share would be convertible on the applicable record date.

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Note 17 - Financial Instruments

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Financial Instruments Disclosure [Text Block]

17. Financial Instruments

The principal financial assets of the Company consist of cash and cash equivalents, restricted cash, trade accounts receivable, other receivables and derivatives. The principal financial liabilities of the Company consist of long-term bank loans, derivatives, trade accounts payable, accrued expenses and amount due to related company.

Interest rate risk

The Company enters into interest rate swap contracts as economic hedges to manage some of its exposure to variability in its floating rate long-term bank loans. Under the terms of the interest rate swaps the Company and Eurobank agree to exchange, at specified intervals the difference between a paying fixed rate and receiving floating rate interest amount calculated by reference to the agreed principal amounts and maturities. Interest rate swaps allow the Company to convert long-term bank loans issued at floating rates into equivalent fixed rates. Even though the interest rate swaps were entered into for economic hedging purposes, as noted in Note 15 they do not qualify for hedge accounting, under the guidance relating to Derivatives and Hedging, as the Company does not have currently written contemporaneous documentation identifying the risk being hedged and, both on a prospective and retrospective basis, performing an effectiveness test to support that the hedging relationship is highly effective. Consequently, the Company recognizes the change in fair value of these derivatives in the “Loss on derivatives, net” in the consolidated statements of operations. As of December 31, 2021, the Company had two open swap contracts for a notional amount of $40.0 million.

Concentration of credit risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit quality financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable.

Fair value of financial instruments

The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;

Level 3: Unobservable inputs that are not corroborated by market data.

The fair value of the Company’s interest rate swap agreements is determined using a discounted cash flow approach based on market-based LIBOR swap rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items. The fair values of the interest rate swaps determined through Level 2 of the fair value hierarchy as defined in guidance relating to "Fair value measurements" are derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.

Recurring Fair Value Measurements

	Fair Value Measurement as of December 31, 2021
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Interest rate swap contracts, current portion	$	540,753		-	$	540,753		-
Liabilities
Interest rate swap contracts, long-term portion	$	952,666		-	$	952,666		-

	Fair Value Measurement as of December 31, 2020
	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities
Interest rate swap contract, current portion	$	203,553		-	$	203,553		-
Interest rate swap contract, long-term portion	$	362,195		-	$	362,195		-

Asset Measured at Fair Value on a Non-recurring Basis

As of June 30, 2020 the vessel "EM Oinousses" with a carrying amount of $3.77 million, was classified as vessel held for sale and written down to its fair value of $3.87 million, less estimated costs to sell of $0.22 million, resulting in a loss of $0.12 million, which was included in the consolidated statement of operations under “Loss on write-down of vessel held for sale” for the year ended December 31, 2020. The fair value of M/V "EM Oinousses" was determined by reference to its negotiated and thereafter agreed sale price and was considered Level 2.

The estimated fair values of the Company’s financial instruments such as cash and cash equivalents and restricted cash approximate their individual carrying amounts as of December 31, 2020 and 2021, due to their short-term maturity. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair value of the Company’s long-term bank loans, bearing interest at variable interest rates approximates their recorded values as of December 31, 2021, due to the variable interest rate nature thereof. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence fair values of the long-term bank loans are considered Level 2 items in accordance with the fair value hierarchy due to their variable interest rate, being the LIBOR. The fair value of the Company’s related party loan outstanding as of December 31, 2020, is estimated based on current interest rates offered to the Company for similar loans and approximates its individual carrying amount due to its short-term maturity. The fair value of the Company’s interest rate swaps is the estimated amount the Company would pay to terminate the swap agreement at the reporting date, taking into account current interest rates and the current creditworthiness of the Company and its counter parties.

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Note 18 - Common Stock

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

18. Common Stock

As per the Company’s Amended and Restated Articles of Incorporation, the Company is authorized to issue 200,000,000 shares of common stock, par value $0.03 per share.

Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the shareholders. Subject to preferences that may be applicable to any outstanding preferred shares, holders of the Company’s common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of the Company’s assets available for distribution upon liquidation, dissolution or winding up; and (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of the Company’s common stock when issued will be fully paid for and non-assessable. The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares which the Company has issued or may issue in the future.

In August 2019, the Company issued 2,816,901 common shares for the acquisition of M/V “EM Hydra”, M/V “EM Spetses”, M/V “EM Kea” and M/V “Diamantis P”, owned by affiliates of the Pittas family, including the Company’s Chief Executive Officer (refer Note 8).

During October 2019, following the Company’s prospectus supplement filed with the SEC on December 20, 2016, as further supplemented by the prospectus dated January 13, 2017, October 30, 2018 and May 30, 2019, the Company issued and sold at-the-market (ATM) 144,727 shares of common stock for gross proceeds net of commissions of $0.9 million.

In November 2019, the Synergy Vessels Acquisition was partially financed through a private placement of $6 million, subscribed equally by an entity affiliated with the Company’s Chief Executive Officer and an entity controlled by the seller of the Synergy vessels, resulting in the issuance of 1,056,338 common shares. 

In addition, during the year ended December 31, 2019, the Company issued 15,444 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 12).

On December 19, 2019, the Company announced that it has completed a 1-for-8 reverse stock split, effective at the close of trading on December 18, 2019. The Company’s common shares began trading on a split-adjusted basis on December 19, 2019.

During August 2020, following the Company’s prospectus supplement filed with the SEC on May 12, 2020, as further supplemented by the prospectus dated May 29, 2020, the Company issued and sold at-the-market (ATM) 200,000 shares of common stock for gross proceeds net of commissions of $0.7 million.

In addition, during the year ended December 31, 2020, the Company issued 45,900 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 12).

On November 16, 2020, the Company issued 161,357 shares to Synergy Holdings Ltd. as a result of a contingent payment agreed upon on November 7, 2019 as part of the agreement for the acquisition of the vessels M/V "Synergy Busan", M/V "Synergy Keelung", M/V "Synergy Oakland" and M/V "Synergy Antwerp"(see Note 5).

On November 24, 2020, the Company received notice from Colby, which had provided Euroseas with a loan of $2.5 million in September 2019, whereby Colby exercised its right to convert the outstanding balance of the loan of $1.875 million into common shares of the Company as per the terms of the loan. As a result, the Company issued 702,247 common shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan (see Note 9-h).

During February 2021, following the Company’s prospectus supplement filed with the SEC on May 12, 2020, as further supplemented by the prospectus dated May 29, 2020 and February 3, 2021 the Company issued and sold 82,901 shares of common stock at-the-market (ATM) for gross proceeds net of commissions of $0.74 million.

On June 30, 2021, the Company converted the remaining outstanding 6,365 Series B Preferred Shares into common stock by issuing 453,044 shares covering the full redemption of the remaining Series B Preferred Shares amounting to $6.365 million (Note 16).

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Note 19 - Other Operating Income

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Other Operating Income and Expense [Text Block]

19. Other operating income

In  January 2020, M/V "EM Oinousses" experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The vessel completed an evaluation for the type of repairs required and was idle during the evaluations. The Company agreed with the Hull & Machinery (“H&M”) underwriters an “unrepaired damage” claim of $2.7 million. Under this agreement the vessel was sold for scrap as is without effecting any permanent repairs. As a result of the above the Company, recognized a gain on hull and machinery claim of $2.7 million, which was included under “Other operating income” in the consolidated statement of operations for the year ended December 31, 2020.

In the year ended December 31, 2021, the Company recognized “Other operating income” of $0.2 million relating to the collection of amounts previously written off, relating to accounts with charterers of sold vessels. The Company also reached a settlement agreement in relation to a dispute with a fuel oil supplier dating back in 2009 in respect of vessel “Ninos”, to pay $0.06 million to the claimants in order for them to withdraw their claim, recording “Other operating income” of $0.1 million, against the provision of $0.15 million already booked in prior years. Additionally, the Company recognized another $1.0 million of “Other operating income” consisting of the proceeds of a claim award related to the sale of one of the Company’s vessels, M/V “Manolis P”, for scrap in March 2020 that initially failed due to COVID-related reasons with the vessel finally being sold to another buyer within the second quarter of 2020 (see Note 5). All these amounts are included under “Other operating income” in the consolidated statement of operations.

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Note 20 - Subsequent Events

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

20. Subsequent Events

(a)

On January 28, 2022, the Company signed a contract for the construction of two eco-design fuel efficient containerships. The vessels will have a carrying capacity of about 2,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea. The two newbuildings are scheduled to be delivered during the fourth quarter of 2023 and first quarter of 2024, respectively. The total consideration for these two newbuilding contracts is approximately $85 million, which the Company intends to finance with a combination of debt and equity.

(b)

On March 18, 2022, the Company signed a contract for the construction of three 1,800 teu eco-design fuel efficient feeder containerships. The vessels will have a carrying capacity of about 1,800 teu each and will be built at Hyundai Mipo Dockyard Co. in South Korea and are scheduled to be delivered during the first half of 2024, one in the first and two in the second quarter of 2024. The total consideration for the construction of the three vessels is approximately $102 million which the Company intends to finance with a combination of debt and equity.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries. Inter-company balances and transactions are eliminated on consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Comprehensive Income, Policy [Policy Text Block]

Other comprehensive income / (loss)

The Company has no other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such, no statement of comprehensive income / (loss) has been presented.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of three months or less.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

Accounts Receivable [Policy Text Block]

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling price less reasonably predictable costs of disposal and transportation. Inventories are valued using the FIFO (First-In First-Out) method.

Vessels [Policy Text Block]

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses to prepare the vessel for her initial voyage, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Assets Held For Sale [Policy Text Block]

Vessels Held for Sale 

The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies a vessel as being held for sale when the following criteria are met: (i) management has committed to a plan to sell the vessel; (ii) the vessel is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; (iv) the sale of the vessel is probable, and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; (v) the vessel is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell. The resulting difference, if any, is recorded under “Loss on write-down of vessel held for sale” in the consolidated statements of operations. The vessels are no longer depreciated once they meet the criteria to be classified as held for sale.

Depreciation, Depletion, and Amortization [Policy Text Block]

Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of 25 years from the completion of their construction. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is $250 per light weight ton as of December 31, 2020 and 2021.

Insurance Premiums Revenue Recognition, Policy [Policy Text Block]

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is not subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue [Policy Text Block]

Revenue and expense recognition

Revenues are generated from time charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified fixed or index-linked daily charter hire rate.

On January 1, 2019, the Company adopted ASC 842 Leases (“ASC 842”), which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842 provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease.

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily fixed or index-linked charter hire rate, which is generally payable 15 or 30 days in advance as determined in the charter party agreement. The duration of the contracts that the Company enters into depends on the market conditions, with the duration decreasing during weak market conditions. During 2019, 2020 and 2021 the duration of the Company’s time charter contracts ranged from 20 days to 3 years and certain time charter contracts included renewal options up to 12 months. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC 842, because (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

The Company, making use of the practical expedient for lessors, elected not to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with ASC 842.

Both the lease component and non-lease component are earned by the passage of time. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and are recorded in “Time charter revenue” in the consolidated statements of operations for the years ended December 31, 2019, 2020 and 2021. Time charter agreements may include ballast bonus payments made by the charterer which serve as compensation for the ballast trip of the vessel to the delivery port, which are deferred and also recognized on a straight-line basis over the charter period.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning may be recovered from the charterer; such amounts recovered are recorded as other income within “Time charter revenue” in the consolidated statements of operations.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Drydocking and Special Survey Expenses [Policy Text Block]

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to 9 months). Accordingly, they are not liable for any pension or post-retirement benefits.

Financing Receivable [Policy Text Block]

Financing costs

Fees paid to lenders or required to be paid to third parties on the lenders’ behalf for obtaining new loans or for refinancing or amending existing loans, are presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, similar to debt discounts. These costs are amortized as interest and other financing costs over the duration of the underlying loan using the effective interest method. Any unamortized balance of costs relating to debt repaid or refinanced that meet the criteria for Debt Extinguishment pursuant to the provisions of Subtopic 470-50, is expensed in the period in which the repayment is made or refinancing occurs. Any unamortized balance of costs relating to debt refinanced that do not meet the criteria for Debt Extinguishment, are amortized over the term of the refinanced debt.

Offering Expenses [Policy Text Block]

Offering expenses

Expenses directly attributable to an equity offering are deferred and are either presented against proceeds from the offering within paid-in capital or are written-off and charged to “General and administrative expenses” in the consolidated statements of operations when it is probable that the offering will be aborted.

Fair Value Measurement, Policy [Policy Text Block]

Fair value of above/below market time charters acquired

The Company values any asset or liability arising from the market value of any time charter assumed when a vessel is acquired. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the market rate for a charter of equivalent duration prevailing at the time the vessels are delivered. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary. The cost of the acquisition is allocated to the vessel and the in-place time charter attached on the basis of their relative fair values. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Share-based Payment Arrangement [Policy Text Block]

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. The shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do not contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Further, the Company accounts for restricted share award forfeitures upon occurrence.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment of vessels

The Company reviews its vessels held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related vessels. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company records an impairment loss to the extent the vessel’s carrying value exceeds its fair market value. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

In developing its estimates of future undiscounted net operating cash flows, the Company makes assumptions and estimates about vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessel operating expenses, drydocking costs, vessels’ residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations.

The Company determines the rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years and on inflation-unadjusted historical average rates for similar size vessels, from the third year onwards. As of December 31, 2021, there were no indicators of impairment for any of the Company’s vessels. As of December 31, 2020, the Company calculated the historical average rates over a 19-year period for 2020, excluding peak periods, which starts in 2002 and takes into account complete market cycles. These rates are used for the period a vessel is not under a charter contract; if there is a contract, the charter rate of the contract is used for the period of the contract. Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company's past experience in finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company's data for its own vessels. Specifically, the Company’s management uses the Company’s internal budget for operating expenses escalated by 1.5% per annum and the Company’s budgeted drydocking costs, assuming a five-year special survey cycle. The estimated salvage value of each vessel is $250 per light weight ton, in accordance with the Company’s vessel depreciation policy. The Company uses a probability weighted approach for developing estimates of future cash flows used to test its vessels for recoverability when alternative uses are under consideration (i.e. sale or continuing operation of a vessel).

If the Company’s estimate of future undiscounted net operating cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down to the vessel’s fair market value with a charge recorded under “Impairment loss” in the consolidated statements of operations.

Derivatives, Policy [Policy Text Block]

Derivative financial instruments

Derivative instruments are recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to “Derivatives and Hedging” or in earnings if hedging criteria are not met.

Stockholders' Equity Note, Redeemable Preferred Stock, Issue, Policy [Policy Text Block]

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Purchase Transactions [Policy Text Block]

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Business Combinations (Topic 805): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. To be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

Earnings Per Share, Policy [Policy Text Block]

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of December 31, 2020 and 2021, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment Reporting, Policy [Policy Text Block]

Segment reporting

The Company reports financial information and evaluates its operations by total charter revenues and not by the type of vessel, length of vessel employment, customer or type of charter. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment, that of operating container carriers. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent accounting pronouncements

In January 2021, the FASB issued Accounting Standard Update (“ASU”) 2021-01 (Topic 848), which amends and clarifies the existing ASU issued in March 2020, the ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Reference rates such as LIBOR, are widely used in a broad range of financial instruments and other agreements. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). The ASU 2020-04 is effective for adoption at any time between March 12, 2020 and December 31, 2022, for all entities and the ASU 2021-01 is effective for all entities as of January 7, 2021 through December 31, 2022. The Company is still evaluating the timing of the adoption and the optional expedients and exceptions it may adopt, as well as the effect of the adoption on its consolidated financial statements.

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Note 1 - Basis of Presentation and General Information (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Year ended December 31,
Charterer	2019			2020			2021
CMA CGM, Marseille		24	%		17	%		24	%
Maersk Line A/S		11	%		19	%		21	%
Vasi Shipping Pte. Ltd., Singapore		-			-			15	%
MSC Geneva		15	%		18	%		-
New Golden Sea Shipping Pte. Ltd., Singapore		21	%		10	%		-
Hapag-Lloyd AG, Hamburg		16	%		-			-

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Note 3 - Inventories (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	2020		2021
Lubricants		1,558,484		1,851,508
Victualing		103,938		105,527
Bunkers		-		317,419
Total		1,662,422		2,274,454

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Note 5 - Vessels, Net (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Cost			Accumulated Depreciation			Net Book Value
Balance, January 1, 2020		132,863,067			(16,632,734	)		116,230,333
- Depreciation for the year		-			(6,605,976	)		(6,605,976	)
- Sale of vessels		(17,655,916	)		5,365,717			(12,290,199	)
- Contingent consideration for the Synergy Vessels acquisition		548,612			-			548,612
- Capitalized expenses		575,677			-			575,677
Balance, December 31, 2020		116,331,440			(17,872,993	)		98,458,447
- Depreciation for the year		-			(7,203,198	)		(7,203,198	)
- Delivery of M/V “Jonathan P”		25,771,926			-			25,771,926
- Delivery of M/V “Marcos V”		58,215,173			-			58,215,173
- Capitalized expenses		869,138			-			869,138
Balance, December 31, 2021		201,187,677			(25,076,191	)		176,111,486

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Note 6 - Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	December 31, 2020		December 31, 2021
Accrued payroll expenses		339,004		604,761
Accrued interest expense		173,576		282,724
Accrued general and administrative expenses		187,311		119,750
Accrued commissions		76,130		239,313
Other accrued expenses		524,399		456,377
Total		1,300,420		1,702,925

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Note 7 - Fair Value of Below Market Time Charters Acquired (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Below Market Time Charters, Future Amortization Expense [Table Text Block]

For the year ending December 31,	Below market acquired charters
2022	$	(4,940,640	)
2023		(4,940,640	)
2024		(4,954,176	)
2025		(2,626,130	)
Total	$	(17,461,586	)

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Note 9 - Long-term Bank Loans (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

Borrower		December 31, 2020			December 31, 2021
Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		24,625,000			-
Noumea Shipping Ltd. / Gregos Shipping Ltd.	(a)		-			9,375,000
Diamantis Shipowners Ltd.	(b)		3,026,300			2,384,460
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(c)		11,150,000			8,450,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(d)		28,500,000			40,300,000
Jonathan John Shipping Ltd. / Corfu Navigation Ltd.	(e)		-			9,500,000
Jonathan Shipowners Ltd.	(f)		-			15,000,000
Marcos Shipping Ltd.	(g)		-			34,000,000
			67,301,300			119,009,460
Less: Current portion			(20,891,840	)		29,284,460
Long-term portion			46,409,460			89,725,000
Deferred charges, current portion			246,520			250,411
Deferred charges, long-term portion			189,432			720,049
Long-term bank loans, current portion net of deferred charges			20,645,320			29,034,049
Long-term bank loans, long-term portion net of deferred charges			46,220,028			89,004,951
Loan from related party, current
Euroseas Ltd.	(h)		2,500,000			-

Schedule of Future Annual Loan Repayments [Table Text Block]

To December 31:
2022	29,284,460
2023	51,765,000
2024	18,440,000
2025	19,520,000
Total	119,009,460

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Note 12 - Stock Incentive Plan (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Nonvested Share Activity [Table Text Block]

Non-vested Shares	Number of shares			Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019		21,948			10.16
Granted		15,444			8.13
Vested		(14,108	)		11.01
Non-vested on December 31, 2019		23,284			8.28
Non-vested on January 1, 2020		23,284			8.28
Granted		45,900			2.71
Vested		(15,064	)		8.34
Forfeited		(817	)		8.39
Non-vested on December 31, 2020		53,303			3.46
Non-vested on January 1, 2021		53,303			3.46
Granted		49,650			26.26
Vested		(30,360	)		3.47
Non-vested on December 31, 2021		72,593			19.05

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Note 13 - Earnings (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	2019			2020			2021
Income:
Net (loss) / income		(1,682,671	)		4,041,431			42,963,660
Dividends to Series B preferred shares		(1,271,782	)		(693,297	)		(255,324	)
Preferred deemed dividend		(504,577	)		-			(345,628	)
Net (loss) / income attributable to common shareholders		(3,459,030	)		3,348,134			42,362,708
Weighted average common shares –outstanding, basic		2,861,928			5,753,917			6,976,905
Basic (loss) / earnings per share		(1.21	)		0.58			6.07
Effect of dilutive securities:
Dilutive effect of non-vested shares		-			-			16,500
Weighted average common shares –outstanding, diluted		2,861,928			5,753,917			6,993,405
Diluted (loss) / earnings per share		(1.21	)		0.58			6.06

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Note 14 - Voyage Expenses and Vessel Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Voyage Vessel Operating Expenses and Commissions [Table Text Block]

	Year ended December 31,
	2019		2020		2021
Voyage expenses
Port charges and canal dues		251,197		451,586		253,855
Bunkers		804,211		882,673		370,879
Total		1,055,408		1,334,259		624,734
Vessel operating expenses
Crew wages and related costs		13,111,682		17,866,847		15,961,904
Insurance		1,844,088		2,947,937		2,917,042
Repairs and maintenance		1,110,995		1,316,864		1,247,176
Lubricants		2,029,230		2,609,647		2,471,994
Spares and consumable stores		4,758,290		6,245,518		5,784,004
Professional and legal fees		259,311		255,948		212,108
Other		869,686		976,928		1,145,209
Total		23,983,282		32,219,689		29,739,437

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Note 15 - Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2020		December 31, 2021
Interest rate swap contracts	Current assets – Derivatives		-		540,753
Total derivative assets			-		540,753
Interest rate swap contract	Current liabilities – Derivative		203,553		-
Interest rate swap contracts	Long-term liabilities – Derivatives		362,195		952,666
Total derivative liabilities			565,748		952,666

Derivative Instruments, Gain (Loss) [Table Text Block]

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2019			Year Ended December 31, 2020			Year Ended December 31, 2021
Interest rate swap contract– Unrealized (loss) / gain	Loss on derivatives, net		-			(565,748	)		153,835
Interest rate swap contract- Realized loss	Loss on derivatives, net		(2,885	)		(22,240	)		(180,976	)
Total net (loss) / gain on interest rate swap contract			(2,885	)		587,988			(27,141	)

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Note 16 - Preferred Shares (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Stockholders Equity [Table Text Block]

	Number of Shares			Preferred Shares Amount			Dividends paid-in-kind			Total
Balance, January 1, 2019		19,605			14,500,000			4,257,361			18,757,361
Dividends declared		81			-			78,639			78,639
Redemption of Preferred shares		(11,686	)		(8,155,055	)		(3,530,945	)		(11,686,000	)
Preferred deemed dividend		-			504,577			-			504,577
Balance, December 31, 2019		8,000			6,849,522			805,055			7,654,577
Dividends declared		365			-			365,059			365,059
Balance, December 31, 2020		8,365			6,849,522			1,170,114			8,019,636
Redemption of Preferred shares		(2,000	)		(2,000,000	)		-			(2,000,000	)
Preferred shares converted to common shares		(6,365	)		(5,195,150	)		(1,170,114	)		(6,365,264	)
Preferred deemed dividend		-			345,628			-			345,628
Balance, December 31, 2021		-			-			-			-

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Note 17 - Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value Measurement as of December 31, 2021
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Interest rate swap contracts, current portion	$	540,753		-	$	540,753		-
Liabilities
Interest rate swap contracts, long-term portion	$	952,666		-	$	952,666		-

	Fair Value Measurement as of December 31, 2020
	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities
Interest rate swap contract, current portion	$	203,553		-	$	203,553		-
Interest rate swap contract, long-term portion	$	362,195		-	$	362,195		-

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Note 1 - Basis of Presentation and General Information (Details Textual)	Dec. 19, 2019	Dec. 18, 2019	Dec. 31, 2021
Shareholders Ownership, Percentage			54.70%
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	8	8

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Note 1 - Basis of Presentation and General Information - Charterers Individually Accounted for More than 10% of the Company's Voyage and Time Charter Revenues (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Charterer CMA [Member]
Concentration Risk, Percentage	24.00%	17.00%	24.00%
Maersk Line A/S [Member]
Concentration Risk, Percentage	21.00%	19.00%	11.00%
Vasi Shipping Pte. Ltd., Singapore [Member]
Concentration Risk, Percentage	15.00%	0.00%	0.00%
Charterer MSC [Member]
Concentration Risk, Percentage	0.00%	18.00%	15.00%
Charterer GSS [Member]
Concentration Risk, Percentage	0.00%	10.00%	21.00%
Hapag-Lloyd AG [Member]
Concentration Risk, Percentage	0.00%	0.00%	16.00%

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Note 2 - Significant Accounting Policies (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2020
Estimated Salvage Value Per Light Weight Ton of Vessel	250	250
Ship Owning Crew Contract Term (Month)	9 months
Impairment, Long-Lived Asset, Held-for-Use, Total	$ 0
Percentage of Annual Increase in Internal Budget for Operating Expense	1.50%
Number of Reportable Segments	1
Minimum [Member]
Lessor, Operating Lease, Term of Contract (Day)	20 days
Maximum [Member]
Lessor, Operating Lease, Term of Contract (Day)	3 years
Lessor, Operating Lease, Option to Renewal Term (Month)	12 months
Vessels [Member]
Property, Plant and Equipment, Useful Life (Year)	25 years

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Note 3 - Inventories - Summary of Inventories (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Inventory	$ 2,274,454	$ 1,662,422
Lubricant [Member]
Inventory	1,851,508	1,558,484
Victualing [Member]
Inventory	105,527	103,938
Bunkers [Member]
Inventory	$ 317,419	$ 0

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Note 4 - Advances for Vessels Under Construction (Details Textual)	6 Months Ended	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 29, 2021 USD ($)
Payments for Vessels Under Construction		$ 7,615,958	$ (0)	$ (0)
Eco Design Fuel Efficient Containerships [Member]
Number of Vessels Under Construction	2	2			2
Construction of Vessels, Amount to Be Financed with a Combination of Debt and Equity	$ 76,100,000	$ 76,100,000			$ 76,100,000
Payments for Vessels Under Construction	$ 7,600,000	7,600,000
Eco Design Fuel Efficient Containership One [Member]
Payments for Vessels Under Construction		$ 3,800,000

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Note 5 - Vessels, Net (Details Textual)											1 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Nov. 11, 2021 USD ($)	Sep. 02, 2021 USD ($)	Nov. 16, 2020 $ / shares shares	Nov. 09, 2020 USD ($)	Oct. 29, 2020 USD ($)	Sep. 17, 2020 USD ($)	Jul. 17, 2020 USD ($)	Jul. 13, 2020 USD ($)	Jul. 06, 2020 USD ($)	Jun. 19, 2020 USD ($)	Feb. 29, 2020 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Nov. 25, 2020 $ / shares	Nov. 07, 2019 USD ($)
Twenty Day Weighted Average Share Price (in dollars per share) | $ / shares			$ 3.09871
Share Price (in dollars per share) | $ / shares			$ 3.40														$ 3.37
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property														$ (9,417)	$ 2,453,736	$ (0)
Other Operating Expenses, Income														1,298,318	2,687,205	$ (0)
Gain (Loss) on Disposition of Property Plant Equipment, Total														9,417
Impairment, Long-Lived Asset, Held-for-Use, Total														$ 0
Number of Vessels Used As Collateral														14
Number of Vessels Unencumbered														2
Synergy Holdings Limited [Member]
Stock Issued During Period, Shares, Contingent Consideration, Acquisition of Vessels (in shares) | shares			161,357
Purchase of Vessels [Member]
Cash Issued Per Vessel Purchased																		$ 500,000
Installation of WBT System Improvements on Vessel [Member]
Payments for Improvements of Property, Plant and Equipment														$ 470,000
Installation of Smart Monitoring Systems Improvement on Vessels [Member]
Payments for Improvements of Property, Plant and Equipment														400,000
MV Jonathan P [Member]
Payments to Acquire Property, Plant, and Equipment, Total		$ 25,500,000
Payments to Make Property, Plant and Equipment Available for Use		271,926
Payments to Acquire Property, Plant, and Equipment, Including Preparation Costs		$ 25,771,926
M/V Marcos V [Member]
Payments to Acquire Property, Plant, and Equipment, Total	$ 40,000,000
Payments to Make Property, Plant and Equipment Available for Use	523,475
Payments to Acquire Property, Plant, and Equipment, Including Preparation Costs	58,215,173
Marcos V, Vessels [Member]
Payments to Acquire Property, Plant, and Equipment, Total	57,691,698
Marcos V, In-place Attached Time Charter [Member]
Payments to Acquire Property, Plant, and Equipment, Total	$ 17,691,698
M/V EM Oinousses [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total							$ 3,600,000		$ 3,700,000
Impairment of Long-Lived Assets to be Disposed of												$ 120,000
Assets Held-for-sale, Not Part of Disposal Group, Current, Total												$ 3,770,000
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property															$ (100,000)
M/V Manolis P [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total										$ 2,000,000.0
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property										$ 300,000
Advance Received for Vessel Held for Sale											$ 1,133,817
Other Operating Expenses, Income													$ 1,000,000.0	$ 1,000,000.0
M/V Kuo Hsiung [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total								$ 1,900,000
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property								$ 300,000
Ninos [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total						$ 2,300,000
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property						$ 800,000
MV EM Athens [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total					$ 4,900,000
M/V Aggeliki P. [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total				$ 1,200,000

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Note 5 - Vessels, Net - Summary of Vessels (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Net book value	$ 98,458,447
Vessel depreciation	(7,203,198)	$ (6,605,976)	$ (4,178,886)
- Depreciation for the year	(7,203,198)	(6,605,976)	(4,178,886)
Net book value	176,111,486	98,458,447
Vessels [Member]
Costs	116,331,440	132,863,067
Accumulated depreciation	(17,872,993)	(16,632,734)
Net book value	98,458,447	116,230,333
Vessel depreciation	(7,203,198)	(6,605,976)
- Depreciation for the year	(7,203,198)	(6,605,976)
- Sale of vessels		(17,655,916)
- Sale of vessels		5,365,717
- Sale of vessels		(12,290,199)
- Contingent consideration for the Synergy Vessels acquisition		548,612
- Capitalized expenses	869,138	575,677
Net book value	176,111,486	98,458,447	116,230,333
Costs	201,187,677	116,331,440	132,863,067
Accumulated depreciation	(25,076,191)	$ (17,872,993)	$ (16,632,734)
Jonathan P Vessels [Member]
- Delivery of Vessels	25,771,926
Marcos V, Vessels [Member]
- Delivery of Vessels	$ 58,215,173

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Note 6 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Accrued payroll expenses	$ 604,761	$ 339,004
Accrued interest expense	282,724	173,576
Accrued general and administrative expenses	119,750	187,311
Accrued commissions	239,313	76,130
Other accrued expenses	456,377	524,399
Total	$ 1,702,925	$ 1,300,420

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Note 7 - Fair Value of Below Market Time Charters Acquired (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Nov. 30, 2019	Aug. 01, 2019
Amortization of fair value of below market time charters acquired	$ 230,112	$ 1,714,370	$ 857,945
Below Market Time Charters Acquired, Noncurrent	17,461,586	$ 0
Fair Value, Inputs, Level 2 [Member] | EM Hydra, EM Kea and EM Spetses [Member]
Below Market Time Charters, Fair Value					$ 778,287
Fair Value, Inputs, Level 2 [Member] | Synergy Keelung, Synergy Oakland and Synergy Busan [Member]
Below Market Time Charters, Fair Value				$ 1,794,028
Fair Value, Inputs, Level 2 [Member] | M/V Marcos V [Member]
Below Market Time Charters, Fair Value	$ 17,691,698

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Note 7 - Fair Value of Below Market Time Charters Acquired (Details)	Dec. 31, 2021 USD ($)
2022	$ (4,940,640)
2023	(4,940,640)
2024	(4,954,176)
2025	(2,626,130)
Total	$ (17,461,586)

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Note 8 - Related Party Transactions (Details Textual)				1 Months Ended	2 Months Ended	4 Months Ended	9 Months Ended	11 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($)	Jan. 01, 2018	Jan. 01, 2012 EUR (€)	Aug. 31, 2019 USD ($) shares	Dec. 31, 2019 USD ($)	Apr. 20, 2022 EUR (€)	Sep. 30, 2020	Nov. 15, 2019 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 EUR (€)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 EUR (€)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 EUR (€)	Nov. 01, 2019 USD ($)
Service Management Costs Daily Fee Related Party | €										€ 685		€ 685		€ 685
Related Party Agreement Term (Year)		5 years	5 years
Related Party Transaction Discount Percentage		5.00%	5.00%
Related Party Transaction Daily Fee Per Vessel Per Day in Lay Up | €			€ 342.5
Due to Related Parties, Total									$ 309,970		$ 24,072
Four Feeder Containerships [Member]
Number of Vessels Acquired				4
Consideration to Acquire Property, Plant and Equipment				$ 28,200,000
Payments to Acquire Property, Plant, and Equipment, Total				$ 15,000,000
Stock Issued During Period, Shares, Purchase of Assets (in shares) | shares				2,816,901
Proceeds from Issuance of Long-term Debt, Total				$ 16,167,680
Shares Issued, Percent of Outsanding Shares of the Company				64.30%
Eurobulk Ltd. [Member] | Vessel Management Fees [Member]
Related Party Transaction, Amounts of Transaction									4,294,789		5,293,199		$ 3,671,335
Eurobulk Ltd. [Member] | Fixed Management Fees [Member]
Related Party Transaction, Amounts of Transaction					$ 2,000,000			$ 1,250,000
Eurobulk Ltd. [Member] | Fixed Management Fees [Member] | Special Bonus to Employees and Consultants [Member]
Related Party Transaction, Amounts of Transaction									460,000
Eurobulk Ltd. [Member] | Fixed Management Fees [Member] | General and Administrative Expense [Member]
Related Party Transaction, Amounts of Transaction									2,460,000		2,000,000		1,344,250
First Debt Agreement [Member] | Colby Trading Ltd [Member]
Due to Related Parties, Total	$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Repayments of Long-term Debt, Total	$ 625,000
Second Debt Agreement [Member] | Colby Trading Ltd [Member]
Due to Related Parties, Total															$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage															8.00%
Eurochart [Member] | Vessel Sales [Member]
Due to Related Parties, Total									$ 255,000
Related Party Transaction Commission, Percentage							1.00%		1.00%	1.00%
Related Party Transaction, Expenses from Transactions with Related Party									$ 0		153,750		0
Eurochart [Member] | Charter Revenues [Member]
Related Party Transaction Commission, Percentage							1.25%
Related Party Transaction, Expenses from Transactions with Related Party									1,075,274		504,892		493,341
Eurochart [Member] | Vessel Sales, Commission [Member]
Related Party Transaction, Amounts of Transaction									400,000
Sentinel [Member]
Related Party Transaction, Expenses from Transactions with Related Party									$ 77,896		100,837		106,749
Related Party Transaction Commission on Premium, Maximum, Percentage									5.00%	5.00%
Technomar [Member]
Related Party Transaction, Expenses from Transactions with Related Party									$ 155,739		$ 203,678		$ 142,332
Related Party Transaction Amounts of Transaction Per Crew Member Per Month									$ 50
Subsequent Event [Member]
Service Management Costs Daily Fee Related Party | €						€ 720
Related Party Transaction Daily Fee Per Vessel Per Day in Lay Up | €						€ 360

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Note 9 - Long-term Bank Loans (Details Textual)																2 Months Ended	3 Months Ended	7 Months Ended	12 Months Ended
	Dec. 14, 2021 USD ($)	Nov. 26, 2021 USD ($)	Oct. 22, 2021 USD ($)	Sep. 06, 2021 USD ($)	Nov. 25, 2020 USD ($) $ / shares shares	Nov. 24, 2020 USD ($)	Jun. 26, 2020 USD ($)	May 15, 2020	Nov. 08, 2019 USD ($)	Nov. 01, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jul. 30, 2019 USD ($)	Jul. 29, 2019 USD ($)	May 30, 2019 USD ($)	Nov. 21, 2018 USD ($)	Nov. 19, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Nov. 23, 2021 USD ($)	Nov. 16, 2020 $ / shares	Sep. 30, 2020 USD ($)	Jul. 29, 2020 USD ($)	Jul. 07, 2020 USD ($)
Number of Vessels Sold																	5
Gain (Loss) on Extinguishment of Debt, Total																			$ 0	$ (491,571)	$ (328,291)
Share Price (in dollars per share) | $ / shares					$ 3.37																		$ 3.40
Restricted Cash, Total																	$ 2,245,010		4,967,285	2,245,010
Interest Expense, Total																			2,556,237	3,836,985	3,219,471
Term Sheet, Piraeus S.A. [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid		$ 4,340,000
Payments of Debt Issuance Costs																			$ 115,000
Debt Instrument, Covenant, Security Cover Ratio																			125.00%
Debt Instrument, Face Amount		$ 16,500,000
Debt Instrument Number of Quarterly Payments		16
Term Sheet, Piraeus S.A., First Four Installments [Member]
Debt Instrument, Periodic Payment, Total		$ 1,500,000
Term Sheet, Piraeus S.A., Eleven Installments [Member]
Debt Instrument, Periodic Payment, Total		$ 560,000
Jonathan John Shipping Ltd., and Corfu Navigation Ltd. [Member]
Debt Instrument, Periodic Payment, Total				$ 500,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid				2,000,000
Payments of Debt Issuance Costs				$ 225,000
Debt Instrument, Covenant, Security Cover Ratio				120.00%
Debt Instrument, Face Amount				$ 10,000,000
Debt Instrument, Periodic Payment, Number of Payments				16
Jonathan John Shipping Ltd. [Member]
Debt Instrument, Face Amount				$ 3,500,000
Corfu Navigation Ltd. [Member]
Debt Instrument, Face Amount				$ 6,500,000
Term Loan, HSBC Bank plc [Member]
Debt Instrument, Periodic Payment, Total			$ 1,100,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			1,800,000
Payments of Debt Issuance Costs			$ 117,500
Debt Instrument, Covenant, Security Cover Ratio			130.00%
Debt Instrument, Face Amount			$ 15,000,000
Debt Instrument Number of Quarterly Payments			12
Term Loan With Eurobank Ergasias S.A. by Marcos Shipping Ltd. [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid	$ 7,000,000
Payments of Debt Issuance Costs	$ 300,000
Debt Instrument, Covenant, Security Cover Ratio	120.00%
Debt Instrument, Face Amount	$ 34,000,000
Debt Instrument Number of Quarterly Payments	16
Term Loan With Eurobank Ergasias S.A. by Marcos Shipping Ltd., Twelve Installments [Member]
Debt Instrument, Periodic Payment, Total	$ 2,000,000
Term Loan With Eurobank Ergasias S.A. by Marcos Shipping Ltd., Four Installments [Member]
Debt Instrument, Periodic Payment, Total	$ 750,000
London Interbank Offered Rate (LIBOR) [Member] | Term Sheet, Piraeus S.A. [Member]
Debt Instrument, Basis Spread on Variable Rate		2.60%
London Interbank Offered Rate (LIBOR) [Member] | Jonathan John Shipping Ltd., and Corfu Navigation Ltd. [Member]
Debt Instrument, Basis Spread on Variable Rate				3.50%
London Interbank Offered Rate (LIBOR) [Member] | Term Loan, HSBC Bank plc [Member]
Debt Instrument, Basis Spread on Variable Rate			2.35%
London Interbank Offered Rate (LIBOR) [Member] | Term Loan With Eurobank Ergasias S.A. by Marcos Shipping Ltd. [Member]
Debt Instrument, Basis Spread on Variable Rate	2.80%
Eurobank Ergasias S.A. [Member] | Corfu Navigation Ltd., Jonathan John Shipping Ltd. and Bridge Shipping Ltd. [Member]
Short-term Debt, Refinanced, Amount				$ 5,525,000
Eurobank Ergasias S.A. [Member] | Revolving Loan Facility [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid							$ 7,125,000							$ 6,000,000
Debt Instrument, Deferred Amount							$ 1,125,000
Debt Instrument, Number of Periodic Payments, Deferred							3
Proceeds from Issuance of Long-term Debt, Total														12,000,000.0
Security Deposit														$ 5,000,000.0				$ 1,000,000.0			$ 1,000,000.0
Debt Instrument, Number of Periodic Payments														16
Debt Instrument, Periodic Payment, Total														$ 375,000
Payments of Debt Issuance Costs														$ 32,000
Eurobank Ergasias S.A. [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Loan Facility [Member]
Debt Instrument, Basis Spread on Variable Rate														4.40%				3.90%
Eurobank Ergasias S.A. [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity															$ 45,000,000
Long-term Line of Credit, Total															$ 30,000,000
Long-term Debt, Term (Month)															18 months
Debt Instrument, Number of Quarterly Installment Payments															12
Debt Instrument, Periodic Payment, Total															$ 900,000		400,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid															19,200,000		12,150,000			$ 12,150,000
Line of Credit Facility, Remaining Borrowing Capacity															$ 7,350,000
Line of Credit Facility, Remaining Percent of Vessel Market Value to Finance															55.00%
Line of Credit Facility, Commitment Fee Percentage															0.40%
Line of Credit Facility, Underwriting Fee Percentage															1.00%
Debt Instrument, Deferred Amount							$ 2,700,000
Debt Instrument, Number of Periodic Payments, Deferred																				3
Repayments of Long-term Debt, Total																	$ 11,750,000
Repayments of Debt																$ 7,030,000.00
Debt Instrument, Covenant, Security Cover Ratio															140.00%
Eurobank Ergasias S.A. [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate															4.40%						3.90%
Piraeus Bank S.A. [Member]
Line of Credit Facility, Maximum Borrowing Capacity													$ 4,000,000
Debt Instrument, Periodic Payment, Total													160,460
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid													1,742,160												$ 1,902,620
Debt Instrument, Deferred Amount																									$ 160,460
Proceeds from Issuance of Long-term Debt, Total													$ 3,667,680
Debt Instrument, Number of Periodic Payments													12
Payments of Debt Issuance Costs																					$ 32,000
Line of Credit Facility, Maximum Borrowing Amount, Percent of Scrap Value of Vessel													90.00%
Debt Instrument, Security Cover Ratio Covenant																		110.00%			110.00%
Debt Instrument, Security Cover Ratio Covenant, After First Anniversary																		120.00%			120.00%
Piraeus Bank S.A. [Member] | Second Debt Agreement [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid									$ 17,400,000													$ 17,400,000				$ 18,900,000
Debt Instrument, Deferred Amount																						$ 1,500,000				$ 1,500,000
Proceeds from Issuance of Long-term Debt, Total									$ 32,000,000
Payments of Debt Issuance Costs																					$ 352,000
Debt Instrument, Security Cover Ratio Covenant									125.00%
Piraeus Bank S.A. [Member] | Second Debt Agreement, First Payments [Member]
Debt Instrument, Periodic Payment, Total									$ 1,400,000
Debt Instrument, Number of Periodic Payments									3
Piraeus Bank S.A. [Member] | Second Debt Agreement, Second Payments [Member]
Debt Instrument, Periodic Payment, Total									$ 800,000
Debt Instrument, Number of Periodic Payments									13
Piraeus Bank S.A. [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate												2.95%	3.50%
Piraeus Bank S.A. [Member] | London Interbank Offered Rate (LIBOR) [Member] | Second Debt Agreement [Member]
Debt Instrument, Basis Spread on Variable Rate									3.50%
HSBC Bank PLC [Member]
Debt Instrument, Periodic Payment, Total												$ 450,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid												6,200,000												$ 7,100,000
Debt Instrument, Deferred Amount																								$ 900,000
Proceeds from Issuance of Long-term Debt, Total												$ 12,500,000
Debt Instrument, Number of Periodic Payments												14
Payments of Debt Issuance Costs																					62,500
Debt Instrument, Security Cover Ratio Covenant												130.00%
Colby Trading Ltd [Member]
Proceeds from Issuance of Long-term Debt, Total											$ 2,500,000
Debt Instrument, Number of Periodic Payments								3			4
Debt Instrument, Periodic Payment, Total											$ 625,000
Debt Instrument, Interest Rate, Stated Percentage											8.00%
Interest Expense, Debt, Total																				$ 160,035	51,111
Gain (Loss) on Extinguishment of Debt, Total					$ (491,571)
Colby Trading Ltd [Member] | Conversion of Loan Into Common Shares [Member]
Debt Conversion, Original Debt, Amount						$ 1,875,000
Debt Conversion, Converted Instrument, Shares Issued (in shares) | shares					702,247
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares					$ 2.67
Colby Trading Ltd [Member] | Second Debt Agreement [Member]
Proceeds from Issuance of Long-term Debt, Total										$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage										8.00%
Interest Expense, Debt, Total																			$ 50,000	$ 201,248	$ 33,333

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Note 9 - Long-term Bank Loans - Summary of Long-term Debt (Details) - USD ($)		Dec. 31, 2021	Dec. 31, 2020
Long-term debt, gross	[1]	$ 119,009,460	$ 67,301,300
Less: Current portion		29,284,460	(20,891,840)
Long-term portion		(89,725,000)	(46,409,460)
Deferred charges, current portion		250,411	246,520
Deferred charges, long-term portion		720,049	189,432
Long-term bank loans, current portion net of deferred charges		29,034,049	20,645,320
Long-term bank loans, long-term portion net of deferred charges		89,004,951	46,220,028
Euroseas Ltd.	[1]	0	2,500,000
Joanna Maritime Ltd., Jonathan John Shipping Ltd., Corfu Navigation Ltd., Bridge Shipping Ltd, Noumea Shipping Ltd., Gregos Shiping Ltd. [Member]
Long-term debt, gross	[2]	0	24,625,000
Noumea Shipping Ltd., Gregos Shipping Ltd. [Member]
Long-term debt, gross	[2]	9,375,000	0
Diamantis Shipowners Ltd. [Member]
Long-term debt, gross	[3]	2,384,460	3,026,300
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd. [Member]
Long-term debt, gross	[4]	8,450,000	11,150,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd. [Member]
Long-term debt, gross	[5]	40,300,000	28,500,000
Jonathan John Shipping Ltd., and Corfu Navigation Ltd. [Member]
Long-term debt, gross	[6]	9,500,000	0
Jonathan Shipowners Ltd. [Member]
Long-term debt, gross	[7]	15,000,000	0
Marcos Shippting Ltd. [Member]
Long-term debt, gross	[8]	$ 34,000,000	$ 0

[1] On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd. (“Colby”), a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as supplemented on December 20, 2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan was 8% per annum and was payable quarterly. The loan was payable in four repayment installments of a principal amount of $625,000 each, maturing by November 2020. The first repayment instalment was paid on May 15, 2020 and the remaining three installments, which were payable on a quarterly basis, were rescheduled to be paid at the maturity of the loan in November 2020. Under certain limited circumstances, the Company could pay principal in equity, and the loan was convertible in common stock of the Company at the option of the lender at certain times. The Company paid $51,111 and $160,035 on interest for the years ended December 31, 2019 and 2020, respectively. On November 24, 2020, Colby exercised its right to convert the outstanding balance of the loan of $1,875,000 into the Company’s common shares as per the terms of the loan agreement. As a result, on November 25, 2020, the Company issued 702,247 shares to Colby. The conversion price was the lowest closing price over the fifteen business days prior to the conversion notice as per the terms of the loan, amounting to approximately $2.67 per share. The Company incurred a loss on the extinguishment of the above debt of $491,571, deriving from the difference between the conversion price and the closing price of the Company’s common shares on the Nasdaq Capital Market on the date of issuance of approximately $3.37 per share. The specific amount was recorded under “Loss on debt extinguishment” in the consolidated statement of operations for the year ended December 31, 2020. On November 1, 2019, Euroseas signed a second agreement with Colby, as supplemented on November 15, 2020, to draw another $2.5 million loan to finance working capital needs. Interest on the loan was 8% per annum and was payable quarterly. This loan was fully repaid upon its maturity on March 31, 2021. The Company paid $33,333, $201,248 and $50,000 on interest for this loan for the years ended December 31, 2019, 2020 and 2021, respectively.

[2] On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A. (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 to fully refinance all of the Company’s existing facilities with this bank and provide working capital. As of December 31, 2020, and following the sale of five vessels used as collateral during 2020 (see below) the borrowers of the specific tranche were Joanna Maritime Ltd., Jonathan John Shipping Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. The revolving tranche was available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and could be renewed subject to the bank’s approval and a fee to be determined. The loan was payable in 12 equal consecutive quarterly principal installments of $900,000 followed by a balloon amount of $19,200,000 to be paid together with the last principal installment in November 2021. The interest rate margin was 3.90% over LIBOR, reduced from 4.40% as described below. Each quarterly principal instalment paid was added to the revolving tranche and could be redrawn. The remaining $7,350,000 of the revolving facility, after including principal repayments up to December 31, 2019, remained available to the Company in order to finance up to 55% of the market value of post 2001-built ships. The undrawn amount available under the revolving facility incurred an annual commitment of 0.40% and any amount drawn would incur a 1% underwriting fee. On June 26, 2020, the Lender signed with the borrower a second supplement letter according to which the undrawn committed amount under the abovementioned credit facility agreement was cancelled upon the borrower’s request. Additionally, the Lender agreed to defer the amount of $2,700,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in November 2021. Within the third and the fourth quarter of 2020 the Company sold five vessels used as collateral under the abovementioned credit facility agreement (M/V “Manolis P.”, M/V “EM Oinousses”, M/V “Kuo Hsiung”, M/V “Ninos” and M/V “EM Athens”). An aggregate amount of $11,750,000 was prepaid and all aforementioned vessels were released from their mortgages. Following the above prepayment, the quarterly principal installments were reduced to $400,000 and the balloon payment was reduced to $12,150,000 with the repayment of the loan resuming in February 2021. On September 9, 2021 and November 19, 2021, Bridge Shipping Ltd. and Joanna Maritime Ltd., respectively, repaid their full amount of outstanding indebtedness amounting to $7.03 million by using the Company’s own funds and became unencumbered. At the same date Jonathan John Shipping Ltd. and Corfu Navigation Ltd. repaid also their indebtedness to the Lender using a new loan facility by Sinopac Capital International (HK) Limited as explained in note (f) below. On May 30, 2019, the Lender made available to the Company two new ship-related (M/V “EM Astoria” and M/V “Evridiki G”) advances totaling $12.0 million or 55% of the aggregate market value of the two aforementioned vessels, with a simultaneous reduction of the margin of the loan, from 4.40% to 3.90% per annum. The Lender also agreed, during the remaining facility period, to reduce the amount held as cash collateral from $5.0 million to $1.0 million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shipping Ltd. and to provide working capital. The loan is payable in 16 equal consecutive quarterly principal installments of $375,000 followed by a balloon amount of $6,000,000 to be paid together with the last principal installment in May 2023. On June 26, 2020, the Lender agreed to defer the amount of $1,125,000 (the remaining three installments of 2020) to be repaid together with the balloon payment in May 2023, increasing the balloon amount to $7,125,000. The loan is secured with (i) first priority mortgages over M/V “Evridiki G” and M/V “EM Astoria”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this tranche. The security cover ratio covenant for the facility is set to 140%.

[3] On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. (“Piraeus”) for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value of M/V “Diamantis P”. On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V “Diamantis P”. The loan is payable in twelve equal consecutive quarterly installments of $160,460 plus a balloon amount of $1,742,160 to be paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Diamantis P”, (ii) first assignment of earnings and insurance of M/V “Diamantis P”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter. On July 29, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $160,460, representing half of the installments of the third and the fourth quarter of 2020 to be repaid together with the balloon payment in July 2022, increasing the balloon amount to $1,902,620.

[4] On July 30, 2019, the Company signed a term loan facility with HSBC Bank Plc. (“HSBC”) for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019. The loan is payable in fourteen consecutive equal quarterly installments of $450,000 plus a balloon payment of $6,200,000 to be paid together with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%. On September 30, 2020, the Company signed a supplemental agreement with HSBC under which it was agreed to defer the amount of $900,000, representing the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in February 2023, increasing the balloon amount to $7,100,000.

[5] On November 8, 2019, the Company signed a term loan facility with Piraeus for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 to paid together with the last instalment in November 2023. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%. On July 7, 2020, the Company signed a supplemental agreement with Piraeus under which it was agreed to defer the amount of $1,500,000 from the installments of the third and the fourth quarter of 2020, to be repaid together with the balloon payment in November 2023, increasing the balloon amount to $18,900,000. On November 23, 2021, the Company paid the amount of $1,500,000 that was deferred according to the latest supplemental agreement reducing again the balloon of the loan to $17,400,000. On November 26, 2021, the Company signed a new facility agreement with Piraeus in respect to the existing revolving facility and on November 29, 2021 drew the amount of $16,500,000 in order to finance general corporate needs of the Company. The loan is payable in sixteen consecutive quarterly instalments, the first four in the amount of $1,500,000 each, the next eleven in the amount of $560,000 each and a last instalment of $4,340,000. The loan bears interest at LIBOR plus a margin of 2.60%. The Company paid loan arrangement fees of $115,000 within 2021 for this loan. The security cover ratio covenant for the facility was set to 125%, the same with the existing facility.

[6] On September 6, 2021, the Company signed a term loan facility with Sinopac Capital International (HK) Limited (“Sinopac”) for an amount of up to $10,000,000, in order to refinance the existing indebtedness of M/V “Aegean Express” and M/V “EM Corfu.”, amounting to $5,525,000 as of the date of refinancing, and for working capital purposes. The facility was available in two advances. Both advances of $3,500,000 and $6,500,000 were drawn on September 9, 2021 by Jonathan John Shipping Ltd. and Corfu Navigation Ltd. as the borrowers. The loan is payable in sixteen consecutive quarterly installments of $500,000 each, followed by a balloon payment of $2,000,000 to be paid together with the last installment in September 2025. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with the following: (i) first priority mortgages over M/V “Aegean Express” and M/V “EM Corfu”, (ii) first assignment of earnings and insurance of the abovementioned vessels and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $225,000 for this loan.

[7] On October 22, 2021, the Company signed a term loan facility with HSBC, and on October 26, 2021, a loan of $15,000,000 was drawn by Jonathan Shipowners Ltd. in order to post-delivery finance part of the acquisition cost of M/V “Jonathan P” and to finance general corporate purposes of the Company. The loan is payable in twelve consecutive quarterly installments of $1,100,000 followed by a balloon payment of $1,800,000 payable together with the last installment in October 2024. The loan bears interest at LIBOR plus a margin of 2.35%. The loan is secured with the following: (i) first priority mortgage over M/V “Jonathan P”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 130%. The Company paid loan arrangement fees of $117,500 for this loan.

[8] On December 14, 2021, the Company signed a term loan facility with Eurobank Ergasias S.A., and a loan of $34,000,000 was drawn by Marcos Shipping Ltd. in order to finance part of the acquisition cost of M/V “Marcos V”. The loan is payable in sixteen consecutive quarterly installments, comprising twelve installments of $2,000,000 followed by four installments of $750,000 each and by a balloon payment of $7,000,000 payable together with the last installment in December 2025. The loan bears interest at LIBOR plus a margin of 2.80%. The loan is secured with the following: (i) first priority mortgage over M/V “Marcos V”, (ii) first assignment of earnings and insurance of the abovementioned vessel and (iii) other covenants and guarantees similar to the remaining loans of the Company. The security cover ratio covenant for this facility stands at 120%. The Company paid loan arrangement fees of $300,000 for this loan.

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Note 9 - Long-term Bank Loans - Summary of Future Annual Loan Repayments for Long-term Debt (Details)	Dec. 31, 2021 USD ($)
2022	$ 29,284,460
2023	51,765,000
2024	18,440,000
2025	19,520,000
Total	$ 119,009,460

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Note 10 - Income Taxes (Details Textual)	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Effective United States Tax on U.S. Source Shipping	4.00%	4.00%	4.00%

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Note 11 - Commitments and Contingencies (Details Textual)	6 Months Ended	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 29, 2021 USD ($)
Future Gross Minimum Revenues Under Non-cancellable Time Charter Agreements	$ 281,900,000	$ 281,900,000
Future Gross Minimum Revenues Under Non-cancellable Time Charter Agreements, Due in Rolling Year One	122,400,000	122,400,000
Future Gross Minimum Revenues Under Non-cancellable Time Charter Agreements, Due in Rolling Year Two	91,000,000.0	91,000,000.0
Future Gross Minimum Revenues Under Non-cancellable Time Charter Agreements, Due in Rolling Year Three	$ 68,500,000	68,500,000
Payments for Vessels Under Construction		$ 7,615,958	$ (0)	$ (0)
Eco Design Fuel Efficient Containerships [Member]
Number of Vessels Under Construction	2	2			2
Construction of Vessels, Amount to Be Financed with a Combination of Debt and Equity	$ 76,100,000	$ 76,100,000			$ 76,100,000
Payments for Vessels Under Construction	7,600,000	7,600,000
Construction of Vessel, Future Minimum Payments Due, Next Twelve Months	19,000,000.0	19,000,000.0
Construction of Vessel, Future Minimum Payments Due in Two Years	$ 49,500,000	$ 49,500,000

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Note 12 - Stock Incentive Plan (Details Textual)							12 Months Ended
	Nov. 19, 2021 shares	Nov. 05, 2020 shares	Nov. 04, 2019 shares	Nov. 21, 2018 shares	Nov. 02, 2017 shares	Jul. 31, 2014 shares	Dec. 31, 2021 USD ($) shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) shares
Share-based Payment Arrangement, Expense | $							$ 182,324	$ 121,631	$ 97,919
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $							$ 1,265,365
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)							10 months 9 days
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)							49,650	45,900	15,444
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (in shares)							0	817	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares								$ 8.39
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Granted in Period, Fair Value | $							$ 1,303,809	$ 124,389	$ 125,560
The 2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)						75,000
Share Based Compensation Arrangement By Share Based Payment Awarded Term (Year)						10 years
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)				15,681	12,534
Number of Key People Issued Awards				18	18
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				50.00%	50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage					50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | Officers and Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	27,700	27,100	8,713	9,021	7,213
The 2014 Plan [Member] | Restricted Stock [Member] | Officers and Directors [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | Eurobulk Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,950	18,800	6,731	6,660	5,321
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			15,444						15,444
Number of Key People Issued Awards			17
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 16 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		45,900
Number of Key People Issued Awards		16
The 2014 Plan [Member] | Restricted Stock [Member] | The 16 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 16 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 21 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	49,650
Number of Key People Issued Awards	21
The 2014 Plan [Member] | Restricted Stock [Member] | The 21 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 21 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%

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Note 12 - Stock Incentive Plan - Summary of the Status of the Company's Non-vested Shares (Details) - Restricted Stock [Member] - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Non-vested (in shares)	53,303	23,284	21,948
Non-vested, weighted average grant date fair value (in dollars per share)	$ 3.46	$ 8.28	$ 10.16
Granted (in shares)	49,650	45,900	15,444
Granted, weighted average grant date fair value (in dollars per share)	$ 26.26	$ 2.71	$ 8.13
Vested (in shares)	(30,360)	(15,064)	(14,108)
Vested, weighted average grant date fair value (in dollars per share)	$ 3.47	$ 8.34	$ 11.01
Non-vested (in shares)	72,593	53,303	23,284
Non-vested, weighted average grant date fair value (in dollars per share)	$ 19.05	$ 3.46	$ 8.28
Forfeited (in shares)	0	(817)	0
Forfeited, weighted average grant date fair value (in dollars per share)		$ 8.39

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Note 13 - Earnings (Loss) Per Share (Details Textual) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Weighted Average Number Diluted Shares Outstanding Adjustment, Total (in shares)	16,500	0	0
Unvested Incentive Award Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		53,303	23,284
Series B Preferred Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		8,365	8,000

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Note 13 - Earnings (Loss) Per Share - Summary of Basic and Diluted Loss Per Common Share (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Net (loss) / income	$ 42,963,660	$ 4,041,431	$ (1,682,671)
Dividends to Series B preferred shares	(255,324)	(693,297)	(1,271,782)
Preferred deemed dividend	(345,628)	0	(504,577)
Net (loss) / income attributable to common shareholders	$ 42,362,708	$ 3,348,134	$ (3,459,030)
Weighted average common shares –outstanding, basic (in shares)	6,976,905	5,753,917	2,861,928
Basic (loss) / earnings per share (in dollars per share)	$ 6.07	$ 0.58	$ (1.21)
Dilutive effect of non-vested shares (in shares)	16,500	0	0
Weighted average common shares –outstanding, diluted (in shares)	6,993,405	5,753,917	2,861,928
Diluted (loss) / earnings per share (in dollars per share)	$ 6.06	$ 0.58	$ (1.21)
Series B Preferred Stock [Member]
Dividends to Series B preferred shares	$ (255,324)	$ (693,297)	$ (1,271,782)

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Note 14 - Voyage Expenses and Vessel Operating Expenses - Summary of Voyage, Vessel, Operating Expenses and Commissions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Voyage expenses	$ 624,734	$ 1,334,259	$ 1,055,408
Vessel operating expenses	29,739,437	32,219,689	23,983,282
Port Charges and Canal Dues [Member]
Voyage expenses	253,855	451,586	251,197
Bunkers [Member]
Voyage expenses	370,879	882,673	804,211
Crew Wages and Related Costs [Member]
Vessel operating expenses	15,961,904	17,866,847	13,111,682
Insurance [Member]
Vessel operating expenses	2,917,042	2,947,937	1,844,088
Repairs and Maintenance [Member]
Vessel operating expenses	1,247,176	1,316,864	1,110,995
Lubricants [Member]
Vessel operating expenses	2,471,994	2,609,647	2,029,230
Spares and Consumable Stores [Member]
Vessel operating expenses	5,784,004	6,245,518	4,758,290
Professional and Legal Fees [Member]
Vessel operating expenses	212,108	255,948	259,311
Other Vessel Operating Expenses [Member]
Vessel operating expenses	$ 1,145,209	$ 976,928	$ 869,686

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Note 15 - Derivative Financial Instruments (Details Textual) - Interest Rate Swap [Member] $ in Millions	Dec. 31, 2021 USD ($)	Oct. 12, 2021 USD ($)	Apr. 16, 2020 USD ($)	Nov. 28, 2017	Nov. 28, 2016	Oct. 17, 2014 USD ($)
Derivative, Notional Amount	$ 40
Eurobank [Member]
Derivative, Number of Instruments Held, Total						1
Derivative, Notional Amount		$ 10	$ 30			$ 10
Derivative, Average Fixed Interest Rate						1.97%
Derivative, Fixed Interest Rate		1.09%	0.78%	3.55%	0.95%	0.50%

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Note 15 - Derivative Financial Instruments - Derivatives Not Designated as Hedging Instruments by Account Type (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Interest rate swap contracts	$ 540,753	$ 0
Total derivative assets	540,753	0
Interest rate swap contract	0	203,553
Interest rate swap contracts	952,666	362,195
Total derivative liabilities	$ 952,666	$ 565,748

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Note 15 - Derivative Financial Instruments - Gain or Loss on Derivatives Not Designated as Hedging Instruments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Gain (loss) on derivatives	$ (27,141)	$ (587,988)	$ (2,885)
Not Designated as Hedging Instrument [Member]
Gain (loss) on derivatives	(27,141)	587,988	(2,885)
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts, Unrealized (Loss) / Gain [Member]
Gain (loss) on derivatives	153,835	(565,748)	0
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts, Realized (Loss) / Gain [Member]
Gain (loss) on derivatives	$ (180,976)	$ (22,240)	$ (2,885)

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Note 16 - Preferred Shares (Details Textual) - USD ($)							1 Months Ended	12 Months Ended
	Jan. 29, 2023	Jan. 29, 2021	Jun. 10, 2019	Jan. 29, 2019	May 30, 2018	Jan. 27, 2014	Jan. 29, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Payments for Repurchase of Redeemable Preferred Stock								$ 2,000,000	$ (0)	$ 11,686,000
Dividends, Preferred Stock, Total								255,324	693,297	1,271,782
Dividends, Paid-in-kind, Total								$ 0	365,059	78,640
Dividends, Preferred Stock, Cash									150,000
Dividends Payable									$ 170,000
Conversion of Series B Preferred Shares into Common Stocks [Member]
Conversion of Stock, Shares Converted (in shares)							6,365	6,365
Series B Preferred Stock [Member]
Proceeds from Issuance of Convertible Preferred Stock						$ 29,000,000
Preferred Stock, Redemption Price Per Share (in dollars per share)						$ 1,000
Preferred Stock, Dividend Rate, Percentage		14.00%	4.00%
Preferred Stock Additional Cash Dividend Under Specified Conditions Percentage						40.00%
Convertible Preferred Stock, Conversion Price Per Share (in dollars per share)						$ 15.58
Payments for Repurchase of Redeemable Preferred Stock		$ 2,000,000	$ 11,700,000
Percentage of Outstanding Preferred Stock Redeemed			59.40%
Preferred Stock, Value, Outstanding			$ 8,000,000
Preferred Stock Deemed Dividend							$ 345,628			504,577
Stock Redeemed or Called During Period, Shares (in shares)		2,000
Preferred Stock, Dividend Rate Per Annum, Cash		8.00%					8.00%
Preferred Stock, Dividend Rate Per Annum, Paid-in-kind		9.00%					9.00%
Dividends, Preferred Stock, Total										1,270,000
Dividends, Paid-in-kind, Total										80,000.00
Dividends, Preferred Stock, Cash										1,030,000.00
Dividends Payable										$ 160,000
Preferred Stock Voting Percentage of Number of Shares Convertible of Common Stock								50.00%
Series B Preferred Stock [Member] | Forecast [Member]
Preferred Stock, Dividend Rate, Percentage	14.00%
Series B Preferred Stock [Member] | Maximum [Member] | First Five Years [Member]
Preferred Stock, Dividend Rate, Percentage						5.00%
Series B Preferred Stock [Member] | Maximum [Member] | Next Two Years [Member]
Preferred Stock, Dividend Rate, Percentage				12.00%
Series B Preferred Stock [Member] | Maximum [Member] | After Two Years [Member]
Preferred Stock, Dividend Rate, Percentage				14.00%
TCP [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)						25,000
Friends Investment Company Inc. [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)						5,700
Eurodry [Member]
Percentage of Preferred Stock Outstanding										50.00%
Common Stock, Value, Distributed					$ 2,254,830
Eurodry [Member] | Series B Preferred Stock [Member]
Preferred Stock Distributed (in shares)					19,042
Eurodry [Member] | Ordinary Preferred Stock [Member]
Preferred Stock, Value, Distributed					$ 14,500,000
Eurodry [Member] | Preferred Stock Issued as Dividends [Member]
Preferred Stock, Value, Distributed					$ 3,692,131

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Note 16 - Preferred Shares - Dividends Series B Preferred Shares (Details) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 29, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Balance (in shares)	8,365	8,365	8,000	19,605
Balance	$ 8,019,636	$ 8,019,636	$ 7,654,577	$ 18,757,361
Dividends declared (in shares)			365	81
Dividends declared			$ 365,059	$ 78,639
Redemption of Preferred shares (in shares)		(2,000)		(11,686)
Redemption of Preferred shares		$ (2,000,000)		$ (11,686,000)
Preferred deemed dividend		$ 345,628	$ (0)	$ 504,577
Balance (in shares)		0	8,365	8,000
Balance		$ 0	$ 8,019,636	$ 7,654,577
Conversion of Series B Preferred Shares into Common Stocks [Member]
Preferred shares converted to common shares (in shares)	(6,365)	(6,365)
Preferred shares converted to common shares		$ (6,365,264)
Ordinary Preferred Stock [Member]
Balance	$ 6,849,522	6,849,522	6,849,522	14,500,000
Dividends declared			0	0
Redemption of Preferred shares		(2,000,000)		(8,155,055)
Preferred deemed dividend		345,628		504,577
Balance		0	6,849,522	6,849,522
Ordinary Preferred Stock [Member] | Conversion of Series B Preferred Shares into Common Stocks [Member]
Preferred shares converted to common shares		(5,195,150)
Preferred Stock Issued as Dividends [Member]
Balance	$ 1,170,114	1,170,114	805,055	4,257,361
Dividends declared			365,059	78,639
Redemption of Preferred shares		0		(3,530,945)
Preferred deemed dividend		0		0
Balance		0	$ 1,170,114	$ 805,055
Preferred Stock Issued as Dividends [Member] | Conversion of Series B Preferred Shares into Common Stocks [Member]
Preferred shares converted to common shares		$ (1,170,114)

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Note 17 - Financial Instruments (Details Textual) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2021
M/V EM Oinousses [Member]
Assets Held-for-sale, Not Part of Disposal Group, Current, Total	$ 3,770
Property, Plant, and Equipment, Fair Value Disclosure	3,870
Vessel Held for Sale, Estimated Sale Costs	220
Impairment of Long-Lived Assets to be Disposed of	$ 120
Interest Rate Swap [Member]
Derivative, Notional Amount		$ 40,000

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Note 17 - Financial Instruments - Recurring Fair Value Measurements (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Interest rate swap contracts	$ 540,753	$ 0
Interest rate swap contracts, long-term portion	952,666	362,195
Interest rate swap contract	0	203,553
Interest rate swap contracts	952,666	362,195
Fair Value, Recurring [Member]
Interest rate swap contracts	540,753
Interest rate swap contracts, long-term portion	952,666	0
Interest rate swap contract		0
Interest rate swap contracts	952,666	0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Interest rate swap contracts	0
Interest rate swap contracts, long-term portion	0	362,195
Interest rate swap contract		203,553
Interest rate swap contracts	0	362,195
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Interest rate swap contracts	540,753
Interest rate swap contracts, long-term portion	952,666	0
Interest rate swap contract		0
Interest rate swap contracts	952,666	$ 0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Interest rate swap contracts	0
Interest rate swap contracts, long-term portion	0
Interest rate swap contracts	$ 0

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Note 18 - Common Stock (Details Textual)						1 Months Ended							12 Months Ended
	Nov. 24, 2020 USD ($) shares	Nov. 16, 2020 shares	Dec. 19, 2019	Dec. 18, 2019	Nov. 04, 2019 shares	Jun. 30, 2021 USD ($) shares	Feb. 28, 2021 USD ($) shares	Aug. 31, 2020 USD ($)	Nov. 30, 2019 USD ($) shares	Oct. 31, 2019 USD ($) shares	Sep. 30, 2019 USD ($)	Aug. 30, 2019 shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) shares	Mar. 31, 2020 $ / shares shares
Common Stock, Shares Authorized (in shares) | shares													200,000,000	200,000,000		200,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares													$ 0.03	$ 0.03		$ 0.03
Proceeds from Issuance of Common Stock													$ 743,553	$ 715,550	$ 6,853,101
Stock Issued During Period, Value, Vessel Acquisition															13,218,662
Stock Issued During Period, Value, New Issues													611,233	496,718	775,532
Proceeds from Related Party Debt													0	0	5,000,000
Conversion of Stock, Amount Issued													$ 6,365,264	$ 0	$ 0
Conversion of Series B Preferred Stock to Common Stock [Member]
Conversion of Stock, Shares Converted (in shares) | shares						6,365
Conversion of Stock, Shares Issued (in shares) | shares						453,044
Conversion of Stock, Amount Issued						$ 6,365,000
Conversion of Loan Into Common Shares [Member] | Colby Trading Ltd [Member]
Debt Conversion, Original Debt, Amount	$ 1,875,000
Debt Conversion, Converted Instrument, Shares Issued (in shares) | shares	702,247
Colby Trading Ltd [Member]
Proceeds from Related Party Debt											$ 2,500,000
Synergy Holdings Limited [Member]
Stock Issued During Period, Shares, Contingent Consideration, Acquisition of Vessels (in shares) | shares		161,357
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio			8	8
Directors, Officers, and Employees [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in shares) | shares														45,900
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares													49,650	45,900	15,444
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | shares					15,444										15,444
M/V “EM Hydra”, M/V “EM Spetses”, M/V“EM Kea” and M/V “Diamantis P” [Member]
Stock Issued During Period, Shares, Vessel Acquisition (in shares) | shares												2,816,901
ATM Common Stock Offering [Member]
Stock Issued During Period, Shares, New Issues (in shares) | shares							82,901			144,727
Proceeds from Issuance of Common Stock							$ 740,000			$ 900,000
Private Placement [Member]
Stock Issued During Period, Shares, Vessel Acquisition (in shares) | shares									1,056,338
Stock Issued During Period, Value, Vessel Acquisition									$ 6,000,000
Stock Issued During Period, Value, New Issues															$ 6,000,000
ATM [Member]
Proceeds from Issuance of Common Stock								$ 700,000
Stock Issued During Period, Value, New Issues								$ 200,000

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Note 19 - Other Operating Income (Details Textual) - USD ($)	1 Months Ended	9 Months Ended	12 Months Ended
	Jan. 31, 2020	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jun. 30, 2017
Other Operating Expenses, Income from Collection of Previously Written off Accounts			$ 200,000
Other Operating Expenses, Income			1,298,318	$ 2,687,205	$ (0)
Alterwall Business Inc. Vs. Fuel Oil Supplier [Member] | Settled Litigation [Member] | Alterwall Business Inc. [Member]
Payments for Legal Settlements			60,000.00
Alterwall Business Inc. Vs. Fuel Oil Supplier [Member] | Pending Litigation [Member] | Alterwall Business Inc. [Member]
Gain (Loss) Related to Litigation Settlement, Total			100,000
Estimated Litigation Liability						$ 150,000
M/V EM Oinousses [Member]
Vessel Evaluation, Unrepaired Damage Claim	$ 2,700,000
M/V EM Oinousses [Member] | Other Operating Income [Member]
Vessel Evaluation, Other Operating Income				$ 2,700,000
M/V Manolis P [Member]
Other Operating Expenses, Income		$ 1,000,000.0	$ 1,000,000.0

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Note 20 - Subsequent Events (Details Textual) - Subsequent Event [Member] - USD ($) $ in Millions	Mar. 18, 2022	Jan. 28, 2022
Eco Design Fuel Efficient Containerships for Two Vessels [Member]
Construction of Vessels, Amount to Be Financed with a Combination of Debt and Equity		$ 85
Eco Design Fuel Efficient Containerships for Three Vessels [Member]
Construction of Vessels, Amount to Be Financed with a Combination of Debt and Equity	$ 102