Navios Maritime Acquisition Corporation
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F (Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGEACT OF 1934OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934OR ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934Date of event requiring this shell company report For the transition period from to Commission file number 001-34104 Navios Maritime Acquisition Corporation(Exact name of Registrant as specified in its charter) Not Applicable(Translation of Registrant’s Name into English)Republic of Marshall Islands(Jurisdiction of incorporation or organization)7 Avenue de Grande Bretagne, Office 11B2Monte Carlo, MC 98000 Monaco(Address of principal executive offices)Todd E. MasonThompson Hine LLP335 Madison AveNew York, NY 10017Todd.Mason@thompsonhine.com(212) 908-3946(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 Name of each exchange on which registeredCommon Stock, par value $.0001 per share New York Stock Exchange LLCSecurities registered or to be registered pursuant toSection 12(g) of the Act. NoneSecurities for which there is a reporting obligation pursuant toSection 15(d) of the Act. None 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:152,107,905 Shares of Common StockIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in 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) ofthe Securities Exchange Act of 1934. Yes ☐ No ☒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 1934during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such reportingrequirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorterperiod 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, a non-accelerated filer, or emerging growth company. Seethe definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 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 haselected 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. ☐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 issuedby the International Accounting Standards Board ☐ Other ☐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 ExchangeAct). Yes ☐ No ☒ Table of ContentsTABLE OF CONTENTS FORWARD-LOOKING STATEMENTS 1 PART I 2 Item 1. Identity of Directors, Senior Management and Advisers 2 Item 2. Offer Statistics and Expected Timetable 2 Item 3. Key Information 2 Item 4. Information on the Company 36 Item 4A. Unresolved Staff Comments 55 Item 5. Operating and Financial Review and Prospects 55 Item 6. Directors, Senior Management and Employees 80 Item 7. Major Stockholders and Related Party Transactions 85 Item 8. Financial Information 95 Item 9. Listing Details 96 Item 10. Additional Information 96 Item 11. Quantitative and Qualitative Disclosures about Market Risks 108 Item 12. Description of Securities Other than Equity Securities 109 PART II 109 Item 13. Defaults, Dividend Arrearages and Delinquencies 109 Item 14. Material Modifications to the Rights of Shareholders and Use of Proceeds 109 Item 15. Controls and Procedures 109 Item 16A. Audit Committee Financial Expert 110 Item 16B. Code of Ethics 110 Item 16C. Principal Accountant Fees and Services 110 Item 16D. Exemptions from the Listing Standards for Audit Committees 111 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 111 Item 16F. Change in Registrant’s Certifying Accountant 111 Item 16G. Corporate Governance 111 Item 16H. Mine Safety Disclosures 111 Item 17. Financial Statements 111 Item 18. Financial Statements 111 Item 19. Exhibits 112 EX-4.52 EX-8.1 EX-12.1 EX-12.2 EX-13.1 EX-15.1 EX-15.2 EX-15.3 1Table of ContentsFORWARD-LOOKING STATEMENTSThis Annual Report should be read in conjunction with the financial statements and accompanying notes included herein.Statements included in this Annual Report on Form 20-F (this “Annual Report”) which are not historical facts (including our statements concerningplans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. Inaddition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statementsinclude, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate asdescribed in this Annual Report. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,”“would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of theseterms or other comparable terminology.Forward-looking statements appear in a number of places and include statements with respect to, among other things: • our ability to maintain or develop new and existing customer relationships with major refined product importers and exporters, major crude oilcompanies and major commodity traders, including our ability to enter into long-term charters for our vessels; • our ability to successfully grow our business, our ability to identify and consummate desirable acquisitions, joint ventures or strategic alliances,business strategy, areas of possible expansion and our capacity to manage our expanding business; • future levels of cash flow and levels of dividends, as well as our future cash dividend policy; • our future opening and financial results, including the amount of filed hire and profit share that we may receive; • tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand; • our ability to take delivery of, integrate into our fleet, and employ any newbuildings we may order in the future and the ability of shipyards todeliver vessels on a timely basis; • the aging of our vessels and resultant increases in operation and drydocking costs; • the ability of our vessels to pass classification inspection and vetting inspections by oil majors; • significant changes in vessel performance, including increased vessel breakdowns; • the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us; • our ability to repay outstanding indebtedness, to fulfill other financial obligations, to obtain additional financing and to obtain replacementcharters for our vessels, in each case, at commercially acceptable rates or at all; • potential liability from litigation and our vessel operations, including discharge of pollutants; • our track record, and past and future performance, in safety, environmental and regulatory matters; • changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors; • global economic outlook and growth and changes in general economic and business conditions; • general domestic and international political conditions, including wars, acts of piracy and terrorism; • changes in production of or demand for oil and petroleum products, either globally or in particular regions; • changes in the standard of service or the ability of our technical manager to be approved as required; • increases or decreases in domestic or worldwide oil consumption; • increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs,maintenance and general and administrative expenses; • the adequacy of our insurance arrangements and our ability to obtain insurance and required certifications; 1Table of Contents • the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well asstandard regulations imposed by our charterers applicable to our business; • the changes to the regulatory requirements applicable to the shipping and oil transportation industry, including, without limitation, stricterrequirements adopted by international organizations, such as the International Maritime Organization and the European Union, or by individualcountries or charterers and actions taken by regulatory authorities and governing such areas as safety and environmental compliance; • potential liability and costs due to environmental, safety and other incidents involving our vessels; • the effects of increasing emphasis on environmental and safety concerns by customers, governments and others, as well as changes in maritimeregulations and standards; • our ability to retain key executive officers; and • our ability to leverage to our advantage, Navios Maritime Holdings Inc. (“Navios Holdings”) relationships and reputation in the shippingindustry.These and other forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions and beliefsconcerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks discussed in “Item 3. KeyInformation”.The forward-looking statements, contained in this Annual Report, are based on our current expectations and beliefs concerning future developmentsand their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.The forward-looking statements are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Wecaution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which suchstatement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of thesefactors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actualresults to be materially different from those contained in any forward-looking statement.PART IItem 1. Identity of Directors, Senior Management and AdvisersNot Applicable.Item 2. Offer Statistics and Expected TimetableNot Applicable.Item 3. Key Information A.Selected Financial DataNavios Maritime Acquisition Corporation (sometimes referred to herein as “Navios Acquisition,” the “Company,” “we” or “us”) was incorporated inthe Republic of Marshall Islands on March 14, 2008 (refer to Item 4. Information on the Company).Navios Acquisition’s selected historical financial information and operating results for the years ended December 31, 2017, 2016, 2015, 2014 and2013 is derived from the audited consolidated financial statements of Navios Acquisition. The selected consolidated statements of operations for the yearsended December 31, 2017, 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017 and 2016 have been derived from our auditedconsolidated financial statements included elsewhere in this 2Table of ContentsAnnual Report. The consolidated statements of operations data for the years ended December 31, 2014 and December 31, 2013, and the consolidated balancesheet data as of December 31, 2015, 2014 and 2013, have been derived from our audited consolidated financial statements which are not included in thisdocument and are available at www.sec.gov. The selected consolidated financial data should be read in conjunction with “Item 5. Operating and FinancialReview and Prospects”, and other financial information included elsewhere in this Annual Report. The selected consolidated financial data is a summary of,is derived from, and is qualified by reference to, our audited consolidated financial statements and notes thereto, which have been prepared in accordancewith U.S. generally accepted accounting principles (“U.S. GAAP”). The historical data included below and elsewhere in this Annual Report is not necessarilyindicative of our future performance. Statement of Income Data (In thousands of U.S. dollars) Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Year endedDecember 31,2014 Year endedDecember 31,2013 Revenue $227,288 $290,245 $313,396 $264,877 $202,397 Time charter expenses (21,919) (4,980) (4,492) (5,187) (6,762) Direct vessel expenses (4,198) (3,567) (1,532) (1,979) (3,096) Management fees (entirely through related partytransactions) (94,973) (97,866) (95,336) (95,827) (71,392) General and administrative expenses (13,969) (17,057) (15,532) (14,588) (7,017) Depreciation and amortization (56,880) (57,617) (57,623) (67,718) (63,880) Loss on bond and debt extinguishment — — — — (33,973) Interest income 10,042 4,767 1,683 720 315 Interest expenses and finance cost (76,438) (75,987) (73,561) (78,610) (58,386) Impairment loss — — — (11,690) — Gain/ (loss) on sale of vessels — 11,749 5,771 22,599 (21,098) Change in fair value of other assets — — — (1,188) — Equity/ (loss) in net earnings of affiliatedcompanies (46,657) 15,499 18,436 2,000 — Other income 82 377 41 280 4,787 Other expense (1,277) (2,685) (1,514) (642) (487) Net (loss)/ income $(78,899) $62,878 $89,737 $13,047 $(58,592) Net (loss)/ income per share, basic $(0.50) $0.40 $0.57 $0.08 $(0.57) Net (loss)/ income per share, diluted $(0.50) $0.40 $0.56 $0.08 $(0.57) Balance Sheet Data (at period end) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year endedDecember 31,2015 Year endedDecember 31,2014 Year endedDecember 31,2013 Current assets, including cash $119,733 $107,282 $97,349 $89,528 $120,801 Vessels, net $1,250,043 $1,306,923 $1,441,635 $1,375,931 $1,353,131 Total assets $1,572,781 $1,703,619 $1,774,091 $1,697,014(1),(2) $1,633,415(1) Long-term debt, including current portion, net ofpremium and deferred finance costs $1,065,369 $1,095,938 $1,197,583 $1,142,002(1) $1,131,202(1) Series D Convertible Preferred Stock $— $— $— $12,000 $12,000 Total Stockholders’ equity $462,475 $572,931 $540,871 $490,793(2) $450,822 Puttable common stock $— $2,500 $6,500 $— $— Common stock $15 $15 $15 $15 $13 Number of shares 152,107,905 150,582,990 149,782,990 151,664,942 136,714,942 Dividends declared/ paid $31,614 $31,682 $32,117 $32,619 $24,521 Cash Flow Data Net cash provided by/ (used in) operating activities $45,942 $92,945 $119,636 $75,985 $(29,571) Net cash provided by/ (used in) investing activities $52,378 $43,505 $(104,510) $(145,729) $(293,740) Net cash (used in)/ provided by financing activities $(66,461) $(141,963) $(14,814) $41,402 $363,300 Cash dividends declared per common share $0.20 $0.20 $0.20 $0.20 $0.20 Fleet Data: Vessels at end of period 36 36 39 37 33 3Table of Contents(1)The total assets and long-term debt, including current portion, net of premium and deferred finance costs presented in this table have been revised toreflect the adoption of ASU 2015-03.(2)The total assets and total stockholders’ equity at December 31, 2014 have been revised to account for the investments in the common units of NaviosMaritime Midstream Partners L.P. (“Navios Midstream”), under the equity method. B.Capitalization and indebtednessNot applicable. C.Reasons for the offer and use of proceedsNot applicable. D.Risk factorsRISK FACTORSThe following factors should be considered carefully in evaluating whether to purchase our securities. These factors should be considered inconjunction with any other information included or incorporated by reference herein, including in conjunction with forward-looking statements madeherein.Risks Relating to the Shipping Industry and the Operation of our VesselsThe cyclical nature of the tanker industry may lead to volatility in charter rates and vessel values, which could adversely affect our future earnings.Oil has been one of the world’s primary energy sources for a number of decades. The global economic growth of previous years had a significant impacton the demand for oil and subsequently on the oil trade and the demand for shipping oil and oil products. However, the past several years were marked by amajor economic slowdown, the rise and continued expansion of shale oil production in the U.S. and extreme volatility that has had, and continues to have, asignificant impact on world trade, including the oil trade. Global economic conditions, while somewhat more stable than in the immediate aftermath of thefinancial crisis, remain uncertain with respect to long-term economic growth. In particular, the uncertainty surrounding the future of the Eurozone, theeconomic prospects of the United States, the future economic growth of China, Brazil, Russia, India and other emerging markets and 4Table of Contentschanging oil production and consumption patterns due to efficiencies, new technologies and government policy changes are all expected to affect demandfor product and crude tankers going-forward. Demand for oil and refined petroleum products about equals current supply as a result of the steady globaleconomic environment and a general global trend towards energy efficient technologies, which in combination with the limited availability of trade creditand an increasing supply of vessels, led to decreased demand for tanker vessels, creating downward pressure on charter rates. This economic downturn hasalso affected vessel values overall. Energy prices sharply declined from mid-2014 to mid-February 2016 primarily as a result of increased oil productionworldwide. In response to this increased production, demand for tankers to move oil and refined petroleum products increased significantly and average spotand period charter rates for product and crude tankers rose to above historically average rates, but have since declined. If oil demand grows in the future, it isexpected to come primarily from emerging markets which have been historically volatile, such as China and India, and a slowdown in these countries’economies may severely affect global oil demand growth, and may result in protracted, reduced consumption of oil products and a decreased demand for ourvessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability tomake cash distributions. Should the Organization of the Petroleum Exporting Countries (“OPEC”) significantly reduce oil production or should there besignificant declines in non-OPEC oil production, that may result in a protracted period of reduced oil shipments and a decreased demand for our vessels andlower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cashdistributions.Historically, the crude oil markets have been volatile as a result of the many conditions and events that can affect the price, demand, production andtransport of oil, including competition from alternative energy sources. Decreased demand for oil transportation may have a material adverse effect on ourrevenues, cash flows and profitability. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and degree ofchanges in industry conditions are unpredictable. The past global financial crisis and the continuing U.S. shale production expansion has intensified thisunpredictability.The factors that influence demand for tanker capacity include: • demand for and supply of liquid cargoes, including petroleum and petroleum products; • developments in international trade; • waiting days in ports; • changes in oil production and refining capacity and regional availability of petroleum refining capacity; • environmental and other legal and regulatory developments, including the adoption of any limits on the consumption of carbon-based fuels dueto climate change agreements or protocols; • global and regional economic conditions; • the distance chemicals, petroleum and petroleum products are to be moved by sea; • changes in seaborne and other transportation patterns, including changes in distances over which cargo is transported due to geographic changesin where oil is produced, refined and used; • competition from alternative sources of energy; • armed conflicts and terrorist activities; • natural or man-made disasters that affect the ability of our vessels to use certain waterways; • political developments; • embargoes and strikes; and • domestic and foreign tax policies.The factors that influence the supply of tanker capacity include: • the number of newbuilding deliveries; • the scrapping rate of older vessels; • port or canal congestion; • the number of vessels that are used for storage or as floating storage offloading service vessels; 5Table of Contents • the conversion of tankers to other uses, including conversion of vessels from transporting oil and oil products to carrying drybulk cargo and thereverse conversion; • availability of financing for new tankers; • the phasing out of single-hull tankers due to legislation and environmental concerns; • the price of steel; • the number of vessels that are out of service; • national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage;and • environmental concerns and regulations, including ballast water management and low sulphur fuel consumption regulations.Furthermore, the extension of refinery capacity in China, India and particularly the Middle East through 2018 is expected to exceed the immediateconsumption in these areas, and an increase in exports of refined oil products is expected as a result. This coupled with announced refinery closures inAustralia, Japan and Europe should increase trade in refined oil products.Historically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price, supply and demand for tankercapacity. The recent global economic crisis may further reduce demand for transportation of oil over long distances and supply of tankers that carry oil,which may materially affect our future revenues, profitability and cash flows.We believe that the current order book for tanker vessels represents a significant percentage of the existing fleet; however the percentage of the totaltanker fleet on order as a percent of the total fleet declined from 18% at the end of 2011 to 12% at the beginning of March 2018. An over-supply of tankercapacity may result in a reduction of charter hire rates. If a reduction in charter rates occurs, we may only be able to charter our vessels at unprofitable rates orwe may not be able to charter these vessels at all, which could lead to a material adverse effect on our results of operations.Spot market rates for tanker vessels are highly volatile and may decrease in the future, which may materially adversely affect our earnings in the event thatour vessels are chartered in the spot market.We may deploy at least some of our product tankers, chemical tankers and VLCCs in the spot market directly or in pools. Although spot chartering iscommon in the product, chemical, tanker and VLCC sectors, product tankers, chemical tanker and VLCC charter hire rates are highly volatile and mayfluctuate significantly based upon demand for seaborne transportation of crude oil and oil products and chemicals, as well as tanker supply. World oildemand is influenced by many factors, including international economic activity; geographic changes in oil production, processing, and consumption; oilprice levels; inventory policies of the major oil and oil trading companies; and strategic inventory policies of countries such as the United States and China.The successful operation of our vessels in the spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing, tothe extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. Furthermore, as charter rates for spot charters are fixedfor a single voyage that may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing thebenefits from such increases. The spot market is highly volatile, and, in the past, there have been periods when spot rates have declined below the operatingcost of vessels. Currently, spot charter hire rates are at or above operating costs for most vessel sizes but there is no assurance that the crude oil, product andchemical tanker charter market will rise over the next several months or will not decline further. A decrease in spot rates may decrease the revenues and cashflow we derive from vessels employed in pools or on index linked charters. Such volatility in pool or index linked charters may be mitigated by anyminimum rate due to us that we negotiate with our charterers.Additionally, if the spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some of ourcharterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate thecharter. 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 tocomply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerateour indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would beimpaired.Certain of our VLCC vessels are contractually committed to time charters. We are not permitted to unilaterally terminate the charter agreements of theVLCC vessels due to upswings in the tanker industry cycle, when spot market voyages might be more profitable. We may also decide to sell a vessel in thefuture. In such a case, should we sell a vessel that is committed to a long-term charter, we may not be able to realize the full 6Table of Contentscharter free fair market value of the vessel during a period when spot market charters are more profitable than the charter agreement under which the vesseloperates. We may re-charter the VLCC vessels on long-term charters or charter them in the spot market or place them in pools upon expiration or terminationof the vessels’ current charters. Furthermore, in connection with the initial public offering (“IPO”) of Navios Midstream, we have provided backstopcommitments for a two-year period as of the redelivery of each of the Nave Celeste, the Shinyo Ocean and the Shinyo Kannika from their original charters, ata net rate of $35,000, $38,400 and $38,025, respectively. Navios Midstream has currently entered into new charter contracts for the above vessels with thirdparties upon their redelivery in first quarter of 2017. Those contracts provide for index linked charter rates or pool earnings, as the case may be. The backstopcommitment for Shinyo Kannika terminated following the sale of this vessel in March 2018. We extended the backstop commitment of the Shinyo Kannikato the Nave Galactic, following the sale of the latter to Navios Midstream in March 2018. If the actual rates achieved are below the agreed backstop rates ourresults of operations and operating cash flows may suffer.An oversupply of tanker vessel capacity may lead to reductions in charter hire rates, vessel values and profitability.The market supply of tankers is affected by a number of factors, such as demand for energy resources and primarily oil and petroleum products, level ofcharter hire rates, asset and newbuilding prices, availability of financing as well as overall economic growth in parts of the world economy, including Asia,and has been increasing as a result of the delivery of substantial newbuilding orders over the last few years. We believe that the current order book for tankervessels represents a significant percentage of the existing fleet; however the percentage of the total tanker fleet on order as a percent of the total fleet declinedfrom 48% in 2008 to 12% as of the beginning of March 2018. If the capacity of new ships delivered exceeds the capacity of tankers being scrapped and lost,tanker capacity will increase. If the supply of tanker capacity increases and if the demand for tanker capacity does not increase correspondingly, charter ratesand vessel values could materially decline. If such a reduction occurs, we may only be able to recharter our vessels at reduced or unprofitable rates as theircurrent charters expire, or we may not be able to charter these vessels at all, which could lead to a material adverse effect on our results of operations.Increasing energy self-sufficiency in the United States could lead to a decrease in imports of oil to that country, which to date has been one of the largestimporters of oil worldwide.“Soaring domestic production makes the United States a net oil exporter by the late 2020s,” according to the 2017 annual World Energy Outlook bythe International Energy Agency (“IEA”). They see two distinct phases in the outlook for oil production to 2040: “In the first phase to the mid-2020s,non-OPEC countries dominate growth. Tight oil from the United States continues its upward march (the United States accounts for 80% of the net increase inproduction to 2025).” “In a second phase, from the mid-2020s, tight oil in the United States begins to fall” but the United States continues to be the world’slargest oil producer to 2040 after overtaking Saudi Arabia around 2018. In its 2016 Medium Term Oil Market Report, the IEA said that the steep rise in shaleoil and gas production is expected to push the country toward energy self-sufficiency. In recent years the share of total U.S. consumption met by total liquidfuel net imports, including both crude oil and products, has been decreasing since peaking at over 60% in 2005. The U.S. Energy Information Administration(“EIA”) statistics through October 2017, show that U.S. crude oil imports rose 1.4% to an average of 8.0 million barrels per day (“MBPD”) over the 7.9 MBPDin 2016, but the average imports are still below the 2005 peak of 10.1 MBPD. EIA statistics note that U.S. crude oil exports rose 76% to 1.04 MBPD throughOctober 2017, which was a very significant increase over the most recent low of 9,100 barrels per day exported in 2002. A slowdown in oil imports to orexports from the United States, one of the most important oil trading nations worldwide, may result in decreased demand for our vessels and lower charterrates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.A number of third party owners have ordered so-called modern vessels, which offer substantial bunker savings as compared to older vessels. Increaseddemand for and supply of modern vessels could reduce demand for certain of our existing older vessels and expose us to lower vessel utilization and/ordecreased charter rates.The product tanker newbuilding order book as of January 2018 is estimated at 240 vessels or 9% of the current product tanker fleet according toClarksons Research Services Limited. The majority of these orders are based on vessel improvements such as improved propulsion system or other technicalmeasures, which purport to offer material bunker savings compared to older vessels, which include certain of our vessels. Such savings could result in asubstantial reduction of bunker cost for charterers compared to such vessels of ours. As the supply of such modern vessel increases and if charterers prefersuch vessels over our vessels, this may reduce demand for our existing older vessels, impair our ability to recharter such vessels at competitive rates and havea material adverse effect on our cash flows and operations.Charter rates in the crude oil tankers sector in which we operate and in the product and chemical tanker sectors of the seaborne transportation industryhave significantly declined from historically high levels in 2008 and may remain depressed or decline further in the future, which may adversely affect ourearnings. 7Table of ContentsCharter rates in the crude oil, product and chemical tanker sectors have significantly declined from historically high levels in 2008 and may remaindepressed or decline further. For example, the Baltic Dirty Tanker Index declined from a high of 2,347 in July 2008 to 453 in mid-April 2009, whichrepresents a decline of approximately 81%. Since January 2016, it has traded between a low of 496 and a high of 1,088; as of March 28, 2018, it stood at662. The Baltic Clean Tanker Index fell from 1,509 in the early summer of 2008 to 345 in April 2009, or an approximate 77% decline. It has traded between alow of 346 and a high of 867 since January 2016 and stood at 563 as of March 28, 2018. Of note is that Chinese imports of crude oil have steadily increasedfrom three million barrels per day in 2008 to a record 9.6 million barrels per day in January 2018 and the U.S. has steadily increased its total petroleumproduct exports by about 460% to about 5.8 million barrels per day in December 2017 from one million barrels per day in January 2006. Additionally, sincethe U.S. removed its ban at the end of 2015, U.S. crude oil exports increased by about 300% from 0.4 million barrels per day to about 1.5 million barrels perday at the end of 2017. If the tanker sector of the seaborne transportation industry, which has been highly cyclical, is depressed in the future at a time whenwe may want to sell a vessel, our earnings and available cash flow may be adversely affected. We cannot assure you that we will be able to successfullycharter our vessels in the future at rates sufficient to allow us to operate our business profitably or to meet our obligations, including payment of debt serviceto our lenders. Our ability to renew the charters on vessels that we may acquire in the future, the charter rates payable under any replacement charters andvessel values will depend upon, among other things, economic conditions in the sector in which our vessels operate at that time, changes in the supply anddemand for vessel capacity and changes in the supply and demand for the seaborne transportation of energy resources and commodities.Any decrease in shipments of crude oil from the Arabian Gulf or West Africa may adversely affect our financial performance.The demand for VLCC oil tankers derives primarily from demand for Arabian Gulf and West African crude oil, which, in turn, primarily depends on theeconomies of the world’s industrial countries and competition from alternative energy sources. A wide range of economic, social and other factors cansignificantly affect the strength of the world’s industrial economies and their demand for Arabian Gulf and West African crude oil.Among the factors that could lead to a decrease in demand for exported Arabian Gulf and West African crude oil are: • increased use of existing and future crude oil pipelines in the Arabian Gulf or West African regions; • increased demand for crude oil in the Arabian Gulf or West African regions; • a decision by OPEC or other petroleum exporters to increase their crude oil prices or to further decrease or limit their crude oil production; • any increase in refining of crude into petroleum products for domestic consumption or export; • armed conflict or acts of piracy in the Arabian Gulf or West Africa and political or other factors; • increased oil production in other regions, such as the United States, Russia and Latin America; and • the development and the relative costs of nuclear power, natural gas, coal and other alternative sources of energy.Any significant decrease in shipments of crude oil from the Arabian Gulf or West Africa may materially adversely affect our financial performance.Delays in deliveries of second-hand vessels, our decision to cancel an order for purchase of a vessel or our inability to otherwise complete the acquisitionsof additional vessels for our fleet, could harm our business, financial condition and results of operations.We expect to purchase second-hand vessels from time to time. The delivery of these vessels could be delayed, not completed or cancelled, whichwould delay or eliminate our expected receipt of revenues from the employment of these vessels. The seller could fail to deliver these vessels to us as agreed,or we could cancel a purchase contract because the seller has not met its obligations.If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we become responsiblefor substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition and results of operations could beadversely affected.Delays in deliveries of any newbuilding vessels we may contract to acquire or order in the future, or our decision to cancel, or our inability to otherwisecomplete the acquisitions of any newbuildings, could harm our operating results and lead to the termination of any related charters. 8Table of ContentsAny newbuildings we may contract to acquire or order in the future could be delayed, not completed or cancelled, which would delay or eliminate ourexpected receipt of revenues under any charters for such vessels. The shipbuilder or third party seller could fail to deliver the newbuilding vessel or any othervessels we acquire or order, or we could cancel a purchase or a newbuilding contract because the shipbuilder has not met its obligations, including itsobligation to maintain agreed refund guarantees in place for our benefit. For prolonged delays, the customer may terminate the time charter.Our receipt of newbuildings could be delayed, canceled, or otherwise not completed because of: • quality or engineering problems or failure to deliver the vessel in accordance with the vessel specifications; • changes in governmental regulations or maritime self-regulatory organization standards; • work stoppages or other labor disturbances at the shipyard; • bankruptcy or other financial or liquidity problems of the shipbuilder; • a backlog of orders at the shipyard; • political or economic disturbances in the country or region where the vessel is being built; • weather interference or a catastrophic event, such as a major earthquake or fire; • the shipbuilder failing to deliver the vessel in accordance with our vessel specifications; • our requests for changes to the original vessel specifications; • shortages of or delays in the receipt of necessary construction materials, such as steel; or • our inability to finance the purchase of the vessel.If delivery of any newbuild vessel acquired, or any vessel we contract to acquire in the future is materially delayed, it could materially adversely affectour results of operations and financial condition.Fifteen of the vessels in our fleet are second-hand vessels, and we may acquire more second-hand vessels in the future. The acquisition and operation ofsuch vessels may result in increased operating costs and vessel off-hire, which could materially adversely affect our earnings.As of April 2, 2018, the vessels in our fleet had an average age of approximately 7.2 years and most tanker vessels have an expected life ofapproximately 25 years. Two of our LR1 product tanker vessels, five of our MR2 product tanker vessels and our eight VLCC vessels are second-hand vessels,and we may acquire more second-hand vessels in the future. Our inspection of second-hand vessels prior to purchase does not provide us with the sameknowledge about their condition and cost of any required or anticipated repairs that we would have had if these vessels had been built for and operatedexclusively by us. Generally, we will not receive the benefit of warranties on second-hand vessels.In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Due to improvements in engine technology,older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels. Cargo insurance rates increase with the ageof 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 ofnew equipment to our vessels and may restrict the type of activities in which the vessels may engage or the geographic regions in which we may operate. Wecannot predict what alterations or modifications our vessels may be required to undergo in the future. As our vessels age, market conditions may not justifythose expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.Although we have considered the age and condition of the vessels in budgeting for operating, insurance and maintenance costs, we may encounterhigher operating and maintenance costs due to the age and condition of these vessels, or any additional vessels we acquire in the future. The age of some ofour VLCC vessels may result in higher operating costs and increased vessel off-hire periods relative to our competitors that operate newer fleets, which couldhave a material adverse effect on our results of operations.Our growth depends on continued growth in demand for crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals and thecontinued demand for seaborne transportation of such cargoes.Our growth strategy focuses on expansion in the crude oil, product and chemical tanker sectors. Accordingly, our growth depends on continued growthin world and regional demand for crude oil, refined petroleum (clean and dirty) products and bulk liquid chemicals and the transportation of such cargoes bysea, which could be negatively affected by a number of factors, including: 9Table of Contents • the economic and financial developments globally, including actual and projected global economic growth; • fluctuations in the actual or projected price of crude oil, refined petroleum products or bulk liquid chemicals; • refining capacity and its geographical location; • increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipelinesystems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets; • decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oil lessattractive or energy conservation measures or pollution reduction measures or those intended to reduce global warming; • availability of new, alternative energy sources; and • negative or deteriorating global or regional economic or political conditions, particularly in oil-consuming regions, which could reduce energyconsumption or its growth.The refining and chemical industries may respond to the economic downturn and demand weakness by reducing operating rates, partially orcompletely closing refineries and by reducing or cancelling certain investment expansion plans, including plans for additional refining capacity, in the caseof the refining industry. Continued reduced demand for refined petroleum products and bulk liquid chemicals and the shipping of such cargoes or theincreased availability of pipelines used to transport refined petroleum products, and bulk liquid chemicals would have a material adverse effect on our futuregrowth and could harm our business, results of operations and financial condition.We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm ourbusiness, financial condition and operating results.Any acquisition of a vessel may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient to justify ourinvestment. In addition, our growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that wemay: • 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 and seafaring personnel to manage and operate our growing business and fleet; • integrate any acquired vessels or businesses successfully with our existing operations; • decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions; • significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions; or • incur or assume unanticipated liabilities, losses or costs associated with the business or vessels acquired.Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum productsworldwide.The IEA noted in its Global EV Outlook 2017 that total electric vehicles (EVs) registered worldwide grew from about 1.25 million in 2015 to 2 millionin 2016 following new registrations of 750,000 EVs. Forecasts are for EVs to grow to between 60 and 200 million registered cars by 2030. According toWard’s there were about 1 billion cars registered in 2010 and there will be about 2 billion cars registered by 2035.According to the EIA, U.S. biodiesel production increased rapidly from 32 thousand barrels per day in 2009 to 100 thousand barrels per day in 2017(average through October), a growth of about 210%. During the same period diesel production from U.S. refineries grew from 4.1 million barrels per day in2009 to 5.3 million barrels per day in December 2017, a growth of about 30%. A growth in EVs or a slowdown in imports or exports of crude or petroleumproducts worldwide, may result in decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business,results of operations, cash flows, financial condition and ability to make cash distributions. 10Table of ContentsOur growth depends on our ability to obtain customers, for which we face substantial competition. In the highly competitive tanker industry, we may not beable to compete for charters with new entrants or established companies with greater resources, which may adversely affect our results of operations.We employ our tanker vessels (or will employ in the case of any product, chemical or LPG tanker vessels that we may acquire) in the highlycompetitive crude oil, product, chemical and LPG tanker sectors of the shipping industry that is capital intensive and fragmented. Competition arisesprimarily from other vessel owners, including major oil companies and traders as well as independent tanker companies, some of whom have substantiallygreater resources and experience than us. Competition for the chartering of tankers can be intense and depends on price, location, size, age, condition, qualityoperations and safety, experience and technical capability of the crew and the acceptability of the vessel and its managers to the charterers. Such competitionhas been enhanced as a result of the downturn in the shipping industry, which has resulted in an excess supply of vessels and reduced charter rates.Medium to long-term time charters and bareboat charters have the potential to provide income at pre-determined rates over more extended periods oftime. However, the process for obtaining longer term time charters and bareboat charters is highly competitive and generally involves a lengthy, intensiveand continuous screening and vetting process and the submission of competitive bids that often extends for several months. In addition to the quality, ageand suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vessel operator.Competition for the transportation of crude oil, refined petroleum products and bulk liquid chemicals can be intense and depends on price, location, size,age, condition and acceptability of the vessel and our managers to the charterers.In addition to having to meet the stringent requirements set out by charterers, it is likely that we will also face substantial competition from a number ofcompetitors who may have greater financial resources, stronger reputations or experience than we do when we try to re-charter our vessels. It is also likely thatwe will face increased numbers of competitors entering in the crude oil, product and chemical tanker sectors, including in the ice class sector. Increasedcompetition may cause greater price competition, especially for medium- to long-term charters. Due in part to the highly fragmented markets, competitorswith greater resources could operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than ours.As a result of these factors, we may be unable to obtain customers for medium- to long-term time charters or bareboat charters on a profitable basis, if atall. Even if we are successful in employing our vessels under longer term time charters or bareboat charters, our vessels will not be available for trading in thespot market during an upturn in the crude oil, product and chemical tanker market cycles, when spot trading may be more profitable. If we cannotsuccessfully employ our vessels in profitable time charters our results of operations and operating cash flow could be adversely affected.If we fail to manage our planned growth properly, we may not be able to expand our fleet successfully, which may adversely affect our overall financialposition.While we have no specific plans, we do intend to continue to expand our fleet in the future. Our growth will depend on: • locating and acquiring suitable vessels; • identifying reputable shipyards with available capacity and contracting with them for the construction of new vessels; • integrating any acquired vessels successfully with our existing operations; • enhancing our customer base; • managing our expansion; • obtaining required financing, which could include debt, equity or combinations thereof; and • Improve operating and financial system and controls.Additionally, the marine transportation and logistics industries are capital intensive, traditionally using substantial amounts of indebtedness to financevessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance of debt securities, it couldresult in: • default and foreclosure on our assets if our operating cash flow after a business combination or asset acquisition were insufficient to pay our debtobligations; 11Table of Contents • acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt securitycontained covenants that required the maintenance of certain financial ratios or reserves and any such covenant were breached without a waiveror renegotiation of that covenant; • our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and • our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additionalfinancing while such security was outstanding.In addition, our business plan and strategy is predicated on buying vessels in a market at what we believe is near the low, but recovering phase of theperiodic cycle in what has typically been a cyclical industry. However, there is no assurance that charter rates and vessels asset values will not sink lower, orthat there will be an upswing in shipping costs or vessel asset values in the near-term or at all, in which case our business plan and strategy may not succeedin the near-term or at all. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experiencedin obtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existinginfrastructures. We may not be successful in growing and may incur significant expenses and losses.We may face unexpected maintenance costs, which could materially adversely affect our business, financial condition and results of operations.If our vessels suffer damage or require upgrade work, they may need to be repaired at a drydocking facility. Our vessels may occasionally requireupgrade work in order to maintain their classification society rating or as a result of changes in regulatory requirements. In addition, our vessels will beoff-hire periodically for intermediate surveys and special surveys in connection with each vessel’s certification by its classification society. The costs ofdrydock repairs are unpredictable and can be substantial and the loss of earnings while these vessels are being repaired and reconditioned, as well as theactual cost of these repairs, would decrease our earnings. Our insurance generally only covers a portion of drydocking expenses resulting from damage to avessel and expenses related to maintenance of a vessel will not be reimbursed. In addition, space at drydocking facilities is sometimes limited and not alldrydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility on a timely basis or may be forced to move adamaged vessel to a drydocking facility that is not conveniently located to the vessel’s position. The loss of earnings while any of our vessels are forced towait for space or to relocate to drydocking facilities that are far away from the routes on which our vessels trade would further decrease our earnings.We rely on our technical managers to provide essential services to our vessels and run the day-to-day operations of our vessels.Pursuant to technical management agreements we are provided with services essential to the business of our vessels, including vessel maintenance,crewing, purchasing, shipyard supervision, insurance and assistance with vessel regulatory compliance, by our technical managers, including a subsidiary ofNavios Holdings. Our operational success and ability to execute our strategy will depend significantly upon the satisfactory performance of theaforementioned services by the current technical manager. The failure of our technical managers to perform these services satisfactorily could have a materialadverse effect on our business, financial condition and results of operations.Our vessels may be subject to unbudgeted periods of off-hire, which could materially adversely affect our business, financial condition and results ofoperations.Under the terms of the charter agreements under which our vessels operate, or are expected to operate in the case of the newbuildings, when a vessel is“off-hire,” or not available for service or otherwise deficient in its condition or performance, the charterer generally is not required to pay the hire rate, and wewill be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving rise to the lack ofavailability. A vessel generally will be deemed to be off-hire if there is an occurrence preventing the full working of the vessel due to, among other things: • operational deficiencies; • the removal of a vessel from the water for repairs, maintenance or inspection, which is referred to as drydocking; • delays due to accidents or deviations from course; • occurrence of hostilities in the vessel’s flag state or in the event of piracy; • crewing strikes, labor boycotts, certain vessel detentions or similar problems; 12Table of Contents • our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry and internationalregulations or to provide the required crew; or • a natural or man-made event of force majeure.The market values of tanker vessels have declined from historically high levels and may fluctuate significantly, which could cause us to breach covenantsin our credit facilities, result in the foreclosure of certain of our vessels, limit the amount of funds that we can borrow and adversely affect our ability topurchase new vessels and our operating results. Depressed vessel values could also cause us to incur impairment charges.Due to the slow growth in world trade, the increase in the tanker fleet and declining tanker charter rates, the market values of our vessels and anycontracted newbuildings and of tankers generally, are currently significantly lower than they would have been prior to the downturn in the second half of2008. Within the past year smaller product tanker yard resale prices have moderated although they are still lower than the average 2015 price, they haverecently risen above the average price for 2017. Vessel values may remain at current low, or lower, levels for a prolonged period of time and can fluctuatesubstantially over time due to a number of different factors, including: • prevailing level of charter rates; • general economic and market conditions affecting the shipping industry; • competition from other shipping companies; • types, sizes and age of vessels; • sophistication and condition of the vessels; • where the ship was built and as-built specifications; • lifetime maintenance record; • supply and demand for vessels; • other modes of transportation; • cost of newbuildings; • governmental or other regulations, including environmental regulations; • technological advances; and • ability of buyers to access financing and capital. 13Table of ContentsIf the market value of our vessels decreases, we may breach some of the covenants contained in the financing agreements relating to our indebtednessat the time. Our credit facilities contain covenants including maximum total net liabilities over total net assets (effective in general after delivery of thevessels), minimum net worth and value to loan ratio covenants of 137% or lower, applicable after delivery of the vessels. If we breach any such covenants inthe future and we are unable to remedy the relevant breach, our lenders could accelerate or require us to prepay a portion of our debt and foreclose on ourvessels. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, we would incur a loss that could have a material adverseeffect on our business, financial condition and results of operations.In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable.We review certain indicators of potential impairment, such as undiscounted projected operating cash flows expected from the future operation of thevessels, which can be volatile for vessels employed on short-term charters or in the spot market. Any impairment charges incurred as a result of declines incharter rates would negatively affect our financial condition and results of operations. In addition, if we sell any vessel at a time when vessel prices havefallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on ourfinancial statements, resulting in a loss and a reduction in earnings. Conversely, if vessel values are elevated at a time when we wish to acquire additionalvessels, the cost of acquisition may increase and this could materially adversely affect our business, financial condition and results of operations.Future increases in vessel operating expenses, including rising fuel prices, could materially adversely affect our business, financial condition and results ofoperations.Under our time charter agreements, the charterer is responsible for substantially all of the voyage expenses, including port and canal charges and fuelcosts, and we are generally responsible for vessel operating expenses. Vessel operating expenses are the costs of operating a vessel, primarily consisting ofcrew wages and associated costs, insurance premiums, management fees, lubricants and spare parts and repair and maintenance costs. In particular, the cost offuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect ourprofitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supplyand demand for oil, actions by members of OPEC and other oil and gas producers, war, terrorism and unrest in oil producing countries and regions, regionalproduction patterns and environmental concerns and regulations.We have fixed the fees for ship management services of our owned fleet, provided by a subsidiary of Navios Holdings, through May 2018 at $6,350 perMR2 product tanker and chemical tanker vessel, $7,150 per LR1 product tanker vessel and $9,500 per VLCC vessel. Drydocking expenses under ourManagement Agreement are reimbursed at cost for all vessels.We generally receive a daily rate for the use of our vessels, which is fixed through the term of the applicable charter agreement. Our charter agreementsdo not provide for any increase in the daily hire rate in the event that vessel-operating expenses increase during the term of the charter agreement. Increases inthe fees for shipmanagement services of our vessels over the term of a charter agreement will effectively reduce our operating income and, if such increases inoperating expenses are significant, adversely affect our business, financial condition and results of operations.The crude oil, product and chemical tanker sectors are subject to seasonal fluctuations in demand and, therefore, may cause volatility in our operatingresults.The crude oil, product and chemical tanker sectors of the shipping industry have historically exhibited seasonal variations in demand and, as a result,in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The product and chemical tanker markets are typicallystronger in the fall and winter months in anticipation of increased consumption of oil and natural gas in the northern hemisphere. In addition, unpredictableweather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, revenues are typically weaker during thefiscal quarters ended June 30 and September 30, and, conversely, typically stronger in fiscal quarters ended December 31 and March 31. Our operatingresults, therefore, may be subject to seasonal fluctuations.A decrease in the level of China’s imports of crude oil or petroleum products or a decrease in oil trade globally could have a material adverse impact onour charterers’ business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows. 14Table of ContentsChina imports significant quantities of crude oil and trades significant quantities of petroleum products. For example in 2016, China imported about354 million tons of crude oil by sea compared with crude oil imports to the United States of about 252 million tons. Through November 2017, Chinaimported 356 million tons crude oil by sea (the United States imported 207 million tons through October 2017, the latest available data). Our tanker vesselsare deployed by our charterers on routes involving crude oil and petroleum product trades in and out of emerging markets, and our charterers’ oil shippingand business revenue may be derived from the shipment of goods within and to the Asia Pacific region from various overseas export markets. Any reductionin or hindrance to China-based importers could have a material adverse effect on the growth rate of China’s imports and on our charterers’ business. Forinstance, the government of China has implemented economic policies aimed at reducing pollution and increasing the strategic stock piling of crude oil.Should these policies change, this may have the effect of reducing crude oil imports or petroleum product exports and may, in turn, result in a decrease indemand for oil shipping. Additionally, though in China there is an increasing level of autonomy and a gradual shift in emphasis to a “market economy” andenterprise reform, many of the reforms, particularly some limited price reforms that result in the prices for certain commodities being principally determinedby market forces, are unprecedented or experimental and may be subject to revision, change or abolition. The level of imports to and exports from Chinacould be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and socialconditions or other relevant policies of the Chinese government. Although China exerts a large effect on the seaborne market for crude oil and petroleumproducts, any decreases in trade in those commodities by any of the countries in other major trading regions in North America, Europe and Asia could depresstime charter rates which could have a material adverse effect on our business, results of operations, financial condition and our ability to pay cashdistributions to our shareholders.Our operations expose us to the risk that increased trade protectionism from China, the United States or other nations will adversely affect our business.If the global recovery is undermined by downside risks and the recent economic downturn returns, governments may turn to trade barriers to protect theirdomestic industries against foreign imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism in the markets that ourcharterers serve may cause (i) a decrease in cargoes available to our charterers in favor of Chinese charterers and Chinese owned ships and (ii) an increase inthe risks associated with importing goods to China. Any increased trade barriers or restrictions on trade, especially trade with China, would have an adverseimpact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to usand 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, financialcondition and our ability to pay cash distributions to our unitholders.The expansion of the Panama Canal may have an adverse effect on our results of operationsIn June 2016, the expansion of the Panama Canal, or the Canal, was completed. The new locks allow the Canal to accommodate significantly larger vessels,including LR1s, which we operate. Transit from the U.S. Gulf, the Caribbean or the Northern Coast of South America to Asia, a possible trade route for ourcustomers using larger tankers, can now be shortened by approximately 15 days compared to transiting via the Cape of Good Hope. Such transits by largertankers would be undertaken only if the cargo carried is close to the full capacity of the tanker and the fees charged by the Canal still allow for a savings intime and expenses compared to the alternative route. Any decrease in voyage time may increase the number of those larger tankers available for cargo liftingand thereby increase industry capacity, which may have an adverse effect on time-charter equivalent, or TCE, rates. Our VLCCs, which cannot transit the newCanal, will be unaffected by its expansion as long as any increased crude oil carrier capacity generated does not cause ships smaller than VLCCs to become amore economic alternative to VLCCs on a long term basis.The employment of our vessels could be adversely affected by an inability to clear the oil majors’ risk assessment process, and we could be in breach of ourcharter agreements with all of our tanker vessels.The shipping industry, and especially the shipment of crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals, has been, andwill remain, heavily regulated. The so-called “oil majors,” such as Exxon Mobil, BP p.l.c., Royal Dutch Shell plc., Chevron, ConocoPhillips and Total S.A.,together with a number of commodities traders, represent a significant percentage of the production, trading and shipping logistics (terminals) of crude oiland refined products worldwide. Concerns for the environment have led the oil majors to develop and implement a strict ongoing due diligence process whenselecting their commercial partners. This vetting process has evolved into a sophisticated and comprehensive risk assessment of both the vessel operator andthe vessel, including physical ship inspections, completion of vessel inspection questionnaires performed by accredited inspectors and the production ofcomprehensive risk assessment reports. In the case of term charter relationships, additional factors are considered when awarding such contracts, including: • office assessments and audits of the vessel operator; • the operator’s environmental, health and safety record; • compliance with the standards of the International Maritime Organization (the “IMO”), a United Nations agency that issues international tradestandards for shipping; • compliance with oil majors’ codes of conduct, policies and guidelines, including transparency, anti-bribery and ethical conduct requirementsand relationships with third parties; 15Table of Contents • compliance with heightened industry standards that have been set by several oil companies; • shipping industry relationships, reputation for customer service, technical and operating expertise; • shipping experience and quality of ship operations, including cost-effectiveness; • quality, experience and technical capability of crews; • the ability to finance vessels at competitive rates and overall financial stability; • relationships with shipyards and the ability to obtain suitable berths; • construction management experience, including the ability to procure on-time delivery of new vessels according to customer specifications; • willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and • competitiveness of the bid in terms of overall price.Under the terms of our charter agreements, our charterers require that these vessels and the technical manager are vetted and approved to transport oilproducts by multiple oil majors. Our failure to maintain any of our vessels to the standards required by the oil majors could put us in breach of the applicablecharter agreement and lead to termination of such agreement, and could give rise to impairment in the value of our vessels.Should we not be able to successfully clear the oil majors’ risk assessment processes on an ongoing basis, the future employment of our vessels, as wellas our ability to obtain charters, whether medium- or long-term, could be adversely affected. Such a situation may lead to the oil majors’ terminating existingcharters and refusing to use our vessels in the future, which would adversely affect our results of operations and cash flows.We depend on significant customers for part of our revenue. Charterers may terminate or default on their obligations to us, which could materiallyadversely affect our results of operations and cash flow, and breaches of the charters may be difficult to enforce.We derive a significant part of our revenue from a number of charterers. For the year ended December 31, 2017, Navig8 Group of Companies(“Navig8”), Mansel LTD (“Mansel”) and Shell Tankers Singapore Private LTD (“Shell”) accounted for 31.9%, 14.3% and 13.7%, respectively, of our totalrevenue. The loss of these or any of our customers, a customer’s failure to make payments or perform under any of the applicable charters, a customer’stermination of any of the applicable charters, the loss or damage beyond repair to any of our vessels, our failure to deliver the vessel within a fixed period oftime or a decline in payments under the charters could have a material adverse effect on our business, results of operations and financial condition. Thecharter agreements for our vessels are generally governed by English law and provide for dispute resolution in English courts or London-based arbitralproceedings. There can be no assurance that we would be able to enforce any judgments against these charterers in jurisdictions where they are based or havetheir primary assets and operations. Even after a charter contract is entered, charterers may terminate charters early under certain circumstances. The events oroccurrences that will cause a charter to terminate or give the charterer the option to terminate the charter generally include a total or constructive total loss ofthe related vessel, the requisition for hire of the related vessel, the vessel becoming subject to seizure for more than a specified number of days or the failureof the related vessel to meet specified performance criteria.In addition, the ability of a charterer to perform its obligations under a charter will depend on a number of factors that are beyond our control. Thesefactors may include general economic conditions, the condition of the crude oil, product and chemical tanker sectors of the shipping industry, the charterrates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of a vessel may beconsiderable and may adversely affect our business, results of operations, cash flows and financial condition.We cannot predict whether our charterers will, upon the expiration of their charters, re-charter our vessels on favorable terms or at all. If our charterersdecide not to re-charter our vessels, we may not be able to re-charter them on terms similar to our current charters or at all. Even if we manage to successfullycharter our vessels in the future, our charterers may go bankrupt or fail to perform their obligations under the charter agreements, they may delay payments orsuspend payments altogether, they may terminate the charter agreements prior to the agreed-upon expiration date or they may attempt to renegotiate theterms of the charters. In the future, we may also employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time chartermarket. If we receive lower charter rates under replacement charters or are unable to re-charter all of our vessels, our results of operations and financialcondition could be materially adversely affected. 16Table of ContentsThe risks and costs associated with vessels increase as the vessels age.As of April 2, 2018, the vessels in our fleet had an average age of approximately 7.2 years and most tanker vessels have an expected life ofapproximately 25 years. We may acquire older vessels in the future. Older vessels are typically more costly to maintain than more recently constructedvessels due to improvements in engine technology. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable tocharterers as well. Governmental regulations, safety or other equipment standards related to the age of the vessels may require expenditures for alterations orthe addition of new equipment, to our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that as ourvessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If wesell vessels, we may have to sell them at a loss, and if charterers no longer charter out vessels due to their age, it could materially adversely affect ourearnings.We are subject to inherent operational risks that may not be adequately covered by our insurance. If we experience a catastrophic loss and our insuranceis not adequate to cover such loss, it could lower our profitability and be detrimental to operations.The operation of ocean-going vessels in international trade is inherently risky. The ownership and operation of vessels in international trade is affectedby a number of inherent risks, including mechanical failure, personal injury, vessel and cargo loss or damage, business interruption due to politicalconditions in foreign countries, hostilities, piracy, terrorism, labor strikes and/or boycotts, adverse weather conditions and catastrophic marine disaster,including environmental accidents and collisions. All of these risks could result in liability, loss of revenues, increased costs and loss of reputation. Althoughwe carry insurance for our fleet against risks commonly insured against by vessel owners and operators, including hull and machinery insurance, war risksinsurance and protection and indemnity insurance (which include environmental damage and pollution insurance), all risks may not be adequately insuredagainst, and any particular claim may not be paid. We do not currently maintain off-hire insurance, which would cover the loss of revenue during extendedvessel off-hire periods, such as those that occur during an unscheduled drydocking due to damage to the vessel from accidents. Other events that may lead tooff-hire periods include natural or man-made disasters that result in the closure of certain waterways and prevent vessels from entering or leaving certainports. Accordingly, any extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business. Any claims covered byinsurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductiblescould be material.We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmentalregulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmentaldamage or pollution. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could harm our business, financial condition andoperating results. Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. Inaddition, the insurance that may be available to us may be significantly more expensive than our existing coverage. We do not carry strike insurance.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. We mayalso 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 protectionand indemnity associations through which we receive indemnity insurance coverage for tort liability. In addition, our protection and indemnity associationsmay not have enough resources to cover claims made against them. Our payment of these calls could result in significant expenses to us, which could reduceour cash flows and place strains on our liquidity and capital resources. Furthermore, in the future, we may not be able to obtain adequate insurance coverageat reasonable rates for our fleet. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe will be standard forthe shipping industry, may result in significant increased overall costs to us. 17Table of ContentsWe 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 have been and may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract disputes,personal injury claims, environmental claims or proceedings, and other tort claims, employment matters, governmental claims for taxes or duties, and otherlitigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty theoutcome 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 materialadverse 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 adverseeffect on our financial condition.We are subject to various laws, regulations and conventions, including environmental and safety laws that could require significant expenditures both tomaintain compliance with such laws and to pay for any uninsured environmental liabilities including any resulting from a spill or other environmentalincident.The shipping business and vessel operation are materially affected by government regulation in the form of international conventions, national, stateand local laws, and regulations in force in the jurisdictions in which vessels operate, as well as in the country or countries of their registration. Governmentalregulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customerrequirements or competition, may require us to make capital and other expenditures. Because such conventions, laws and regulations are often revised, wecannot predict the ultimate cost of complying with such conventions, laws and regulations, or the impact thereof on the fair market price or useful life of ourvessels. In order to satisfy any such requirements, we may be required to take any of our vessels out of service for extended periods of time, withcorresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly oldervessels, profitably during the remainder of their economic lives. This could lead to significant asset write downs. In addition, violations of environmental andsafety regulations can result in substantial penalties and, in certain instances, seizure or detention of our vessels.Additional conventions, laws and regulations may be adopted that could limit our ability to do business, require capital expenditures or otherwiseincrease our cost of doing business, which may materially adversely affect our operations, as well as the shipping industry generally. For example, in variousjurisdictions, legislation has been enacted, or is under consideration, that would impose more stringent requirements on air pollution and effluent dischargesfrom our vessels. For example, the IMO periodically proposes and adopts amendments to revise the International Convention for the Prevention of Pollutionfrom Ships (“MARPOL”), such as the revision to Annex VI which came into force on July 1, 2010. The revised Annex VI implements a phased reduction ofthe sulfur content of fuel and allows for stricter sulfur limits in designated emission control areas (“ECAs”). Thus far, ECAs have been formally adopted forthe Baltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOx emissions only) and the North AmericanECA (which came into effect on August 1, 2012 limiting SOx, NOx and particulate matter emissions). In October 2016, the IMO approved the designation ofthe North Sea and the Baltic Sea as ECAs for NOx under Annex VI, which is scheduled for adoption in 2017 and would take effect in January 2021. TheUnited States Caribbean Sea ECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOx and particulatematter emissions. In January 2015, the limit for fuel oil sulfur levels fell to 0.10% m/m in ECAs established to limit SOx and particulate matter emissions.After considering the issue for many years, the IMO announced on October 27, 2016 that it was proceeding with a requirement for 0.5% m/m sulfurcontent in marine fuel (down from current levels of 3.5%) outside the ECAs starting on January 1, 2020. Under Annex VI, the 2020 date was subject to reviewas to the availability of the required fuel oil. Annex VI required the fuel availability review to be completed by 2018 but was ultimately completed in2016. Therefore, by 2020, ships will be required to remove sulfur from emissions through the use of emission control equipment, or purchase marine fuel with0.5% sulfur content, which may see increased demand and higher prices due to supply constraints. Installing pollution control equipment or using lowersulfur fuel could result in significantly increased costs to our company. Similarly, MARPOL Annex VI requires Tier III standards for NOx emissions to beapplied to ships constructed and engines installed in ships operating in NOx ECAs from January 1, 2016.California has adopted more stringent low sulfur fuel requirements within California-regulated waters. In addition, the IMO, the U.S. and states withinthe U.S. have proposed or implemented requirements relating to the management of ballast water to prevent the harmful effects of foreign invasive species.In February 2004, the IMO adopted the International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWMConvention”). The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to bereplaced in time with mandatory concentration limits, as well as other obligations, including recordkeeping requirements and implementation of a BallastWater and Sediments Management Plan. The BWM Convention entered into force on September 8, 2017. The BWM Convention requires ships to manageballast water in a manner that removes, renders harmless or avoids the uptake or discharge of aquatic organisms and pathogens within ballast water andsediment. 18Table of ContentsRecently updated Ballast Water and Sediment Management Plan guidance includes more robust testing and performance specifications. Enforcement of theBWM Convention and revised guidance will likely result in additional compliance costs, to be implemented over a period of time, depending upon theship’s age and renewal survey cycle. Currently, all ships must have a ballast water management plan, a ballast water record book and an International BallastWater Management Certificate. Existing ships built before September 8, 2017, are required to exchange ballast water in open seas, away from coastal areas orin designated areas. Ships built after September 8, 2017, are required to comply with discharge standards based on the maximum allowable amount of viableorganisms, which usually involves the installation of ballast water treatment systems. Ships built before September 8, 2017 must comply with IMO dischargestandards by the due date for their IOPPC renewal survey under MARPOL Annex 1. All ships must meet the IMO ballast water discharge standard bySeptember 8, 2024. The entry of the BWM Convention and revised guidance will likely result in additional compliance costs.The operation of vessels is also affected by the requirements set forth in the International Safety Management Code (the “ISM Code”). The ISM Coderequires ship owners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety andenvironmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing with emergencies.Further to this, the IMO has introduced the first ever mandatory measures for an international greenhouse gas reduction regime for a global industry sector.These energy efficiency measures took effect on January 1, 2013 and apply to all ships of 400 gross tonnage and above. They include the development of aship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan, with which the industry will have to comply. The failure of aship owner or bareboat charterer to comply with the ISM Code and IMO measures may subject such party to increased liability, may decrease availableinsurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports.We operate a fleet of crude, product and chemical tankers that are subject to national and international laws governing pollution from such vessels.Several international conventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as definedby the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollutiondamage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by referenceto the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by the ship owner’s intentional or reckless conduct. Liability mayalso be incurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for any pollutiondamage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where the spillage occurs.The same principle applies to any pollution from the vessel in a jurisdiction which is not a party to the CLC. The CLC applies in over 100 jurisdictionsaround the world, but it does not apply in the United States, where the corresponding liability laws such as the Oil Pollution Act of 1990 (the “OPA”)discussed below, are particularly stringent. For vessel operations not covered by the CLC, including those operated under our fleet, at present, internationalliability for oil pollution is governed by the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”). In2001, the IMO adopted the Bunker Convention, which imposes strict liability on ship owners for pollution damage and response costs incurred incontracting states caused by discharges, or threatened discharges, of bunker oil from all classes of ships not covered by the CLC. The Bunker Conventionalso requires registered owners of ships over a certain size to maintain insurance to cover their liability for pollution damage in an amount equal to the limitsof liability under the applicable national or international limitation regime, including liability limits calculated in accordance with the Convention onLimitation of Liability for Maritime Claims 1976, as amended (the “1976 Convention”), discussed in more detail in the following paragraph. The BunkerConvention became effective in contracting states on November 21, 2008 and, August 23, 2017, had 86 contracting states. In non-contracting states, liabilityfor such bunker oil pollution typically is determined by the national or other domestic laws in the jurisdiction where the spillage occurs.The CLC and Bunker Convention also provide vessel owners a right to limit their liability, depending on the applicable national or internationalregime. The CLC includes its own liability limits. The 1976 Convention is the most widely applicable international regime limiting maritime pollutionliability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a ship owner’s intentional or reckless conduct. Certainjurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” The Protocol of 1996 provides forsubstantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention. Finally, some jurisdictions, such as the UnitedStates, are not a party to either the 1976 Convention or the Protocol of 1996, and, therefore, a ship owner’s rights to limit liability for maritime pollution insuch jurisdictions may be uncertain.Environmental legislation in the United States merits particular mention as it is in many respects more onerous than international laws, representing ahigh-water mark of regulation with which ship owners and operators must comply, and of liability likely to be incurred in the event of non-compliance or anincident causing pollution. Though it has been eight years since the Deepwater Horizon oil spill in the Gulf of Mexico (the “Deepwater Horizon incident”),such regulation may become even stricter because of the incident’s impact. In the United States, the OPA establishes an extensive regulatory and liabilityregime for the protection and cleanup of the environment from cargo and bunker oil spills from vessels, including tankers. The OPA covers all owners andoperators whose vessels 19Table of Contentstrade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States’ territorial sea andits 200 nautical mile exclusive economic zone. Under the OPA, vessel owners, operators and bareboat charterers 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 andclean-up costs and other damages arising from discharges or substantial threats of discharges, of oil from their vessels. In response to the Deepwater Horizonincident, the U.S. House of Representatives passed and the U.S. Senate considered but did not pass a bill to strengthen certain requirements of the OPA;similar legislation may be introduced in the future.In addition to potential liability under the federal OPA, vessel owners may in some instances incur liability on an even more stringent basis under statelaw in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oil contingency plan befiled with the state, require that the ship owner contract with an oil response organization and require a valid certificate of financial responsibility, all prior tothe vessel entering state waters.In recent years, the EU has become increasingly active in the field of regulation of maritime safety and protection of the environment. In some areas ofregulation the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, in 2005 the EU adopteda directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not only where pollution is caused by intent orrecklessness (which would be an offence under MARPOL), but also where it is caused by “serious negligence.” The concept of “serious negligence” may beinterpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liability being incurred in circumstanceswhere it would not be incurred under international law. In February 2017, EU member states met to consider independently regulating the shipping industryunder the Emissions Trading System (“ETS”), which requires ETS-regulated businesses to report on carbon emissions and provides for a credit trading systemfor carbon allowances. On February 15, 2017, European Parliament voted in favor of a bill to include maritime shipping in the ETS by 2023 if the IMO hasnot promulgated a comparable system by 2021. In November 2017, the Council of Ministers, EU’s main decision making body, agreed that Europe shouldact on shipping emissions from 2023 if the IMO fails to deliver effective global measures. Last year, IMO’s urgent call to action to bring about shipgreenhouse gas emissions reductions before 2023 was met with industry push-back by many countries. Depending on how fast IMO and the EU move on thisissue, the ETS may result in additional compliance costs for our vessels.In response to the Deepwater Horizon incident, the European Union issued “Directive 2013/30/EU of the European Parliament and of the Council ofJune 12, 2013 on safety of offshore oil and gas operations.” Implemented on July 19, 2015, the objective of this Directive is to reduce as far as possible theoccurrence of major accidents relating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marineenvironment and coastal economies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas andlimiting possible disruptions to Union indigenous energy production, and to improve the response mechanisms in case of an accident. As far as theenvironment is concerned, the UK has various new or amended regulations such as: the Offshore Petroleum Activities (Offshore Safety Directive)(Environmental Functions) Regulations 2015 (“OSDEF”), the 2015 amendments to the Merchant Shipping (Oil Pollution Preparedness, Response andCooperation Convention) Regulations 1998 (“OPRC 1998”) and other environmental Directive requirements, specifically the Environmental ManagementSystem. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensing Directive requirements.Criminal liability for a pollution incident could not only result in us incurring substantial penalties or fines, but may also, in some jurisdictions,facilitate civil liability claims for greater compensation than would otherwise have been payable.We maintain insurance coverage for each owned vessel in our fleet against pollution liability risks in the amount of $1.0 billion in the aggregate forany one event. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, thisinsurance coverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage,or if damages from a catastrophic incident exceed the aggregate liability of $1.0 billion for any one event, our cash flow, profitability and financial positionwould be adversely impacted.Climate change and government laws and regulations related to climate change could negatively impact our financial condition.We are and will be, directly and indirectly, subject to the effects of climate change and may, directly or indirectly, be affected by government laws andregulations related to climate change. A number of countries have adopted or are considering the adoption of regulatory frameworks to reduce greenhousegas emissions, such as carbon dioxide, methane and nitrogen oxides. In the United States, the United States Environmental Protection Agency (“EPA”) hasdeclared greenhouse gases to be dangerous pollutants and has issued greenhouse gas reporting requirements for emissions sources in certain industries (whichcurrently do not include the shipping industry). The EPA does require owners of vessels subject to MARPOL Annex VI to maintain records for nitrogenoxides standards and in-use fuel specifications. 20Table of ContentsIn addition, while the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United NationsFramework Convention on Climate Change (the “UNFCC”), which requires adopting countries to implement national programs to reduce greenhouse gasemissions, the IMO intends to develop limits on greenhouse gases from international shipping. It has responded to the global focus on climate change andgreenhouse gas emissions by developing specific technical and operational efficiency measures and a work plan for market-based mechanisms in 2011. Theseinclude the mandatory measures of SEEMP, outlined above, and an energy efficiency design index (“EEDI”) for new ships. The IMO is also considering itsposition on market-based measures through an expert working group. Among the numerous proposals being considered by the working group are thefollowing: a port state levy based on the amount of fuel consumed by the vessel on its voyage to the port in question; a global emissions trading schemewhich would allocate emissions allowances and set an emissions cap; and an international fund establishing a global reduction target for internationalshipping, to be set either by the UNFCCC or the IMO.At its 64th session (2012), the IMO’s Marine Environment Protection Committee (the “MEPC”) indicated that 2015 was the target year for memberstates to identify market-based measures for international shipping. At its 66th session (2014), the MEPC continued its work on developing technical andoperational measures relating to energy-efficiency measures for ships, following the entry into force of the mandatory efficiency measures on January 1, 2013.It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicable to new ships. It further adopted amendments to MARPOLAnnex VI concerning the extension of the scope of application of the EEDI to Liquefied Natural Gas (“LNG”) carriers, ro-ro cargo ships (vehicle carriers),ro-ro cargo ships, ro-ro passenger ships and cruise passengers ships with nonconventional propulsion. At its 67th session (2014), the MEPC adopted the 2014Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted with dual-fuel engines using LNG and liquid fueloil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimum propulsion power to maintain the maneuverability ofships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) of the EEDI requirements. At its 68th session (2015), theMEPC amended the 2014 Guidelines on EEDI survey and certification as well as the method of calculating an EEDI for new ships, the latter of which wasagain amended at the 70th session (2016). At its 70th session, the MEPC also adopted mandatory requirements for ships of 5,000 gross tonnage or greater tocollect fuel consumption data for each type of fuel used, and report the data to the flag State after the end of each calendar year.In December 2011, UN climate change talks took place in Durban and concluded with an agreement referred to as the Durban Platform for EnhancedAction. The Durban Conference did not result in any proposals specifically addressing the shipping industry’s role in climate change but the progress thathas been made by the IMO in this area was widely acknowledged throughout the negotiating bodies of the UNFCCC process and an ad hoc working groupwas established.Although regulation of greenhouse gas emissions in the shipping industry was discussed during the 2015 UN Climate Change Conference in Paris (the“Paris Conference”), the agreement reached among the 195 nations did not expressly reference the shipping industry. Following the Paris Conference, theIMO announced it would continue its efforts on this issue at the MEPC, and at its 70th session, the MEPC approved a roadmap for developing acomprehensive GHG emissions reduction strategy for ships, which includes the goal of adopting an initial strategy and emission reduction commitments in2018. The roadmap also provides for additional studies and further intersessional work, to be continued at the 71st session in 2017, with a goal of adopting arevised strategy in 2023 to include short-, mid- and long-term reduction measures and schedules for implementation. In April 2018, the committee chargedwith creating the reduction strategy must finalize the initial draft of the strategy and submit a report to MEPC.The EU announced in April 2007 that it planned to expand the EU emissions trading scheme by adding vessels, and a proposal from the EuropeanCommission (“EC”) was expected if no global regime for reduction of seaborne emissions had been agreed to by the end of 2011. As of January 31, 2013, theEC had stopped short of proposing that emissions from ships be included in the EU’s emissions-trading scheme. However, on October 1, 2012, it announcedthat it would propose measures to monitor, verify and report on greenhouse-gas emissions from the shipping sector. On June 28, 2013, the EC adopted acommunication setting out a strategy for progressively including greenhouse gas emissions from maritime transport in the EU’s policy for reducing its overallGHG emissions. The first step proposed by the EC was an EU Regulation (as defined below) to an EU-wide system for the monitoring, reporting andverification of carbon dioxide emissions from large ships starting in 2018. The EU Regulation (2015/757) was adopted on April 29, 2015 and took effect onJuly 1, 2015, with monitoring, reporting and verification requirements beginning on January 1, 2018. This Regulation appears to be indicative of an intent tomaintain pressure on the international negotiating process. The EC also adopted an Implementing Regulation, which entered into force in November 2016,setting templates for monitoring plans, emissions reports and compliance documents pursuant to Regulation 2015/757.We cannot predict with any degree of certainty what effect, if any, possible climate change and government laws and regulations related to climatechange will have on our operations, whether directly or indirectly. However, we believe that climate change, including the possible increase in severeweather events resulting from climate change, and government laws and regulations related to climate change may affect, directly or indirectly, (i) the cost ofthe vessels we may acquire in the future, (ii) our ability to continue to operate as we have in the past, (iii) the cost of operating our vessels, and (iv) insurancepremiums, deductibles and the availability of coverage. As a result, our financial condition could be negatively impacted by significant climate change andrelated governmental regulation, and that impact could be material. 21Table of ContentsWe are subject to vessel security regulations and we incur costs to comply with adopted regulations. We may be subject to costs to comply with similarregulations that may be adopted in the future in response to terrorism.Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002,the Maritime Transportation Security Act of 2002 (the “MTSA”) came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. CoastGuard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of theUnited States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea (the “SOLAS”) created a new chapter ofthe convention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailed security obligationson vessels and port authorities, most of which are contained in the International Ship and Port Facilities Security Code (the “ISPS Code”). Among the variousrequirements are: • on-board installation of automatic information systems (“AIS”), to enhance vessel-to-vessel and vessel-to-shore communications; • on-board installation of ship security alert systems; • the development of vessel security plans; and • compliance with flag state security certification requirements.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels from MTSA vesselsecurity measures, provided such vessels have on board a valid International Ship Security Certificate (“ISSC”) that attests to the vessel’s compliance withSOLAS security requirements and the ISPS Code. Starting January 1, 2016, the IMDG Code also included updates to the provisions for radioactive material,reflecting the latest provisions from the International Atomic Energy Agency, or the IAEA, new marking requirements for “overpack” and “salvage” andupdates to various individual packing requirements. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Codeand take measures for our vessels or vessels that we charter to attain compliance with all applicable security requirements within the prescribed time periods.Although management does not believe these additional requirements will have a material financial impact on our operations, there can be no assurance thatthere will not be an interruption in operations to bring vessels into compliance with the applicable requirements and any such interruption could cause adecrease in charter revenues. Furthermore, additional security measures could be required in the future that could have significant financial impact on us.The cost of vessel security measures has also been affected by the escalation in recent years in the frequency and seriousness of acts of piracy againstships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Attacks of this kind have commonly resulted in vessels and theircrews being detained for several months, and being released only on payment of large ransoms. Substantial loss of revenue and other costs may be incurred asa result of such detention. Although we insure against these losses to the extent practicable, the risk remains of uninsured losses which could significantlyaffect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably thosecontained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration, which expresses commitment to BestManagement Practices in relation to piracy and calls for compliance with them as an essential part of compliance with the ISPS Code.Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the European Unionand other jurisdictions.Prior to January 2016, the scope of sanctions imposed against Iran, the government of Iran and persons engaging in certain activities or doing certainbusiness with and relating to Iran was expanded by a number of jurisdictions, including the United States, the European Union and Canada. In 2010, the U.S.enacted the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”), which expanded the scope of the former Iran Sanctions Act. Thescope of U.S. sanctions against Iran were expanded subsequent to CISADA by, among other U.S. laws, the National Defense Authorization Act of 2012 (the“2012 NDAA”), the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), Executive Order 13662, and the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”). The foregoing laws, among other things, expanded the application of prohibitions to non-U.S. companies, such as ourcompany, and introduced limits on the ability of non-U.S. companies and other non-U.S. persons to do business or trade with Iran when such activities relateto specific activities such as investment in Iran, the supply or export of refined petroleum or refined petroleum products to Iran, the supply and delivery ofgoods to Iran which could enhance Iran’s petroleum or energy sectors, and the transportation of crude oil from Iran to countries which do not enjoy Iran crudeoil sanctions waivers (our tankers called in Iran but did not engage in the prohibited activities specifically identified by these sanctions). U.S. economicsanctions on Iran fall into two general categories: “Primary” sanctions, which prohibit U.S. persons or U.S. companies and their foreign branches, U.S.citizens, U.S. permanent residents, persons within the territory of the United States from engaging in all direct and indirect trade and other transactions withIran without U.S. government authorization, and “secondary” sanctions, which are mainly nuclear-related sanctions. While most of the U.S. nuclear-relatedsanctions with respect to Iran and the EU sanctions on Iran (including, inter alia, CISADA, ITRA, and IFCA) were lifted on January 16, 2016 through theimplementation of the Joint Comprehensive Plan of Action (“JCPOA”) entered into between the permanent members of the United Nations Security Council(China, France, Russia, the United Kingdom and the United States) and Germany, there are still certain limitations in place with which 22Table of Contentswe need to comply. The primary sanctions with which U.S. persons or transactions with a U.S. nexus must comply are still in force and have not been lifted orrelaxed, except in a very limited fashion. Additionally, the sanctions lifted under the JCPOA could be reimposed (“snapped back”) at any time if Iran violatesthe JCPOA or the United States does not certify that Iran is in compliance with the JCPOA.After the lifting of most of the nuclear-related sanctions on January 16, 2016, EU sanctions remain in place in relation to the export of arms andmilitary goods listed in the EU common military list, missiles-related goods and items that might be used for internal repression. The main nuclear-related EUsanctions which remain in place include restrictions on: i.Graphite and certain raw or semi-finished metals such as corrosion-resistant high-grade steel, iron, aluminium and alloys, titanium and alloys andnickel and alloys (as listed in Annex VIIB to EU Regulation 267/2012 as updated by EU Regulation 2015/1861 (the “EU Regulation”); ii.Goods listed in the Nuclear Suppliers Group list (listed in Annex I to the EU Regulation); iii.Goods that could contribute to nuclear-related or other activities inconsistent with the JCPOA (as listed in Annex II to the EU Regulation); and iv.Software designed for use in nuclear/military industries (as listed in Annex VIIA to the EU Regulation).Dealing with the above is no longer prohibited, but prior authorization must be obtained first and is granted on a case-by-case basis. The remainingrestrictions apply to the sale, supply, transfer or export, directly or indirectly to any Iranian person/for use in Iran, as well as the provision of technicalassistance, financing or financial assistance in relation to the restricted activity. Certain individuals and entities remain sanctioned and the prohibition tomake available, directly or indirectly, economic resources or assets to or for the benefit of sanctioned parties remains. “Economic resources” is widely definedand it remains prohibited to provide vessels for a fixture from which a sanctioned party (or parties related to a sanctioned party) directly or indirectly benefits.It is therefore still necessary to carry out due diligence on the parties and cargoes involved in fixtures involving Iran.Russia/UkraineAs a result of the crisis in Ukraine and the annexation of Crimea by Russia in 2014, both the U.S. and EU have implemented sanctions against certainpersons and entities.The EU has imposed travel bans and asset freezes on certain Russian persons and entities pursuant to which it is prohibited to make available, directlyor indirectly, economic resources or assets to or for the benefit of the sanctioned parties. Certain Russian ports including Kerch Commercial Seaport;Sevastopol Commercial Seaport and Port Feodosia are subject to the above restrictions. Other entities are subject to sectoral sanctions which limit theprovision of equity financing and loans to the listed entities. In addition, various restrictions on trade have been implemented which, amongst others, includea prohibition on the import into the EU of goods originating in Crimea or Sevastopol as well as restrictions on trade in certain dual-use and military items andrestrictions in relation to various items of technology associated with the oil industry for use in deep water exploration and production, Arctic oil explorationand production or shale oil projects in Russia. As such, it is important to carry out due diligence on the parties and cargoes involved in fixtures relating toRussia.The United States has imposed sanctions against certain designated Russian entities and individuals (“U.S. Russian Sanctions Targets”). Thesesanctions block the property and all interests in property of the U.S. Russian Sanctions Targets. This effectively prohibits U.S. persons from engaging in anyeconomic or commercial transactions with the U.S. Russian Sanctions Targets unless the same are authorized by the U.S. Treasury Department. Similar to EUsanctions, U.S. sanctions also entail restrictions on certain exports from the United States to Russia and the imposition of Sectoral Sanctions which restrict theprovision of equity and debt financing to designated Russian entities. While the prohibitions of these sanctions are not directly applicable to us, we havecompliance measures in place to guard against transactions with U.S. Russian Sanctions Targets which may involve the United States or U.S. persons and thusimplicate prohibitions. The United States also maintains prohibitions on trade with Crimea.Venezuela-Related SanctionsThe U.S. sanctions with respect to Venezuela prohibit dealings with designated Venezuelan government officials, and curtail the provision of financing toPDVSA and other government entities. EU sanctions against Venezuela are primarily governed by EU Council Regulation 2017/2063 of 13 November 2017concerning restrictive measures in view of the situation in Venezuela. This includes financial sanctions and restrictions on listed persons and an, armsembargo and related prohibitions and restrictions including restrictions related to internal repression. 23Table of ContentsOther U.S. Economic Sanctions TargetsIn addition to Iran and certain Russian entities and individuals, as indicated above, the United States maintains economic sanctions against Syria,Cuba, North Korea, and sanctions against entities and individuals (such as entities and individuals in the foregoing targeted countries, designated terrorists,narcotics traffickers) whose names appear on the List of SDNs and Blocked Persons maintained by the U.S. Treasury Department (collectively, “SanctionsTargets”). We are subject to the prohibitions of these sanctions to the extent that any transaction or activity we engage in involves Sanctions Targets and aU.S. person or otherwise has a nexus to the United States.Other E.U. Economic Sanctions TargetsThe EU also maintains sanctions against Syria, North Korea and certain other countries and against individuals listed by the EU. These restrictionsapply to our operations and as such, to the extent that these countries may be involved in any business it is important to carry out checks to ensurecompliance with all relevant restrictions and to carry out due diligence checks on counterparties and cargoes.ComplianceConsidering the afoementioned prohibitions of U.S. as well as EU sanctions and the nature of our business, there is a sanctions risk for us due to the wordwidetrade of our vessels, which we seek to minimise by the implementation of our corporate Sanctions policy and our compliance with all applicable sanctionsand embargo laws and regulations. Although we intend to maintain such compliance, there can be no assurance that we will be in compliance in the future,particularly as the scope of certain laws may be unclear and may be subject to changing interpretations, and the law may change. Moreover, despite, forexample, relevant provisions in charter parties forbidding the use of our vessels in trade that would violate economic sanctions, our charterers maynevertheless violate applicable sanctions and embargo laws and regulations and those violations could in turn negatively affect our reputation and beimputed to us. In addition, given our relationship with Navios Midstream and Navios Holdings, we cannot give any assurance that an adverse finding againstNavios Midstream or Navios Holdings by a governmental or legal authority or others with respect to the matters discussed herein or any future matter relatedto regulatory compliance by Navios Acquisition, Navios Holdings or ourselves will not have a material adverse impact on our business, reputation or themarket price or trading of our common stock-units.We are constantly monitoring developments in the United States, the European Union and other jurisdictions that maintain economic sanctions againstIran, other countries, and other sanctions targets, including developments in implementation and enforcement of such sanctions programs. Expansion ofsanctions programs, embargoes and other restrictions in the future (including additional designations of countries and persons subject to sanctions), ormodifications in how existing sanctions are interpreted or enforced, could prevent our vessels from calling in ports in sanctioned countries or could limittheir cargoes. If any of the risks described above materialize, it could have a material adverse impact on our business and results of operations.To reduce the risk of violating economic sanctions, we have a policy of compliance with applicable economic sanctions laws and have implementedand continue to implement and diligently follow compliance procedures to avoid economic sanctions violations.We could be materially adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and anti-corruption laws in otherapplicable jurisdictions.As an international shipping company, we may operate in countries known to have a reputation for corruption. The U.S. Foreign Corrupt Practices Actof 1977 (the “FCPA”) and other anti-corruption laws and regulations in applicable jurisdictions generally prohibit companies registered with the SEC andtheir intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Under the FCPA, U.S.companies may be held liable for some actions taken by strategic or local partners or representatives. Legislation in other countries includes the U.K. BriberyAct 2010 (the “U.K. Bribery Act”) which is broader in scope than the FCPA because it does not contain an exception for facilitation payments. We and ourcustomers may be subject to these and similar anti-corruption laws in other applicable jurisdictions. Failure to comply with legal requirements could exposeus to civil and/or criminal penalties, including fines, prosecution and significant reputational damage, all of which could materially and adversely affect ourbusiness and results of operations, including our relationships with our customers, and our financial results. Compliance with the FCPA, the U.K. Bribery Actand other applicable anti-corruption laws and related regulations and policies imposes potentially significant costs and operational burdens on us. Moreover,the compliance and monitoring mechanisms that we have in place including our Code of Ethics and our anti-bribery and anti-corruption policy, may notadequately prevent or detect all possible violations under applicable anti-bribery and anti-corruption legislation. However, we believe that the procedures wehave in place to prevent bribery are adequate and that they should provide a defense in most circumstances to a violation or a mitigation of applicablepenalties, at least under the U.K.’s Bribery Act. 24Table of ContentsIncreased inspection procedures and tighter import and export controls could increase costs and disrupt our business.International shipping is subject to various security and customs inspections and related procedures in countries of origin and destination. Inspectionprocedures can result in the seizure of contents of vessels, delays in the loading, offloading or delivery and the levying of customs, duties, fines and otherpenalties.It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspectionprocedures could also impose additional costs and obligations on our future customers and may, in certain cases, render the shipment of certain types of cargoimpractical. Any such changes or developments may have a material adverse effect on our business, financial condition, and results of operations.A failure to pass inspection by classification societies could result in our vessels becoming unemployable unless and until they pass inspection, resulting ina loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows.The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classificationsociety 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 withSOLAS. A vessel must undergo an annual survey, an intermediate survey and a special survey. In lieu of a special survey, a vessel’s machinery may be on acontinuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydockedevery two to three years for inspection of the underwater parts of such vessel. If any of our vessels fail any annual survey, intermediate survey, or specialsurvey, the vessel may be unable to trade between ports and, therefore, would be unemployable, potentially causing a negative impact on our revenues due tothe loss of revenues from such vessel until it was able to trade again. Further, if any vessel fails a classification survey and the condition giving rise to thefailure is not cured within a reasonable time, the vessel may lose coverage under various insurance programs, including hull & machinery insurance and/orprotection & indemnity insurance.The operation of ocean-going vessels entails the possibility of marine disasters, including damage or destruction of a vessel due to accident, the loss of avessel due to piracy, terrorism or political conflict, damage or destruction of cargo and similar events that are inherent operational risks of the tankerindustry and may cause a loss of revenue from affected vessels and damage to our business reputation and condition, which may in turn lead to loss ofbusiness.The operation of ocean-going vessels entails certain inherent risks that may adversely affect our business and reputation. Our vessels and their cargoesare at risk of being damaged or lost due to events such as: • damage or destruction of a vessel due to marine disaster such as a collision; • the loss of a vessel due to piracy and terrorism; • cargo and property losses or damage as a result of the foregoing or less drastic causes such as human error, mechanical failure, grounding, fire,explosions and bad weather; • environmental accidents as a result of the foregoing; and • business interruptions and delivery delays caused by mechanical failure, human error, acts of piracy, war, terrorism, political action in variouscountries, labor strikes, potential government expropriation of our vessels or adverse weather conditions.In addition, increased operational risks arise as a consequence of the complex nature of the crude oil, product and chemical tanker industry, the natureof services required to support the industry, including maintenance and repair services, and the mechanical complexity of the tankers themselves. Comparedto other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision or other cause, due tothe high flammability and high volume of the oil transported in tankers. Damage and loss could also arise as a consequence of a failure in the servicesrequired to support the industry, for example, due to inadequate dredging. Inherent risks also arise due to the nature of the product transported by our vessels.Any damage to, or accident involving, our vessels while carrying crude oil could give rise to environmental damage or lead to other adverse consequences.Each of these inherent risks may also result in death or injury to persons, loss of revenues or property, higher insurance rates, damage to our customerrelationships, delay or rerouting.Any of these circumstances or events could substantially increase our costs. For example, the costs of replacing a vessel or cleaning up environmentaldamage could substantially lower our revenues by taking vessels out of operation permanently or for periods of time. Furthermore, the involvement of ourvessels in a disaster or delays in delivery, damage or the loss of cargo may harm our reputation as a safe and reliable vessel operator and cause us to losebusiness. Our vessels could be arrested by maritime claimants, which could result in the interruption of business and decrease revenue and lower profitability. 25Table of ContentsSome of these inherent risks could result in significant damage, such as marine disaster or environmental incidents, and any resulting legal proceedingsmay be complex, lengthy, costly and, if decided against us, any of these proceedings or other proceedings involving similar claims or claims for substantialdamages may harm our reputation and have a material adverse effect on our business, results of operations, cash flow and financial position. In addition, thelegal systems and law enforcement mechanisms in certain countries in which we operate may expose us to risk and uncertainty. Further, we may be requiredto devote substantial time and cost defending these proceedings, which could divert attention from management of our business. Crew members, tortclaimants, claimants for breach of certain maritime contracts, vessel mortgagees, suppliers of goods and services to a vessel, shippers of cargo and otherpersons may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages, and in many circumstances a maritime lien holder mayenforce its lien by “arresting” a vessel through court processes. Additionally, in certain jurisdictions, such as South Africa, under the “sister ship” theory ofliability, a claimant may arrest not only the vessel with respect to which the claimant’s lien has arisen, but also any “associated” vessel owned or controlledby the legal or beneficial owner of that vessel. If any vessel ultimately owned and operated by us is “arrested,” this could result in a material loss of revenues,or require us to pay substantial amounts to have the “arrest” lifted.Any of these factors may have a material adverse effect on our business, financial conditions and results of operations.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 andwhether 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 ourbusiness, results of operations, cash flows and financial condition. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subjectthe vessel to forfeiture to the government of such jurisdiction.We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect ourbusiness and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could beharmed.The efficient operation of our business is dependent on computer hardware and software systems. Information systems are vulnerable to securitybreaches by computer hackers and cyber terrorists. We rely on industry accepted security measures and technology to securely maintain confidential andproprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. Inaddition, the unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business andcould result in decreased performance and increased operating costs, causing our business and results of operations to suffer. Any significant interruption orfailure of our information systems or any significant breach of security could adversely affect our business, results of operations and financial condition, aswell as our cash flows, including cash available for dividends to our stockholders.Acts of piracy on ocean-going vessels have increased in frequency and magnitude, which could adversely affect our business.The shipping industry has historically been affected by acts of piracy in regions such as the South China Sea, the Indian Ocean, the Strait of Malacca,the Arabian Sea, the Gulf of Aden off the coast of Somalia and the Red Sea. Although the frequency of sea piracy worldwide has decreased in recent years, seapiracy incidents continue to occur, particularly in the Gulf of Aden and towards the Mozambique Channel in the North Indian Ocean and increasingly in theGulf of Guinea. A significant example of the heightened level of piracy came in February 2011 when the M/V Irene SL, a crude oil tanker in the Arabian Seawhich was not affiliated with us, was captured by pirates in the Arabian Sea while carrying crude oil estimated to be worth approximately $200 million. InDecember 2009, the Navios Apollon, a vessel owned by Navios Maritime Partners L.P. (“Navios Partners”), was seized by pirates 800 miles off the coast ofSomalia while transporting fertilizer from Tampa, Florida to Rozi, India and was released on February 27, 2010. In January 2014, the Nave Atropos, a vesselowned by us, came under attack from a pirate action group in international waters off the coast of Yemen and in February 2016, the Nave Jupiter, a vessel alsoowned by us, came under attack from pirate action groups on her way out from her loading terminal about 50 nautical miles off Bayelsa, Nigeria. In bothinstances, the crew and the on-board security team successfully implemented the counter piracy action plan and standard operating procedures to deter theattack with no consequences to the vessels or their crew. These piracy attacks have resulted in regions (in which our vessels are deployed) being characterizedby insurers as “war risk” zones or Joint War Committee “war and strikes” listed areas. Premiums payable for insurance coverage could increase significantlyand insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard security guards, could increase in suchcircumstances. While the use of security guards is intended to deter and prevent the hijacking of our vessels, it could also increase our risk of liability fordeath or injury to persons or damage to personal property. In addition, while we believe the charterer remains liable for charter payments when a vessel isseized 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 pirateswas not “on-hire” for a certain number of days and it is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequatelyinsured to cover losses from these incidents, which could have a material adverse effect on us. In 26Table of Contentsaddition, detention hijacking as a result of an act of piracy against our vessels, an increase in cost, or unavailability of insurance for our vessels, could have amaterial adverse impact on our business, financial condition, results of operations and cash flows. Acts of piracy on ocean-going vessels could adverselyaffect our business and operations.Political and government instability, terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs anddisruption of our business.We conduct most of our operations outside of the United States. In particular, we derive our revenues from shipping oil and oil products frompolitically unstable regions and our business, results of operations, cash flows, financial condition and ability to make cash distributions may be adverselyaffected by the effects of political instability, terrorist or other attacks, war or international hostilities. Terrorist attacks, such as the attacks in the UnitedStates on September 11, 2001, the attacks in London on July 7, 2005, in Paris on January 7, 2015 and November 13, 2015, and the bombings in Spain onMarch 11, 2004, along with the recent conflicts in Iraq, Afghanistan, Syria, Yemen, Ukraine and other current and future conflicts, and the continuingresponse of the United States and other countries to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the worldfinancial markets, including the energy markets. Continuing hostilities in the Middle East may lead to additional refugee flows, armed conflicts or to furtheracts of terrorism and civil disturbance in the United States or elsewhere, which could result in increased volatility and turmoil in the financial markets andmay contribute further to economic instability. Current and future conflicts and terrorist attacks may adversely affect our business, operating results, financialcondition, ability to raise capital and future growth. Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, a VLCC not related tous, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers.In addition, oil facilities, shipyards, vessels, pipelines and oil and gas fields could be targets of future terrorist attacks. Any such attacks could lead to,among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs, and theinability to transport oil and other refined products to or from certain locations. Terrorist attacks, war, sanctions against oil exporting countries or otherevents beyond our control that adversely affect the distribution, production or transportation of oil and other refined products to be shipped by us couldentitle our customers to terminate our charter contracts, which would harm our cash flow and our business.Furthermore, our operations may be adversely affected by changing or adverse political and governmental conditions in the countries where ourvessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with theoperation of our vessels, which could harm our business, financial condition and results of operations. Our operations may also be adversely affected byexpropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to trading activities, or other adverse eventsor circumstances in or affecting the countries and regions where we operate or where we may operate in the future.Governments could requisition vessels of a target business during a period of war or emergency, resulting in a loss of earnings.A government could requisition a business’ vessels for title or hire. Requisition for title occurs when a government takes control of a vessel andbecomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charterrates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances.Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, requisition of one or more of our vessels wouldhave a substantial negative effect on us as we would potentially lose all revenues and earnings from the requisitioned vessels and permanently lose thevessels. Such losses might be partially offset if the requisitioning government compensated us for the requisition.Disruptions in world financial markets and the resulting governmental action in Europe, the United States and in other parts of the world could have amaterial adverse impact on our ability to obtain financing required to acquire vessels or new businesses. Furthermore, such a disruption would materiallyadversely affect our results of operations, financial condition and cash flows.Global financial markets and economic conditions have been severely disrupted and volatile in recent years and remain subject to significantvulnerabilities, such as the deterioration of fiscal balances and the rapid accumulation of public debt, continued deleveraging in the banking sector and alimited supply of credit. Continuing turmoil and hostilities in Iraq, Afghanistan, Syria, Ukraine, other current conflicts, the refugee crisis in Europe and theMiddle East and continuing concerns relating to the European sovereign debt crisis, the socioeconomic and political crisis in Venezuela and the UnitedKingdom’s pending exit from the European Union have led to increased volatility in global credit and equity markets. Several European countries, includingGreece, have been affected by increasing public debt burdens and weakening economic growth prospects. In recent years, Standard and Poor’s RatingServices and Moody’s Investors Service downgraded the long-term ratings of most European countries’ sovereign debt and initiated negative outlooks. Suchdowngrades could negatively affect those countries’ ability to access the public debt markets at reasonable rates or at all, materially affecting the financialconditions of banks in those countries, including those with which we maintain cash deposits and equivalents, or on which we rely on to finance our vesseland new business acquisitions. 27Table of ContentsCash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the eventof non-performance by financial institutions. We maintain cash deposits and equivalents in excess of government-provided insurance limits at banks inGreece and other European banks, which may expose us to a loss of cash deposits or cash equivalents.During the financial crisis credit markets worldwide and in the U.S. experienced significant contraction, de-leveraging and reduced liquidity, and theU.S. federal government, state governments and foreign governments took highly significant measures in response to such events, including the enactment ofthe Emergency Economic Stabilization Act of 2008 in the United States, and may implement other significant responses in the future. Additionally,uncertainty regarding trade barriers, including import tariffs, tax policy and government spending in the United States have created an uncertain environmentwhich could reduce demand for our services. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations andother requirements. The Securities and Exchange Commission (the “SEC”), other regulators, self-regulatory organizations and exchanges are authorized totake extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws. Any changes to securities,tax, environmental, trade, or other laws or regulations, could have a material adverse effect on our results of operations, financial condition or cash flows, andcould cause the market price of our common stock to decline.Within the last several years, a number of financial institutions have experienced serious financial difficulties and, in some cases, have enteredbankruptcy proceedings or are in regulatory enforcement actions. These difficulties resulted, in part, from declining markets for assets held by suchinstitutions, particularly the reduction in the value of their mortgage and asset-backed securities portfolios. These difficulties were compounded by financialturmoil affecting the world’s debt, credit and capital markets, and the general decline in the willingness by banks and other financial institutions to extendcredit, particularly to the shipping industry due to the historically low vessel earnings and values, and, in part, due to changes in overall banking regulations(for example, Basel III). As a result, the ability of banks and credit institutions to finance new projects, including the acquisition of new vessels in the future,were for a time uncertain. Following the stress tests run by the European Central Bank (the “ECB”), revised capital ratios have been communicated toEuropean banks. This has reduced the uncertainty following the difficulties of the past several years, but it has also led to changes in each bank’s lendingpolicies and ability to provide financing or refinancing. A recurrence of global economic weakness may adversely affect the financial institutions thatprovide our credit facilities and may impair their ability to continue to perform under their financing obligations to us, which could have an impact on ourability to fund current and future obligations.Furthermore, we may experience difficulties obtaining financing commitments, including commitments to refinance our existing debt as balloonpayments come due under our credit facilities, in the future if lenders are unwilling to extend financing to us or unable to meet their funding obligations dueto their own liquidity, capital or solvency issues. Because we would possibly cover all or a portion of the cost of any new vessel acquisition with debtfinancing, such uncertainty, combined with restrictions imposed by our current debt, could hamper our ability to finance vessels or new businessacquisitions.In addition, the economic uncertainty worldwide has markedly reduced demand for shipping services and has decreased shipping rates, which mayadversely affect our results of operations and financial condition. Currently, the economies of China, Japan, other Pacific Asian countries and India are themain driving force behind the development in seaborne transportation. Reduced demand from such economies has in the past driven decreased rates andvessel values and could do so in the future.In addition, as a result of the ongoing political and economic turmoil in Greece resulting from the sovereign debt crisis and the related austeritymeasures implemented by the Greek government, the operations of our managers located in Greece may be subjected to new regulations and potential shift ingovernment policies that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Greekgovernment new taxes or other fees. We also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt the shoresideoperations of our managers located in Greece.We could face risks attendant to changes in economic environments, changes in interest rates, tax policies, and instability in certain securities markets,among other factors. Major market disruptions and the uncertainty in market conditions and the regulatory climate in the U.S., Europe and worldwide couldadversely affect our business or impair our ability to borrow amounts under any future financial arrangements. The current market conditions may last longerthan we anticipate. These recent and developing economic and governmental factors could have a material adverse effect on our results of operations,financial condition or cash flows.As international tank companies often generate most or all of their revenues in U.S. dollars but incur a portion of their expenses in other currencies,exchange rate fluctuations could cause us to suffer exchange rate losses, thereby increasing expenses and reducing income.We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, ourtransactions are predominantly U.S. dollar-denominated. Transactions in currencies other than the functional currency are translated at the exchange rate ineffect at the date of each transaction. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase, decreasing our income.A greater percentage of our transactions and expenses in the 28Table of Contentsfuture may be denominated in currencies other than the U.S. dollar. As part of our overall risk management policy, we will attempt to hedge these risks inexchange rate fluctuations from time to time. We may not always be successful in such hedging activities and, as a result, our operating results could suffer asa result of un-hedged losses incurred as a result of exchange rate fluctuations. For example, as of December 31, 2017, the value of the U.S. dollar as comparedto the Euro decreased by approximately 12.3% compared with the respective value as of December 31, 2016. A greater percentage of our transactions andexpenses in the future may be denominated in currencies other than the U.S. dollar.Labor interruptions and problems could disrupt our business.Certain of our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effectivemanner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverseeffect on our business, results of operations, cash flow and financial condition.Our right to be indemnified against certain damages may be inadequate.The Securities Purchase Agreement for the VLCC vessels acquired through the VLCC Acquisition has a cap on indemnity obligations, subject tocertain exceptions, of $58.7 million. Although we performed substantial due diligence with respect to the VLCC Acquisition, there can be no assurance thatthere will not be undisclosed liabilities or other matters not discovered in the course of such due diligence and the $58.7 million indemnity may beinadequate to cover these or other damages related to breaches of such agreement. In addition, since the return to Navios Acquisition of 217,159 shares onNovember 4, 2011 in settlement of claims relating to representation and warranties attributable to the sellers and the return of the balance of the escrow sharesto the sellers, it may be difficult to enforce an arbitration award for any amount of damages.Risks Related to Our Relationship with Navios Holdings and Its AffiliatesNavios Holdings has limited experience in the crude oil, product and chemical tanker sectors.Navios Tankers Management Inc. (the “Manager”), a wholly owned subsidiary of Navios Holdings, oversees the commercial and administrativemanagement of our entire fleet and the technical management of a portion of our fleet. Navios Holdings is a vertically-integrated seaborne shipping andlogistics company with 60 years of operating history in the shipping industry that held approximately 44.4% of our shares of common stock as of April 2,2018. Other than with respect to South American operations, Navios Holdings’ experience in the crude oil, chemical and product tanker sectors dates to 2010.Navios Holdings or the Manager may make decisions that a more experienced operator in the sector might not make. If Navios Holdings or the Manager isnot able to properly assess or ascertain a particular aspect of the crude oil, product or chemical tanker sectors, it could have a material adverse effect on ouroperations.Navios Holdings may compete directly with us, causing certain officers to have a conflict of interest.Angeliki Frangou is an officer and director of Navios Holdings, Navios Midstream, Navios Partners, Navios Acquisition and Navios MaritimeContainers Inc. (“Navios Containers”). We operate in the crude oil, product and chemical tanker sectors of the shipping industry, and although NaviosHoldings does not currently have any significant exposure in those sectors, there is no assurance it will not enter them. If it does, we may compete directlywith Navios Holdings for business opportunities.Navios Holdings, Navios Partners, Navios Midstream, Navios Acquisition and Navios Containers share certain officers and directors who may not be ableto devote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.Some of our officers provide services to Navios Holdings, Navios Partners, Navios Midstream and Navios Containers and their affiliates. For instance,Angeliki Frangou is an officer and director of Navios Holdings, Navios Midstream, Navios Acquisition, Navios Partners and Navios Containers. As a result,demands for our officers’ time and attention as required from Navios Acquisition, Navios Partners, Navios Midstream, Navios Holdings and NaviosContainers may conflict from time to time and her limited devotion of time and attention to our business may hurt the operation of our business.The loss of key members of our senior management team could disrupt the management of our business. 29Table of ContentsWe believe that our success depends on the continued contributions of the members of our senior management team, including Angeliki Frangou, ourChairman and Chief Executive Officer. The loss of the services of Ms. Frangou or one of our other executive officers or senior management members couldimpair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwise manage our business, which could havea material adverse effect on our financial performance and our ability to compete.We are dependent on a subsidiary of Navios Holdings for the commercial and administrative management of our fleet and the technical management of aportion of our fleet, which may create conflicts of interest.As we subcontract the technical and commercial management of our fleet, including crewing, maintenance and repair, to the Manager, and on aninterim basis to other third party managers, the loss of these services or the failure of the Manager to perform these services could materially and adverselyaffect the results of our operations. Although we may have rights against the Manager if it defaults on its obligations to us, you will have no recourse directlyagainst it. Further, we expect that we will need to seek approval from our respective lenders to change our commercial and technical managers. NaviosHoldings has responsibilities and relationships to owners other than Navios Acquisition that could create conflicts of interest between us and NaviosHoldings or the Manager. These conflicts may arise in connection with the provision of chartering services to us for our fleet versus carriers managed byNavios Holdings’ subsidiaries or other companies affiliated with Navios Holdings.Navios Holdings, our affiliate and a greater than 5% holder of our common stock, Angeliki Frangou, our Chairman and Chief Executive Officer, andcertain of our officers and directors collectively own a substantial interest in us, and, as a result, may influence certain actions requiring stockholder vote.As of April 2, 2018, Navios Holdings, Angeliki Frangou, our Chairman and Chief Executive Officer, and certain of our officers and directorsbeneficially own, in the aggregate, 49.4% of our issued and outstanding shares of common stock, which permits them to influence the outcome of effectivelyall matters requiring approval by our stockholders at such time, including the election of directors and approval of significant corporate transactions.Furthermore, if Navios Holdings and Ms. Frangou or an affiliate ceases to hold a minimum of 30% of our common stock, then we will be in default under ourcredit facilities.Risks Related to Our Common Stock and Capital StructureWe are incorporated in the Republic of the Marshall Islands, a country that does not have a well-developed body of corporate law, which may negativelyaffect the ability of public stockholders to protect their interests.Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws, and by the Marshall Islands BusinessCorporations 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 underthe law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicialprecedent in existence in certain United States jurisdictions. Stockholder rights may differ as well. While the BCA does specifically incorporate thenon-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, public stockholders mayhave more difficulty in protecting their interests in the face of actions by the management, directors or controlling stockholders than would stockholders of acorporation incorporated in a United States jurisdiction.We are incorporated under the laws of the Marshall Islands and our directors and officers are non-U.S. residents, and although you may bring an originalaction in the courts of the Marshall Islands or obtain a judgment against us, our directors or our management based on U.S. laws in the event you believeyour rights as a stockholder have been infringed, it may be difficult to enforce judgments against us, our directors or our management.We are incorporated under the laws of the Republic of the Marshall Islands and all of our assets are located outside of the United States. Our businesswill be operated primarily from our offices in Monte Carlo, Monaco. In addition, our directors and officers are non-residents of the United States, and all or asubstantial portion of the assets of these nonresidents are located outside the United States. As a result, it may be difficult or impossible for you to bring anaction against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Evenif you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing ajudgment against our assets or the assets of our directors and officers. Although you may bring an original action against us or our affiliates in the courts ofthe Marshall Islands based on U.S. laws, and the courts of the Marshall Islands may impose civil liability, including monetary damages, against us or ouraffiliates for a cause of action arising under Marshall Islands law, it may impracticable for you to do so given the geographic location of the Marshall Islands. 30Table of ContentsSince we are a foreign private issuer, we are not subject to certain SEC regulations that companies incorporated in the United States would be subject to.We are a “foreign private issuer” within the meaning of the rules promulgated under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”). As such, we are exempt from certain provisions applicable to United States public companies including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under theExchange Act; • the provisions of Regulation FD of the Exchange Act aimed at preventing issuers from making selective disclosures of material information; and • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insiderliability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equitysecurities within less than six months).Accordingly, investors in our common stock may not be able to obtain all of the information of the type described above, and our stockholders maynot be afforded the same protections or information generally available to investors holding shares in public companies in the United States.Anti-takeover provisions in our amended and restated articles of incorporation could make it difficult for our stockholders to replace or remove ourcurrent board of directors or could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the marketprice of our common stock.Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our stockholders to change thecomposition of our board of directors in any one year, preventing them from changing the composition of our management. In addition, the same provisionsmay discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These provisions include those that: • authorize our board of directors to issue “blank check” preferred stock without stockholder approval; • provide for a classified board of directors with staggered, three-year terms; • require a super-majority vote in order to amend the provisions regarding our classified board of directors with staggered, three-year terms; and • prohibit cumulative voting in the election of directors.These anti-takeover provisions could substantially impede the ability of stockholders to benefit from a change in control and, as a result, mayadversely affect the market price of our common stock and your ability to realize any potential change of control premium.Registration rights held by our initial stockholders and others may have an adverse effect on the market price of our common stock.Certain stockholders, which include Navios Holdings and certain members of the management of Navios Acquisition, Navios Holdings and NaviosPartners, are entitled to demand that we register the resale of their common stock totaling 67,320,507 shares. In addition, one third-party holder has aneffective resale registration statement with respect to 1,677,759 shares of common stock. If all of these stockholders exercise their registration rights withrespect to all of their shares of common stock, including the effective resale registration statement, there will be an additional 68,998,266 shares of commonstock eligible for trading in the public market. The presence of these additional shares may have an adverse effect on the market price of our common stock.The New York Stock Exchange may delist our securities from quotation on its exchange, which could limit your ability to trade our securities and subjectus to additional trading restrictions.Our securities are listed on the New York Stock Exchange (the “NYSE”), a national securities exchange. The NYSE minimum listing standards, requirethat we meet certain requirements relating to stockholders’ equity, number of round-lot holders, market capitalization, aggregate market value of publiclyheld shares and distribution requirements. However, on February 13, 2018, we were notified by the NYSE that we were no longer in compliance with theNYSE’s continued listing standards because the average closing price of our common stock over a consecutive 30 trading-day period was less than $1.00 pershare. Although we intend to cure this deficiency within the prescribed timeframe set out in the NYSE’s Listed Company Manual, we cannot assure you thatour securities will continue to be listed on NYSE in the future. 31Table of ContentsIf NYSE delists our securities from trading on its exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited amount of news and analyst coverage for us; • a decreased ability for us to issue additional securities or obtain additional financing in the future; • limited liquidity for our stockholders due to thin trading; and • loss of our tax exemption under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), loss of preferential capitalgain tax rates for certain dividends received by certain non-corporate U.S. holders and loss of “mark-to-market” election by U.S. holders in theevent we are treated as a passive foreign investment company (“PFIC”).Risks Related to Our IndebtednessWe have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability toobtain financing in the future, react to changes in our business and make debt service payments.We have substantial indebtedness, and we may also increase the amount of our indebtedness in the future. The terms of our credit facilities and otherinstruments and agreements governing our indebtedness do not prohibit us from doing so. Our substantial indebtedness could have important consequencesfor our stockholders.Because of our substantial indebtedness: • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or other acquisitions orgeneral corporate purposes may be impaired in the future; • if new debt is added to our debt levels after the vessel acquisition, the related risks that we now face would increase and we may not be able tomeet all of our debt obligations; • a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, therebyreducing the funds available to us for other purposes, and there can be no assurance that our operations will generate sufficient cash flow toservice this indebtedness; • we will be exposed to the risk of increased interest rates because our borrowings under the credit facilities will be at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates and, as aresult, we may not be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; and • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be preventedfrom carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business.Highly leveraged companies are significantly more vulnerable to unanticipated downturns and setbacks, whether directly related to their business orflowing from a general economic or industry condition, and therefore are more vulnerable to a business failure or bankruptcy.The agreements and instruments governing our indebtedness and other obligations do or will contain restrictions, limitations and obligations that couldsignificantly impact our ability to operate our business and adversely affect our stockholders.The agreements and instruments governing our indebtedness and other commitments we enter into, including certain credit lines to our affiliates,impose certain operating and financial restrictions on us.Among other restrictions, these restrictions and our other obligations and commitments may limit our ability to: 32Table of Contents • incur or guarantee additional indebtedness or issue certain preferred stock; • create liens on our assets; • make investments; • engage in mergers and acquisitions or sell all or substantially all of our properties or assets; • redeem or repurchase capital stock, pay dividends or make other restricted payments and investments; • make capital expenditures; • change the management of our vessels or terminate the management agreements we have relating to our vessels; • enter into long-term charter arrangements without the consent of the lender; • transfer or sell any of our vessels; • enter into certain transactions with our affiliates; and • reduce our cash available for growth and other purposes.Therefore, we will need to seek permission from our lenders in order to engage in some corporate and commercial actions that we believe would be inthe best interest of our business, and a denial of permission may make it difficult for us to successfully execute our business strategy or effectively competewith companies that are not similarly restricted. Our lenders’ interests may be different from our interests, and we cannot guarantee that we will be able toobtain our lenders’ permission when needed. This may prevent us from taking actions that are in our best interest. Any future credit agreement may includesimilar or more restrictive restrictions.Additionally, in September 2016 we had entered into an agreement with Navios Holdings, pursuant to which we have provided Navios Holdings with acredit facility of up to $70.0 million. On November 3, 2017, Navios Holdings prepaid in full the outstanding amount of $55.1 million.Our credit facilities contain requirements that the value of the collateral provided pursuant to the credit facilities must equal or exceed by a certainpercentage the amount of outstanding borrowings under the credit facilities and that we maintain a minimum liquidity level. In addition, our credit facilitiescontain additional restrictive covenants, including a minimum net worth requirement and maximum total net liabilities over net assets requirement. It is anevent of default under our credit facilities if such covenants are not complied with or if Navios Holdings, Ms. Angeliki Frangou, our Chairman and ChiefExecutive Officer, and their respective affiliates cease to hold a minimum percentage of our issued stock. In addition, the indenture governing the notes alsocontains certain provisions obligating us in certain instances to make offers to purchase outstanding notes with the net proceeds of certain sales or otherdispositions of assets or upon the occurrence of an event of loss with respect to a mortgaged vessel, as defined in the indenture. Our ability to comply with thecovenants and restrictions contained in our agreements and instruments governing our indebtedness may be affected by economic, financial and industryconditions and other factors beyond our control. If we are unable to comply with these covenants and restrictions, our indebtedness could be accelerated. Ifwe are unable to repay indebtedness, our lenders could proceed against the collateral securing that indebtedness. In any such case, we may be unable toborrow under our credit facilities and may not be able to repay the amounts due under our agreements and instruments governing our indebtedness. Thiscould have serious consequences on our financial condition and results of operations and could cause us to become bankrupt or insolvent. Our ability tocomply with these covenants in future periods will also depend substantially on the value of our assets, our charter rates, our success at keeping our costs lowand our ability to successfully implement our overall business strategy. Any future credit agreement or amendment or debt instrument may contain similar ormore restrictive covenants.Our ability to generate the significant amount of cash needed to service our other indebtedness and our ability to refinance all or a portion of ourindebtedness or obtain additional financing depends on many factors beyond our control.Our ability to make scheduled payments on or to refinance our obligations under, our indebtedness will depend on our financial and operatingperformance, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may bebeyond our control.We will use cash to pay the principal and interest on our indebtedness. These payments limit funds otherwise available for working capital, capitalexpenditures, vessel acquisitions and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need totake on additional indebtedness as we expand our fleet, which could increase our ratio of indebtedness to equity. The need to service our indebtedness maylimit funds available for other purposes and our inability to service indebtedness in the future could lead to acceleration of our indebtedness and foreclosureon our owned vessels. 33Table of ContentsOur credit facilities mature on various dates through 2024 and our ship mortgage notes mature on November 15, 2021. In addition, borrowings undercertain of the credit facilities have amortization requirements prior to final maturity. We cannot assure you that we will be able to refinance any of ourindebtedness or obtain additional financing, particularly because of our anticipated high levels of indebtedness and the indebtedness incurrence restrictionsimposed by the agreements governing our indebtedness, as well as prevailing market conditions.We could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our indebtedness service andother obligations. Our credit facilities, the indenture governing our notes and any future indebtedness may restrict our ability to dispose of assets and use theproceeds from any such dispositions. If we do not reinvest the proceeds of asset sales in our business (in the case of asset sales of no collateral with respect tosuch indebtedness) or in new vessels or other related assets that are mortgaged in favor of the lenders under our credit facilities (in the case of assets sales ofcollateral securing), we may be required to use the proceeds to repurchase senior indebtedness. We cannot assure you we will be able to consummate anyasset sales, or if we do, what the timing of the sales will be or whether the proceeds that we realize will be adequate to meet indebtedness service obligationswhen due.Most of our credit facilities require that we maintain loan to collateral value ratios in order to remain in compliance with the covenants set forththerein. If the value of such collateral falls below such required level, we would be required to either prepay the loans or post additional collateral to theextent necessary to bring the value of the collateral as compared to the aggregate principal amount of the loan back to the required level. We cannot assureyou that we will have the cash on hand or the financing available to prepay the loans or have any unencumbered assets available to post as additionalcollateral. In such case, we would be in default under such credit facility and the collateral securing such facility would be subject to foreclosure by theapplicable lenders.An increase or continuing volatility in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, earnings andcash flow.Amounts borrowed under our term loan facilities fluctuate with changes in LIBOR. LIBOR has been volatile, with the spread between LIBOR and theprime lending rate widening significantly at times. We may also incur indebtedness in the future with variable interest rates. As a result, an increase in marketinterest rates would increase the cost of servicing our indebtedness and could materially reduce our profitability, earnings and cash flows. The impact of suchan increase would be more significant for us than it would be for some other companies because of our substantial indebtedness. Because the interest ratesborne by our outstanding indebtedness may fluctuate with changes in LIBOR, if this volatility were to continue, it could affect the amount of interest payableon our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.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 our subsidiaries are also incorporated under the laws of the Republic ofthe Marshall Islands, the Cayman Islands, Hong Kong and certain other countries other than the United States, and we conduct operations in countries aroundthe world. Consequently, in the event of any bankruptcy, insolvency or similar proceedings involving us or one of our subsidiaries, bankruptcy laws otherthan those of the United States could apply. We have limited operations in the United States. If we become a debtor under the United States bankruptcy laws,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 United States bankruptcy court would be entitled to, oraccept, jurisdiction over such bankruptcy case or that courts in other countries that have jurisdiction over us and our operations would recognize a UnitedStates bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.We may be unable to raise funds necessary to finance the change of control repurchase offer required by the indenture governing our notes.If we experience specified changes of control, we would be required to make an offer to repurchase all of our outstanding notes (unless otherwiseredeemed) at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the repurchase date. The occurrence ofspecified events that could constitute a change of control will constitute a default under our credit facilities. There are also change of control events thatwould constitute a default under the credit facilities that would not be a change of control under the indenture. In addition, our credit facilities prohibit thepurchase of notes by us in the event of a change of control, unless and until such time as the indebtedness under our credit facilities is repaid in full. As aresult, following a change of control event, we would not be able to repurchase notes unless we first repay all indebtedness outstanding under our creditfacilities and any of our other indebtedness that contains similar provisions; or obtain a waiver from the holders of such indebtedness to permit us torepurchase the notes. We may be unable to repay all of that indebtedness or obtain a waiver of that type. Any requirement to offer to repurchase outstandingnotes may therefore require us to refinance our other outstanding debt, which we may not be able to do on commercially reasonable terms, if at all. Inaddition, our failure to purchase the notes after a change of control in accordance with the terms of the indenture would constitute an event of default underthe indenture, which in turn would result in a default under our credit facilities. 34Table of ContentsOur inability to repay the indebtedness under our credit facilities will constitute an event of default under the indenture governing our notes, whichcould have materially adverse consequences to us. In the event of a change of control, we cannot assure you that we would have sufficient assets to satisfy allof our obligations under our credit facilities and the notes. Our future indebtedness may also require such indebtedness to be repurchased upon a change ofcontrol.We may require additional financing to acquire vessels or businesses or to exercise vessel purchase options, to finance any planned growth, and suchfinancing may not be available.In the future, we may be required to make substantial cash outlays to exercise options or to acquire vessels or business and will need additionalfinancing to cover all or a portion of the purchase prices. We may seek to cover the cost of such items with new debt collateralized by the vessels to beacquired, if applicable, but there can be no assurance that we will generate sufficient cash or that debt financing will be available. Moreover, the covenants inour credit facilities, the indenture or other debt may make it more difficult to obtain such financing by imposing restrictions on what we can offer ascollateral.Tax RisksU.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S.holders.We will be treated as a “passive foreign investment company,” (“PFIC”), for U.S. federal income tax purposes if either (1) at least 75% of our grossincome for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of our assets produce or are held for theproduction of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchangeof investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct ofa trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S. stockholders of aPFIC may be subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive fromthe PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.Based on our current and projected methods of operations, and an opinion of counsel, we believe that we were not a PFIC for the 2011 through 2017taxable years (we were treated as a PFIC for the 2008 through 2010 taxable years), and we do not believe that we will be a PFIC for 2018 and subsequenttaxable years. For post-2010 taxable years, our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from the time charteringactivities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income fromtime charters exceeds 25.0% of our gross income for each taxable year after our 2010 taxable year and the value of our vessels contracted under time chartersexceeds 50.0% of the average value of our assets for each taxable year after our 2010 taxable year, we should not be a PFIC for any taxable year after our2010 taxable year. This opinion is based on representations and projections provided to our counsel by us regarding our assets, income and charters, and itsvalidity is conditioned on the accuracy of such representations and projections.We may have to pay tax on United States source income, which would reduce our earnings.Under the Code, 50% of the gross transportation income of a vessel-owning or chartering corporation, such as us and our subsidiaries, that isattributable to transportation that either begins or ends, but that does not both begin and end, in the United States is characterized as U.S. SourceInternational Transportation Income and such U.S. Source International Transportation Income is generally subject to a 4% U.S. federal income tax withoutallowance for deduction or, if such U.S. Source International Transportation Income is effectively connected with the conduct of a trade or business in theUnited States, U.S. federal corporate income tax (presently imposed at 21.0% rate) as well as a branch profits tax (presently imposed at a 30.0% rate oneffectively connected earnings), unless the non-U.S. corporation qualifies for exemption from tax under Section 883 of the Code and the treasury regulationspromulgated thereunder (“Treasury Regulations”). In general, the exemption from U.S. federal income taxation under Section 883 of the Code provides that ifa non-U.S. corporation satisfies the requirements of Section 883 of the Code and the Treasury Regulations, it will not be subject to the net basis and branchprofit taxes or the 4% gross basis tax on its U.S. Source International Transportation Income.We expect that we and each of our vessel-owning subsidiaries have qualified for this statutory tax exemption and we will take this position for U.S.federal income tax return reporting purposes for our 2017 taxable year. However, the delisting of our securities from quotation on the NYSE (or other factualcircumstances beyond our control) could cause us to lose the benefit of this tax exemption and thereby become subject to U.S. federal income tax on our U.S.Source International Transportation Income. See “— Risks Related to our Common Stock and Capital Structure—The New York Stock Exchange may delistour securities from quotation on its exchange, which could limit your ability to trade our securities and subject us to additional trading restrictions.” 35Table of ContentsIf we or our vessel-owning subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries would besubject for those years to a 4% U.S. federal income tax (without allowance for deduction) on our U.S. Source International Transportation Income. Theimposition of this taxation could have a negative effect on our business and would result in decreased earnings.Other Tax JurisdictionsIn accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessels’ tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel. In case that tonnage tax and/or similar taxes/duties are paid to the vessel’s flag state,these are deducted from the amount of the duty to be paid in Greece.Item 4. Information on the CompanyA. History and development of Navios AcquisitionNavios Acquisition was formed on March 14, 2008 under the laws of the Republic of the Marshall Islands and has its principal offices located at 7Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. Our agent for service is Trust Company of the Marshall Islands, Inc., located atTrust Company Complex, Ajeltake Island, P.O. Box 1405, Majuro, Marshall Islands MH96960.Navios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing world-wide marine transportationservices. The Company’s strategy is to charter its vessels to international oil companies, refiners and large vessel operators under long, medium and short-term contracts. The Company is committed to providing quality transportation services and developing and maintaining long-term relationships with itscustomers.On July 1, 2008, Navios Acquisition completed its IPO. On May 28, 2010, Navios Acquisition consummated the vessel acquisition which constitutedits initial business combination. Following such transaction, Navios Acquisition commenced its operations as an operating company.As of December 31, 2017, Navios Holdings had 42.9% of the voting power and 46.2% of the economic interest in Navios Acquisition. 36Table of ContentsEquity Transactions Series C Convertible Preferred StockOn March 30, 2011, pursuant to an Exchange Agreement Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s common stock it heldfor 1,000 non-voting Series C Convertible Preferred Stock of Navios Acquisition. Each holder of shares of Series C Convertible Preferred Stock shall beentitled at their option at any time, after March 31, 2013 to convert all or any of the outstanding shares of Series C Convertible Preferred Stock into a numberof fully paid and non-assessable shares of Common Stock determined by multiplying each share of Series C Convertible Preferred Stock to be converted by7,676, subject to certain limitations. Upon the declaration of a common stock dividend, the holders of the Series C Convertible Preferred Stock are entitled toreceive dividends on the Series C Convertible Preferred Stock in an amount equal to the amount that would have been received in the number of shares ofCommon Stock into which the Shares of Series C Convertible Preferred Stock held by each holder thereof could be converted. For the purpose of calculatingearnings / (loss) per share this preferred stock is treated as in-substance common stock and is allocated income / (losses) and considered in the dilutedcalculation.The Company was authorized to issue up to 10,000,000 shares of $0.0001 par value preferred stock in total with such designations, voting and otherrights and preferences as may be determined from time to time by the Board of Directors.As of each of December 31, 2017 and December 31, 2016 the Company’s issued and outstanding preferred stock consisted of the 1,000 shares of SeriesC Convertible Preferred Stock. 37Table of ContentsCommon Stock In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25.0 million of Navios Acquisition’scommon stock, for two years. Stock repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privatelynegotiated transactions. The timing and amount of repurchases under the program will be determined by management based upon market conditions andother factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Theprogram does not require any minimum repurchase or any specific number or amount of shares of common stock and may be suspended or reinstated at anytime in Navios Acquisition’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject torestrictions under Navios Acquisition’s credit facilities and indenture.As of December 31, 2017, the Company was authorized to issue 250,000,000 shares of $0.0001 par value common stock of which 152,107,905 wereissued and outstanding. As of March 31, 2018, the Company has repurchased 5,166,544 shares of common stock, for a total cost of approximately $4.2million, out of which 5,021,764 shares of common stock have been cancelled.As of March 31, 2018, 147,086,141 shares of common stock were issued and outstanding.Vessel Deliveries, Acquisitions and SalesAcquisition of vessels2015On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliated thirdparty for a total cost of $33.4 million. Cash paid was $17.8 million and $15.6 million was transferred from vessel deposits.On February 11, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliatedthird party for a total cost of $39.2 million. Cash paid was $12.6 million and $26.6 million was transferred from vessel deposits.On November 6, 2015, Navios Acquisition took delivery of the Nave Spherical, a 2009-built, 297,188 dwt VLCC, from an unaffiliated third party for atotal cost of $69.2 million.On December 2, 2015, Navios Acquisition took delivery of the Nave Photon, a 2008-built, 297,395 dwt VLCC from an unaffiliated third party for atotal cost of $65.2 million.Disposal of vessels2018On March 15, 2018, Navios Acquisition agreed to sell to Navios Midstream the Nave Galactic, a 2009 built VLCC vessel of 297,168 dwt, for a totalsale price of $44.5 million the delivery of which completed on March 29, 2018. As of March 31, 2018, the estimated loss due to the sale is expected to beapproximately $0.3 million.2016On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18.4 million. The gain on sale ofthe vessel, upon write-off of the unamortized dry-docking, was $2.3 million.On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated third party for net cash proceeds of $35.8 million. As of June 30,2016, the vessel was classified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4.8 million. 38Table of ContentsOn November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for net cash proceeds of $35.8 million. As ofJune 30, 2016, the vessel was classified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4.6 million.2015On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste, a 2003-built of298,717 dwt VLCC, and the C. Dream, a 2000 built VLCC of 298,570 dwt, from Navios Acquisition for an aggregate sale price of $100.0 million. The saleprice consisted of $73.0 million cash consideration and the issuance of 1,592,920 Subordinated Series A Units to Navios Acquisition.B. Business OverviewIntroductionNavios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing worldwide marine transportationservices. Our strategy is to charter our vessels to international oil companies, refiners and large vessel operators under long, medium and short-term contracts.We are committed to providing quality transportation services and developing and maintaining long-term relationships with our customers. We believe thatthe Navios brand will allow us to take advantage of increasing global environmental concerns that have created a demand in the petroleum products/crudeoil seaborne transportation industry for vessels and operators that are able to conform to the stringent environmental standards currently being imposedthroughout the world.Navios Acquisition’s FleetAs of April 2, 2018, our fleet consisted of a total of 35 double-hulled tanker vessels, aggregating approximately 3.6 million deadweight tons, or dwt. The fleetincludes seven Very Large Crude Carrier (“VLCC”) tankers (over 200,000 dwt per ship), which transport crude oil, eight Long Range 1 (“LR1”) producttankers (60,000-79,999 dwt per ship), 18 Medium Range 2 (“MR2”) product tankers (30,000-59,999 dwt per ship) and two chemical tankers (25,000 dwt pership), which transport refined petroleum products and bulk liquid chemicals. All our vessels are currently chartered-out to high-quality counterparties,including affiliates of Navig8, Shell Tankers Singapore Private LTD (“Shell”) and Mansel LTD (“Mansel”), with an average remaining charter period ofapproximately one year. As of April 2, 2018, we had contracts covering 70.6% of available days in 2018 and 10.3 % of available days in 2019. Vessels Type YearBuilt Net CharterRate (1) Profit Sharing ExpirationDate (2) Owned Vessels Nave Polaris Chemical Tanker 2011 25,145 Floating Rate(8) None July 2018 Nave Cosmos Chemical Tanker 2010 25,130 Floating Rate(8) None July 2018 Nave Velocity MR2 Product Tanker 2015 49,999 $11,850(16) 50%/50% May 2018 Nave Sextans MR2 Product Tanker 2015 49,999 $13,250(17) 50%/50% February 2019 Nave Pyxis MR2 Product Tanker 2014 49,998 $13,250(17) 50%/50% March 2019 Nave Luminosity MR2 Product Tanker 2014 49,999 $11,850(16) 50%/50% September 2018 Nave Jupiter MR2 Product Tanker 2014 49,999 $11,850(16) 50%/50% May 2018 Bougainville MR2 Product Tanker 2013 50,626 $14,138(5) 100% September 2018 $14,420 100% September 2019 Nave Alderamin MR2 Product Tanker 2013 49,998 $13,260 None February 2019 Nave Bellatrix MR2 Product Tanker 2013 49,999 $13,331(3) None December 2018 Nave Capella MR2 Product Tanker 2013 49,995 $13,331(11) None January 2019 Nave Orion MR2 Product Tanker 2013 49,999 $13,260 None March 2019 Nave Titan MR2 Product Tanker 2013 49,999 $11,850(16) 50%/50% June 2018 Nave Aquila MR2 Product Tanker 2012 49,991 $13,331(3) None November 2018 Nave Atria MR2 Product Tanker 2012 49,992 $11,850(16) 50%/50% July 2018 Nave Orbit MR2 Product Tanker 2009 50,470 $13,500(14) None November 2018 Nave Equator MR2 Product Tanker 2009 50,542 $13,000(12) None October 2018 Nave Equinox MR2 Product Tanker 2007 50,922 $13,578(15) ice-transitpremium (4) January 2019 39Table of ContentsNave Pulsar MR2 Product Tanker 2007 50,922 $12,344 50%/50%andice-transitpremium (6) October 2018Nave Dorado MR2 Product Tanker 2005 47,999 $13,331(9) None January 2019Nave Atropos LR1 Product Tanker 2013 74,695 Floating Rate (13) None October 2019Nave Rigel LR1 Product Tanker 2013 74,673 $18,022 50%/50% August 2019Nave Cassiopeia LR1 Product Tanker 2012 74,711 Floating Rate (13) None February 2019Nave Cetus LR1 Product Tanker 2012 74,581 $18,022 50%/50% April 2019Nave Estella LR1 Product Tanker 2012 75,000 $13,260 None March 2019Nave Andromeda LR1 Product Tanker 2011 75,000 $17,775 50%/50% May 2018Nave Ariadne LR1 Product Tanker 2007 74,671 Floating Rate None July 2018Nave Cielo LR1 Product Tanker 2007 74,671 $17,775 50%/50% May 2018Nave Buena Suerte(10) VLCC 2011 297,491 $28,638 None April 2018Nave Quasar VLCC 2010 297,376 Floating Rate (7) None July 2018Nave Synergy VLCC 2010 299,973 Floating Rate (7) None July 2018Nave Spherical VLCC 2009 297,188 Floating Rate (7) None July 2018Nave Neutrino(10) VLCC 2003 298,287 $34,500 None April 2018Nave Electron(10) VLCC 2002 305,178 Floating Rate (7) None July 2018Nave Photon VLCC 2008 297,395 Floating Rate (7) None July 2018 (1)Net time charter-out rate per day (net of commissions), presented in U.S. Dollars.(2)Estimated dates assuming the midpoint of the redelivery period by charterers, including owner’s extension options not declared yet.(3)Charterer’s option to extend the charter for one year months at $14,566 net per day.(4)The premium for the Nave Equinox when vessel is trading on ice or follows ice braker is $1,975 net per day.(5)Rate can increase to $19,013 net per day in year one and $19,393 in year two calculated based on a formula. Charterer’s option to extend the charter fortwo years at $14,708 net per day for the first year and $15,002 net per day for the second year, plus profit sharing for both years.(6)The premium for the Nave Pulsar when vessel is trading on ice or follows ice braker is $1,975 net per day. Charterer’s option to extend the charter forone year at $13,455 net per day.(7)Rate based on VLCC pool earnings, evergreen upon notice.(8)Rate based on chemical tankers pool earnings.(9)Charterer’s option to extend the charter for one year at $14,813 net per day.(10)Navios Acquisition has granted an option to Navios Midstream to purchase the vessel from Navios Acquisition at fair market value. The options wereextended for an additional two-year period expiring on November 18, 2018.(11)Charterer’s option to extend for one year at $14,566 net per day.(12)Charterer’s option to extend the charter for one year at $14,250 net per day.(13)Rate based on LR1 pool earnings.(14)Charterer’s option to extend for one year at $14,750 net per day.(15)Charterer’s option to extend for one year at $14,813 net per day.(16)Charterer’s option to extend the charter for one year at $13,331 net per day.(17)Charterer’s option to extend the charter for one year at $14,500 net per day.Competitive StrengthsWe believe that the following strengths will allow us to maintain a competitive advantage within the international shipping market: • Modern, High—Quality Fleet. We own a large fleet of modern, high–quality double–hull tankers that are designed for enhanced safety and lowoperating costs. We believe that the increased enforcement of stringent environmental standards currently being imposed throughout the worldhas resulted in a shift in major charterers’ preference towards greater use of modern double–hull vessels. We also have a large proportion ofyoung product and chemical tankers in our fleet. Since our inception, we have committed to and have fully financed investments of over$2.1 billion, including investments of approximately $0.8 billion in newbuilding constructions. As of April 2, 2018, our fleet had an average ageof approximately 7.2 years. We believe that owning and maintaining a modern, high–quality fleet reduces off–hire time and operating costs,improves safety and environmental performance and provides us with a competitive advantage in securing employment for our vessels. 40Table of Contents • Operating Visibility Through Contracted Revenues. All of the vessels that we have taken delivery of as of April 2, 2018, are employed with anaverage remaining charter period of approximately one year, and we believe our existing employment coverage provides us with predictable,contracted revenues and operating visibility. As of April 2, 2018, we had contracts covering 70.6% of available days in 2018 and 10.3% ofavailable days in 2019. • Diversified Fleet. Our diversified fleet, which includes VLCC, product and chemical tankers, allows us to serve our customers’ internationalcrude oil, petroleum product and liquid bulk chemical transportation needs. VLCC tankers transport crude oil and operate on primarily long–haul trades from the Arabian Gulf or West Africa to the Far East, North America and Europe. Product tankers transport a large number of differentrefined oil products, such as naphtha, gasoline, kerosene, jetfuel and gasoil, and principally operate on short– to medium–haul routes. Chemicaltankers transport primarily organic and inorganic chemicals, vegetable oils and animal fats. We believe that our fleet of vessels servicing thecrude oil, product and chemical tanker transportation sectors provides us with more balanced exposure to oil and commodities and more diverseopportunities to generate revenues than would a focus on any single shipping sector. • High Quality Counterparties. Our strategy is to charter our vessels to international oil companies, refiners and large vessel operators under long,medium and short–term contracts. We are committed to providing safe and quality transportation services and developing and maintaininglong–term relationships with our customers, and we believe that our modern fleet will allow us to charter–out our vessels to what managementviews as high–quality counterparties and for long periods of time. Our current charterers include: Shell, one of the largest global groups ofenergy and petrochemical companies, operating in over 90 countries; Navig8 which controls a substantial fleet of product chemical tankers;Vitol, a major oil trader, trading over 5 million barrels of crude and product per day, Chevron, one of the world’s leading integrated energycompanies and Saudi Aramco, the state owned oil company of the Kingdom of Saudi Arabia. • An Experienced Management Team and a Strong Brand. We have an experienced management team that we believe is well regarded in theshipping industry. The members of our management team have considerable experience in the shipping and financial industries. We also believethat we will be able to leverage the management structure at our affiliate, Navios Holdings, which benefits from a reputation for reliability andperformance and operational experience in both the tanker and drybulk markets. Our management team is led by Angeliki Frangou, ourChairman and Chief Executive Officer, who has over 25 years of experience in the shipping industry. Ms. Frangou is also the Chairman & ChiefExecutive Officer of Navios Holdings, Navios Partners, Navios Midstream and Navios Containers and has been a Chief Executive Officer ofvarious shipping and finance companies in the past. Ms. Frangou is a member of a number of recognized shipping committees. We believe thatour well respected management team and strong brand may present us with market opportunities not afforded to other industry participants.Business StrategyWe seek to generate predictable and growing cash flow through the following: • Strategically Manage Sector Exposure. We operate a fleet of crude carriers and product and chemical tankers, which we believe provides us withdiverse opportunities with a range of producers and consumers. As we grow our fleet, we expect to adjust our relative emphasis among the crudeoil, product and chemical tanker sectors according to our view of the relative opportunities in these sectors. We believe that having a mixed fleetof tankers provides the flexibility to adapt to changing market conditions and will allow us to capitalize on sector–specific opportunitiesthrough varying economic cycles. • Enhance Operating Visibility With Our Employment Strategy. We believe that we are a safe, cost-efficient operator of modern and well-maintained tankers. We also believe that these attributes, together with our strategy of proactively working towards meeting our customers’chartering needs, will contribute to our ability to attract leading charterers as customers and to our success in obtaining attractive long-termcontracts. We will also seek profit sharing arrangements in our time charters, to provide us with potential incremental revenue above thecontracted minimum charter rates. Depending on the then applicable market conditions, we intend to deploy our vessels to leading charterers ona mix of long, medium and short-term time contracts, with a greater emphasis on long-term charters and profit sharing. We believe that thischartering strategy will afford us opportunities to capture increased profits during strong charter markets, while benefiting from the relativelystable cash flows and high utilization rates associated with longer-term time charters. As of April 2, 2018, we had charters covering 70.6% ofavailable days in 2018 and 10.3% of available days in 2019. 41Table of Contents • Actively Manage our Fleet to Maximize Return on Capital over Market Cycles. We plan to actively manage the size and composition of our fleetthrough opportunistic acquisitions and dispositions as part of our effort to achieve above-market returns on capital for our vessel assets. UsingNavios Holdings’ global network of relationships and extensive experience in the maritime transportation industry, coupled with its commercial,financial and operational expertise, we plan to opportunistically grow our fleet through the timely and selective acquisition of high-qualitynewbuilding or secondhand vessels when we believe those acquisitions will result in attractive returns on invested capital and increased cashflow. We also intend to engage in opportunistic dispositions where we can achieve attractive values for our vessels as we assess the market cycle.We believe our diverse and versatile fleet, combined with the experience and long- standing relationships of Navios Holdings with participantsin the maritime transportation industry, position us to identify and take advantage of attractive acquisition opportunities. • Leverage the Experience, Brand, Network and Relationships of Navios Holdings. We intend to capitalize on the global network of relationshipsthat Navios Holdings has developed during its long history of investing and operating in the marine transportation industry. This includesdecades-long relationships with leading charterers, financing sources and key shipping industry players. When charter markets and vessel pricesare depressed and vessel financing is difficult to obtain we believe the relationships and experience of Navios Holdings and its managementenhances our ability to acquire young, technically advanced vessels at cyclically low prices and employ them under attractive charters withleading charterers. Navios Holdings’ long involvement and reputation for reliability in the Asia Pacific region have also allowed it to developprivileged relationships with many of the largest institutions in Asia. Through its established reputation and relationships, Navios Holdings hashad access to opportunities not readily available to most other industry participants that lack Navios Holdings’ brand recognition, credibilityand track record. • Benefit from Navios Holdings’ Risk Management Practices and Corporate Managerial Support. Risk management requires the balancing of anumber of factors in a cyclical and potentially volatile environment. In part, this requires a view of the overall health of the market, as well as anunderstanding of capital costs and returns. Navios Holdings actively engages in assessing financial and other risks associated with fluctuatingmarket rates, fuel prices, credit risks, interest rates and foreign exchange rates. Navios Holdings closely monitors credit exposure to charterers andother counterparties and has established policies designed to ensure that contracts are entered into with counterparties that have appropriatecredit history. We believe that Navios Acquisition benefits from these established policies. • Sustain a Competitive Cost Structure. Pursuant to our management agreement with the Manager, a wholly owned subsidiary of Navios Holdings,the Manager coordinates and oversees the commercial, technical and administrative management of our fleet. We believe that the Manager isable to do so at rates competitive with those that would be available to us through independent vessel management companies. For example,pursuant to our amended management agreement with Navios Holdings, management fees of our vessels are fixed through May 2018. We believethis external management arrangement will enhance the scalability of our business by allowing us to grow our fleet without incurring significantadditional overhead costs. We believe that we will be able to leverage the economies of scale of Navios Holdings and manage operating,maintenance and corporate costs. At the same time, we believe the young age and high-quality of the vessels in our fleet, coupled with NaviosHoldings’ safety and environmental record, will position us favorably within the crude oil, product and chemical tanker transportation sectorswith our customers and for future business opportunities.Our CustomersWe provide or will provide seaborne shipping services under contracts with customers that we believe are creditworthy.Our major customers during 2017 were: Navig8, Mansel and Shell. For the year ended December 31, 2017, these three customers accounted for 31.9%,14.3% and 13.7%, respectively, of Navios Acquisition’s revenue.Our major customers during 2016 were: Navig8, Shell and Mansel. For the year ended December 31, 2016, these three customers accounted for 33.0%,20.0% and 14.7%, respectively, of Navios Acquisition’s revenue.Our major customers during 2015 were: Navig8, Shell and Mansel. For the year ended December 31, 2015, these three customers accounted for 35.2%,13.6% and 10.8%, respectively, of Navios Acquisition’s revenue.Although we believe that if any one of our contracts were terminated we could re-charter the related vessel at the prevailing market rate relativelyquickly, the permanent loss of a significant customer or a substantial decline in the amount of services requested by a significant customer could harm ourbusiness, financial condition and results of operations if we were unable to re-charter our vessel on a favorable basis due to then-current market conditions, orotherwise. 42Table of ContentsCompetitionThe market for international seaborne crude oil transportation services is fragmented and highly competitive. Seaborne crude oil transportationservices generally are provided by two main types of operators: major oil company captive fleets (both private and state-owned) and independent ship ownerfleets. In addition, several owners and operators pool their vessels together on an ongoing basis, and such pools are available to customers to the same extentas independently owned and operated fleets. Many major oil companies and other oil trading companies also operate their own vessels and use such vesselsnot only to transport their own crude oil but also to transport crude oil for third party charterers in direct competition with independent owners and operatorsin the tanker charter market. Competition for charters is intense and is based upon price, location, size, age, condition and acceptability of the vessel and itsmanager. Due in part to the fragmented tanker market, competitors with greater resources could enter the tanker market and operate larger fleets throughacquisitions or consolidations and may be willing or able to accept lower prices than us, which could result in our achieving lower revenues from our vessels.See “Risk Factors—Our growth depends on our ability to obtain customers, for which we face substantial competition. In the highly competitive tankerindustry, we may not be able to compete for charters with new entrants or established companies with greater resources, which may adversely affect our resultsof operations.”Time ChartersA time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. Under a time charter, the vessel owner providescrewing and other services related to the vessel’s operation, the cost of which is included in the daily rate and the customer is responsible for substantially allof the vessel voyage costs. Most of the vessels in our fleet are hired out under time charters, and we intend to continue to hire out our vessels under timecharters. The following discussion describes the material terms common to all of our time charters.Base Hire Rate“Base hire rate” refers to the basic payment from the customer for the use of the vessel. The hire rate is generally payable monthly, in advance on thefirst day of each month, in U.S. Dollars as specified in the charter.Off-hireWhen the vessel is “off-hire,” the charterer generally is not required to pay the base hire rate, and we are responsible for all costs. Prolonged off-hiremay lead to vessel substitution or termination of the time charter. A vessel generally will be deemed off-hire if there is a loss of time due to, among otherthings: • operational deficiencies; drydocking for repairs, maintenance or inspection; equipment breakdowns; or delays due to accidents, crewing strikes,certain vessel detentions or similar problems; or • the shipowner’s failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew.Under some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which is generallydefined as a period of 90 or more consecutive off-hire days.TerminationWe are generally entitled to suspend performance under the time charters covering our vessels if the customer defaults in its payment obligations.Under some of our time charters, either party may terminate the charter in the event of war in specified countries or in locations that would significantlydisrupt the free trade of the vessel. Some of our time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advancespaid by the charterer but not earned by us.Pooling ArrangementsFor vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by thepool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula,which is determined by the margins awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. Revenueunder pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is providedand the collectability is reasonably assured. 43Table of ContentsExpensesManagement fees: Pursuant to the Management Agreement dated May 28, 2010 and as amended in May 2012 and May 2014, the Manager providedcommercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6,000 per MR2 product tanker and chemicaltanker vessel; (b) $7,000 per LR1 product tanker vessel; and (c) $9,500 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6,350 per MR2 product tankerand chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition at cost.Total management fees for each of the years ended December 31, 2017, 2016 and 2015 amounted to $95.0 million, $97.9 million and $95.3 million,respectively.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with NaviosHoldings, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping,audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of theseservices. In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020.For each of the years ended December 31, 2017, 2016 and 2015 the expense arising from administrative services rendered by Navios Holdingsamounted to $9.0 million, $9.4 million and $7.6 million, respectively.Management of Ship Operations, Administration and SafetyNavios Holdings provides, through a wholly owned subsidiary, expertise in various functions critical to our operations. Pursuant to the ManagementAgreement and an Administrative Services Agreement with Navios Holdings, we have access to human resources, financial and other administrativefunctions, including: • bookkeeping, audit and accounting services; • administrative and clerical services; • banking and financial services; and • client and investor relations.Technical management services are also provided, including: • commercial management of the vessel; • vessel maintenance and crewing; • purchasing and insurance; and • shipyard supervision.For more information on the Management Agreement and the Administrative Services Agreement we have with Navios Holdings, please read “Item 7.— Major Stockholders and Related Party Transactions”.Oil Company Tanker Vetting ProcessTraditionally there have been relatively few charterers in the oil transportation business and that part of the industry has been undergoingconsolidation. The so called “oil majors,” such as Exxon Mobil, BP p.l.c., Royal Dutch Shell plc., Chevron, ConocoPhillips and Total S.A., together with afew smaller companies, represent a significant percentage of the production, trading and, especially, seaborne transportation of crude oil and refinedpetroleum products worldwide. Concerns about the environment have led oil majors to develop and implement a strict due diligence process, known asvetting, when selecting vessels and considering their managers. Vetting has evolved into a sophisticated and comprehensive assessment of both the vesseland the vessel manager. While numerous factors are considered and evaluated prior to a commercial decision, the oil majors, through their association, OilCompanies International Marine Forum (OCIMF), have developed two basic tools: the Ship Inspection Report program, which is known as SIRE, and theTanker Management & Self Assessment program, which is known as TMSA. The former is a physical ship inspection based upon a thorough vessel inspectionquestionnaire and performed by accredited OCIMF inspectors, resulting in a report being logged on SIRE, while the latter is a recent addition to the riskassessment tools used by the oil majors. Based upon commercial risk, there are three levels of assessment used by oil majors: 44Table of Contents • terminal use, which clears a vessel to call at one of the oil major’s terminals; • voyage charter, which clears the vessel for a single voyage; and • period charter, which clears the vessel for use for an extended period of time.The depth and complexity of each of these levels of assessment varies. Each charter agreement for our vessels requires that the applicable vessel have avalid SIRE report (less than six months old) in the OCIMF website as recommended by OCIMF. In addition, under the terms of the charter agreements, thecharterers require that our vessels and their technical managers be vetted and approved to transport crude oil or refined petroleum products (as applicable).The technical manager is responsible for obtaining and maintaining the vetting approvals required to successfully charter our vessels.Governmental and Other RegulationsSources of Applicable Rules and StandardsShipping is one of the world’s most heavily regulated industries, and, in addition, it is subject to many industry standards. Government regulationsignificantly affects the ownership and operation of vessels. These regulations consist mainly of rules and standards established by international conventions,but they also include national, state, and local laws and regulations in force in jurisdictions where vessels may operate or are registered, and which arecommonly more stringent than international rules and standards. This is the case particularly in the United States and, increasingly, in Europe.A variety of governmental and private entities subject vessels to both scheduled and unscheduled inspections. These entities include local portauthorities (the U.S. Coast Guard, harbor masters or equivalent entities), classification societies, flag state administration (country vessel of registry), andcharterers, particularly terminal operators. Certain of these entities require vessel owners to obtain permits, licenses, and certificates for the operation of theirvessels. Failure to maintain necessary permits or approvals could require a vessel owner to incur substantial costs or temporarily suspend operation of one ormore of its vessels.Heightened levels of environmental and quality concerns among insurance underwriters, regulators, and charterers continue to lead to greaterinspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmentalconcerns have created a demand for vessels that conform to stricter environmental standards. Vessel owners are required to maintain operating standards forall vessels that will emphasize operational safety, quality maintenance, continuous training of officers and crews and compliance with U.S. and internationalregulations.Ship Safety RegulationThe International Maritime Organization, or IMO, has adopted a number of international conventions concerned with ship safety and with preventing,reducing or controlling pollution from ships. These fall into two main categories, consisting firstly of those concerned generally with ship safety standards,and secondly of those specifically concerned with measures to prevent pollution.In the former category the primary international instrument is the Safety of Life at Sea Convention of 1974, as amended, or SOLAS, together with theregulations and codes of practice that form part of its regime. Much of SOLAS is not directly concerned with preventing pollution, but some of its safetyprovisions are intended to prevent pollution as well as promote safety of life and preservation of property. These regulations have been and continue to beregularly amended as new and higher safety standards are introduced with which we are required to comply.An amendment of SOLAS introduced the International Safety Management (ISM) Code, which has been effective since July 1998. Under the ISM Codethe party with operational control of a vessel is required to develop an extensive safety management system that includes, among other things, the adoptionof a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures forresponding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificateevidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless itsmanager has been awarded a document of compliance, issued by the flag state for the vessel, under the ISM Code. Noncompliance with the ISM Code andother IMO regulations, such as the mandatory ship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan and came intoeffect on January 1, 2013, may subject a ship owner to increased liability, may lead to decreases in available insurance coverage for affected vessels, and mayresult in the denial of access to, or detention in, some ports. For example, the United States Coast Guard and European Union authorities have indicated thatvessels not in compliance with the ISM Code will be prohibited from trading in ports in the United States and European Union. Each vessel’s certificateevidencing compliance with the ISM Code and the ISPS Code, described below, must be periodically renewed and compliance must be periodically verified. 45Table of ContentsSecurity RegulationsSince the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. In 2002, MarineTransportation Security Act (“MTSA”) came into effect. To implement certain portions of the MTSA, in 2003, the U.S. Coast Guard issued regulationsrequiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in2002, amendments to SOLAS imposed various detailed security obligations on vessels and port authorities, most of which are contained in the InternationalShip and Port Facility Security Code (“ISPS Code”). Among the various requirements are: • on-board installation of automatic information systems to enhance vessel-to-vessel and vessel-to-shore communications; • on-board installation of ship security alert systems; • the development of vessel security plans; and • compliance with flag state security certification requirements.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels from MTSA vesselsecurity measures, provided such vessels had on board, by July 1, 2004, a valid International Ship Security Certificate (“ISSC”) that attests to the vessel’scompliance with SOLAS security requirements and the ISPS Code.International Regulations to Prevent Pollution from ShipsIn the second main category of international regulation, the primary instrument is the International Convention for the Prevention of Pollution fromShips, or MARPOL, which imposes environmental standards on the shipping industry set out in Annexes I-VI of MARPOL. These contain regulations for theprevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II), by harmful substances in packaged forms within the scope of theInternational Maritime Dangerous Goods Code (Annex III), by sewage (Annex IV), by garbage (Annex V), and by air emissions (Annex VI).These regulations have been and continue to be regularly amended as new and more stringent standards of pollution prevention are introduced withwhich we are required to comply. For example, MARPOL Annex VI, together with the NOx Technical Code established thereunder, sets limits on sulfur oxideand nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. It alsoincludes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on emissions. Originallyadopted in September 1997, Annex VI came into force in May 2005 and was amended in October 2008 (as was the NOx Technical Code) to provide forprogressively more stringent limits on such emissions from 2010 onwards. The revised Annex VI provides, in particular, for a reduction of the global sulfurcap. After considering the issue for many years, the IMO announced on October 27, 2016 that it was proceeding with a requirement for 0.5% m/m sulfurcontent in marine fuel (down from current levels of 3.5%) outside the ECAs starting on January 1, 2020. Under Annex VI, the 2020 date was subject to reviewas to the availability of the required fuel oil. Annex VI required the fuel availability review to be completed by 2018 but was ultimately completed in 2016.Therefore, by 2020, ships will be required to remove sulfur from emissions through the use of emission control equipment, or purchase marine fuel with 0.5%sulfur content, which may see increased demand and higher prices due to supply constraints. Installing pollution control equipment or using lower sulfur fuelcould result in significantly increased costs to our company. Similarly Annex VI requires Tier III standards for NOx emissions to be applied to shipsconstructed and engines installed in ships operating in NOx ECAs from January 1, 2016. We anticipate incurring costs to comply with these more stringentstandards by implementing measures such as fuel switching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaningscrubbers, and may require installation and operation of further control equipment at significantly increased cost.The revised Annex VI further allows for designation, in response to proposals from member parties, of Emission Control Areas (ECAs) that imposeaccelerated and/or more stringent requirements for control of sulfur oxide, particulate matter, and nitrogen oxide emissions. Thus far, ECAs have beenformally adopted for the Baltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOx emissions only) and theNorth American ECA (which came into effect from August 1, 2012 limiting SOx, NOx and particulate matter emissions). In October 2016, the IMO approvedthe designation of the North Sea and Baltic Sea as ECAs for NOx under Annex VI as well, which is scheduled for adoption in 2017 and would take effect inJanuary 2021. The United States Caribbean Sea ECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOxand particulate matter emissions. For the currently-designated ECAs, much lower sulfur limits on fuel oil content are being phased in (0.1% from January 1,2015). 46Table of ContentsAt its 66th Session, the IMO’s Marine Environment Protection Committee (the “MEPC”) adopted amendments (effective September 2015) to AnnexVI, regulation 13, regarding NOx and the date for the implementation of the “Tier III” standards within ECAs. These amendments provide, inter alia, that suchstandards, applicable on January 1, 2016, apply to marine diesel engines installed on ships which operate in the North American ECA or the U.S. CaribbeanSea ECA and to installed marine diesel engines which operate in other ECAs which might be designated in the future for Tier III NOx control. At MEPC 69,Annex VI was also amended to require recordkeeping requirements to demonstrate compliance with the NOX Tier III ECA.At its 64th session (2012), the MEPC indicated that 2015 was the target year for member states to identify market-based measures for internationalshipping. At its 66th session (2014), the MEPC continued its work on developing technical and operational measures relating to energy-efficiency measuresfor ships, following the entry into force of the mandatory efficiency measures on January 1, 2013. It adopted the 2014 Guidelines on the Method ofCalculation of the Attained EEDI, applicable to new ships. It further adopted amendments to MARPOL Annex VI concerning the extension of the scope ofapplication of the EEDI to Liquified Natural Gas (“LNG”) carriers, ro-ro cargo ships (vehicle carriers), ro-ro cargo ships, ro-ro passenger ships and cruisepassengers ships with nonconventional propulsion. At its 67th session (2014), the MEPC adopted the 2014.Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted with dual-fuel engines using LNG and liquidfuel oil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimum propulsion power to maintain the maneuverability ofships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) of the EEDI requirements. At its 68th session (2015), theMEPC amended the 2014 Guidelines on EEDI survey and certification as well as the method of calculating of EEDI for new ships, the latter of which wasagain amended at the 70th session (2016). At its 70th session, the MEPC adopted mandatory requirements for ships of 5,000 gross tonnage or greater tocollect fuel consumption data for each type of fuel used, and report the data to the flag State after the end of each calendar year.The revised Annex I to the MARPOL Convention entered into force in January 2007. It incorporates various amendments to the MARPOL Conventionand imposes construction requirements for oil tankers delivered on or after January 1, 2010. On August 1, 2007, Regulation 12A (an amendment to Annex I)came into force imposing performance standards for accidental oil fuel outflow and requiring oil fuel tanks to be located inside the double-hull in all shipswith an aggregate oil fuel capacity of 600 cubic meters and above, and which are delivered on or after August 1, 2010, including ships for which the buildingcontract is entered into on or after August 1, 2007 or, in the absence of a contract, for which keel is laid on or after February 1, 2008. We intend that all of ournewbuild tanker vessels, if any, will comply with Regulation 12A.Greenhouse Gas EmissionsIn February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force. Pursuant to the KyotoProtocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases,which are suspected of contributing to global warming. Currently, the greenhouse gas emissions from international shipping do not come under the KyotoProtocol.In December 2011, UN climate change talks took place in Durban and concluded with an agreement referred to as the Durban Platform for EnhancedAction. In preparation for the Durban Conference, the International Chamber of Shipping (“ICS”) produced a briefing document, confirming the shippingindustry’s commitment to cut shipping emissions by 20% by 2020, with significant further reductions thereafter. The ICS called on the participants in theDurban Conference to give the IMO a clear mandate to deliver emissions reductions through market-based measures, for example a shipping industryenvironmental compensation fund. Notwithstanding the ICS’s request for global regulation of the shipping industry, the Durban Conference did not result inany proposals specifically addressing the shipping industry’s role in climate change.Although regulation of greenhouse gas emissions in the shipping industry was discussed during the 2015 UN Climate Change Conference in Paris (the“Paris Conference”), the agreement reached among the 195 nations did not expressly reference the shipping industry. Following the Paris Conference, theIMO announced it would continue its efforts on this issue at the MEPC, and at its 70th session, the MEPC approved a Roadmap for developing acomprehensive GHG emissions reduction strategy for ships, which includes the goal of adopting an initial strategy and emission reduction commitments in2018. The Roadmap also provides for additional studies and further intersessional work, to be continued at the 71st session in 2017, with a goal of adopting arevised strategy in 2023 to include short-, mid- and long-term reduction measures and schedules for implementation.In April 2007, the EU announced its plan to add vessels to its emissions trading scheme. A proposal from the European Commission (“EC”) wasexpected if no global regime for reduction of seaborne emissions had been agreed by the end of 2011. As of January 31, 2013, the Commission stopped shortof proposing that emissions from ships be included in the EU’s emissions-trading scheme (“ETS”). However, on October 1, 2012, it announced that it wouldpropose measures to monitor, verify and report on greenhouse gas emissions from the shipping sector. 47Table of ContentsOn June 28, 2013, the EC adopted a communication setting out a strategy for progressively including greenhouse gas emissions from maritimetransport in the EU’s policy for reducing its overall GHG emissions. The first step proposed by the EC was an EU Regulation to an EU-wide system for themonitoring, reporting and verification of carbon dioxide emissions from large ships starting in 2018. The Regulation was adopted on April 29, 2015 and tookeffect on July 1, 2015, with monitoring, reporting and verification requirements beginning on January 1, 2018. This Regulation appears to be indicative of anintent to maintain pressure on the international negotiating process. The EC also adopted an Implementing Regulation, which entered into force November2016, setting templates for monitoring plans, emissions reports and compliance documents pursuant to Regulation 2015/757.Other International Regulations to Prevent PollutionIn addition to MARPOL, other more specialized international instruments have been adopted to prevent different types of pollution or environmentalharm from ships. In February 2004, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, orthe BWM Convention. 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, as well as other obligations including recordkeeping requirements and implementation of aBallast Water and Sediments Management Plan.The BWM Convention entered into force on September 8, 2017. The BWM Convention requires ships to manage ballast water in a manner thatremoves, renders harmless or avoids the uptake or discharge of aquatic organisms and pathogens within ballast water and sediment. Recently updated BallastWater and Sediment Management Plan guidance includes more robust testing and performance specifications. The entry of the BWM Convention andrevised guidance will likely result in additional compliance costs.European RegulationsEuropean regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999, the EuropeanCommunity has become increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving forcebehind a number of amendments of MARPOL (including, for example, changes to accelerate the time-table for the phase-out of single hull tankers, and toprohibit the carriage in such tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the time-table for theirintroduction it has been prepared to legislate on a unilateral basis. It should be noted, for instance, that the EU has its own regime as far as ship emissions areconcerned and whilst it does in some respects reflect the IMO regime, this is not always the case. As far as sulfur dioxide emissions are concerned, forexample, the EU regulation has not just caught up with the IMO limits for sulfur in ECAs, but it continues to have certain elements that exceed IMOregulations (e.g., as of January 1, 2015, EU Member States must ensure that ships in the Baltic, the North Seam and the English Channel are using gas oilswith a sulfur content of no more than 0.10%).In some instances where it has done so, international regulations have subsequently been amended to the same level of stringency as that introduced inEurope, but the risk is well established that EU regulations may from time to time impose burdens and costs on shipowners and operators which are additionalto those involved in complying with international rules and standards. In December 2016, the EU signed into law the National Emissions Ceiling (“NEC”)Directive, which entered into force on December 31, 2016. The NEC must be implemented by individual members states through particular laws in each stateby June 30, 2018. The NEC aims to set stricter emissions limits on SO2, ammonia, non-methane volatile organic compounds, NOx and fine particulate(PM2.5) by setting new upper limits for emissions of these pollutants, starting in 2020. While the NEC is not specifically directed toward the shippingindustry, the EU specifically mentions the shipping industry in its announcement of the NEC as a contributor to emissions of PM2.5, SO2 and NOx.Implementation of new laws by member states to reduce emissions may ultimately result in increased costs to us to comply with the more stringent standards.In some areas of regulation the EU has introduced new laws without attempting to procure a corresponding amendment of international law. Notably, itadopted in 2005 a directive on ship-source pollution, imposing criminal sanctions for pollution not only where this is caused by intent or recklessness (whichwould be an offense under MARPOL), but also where it is caused by “serious negligence.” The directive could therefore result in criminal liability beingincurred in circumstances where it would not be incurred under international law. Experience has shown that in the emotive atmosphere often associated withpollution incidents, retributive attitudes towards ship interests have found expression in negligence being alleged by prosecutors and found by courts.Moreover, there is skepticism that the notion of “serious negligence” is likely to prove any narrower in practice than ordinary negligence. Criminal liabilityfor a pollution incident could not only result in us incurring substantial penalties or fines but may also, in some jurisdictions, facilitate civil liability claimsfor greater compensation than would otherwise have been payable.United States Environmental Regulations and Laws Governing Civil Liability for PollutionEnvironmental legislation in the United States merits particular mention as it is in many respects more onerous than international laws, representing ahigh-water mark of regulation with which shipowners and operators must comply, and of liability likely to be incurred in the event of non-compliance or anincident causing pollution. 48Table of ContentsU.S. federal legislation, including notably the Oil Pollution Act of 1990, or OPA, establishes an extensive regulatory and liability regime for theprotection and cleanup of the environment from oil spills, including cargo or bunker oil spills from tankers. OPA affects all owners and operators whosevessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States’ territorialsea and its 200 nautical mile exclusive economic zone. Under OPA, vessel owners, operators and bareboat charterers 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 andclean-up costs and other damages arising from discharges or substantial threats of discharges, of oil from their vessels. In addition to potential liability underOPA as the relevant federal legislation, vessel owners may in some instances incur liability on an even more stringent basis under state law in the particularstate where the spillage occurred.Title VII of the Coast Guard and Maritime Transportation Act of 2004, or the CGMTA, amended OPA to require the owner or operator of any non-tankvessel of 400 gross tons or more, that carries oil of any kind as a fuel for main propulsion, including bunkers, to prepare and submit a response plan for eachvessel on or before August 8, 2005. The implementing regulations took effect on October 30, 2013. The vessel response plans must include detailedinformation on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat of such a discharge of ore from the vessel dueto operational activities or casualties.OPA liability limits are periodically adjusted for inflation, and the U.S. Coast Guard issued a final rule on November 19, 2015 to reflect increases in theConsumer Price Index. With this adjustment, OPA currently limits liability of the responsible party for single-hull tank vessels over 3,000 gross tons to thegreater of $3,500 per gross ton or $25.846 million (this amount is reduced to $7.05 million if the vessel is less than 3,000 gross tons). For tank vessels over3,000 gross tons, other than a single-hull vessel, liability is limited to $2,200 per gross ton or $18.8 million (or $4.7 million for a vessel less than 3,000 grosstons), whichever is greater. Under the OPA, these liability limits do not apply if an incident was directly caused by violation of applicable United Statesfederal safety, construction or operating regulations or by a responsible party’s gross negligence or willful misconduct, or if the responsible party fails orrefuses to report the incident or to cooperate and assist in connection with oil removal activities.In response to the Deepwater Horizon incident in the Gulf of Mexico, in 2010 the U.S. Congress proposed, but did not formally adopt, legislation toamend OPA to mandate stronger safety standards and increased liability and financial responsibility for offshore drilling operations. While Congressionalactivity on this topic is expected to continue to focus on offshore facilities rather than on vessels generally, it cannot be known with certainty what form anysuch new legislative initiatives may take.In addition, the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, which applies to the discharge of hazardoussubstances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and natural resource damages.Liability under CERCLA is limited to the greater of $300 per gross ton, or $5.0 million for vessels carrying any hazardous substances as cargo, or$0.5 million for vessels not carrying hazardous substances as cargo or residue, unless the incident is caused by gross negligence, willful misconduct, or aviolation of certain regulations, in which case liability is unlimited.Similarly, in response to the Deepwater Horizon incident, the EU issued “Directive 2013/30/EU of the European Parliament and of the Council ofJune 12, 2013 on safety of offshore oil and gas operations.” The objective of this Directive is to reduce as far as possible the occurrence of major accidentsrelating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment and coastal economiesagainst pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions to Unionindigenous energy production, and to improve the response mechanisms in case of an accident. Member states had to implement the Directive by July 19,2015. As far as the environment is concerned, the UK has various regulations such as: the Offshore Petroleum Activities (Offshore Safety Directive)(Environmental Functions) Regulations 2015 (OSDEF), the 2015 amendments to the Merchant Shipping (Oil Pollution Preparedness, Response andCooperation Convention) Regulations 1998 (OPRC 1998) and other environmental Directive requirements, specifically the Environmental ManagementSystem. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensing Directive requirements.We currently maintain, for each of our owned vessels, insurance coverage against pollution liability risks in the amount of $1.0 billion per incident.The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, this insurance coverage issubject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage, or if damages from acatastrophic incident exceed the $1.0 billion limitation of coverage per incident, our cash flow, profitability and financial position could be adverselyimpacted.Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient tocover the vessel in the fleet having the greatest maximum liability under OPA. Under the self-insurance provisions, the shipowner or operator must have a networth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicableamount of financial responsibility. We have complied with the U.S. Coast Guard regulations by providing a certificate of responsibility from third partyentities that are acceptable to the U.S. Coast Guard evidencing sufficient self-insurance. 49Table of ContentsThe U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suitdirectly against an insurer or guarantor that furnishes certificates of financial responsibility. If such insurer or guarantor is sued directly, it is prohibited fromasserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsibleparty and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically providedcertificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations, have declined to furnish evidence ofinsurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses. This requirement may have theeffect of limiting the availability of the type of coverage required by the Coast Guard and could increase our costs of obtaining this insurance as well as thecosts of our competitors that also require such coverage.OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within theirboundaries, and some states’ environmental laws impose unlimited liability for oil spills. In some cases, states which have enacted such legislation have notyet issued implementing regulations defining vessels owners’ responsibilities under these laws.The United States Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liabilityin the form of penalties for unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages andcomplements the remedies available under CERCLA. The EPA regulates the discharge of ballast water and other substances incidental to the normaloperation of vessels in U.S. waters using a Vessel General Permit (VGP) system pursuant to the CWA, in order to combat the risk of harmful organisms that cantravel in ballast water carried from foreign ports and to minimize the risk of water pollution through numerous specified effluent streams incidental to thenormal operation of vessels. Compliance with the conditions of the VGP is required for commercial vessels 79 feet in length or longer (other than commercialfishing vessels). On March 28, 2013 the EPA adopted the 2013 VGP which took effect on December 19, 2013. The 2013 VGP is valid for five years andexpires at the end of this year. The VGP imposes a numeric standard to control the release of non-indigenous invasive species in ballast water discharges. OnOctober 5, 2015, the U.S. Court of Appeals for the Second Circuit found the EPA was arbitrary and capricious in issuing the ballast water provisions of theVGP, finding the EPA failed to adequately explain why stricter technology-based effluent standards should not be applied. The court instructed the EPA toreconsider these issues but held the 2013 VGP remains in effect until the EPA addresses the issues. If the EPA establishes more stringent numeric standards forballast water discharges, we may incur costs to modify our vessels to comply with new standards. In addition, through the CWA certification provisions thatallow U.S. states to place additional conditions on use of the VGP within state waters, a number of states have proposed or implemented a variety of stricterballast water requirements including, in some states, specific treatment standards.Because the VGP expires at the end of this year, there may be new U.S. federal and state requirements that could require the installation of equipmenton our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentiallysubstantial cost, and/or otherwise restrict our vessels from entering U.S. waters. Coast Guard regulations require commercial ships operating in U.S. waters tomanage ballast water by meeting certain requirements, which include using a U.S. type-approved Ballast Water Management System (“BWMS”), temporarilyusing a foreign-type BWMS that has been accepted by the Coast Guard, using ballast water obtained from a U.S. Public Water System, discharge ballast waterinto a shore-side facility or not discharge ballast water within 12 nautical miles. Vessel owners/operators may request an extension to the compliancedeadline by showing that, despite all efforts, it cannot comply with one of the approved systems or compliance methods. There are numerous foreign-approved Ballast Water Treatment Systems (“BWTS”) in the Coast Guard’s list of approved Alternate Management Systems. Since December 2016, the CoastGuard has type approved six Ballast Water Management System (“BWMS”), which claim to meet the range of requirements that most vessel owners andoperators described in their extension requests in the past. Due to the increase in approvals, it will become more difficult to receive compliance extensionsand thus could result in significant costs to install an approved BWTS. Failure to comply with U.S. ballast water regulations, including installation of BWTSby September 8, 2017, could result in civil or criminal fines or penalties.The Federal Clean Air Act (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other aircontaminants. Our vessels are subject to CAA vapor control and recovery standards (“VCS”) for cleaning fuel tanks and conducting other operations inregulated port areas, and to CAA emissions standards for so-called “Category 3” marine diesel engines operating in U.S. waters. In April 2010, EPA adoptedregulations implementing the provision of MARPOL Annex VI regarding emissions from Category 3 marine diesel engines. Under these regulations, bothU.S. and foreign-flagged ships must comply with the applicable engine and fuel standards of Annex VI, including the stricter North America ECA standardswhich took effect in August 2012, when they enter U.S. ports or operate in most internal U.S. waters including the Great Lakes. Annex VI requirements arediscussed in greater detail above under “International regulations to prevent pollution from ships.” We may incur costs to install control equipment on ourvessels to comply with the new standards.Also under the CAA, since 1990 the U.S. Coast Guard has regulated the safety of VCSs that are required under EPA and state rules. Our vesselsoperating in regulated port areas have installed VCSs that are compliant with EPA, state and U.S. Coast Guard requirements. On July 16, 2013, the U.S. CoastGuard adopted regulations that made its VCS requirements more compatible with new EPA and State regulations, reflected changes in VCS technology, andcodified existing U.S. Coast Guard guidelines. We intend to comply with all applicable state and U.S. federal regulations in the ports where our vessels call. 50Table of ContentsInternational laws governing civil liability to pay compensation or damagesWe operate a fleet of crude, product and chemical tankers that are subject to national and international laws governing pollution from such vessels.Several international conventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as definedby the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollutiondamage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by referenceto the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct. Liability mayalso be incurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for any pollutiondamage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where the spillage occurs.The same principle applies to any pollution from the vessel in a jurisdiction which is not a party to the CLC. The CLC applies in over 100 jurisdictionsaround the world, but it does not apply in the United States, where the corresponding liability laws such as the OPA discussed above, are particularlystringent.In 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, which imposesstrict liability on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of “bunker oil.” The Bunker Conventiondefines “bunker oil” as “any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, andany residues of such oil.” The Bunker Convention also requires registered owners of ships over a certain size to maintain insurance for pollution damage inan amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated inaccordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended, or the 1976 Convention). The Bunker Conventionentered into force on November 21, 2008, and as of August 23, 2017, had 86 contracting states. In other jurisdictions liability for spills or releases of oil fromships’ bunkers continues to be determined by the national or other domestic laws in the jurisdiction where the events or damages occur.Outside the United States, national laws generally provide for the owner to bear strict liability for pollution, subject to a right to limit liability underapplicable national or international regimes for limitation of liability. The most widely applicable international regime limiting maritime pollution liabilityis the 1976 Convention. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowners’ intentional or recklessconduct. Some states have ratified the 1996 LLMC Protocol to the 1976 Convention, which provides for liability limits substantially higher than those setforth in the 1976 Convention to apply in such states. Finally, some jurisdictions are not a party to either the 1976 Convention or the 1996 LLMC Protocol,and, therefore, shipowners’ rights to limit liability for maritime pollution in such jurisdictions may be uncertain.Inspection by Classification SocietiesEvery sea going vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in class,” signifying that thevessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of thevessel’s country of registry and the international conventions of which that country is a member. In addition, where surveys are required by internationalconventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, actingon behalf of the authorities concerned. The classification society also undertakes, on request, other surveys and checks that are required by regulations andrequirements of the flag state or port authority. These surveys are subject to agreements made in each individual case or to the regulations of the countryconcerned. For maintenance of the class, regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipmentclassed are required to be performed as follows: • Annual Surveys: For ocean-going ships, annual surveys are conducted for the hull and the machinery (including the electrical plant) and, whereapplicable, for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in thecertificate. • Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years aftercommissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. 51Table of Contents • Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery (including theelectrical plant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the specialsurvey, the vessel is thoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness befound to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one yeargrace period for completion of the special survey under certain conditions. Substantial amounts of money may have to be spent for steel renewalsto pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending onwhether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel’s integrated hull ormachinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.Risk of Loss and Liability InsuranceGeneralThe operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, and cargo loss or damage andbusiness interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility ofmarine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. TheOPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economiczone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the UnitedStates market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specificclaim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.Hull and Machinery InsuranceWe have obtained marine hull and machinery and war risk insurance, which include coverage of the risk of actual or constructive total loss, for all ofour owned vessels. Each of the owned vessels is covered for up to at least fair market value, with deductibles of $0.1 million per Handymax and Panamaxtanker vessel and $0,25 million per VLCC tanker. We have also extended our war risk insurance to include war loss of hire for any loss of time to the vessel,including for physical repairs, caused by a warlike incident and piracy seizure for up to 270 days of detention / loss of time. There are no deductibles for thewar risk insurance or the war loss of hire cover.We have arranged, as necessary, increased value insurance for our vessels. With the increased value insurance, in case of total loss of the vessel, we willbe able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased valueinsurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies by reason of underinsurance. We do not expect tomaintain loss of hire insurance for our vessels. Loss of hire insurance covers business interruptions that result in the loss of use of a vessel.Protection and Indemnity InsuranceProtection and indemnity insurance is expected to be provided by mutual protection and indemnity associations, or P&I Associations, who indemnifymembers in respect of discharging their tortious, contractual or statutory third-party legal liabilities arising from the operation of an entered ship. Suchliabilities include but are not limited to third-party liability and other related expenses from injury or death of crew, passengers and other third parties, loss ordamage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, andsalvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended byprotection and indemnity mutual associations and always provided in accordance with the applicable associations’ rules and members’ agreed upon termsand conditions.Navios Acquisition’s fleet is currently entered for protection and indemnity insurance with International Group associations where, in line with allInternational Group Clubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the International Groupinsure approximately 95% of the world’s commercial tonnage and have entered into a pooling agreement to collectively reinsure each association’sliabilities. Each vessel that Navios Acquisition acquires will be entered with P&I Associations of the International Group. Under the International Groupreinsurance program for the current policy year, each P&I club in the International Group is responsible for the first $10.0 million of every claim. In everyclaim the amount in excess of $10.0 million and up to $80.0 million is shared by the clubs under the pooling agreement. Any claim in excess of$80.0 million is reinsured by the International Group in the international reinsurance market under the General Excess of Loss Reinsurance Contract. Thispolicy currently provides an additional $2.0 billion of coverage for non-oil pollution claims. Further to this, an additional reinsurance layer has been placedby the International Group for claims up to $1.0 billion in excess of $2.08 billion, i.e., $3.08 billion in total. For passengers and crew claims the overall limitis $3.0 billion for any one event with any one vessel with a 52Table of Contentssub-limit of $2.0 billion for passengers. With the exception of pollution, passenger or crew claims, should any other P&I claim exceed Group reinsurancelimits, the provisions of all International Group Club’s overspill claim rules will operate and members of any International Group Club will be liable foradditional contributions in accordance with such rules. To date, there has never been an overspill claim, or one even nearing this level.As a member of a P&I Association, which is a member of the International Group, Navios Acquisition will be subject to calls payable to theassociations based on the individual fleet record, the associations’ overall claim records as well as the claim records of all other members of the individualassociations, and members of the pool of P&I Associations comprising the International Group. The P&I Associations’ policy year commences onFebruary 20th. Calls are levied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according to theactual total premium ultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls which might be leviedby the board of directors of the club if the ETP is insufficient to cover amounts paid out by the club.Should a member leave or entry cease with any of the associations, at the Club’s Managers discretion, they may be also be liable to pay release calls orprovide adequate security for the same amount. Such calls are levied in respect of potential outstanding Club/Member liabilities on open policy years andinclude but are not limited to liabilities for deferred calls and supplementary calls.Uninsured RisksNot all risks are insured and not all risks are insurable. The principal insurable risks which nonetheless remain uninsured across our fleet are “loss ofhire” and “strikes,” except in cases of loss of hire due to war or a piracy event. Specifically, Navios Acquisition does not insure these risks because the costsare regarded as disproportionate. These insurances provide, subject to a deductible, a limited indemnity for hire that would not be receivable by theshipowner for reasons set forth in the policy. Should a vessel on time charter, where the vessel is paid a fixed hire day by day, suffer a serious mechanicalbreakdown, the daily hire will no longer be payable by the charterer. Under some circumstances, an event of force majeure may also permit the charterer toterminate the time charter or suspend payment of charter hire. The purpose of the loss of hire insurance is to secure the loss of hire during such periods. In thecase of strikes insurance, if a vessel is being paid a fixed sum to perform a voyage and the ship becomes strike bound at a loading or discharging port, theinsurance covers the loss of earnings during such periods.Exchange ControlsUnder Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictionsthat affect the remittance of dividends, interest or other payments to non-resident holders of Navios Acquisition’s securities.FacilitiesWe have offices at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. We believe that our office facilities are suitable andadequate for our business as it is presently conducted. We presently occupy office space provided by Navios Holdings. Navios Holdings has agreed that itwill make such office space, as well as certain office and secretarial services, available to us, as may be required by us from time to time.Crewing and StaffThe Manager crews its vessels primarily with Greek, Filipino, Romanian, Russian, Ukrainian and Croatian officers and Filipino seamen. The Manageris responsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewing agencies. Navios Acquisitionrequires that all of its seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.Administrative ServicesOn May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with Navios Holdings, initially set to expire on May 28,2015 that has been extended to May 2020, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisitionwhich include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services,advisory services, client and investor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connectionwith the provision of these services. See “Item 7B-Related Party Transactions — the Administrative Services Agreement.” 53Table of ContentsLegal ProceedingsThe Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable and for which the amounts are reasonablyestimable, based upon facts known at the date of the financial statements were prepared. We maintain insurance policies with insurers in amounts and withcoverage and deductibles as our board of directors believes are reasonable and prudent. In the opinion of the management, the ultimate disposition of thesematters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity. C.Organizational StructureThe table below lists the Company’s wholly-owned subsidiaries as of December 31, 2017. Navios Maritime AcquisitionCorporation and Subsidiaries: Nature Country ofIncorporationCompany Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is.Amorgos Shipping Corporation Vessel-Owning Company Marshall Is.Andros Shipping Corporation Vessel-Owning Company Marshall Is.Antikithira Shipping Corporation Vessel-Owning Company Marshall Is.Antiparos Shipping Corporation Vessel-Owning Company Marshall Is.Amindra Navigation Co. Sub-Holding Company Marshall Is.Crete Shipping Corporation Vessel-Owning Company Marshall Is.Folegandros Shipping Corporation Vessel-Owning Company Marshall Is.Ikaria Shipping Corporation Vessel-Owning Company Marshall Is.Ios Shipping Corporation Vessel-Owning Company Cayman Is.Kithira Shipping Corporation Vessel-Owning Company Marshall Is.Kos Shipping Corporation Vessel-Owning Company Marshall Is.Mytilene Shipping Corporation Vessel-Owning Company Marshall Is.Navios Maritime Acquisition Corporation Holding Company Marshall Is.Navios Acquisition Finance (U.S.) Inc. Co-Issuer DelawareRhodes Shipping Corporation Vessel-Owning Company Marshall Is.Serifos Shipping Corporation Vessel-Owning Company Marshall Is.Shinyo Loyalty Limited Former Vessel-Owning Company(1) Hong KongShinyo Navigator Limited Former Vessel-Owning Company(2) Hong KongSifnos Shipping Corporation Vessel-Owning Company Marshall Is.Skiathos Shipping Corporation Vessel-Owning Company Marshall Is.Skopelos Shipping Corporation Vessel-Owning Company Cayman Is.Syros Shipping Corporation Vessel-Owning Company Marshall Is.Thera Shipping Corporation Vessel-Owning Company Marshall Is.Tinos Shipping Corporation Vessel-Owning Company Marshall Is.Oinousses Shipping Corporation Vessel-Owning Company Marshall Is.Psara Shipping Corporation Vessel-Owning Company Marshall Is.Antipsara Shipping Corporation Vessel-Owning Company Marshall Is.Samothrace Shipping Corporation Vessel-Owning Company Marshall Is.Thasos Shipping Corporation Vessel-Owning Company Marshall Is.Limnos Shipping Corporation Vessel-Owning Company Marshall Is.Skyros Shipping Corporation Vessel-Owning Company Marshall Is.Alonnisos Shipping Corporation Former Vessel-Owning Company(3) Marshall Is.Makronisos Shipping Corporation Former Vessel-Owning Company(3) Marshall Is.Iraklia Shipping Corporation Vessel-Owning Company Marshall Is.Paxos Shipping Corporation Former Vessel-Owning Company(4) Marshall Is.Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is.Donoussa Shipping Corporation Former Vessel-Owning Company(5) Marshall Is.Schinousa Shipping Corporation Former Vessel-Owning Company(6) Marshall Is.Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is.Kerkyra Shipping Corporation Vessel-Owning Company(7) Marshall Is.Lefkada Shipping Corporation Vessel-Owning Company Marshall Is.Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is.Leros Shipping Corporation Vessel-Owning Company Marshall Is.Kimolos Shipping Corporation Vessel-Owning Company Marshall Is.Samos Shipping Corporation Vessel-Owning Company Marshall Is.Tilos Shipping Corporation Vessel-Owning Company Marshall Is.Delos Shipping Corporation Vessel-Owning Company Marshall Is.Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 54Table of Contents(1)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(2)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(3)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts wereterminated, with no exposure to Navios Acquisition, due to the shipyard’s inability to issue a refund guarantee.(4)Former vessel-owner of the Nave Lucida which was sold to an unaffiliated third party on January 27, 2016.(5)Former vessel-owner of the Nave Universe which was sold to an unaffiliated third party on October 4, 2016.(6)Former vessel-owner of the Nave Constellation which was sold to an unaffiliated third party on November 15, 2016.(7)The vessel Nave Galactic was sold to Navios Midstream on March 29, 2018.Affiliates included in the financial statements accounted for under the equity method:In the consolidated financial statements of Navios Acquisition, Navios Europe I Inc. (“Navios Europe I”) with ownership interest of 47.5% and NaviosEurope II Inc. (“Navios Europe II”) with ownership interest of 47.5% are included as affiliates and are accounted for under the equity method, for such periodsduring which the entities were affiliates of Navios Acquisition. See Note 8 to the Notes to Consolidated Financial Statements, included elsewhere within thisAnnual Report.On November 16, 2017, in accordance with the terms of the Limited Partnership Agreement of Navios Midstream all of the 9,342,692 subordinatedunits of Navios Midstream converted into common units on a one-for-one basis. Following their conversion into common units, these units have the samedistribution rights as all other common units.As of December 31, 2017, Navios Acquisition owns the 2% general partner interest in Navios Midstream totaling 427,499 general partner units, as wellas a 57.0% limited partner interest, which represents 10,585,384 common units (49.5%), no subordinated units and 1,592,920 Subordinated Series A Units(7.5%). In the consolidated financial statements of Navios Acquisition, Navios Midstream with ownership interest of 59.0% is included as an affiliate. TheCompany analyzed its investments in Navios Midstream and concluded that it has the ability to exercise significant influence over the operating andfinancial policies of Navios Midstream and, therefore all classes of units i.e., common units, the subordinated units, the Subordinated Series A units and thegeneral partner units of Navios Midstream are accounted for under the equity method.D. Property, plants and equipmentOther than our vessels, we do not have any other material property, plants or equipment.Item 4A. Unresolved Staff CommentsNone.Item 5. Operating and Financial Review and ProspectsOverviewWe are an owner and operator of tanker vessels focusing in the transportation of petroleum products (clean and dirty) and bulk liquid chemicals and weare incorporated in the Republic of the Marshall Islands.On May 25, 2010, we consummated the Product and Chemical Tanker Acquisition, the acquisition of 13 vessels (11 product tankers and two chemicaltankers), for an aggregate purchase price of $457.7 million, including amounts to be paid for future contracted vessels to be delivered. On September 10,2010, we consummated the VLCC Acquisition, for an aggregate purchase price of $587.0 million.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe I and have economic interests of 47.5%,47.5% and 5.0%, respectively. Navios Europe I is engaged in the marine transportation industry through the ownership of five tankers and five containervessels. Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interest of 50%, 50% and 0%, respectively. OnFebruary 21, 2017, Navios Holdings agreed to transfer to Navios Partners its participation in Navios Revolving Loans I and Navios Term Loans I, bothrelating to Navios Europe I, for a consideration of $4.1 million in cash and 13,076,923 newly issued common units of Navios Partners. 55Table of ContentsOn October 13, 2014, Navios Acquisition formed Navios Midstream under the laws of the Marshall Islands. Navios Maritime Midstream Partners GPLLC, or the general partner, a wholly-owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of Navios Midstreamand received a 2.0% general partner interest in Navios Midstream. Navios Midstream is an affiliate and not consolidated under Navios Acquisition.On February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II and have economic interests of 47.5%,47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively. Navios Europe II is engaged in the marine transportation industrythrough the ownership of seven dry bulk and seven container vessels.Fleet DevelopmentAcquisition of vessels2015On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliated thirdparty for a total cost of $33.4 million. Cash paid was $17.8 million and $15.6 million was transferred from vessel deposits.On February 11, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliatedthird party for a total cost of $39.2 million. Cash paid was $12.6 million and $26.6 million was transferred from vessel deposits.On November 6, 2015, Navios Acquisition took delivery of the Nave Spherical, a 2009-built, 297,188 dwt VLCC, from an unaffiliated third party for atotal cost of $69.2 million.On December 2, 2015, Navios Acquisition took delivery of the Nave Photon, a 2008-built, 297,395 dwt VLCC from an unaffiliated third party for atotal cost of $65.2 million.Disposal of vessels2018On March 15, 2018, Navios Acquisition agreed to sell to Navios Midstream the Nave Galactic, a 2009 built VLCC vessel of 297,168 dwt, for a totalsale price of $44.5 million the delivery of which completed on March 29, 2018. As of March 31, 2018, the estimated loss due to the sale is expected to beapproximately $0.3 million.2016On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18.4 million. The gain on sale ofthe vessel, upon write-off of the unamortized dry-docking, was $2.3 million.On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated third party for net cash proceeds of $35.8 million. As of June 30,2016, the vessel was classified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4.8 million.On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for net cash proceeds of $35.8 million. As ofJune 30, 2016, the vessel was classified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4.6 million.2015On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste, a 2003-built of298,717 dwt VLCC, and the C. Dream, a 2000 built VLCC of 298,570 dwt, from Navios Acquisition for an aggregate sale price of $100.0 million. The saleprice consisted of $73.0 million cash consideration and the issuance of 1,592,920 Subordinated Series A Units to Navios Acquisition. Navios Maritime AcquisitionCorporation and Subsidiaries: Nature Country ofIncorporation 2017 2016 2015 Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Amorgos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Andros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antikithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 56Table of ContentsAntiparos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Amindra Navigation Co. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Crete Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Folegandros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ikaria Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ios Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mytilene Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Acquisition Corporation Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Acquisition Finance (U.S.) Inc. Co-Issuer Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rhodes Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serifos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Dream Limited Vessel-Owning Company(3) Hong Kong — — 1/1 - 6/17 Shinyo Loyalty Limited Former Vessel-OwningCompany(1) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Navigator Limited Former Vessel-OwningCompany(2) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Sifnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Skiathos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Skopelos Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Syros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Thera Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Tinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Oinousses Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Psara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antipsara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Samothrace Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Thasos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Limnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Skyros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Alonnisos Shipping Corporation Former Vessel-OwningCompany(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Makronisos Shipping Corporation Former Vessel-OwningCompany(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Iraklia Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Paxos Shipping Corporation Former Vessel-OwningCompany(5) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Donoussa Shipping Corporation Former Vessel-OwningCompany(6) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Schinousa Shipping Corporation Former Vessel-OwningCompany(7) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Sikinos Shipping Corporation Vessel-Owning Company(3) Marshall Is. — — 1/1 - 6/17 Kerkyra Shipping Corporation Vessel-Owning Company(8) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Lefkada Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Leros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kimolos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Samos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Tilos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 -12/31 Delos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 -12/31 Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 (1)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(2)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(3)Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary.(4)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts wereterminated, with no exposure to Navios Acquisition, due to the shipyard’s inability to issue a refund guarantee.(5)Former vessel-owner of the Nave Lucida which was sold to an unaffiliated third party on January 27, 2016.(6)Former vessel-owner of the Nave Universe which was sold to an unaffiliated third party on October 4, 2016(7)Former vessel-owner of the Nave Constellation which was sold to an unaffiliated third party on November 15, 2016(8)The vessel Nave Galactic was sold to Navios Midstream on March 29, 2018. 57Table of ContentsOur ChartersOur major customers during 2017 were: Navig8, Mansel and Shell. For the year ended December 31, 2017, these three customers accounted for 31.9%,14.3% and 13.7%, respectively, of Navios Acquisition’s revenue.Our major customers during 2016 were: Navig8, Shell and Mansel. For the year ended December 31, 2016, these three customers accounted for 33.0%,20.0% and 14.7%, respectively, of Navios Acquisition’s revenue.Our major customers during 2015 were: Navig8, Shell and Mansel. For the year ended December 31, 2015, these three customers accounted for 35.2%,13.6% and 10.8%, respectively, of Navios Acquisition’s revenue.No other customers accounted for 10% or more of total revenue for any of the years presented.Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charter hire rates, which, inturn, are affected by a number of factors, including: • the duration of the charters; • the level of spot and long-term market rates at the time of charter; • decisions relating to vessel acquisitions and disposals; • the amount of time spent positioning vessels; • the amount of time that vessels spend undergoing repairs and upgrades in drydock; • the age, condition and specifications of the vessels; and • the aggregate level of supply and demand in the tanker shipping industry.Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be any number of years. In general, along-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot marketopportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate ourvessels in a mix of short-term and long-term charter markets. Vessel charter rates are affected by world economics, international events, weather conditions,strikes, governmental policies, supply and demand and many other factors that might be beyond our control.We could lose a customer or the benefits of a charter if: • the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise; • the customer exercises certain rights to terminate the charter of the vessel; • the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair,there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or • a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or politicalunrest prevents us from performing services for that customer.If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most charters and thecyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorable than the charterthat has been terminated. The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have a material adverseeffect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace suchcustomer, time charter or vessel.Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that wouldsignificantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel,all advances paid by the charterer but not earned by us. 58Table of ContentsVessels OperationsUnder our charters, our vessel manager is generally responsible for commercial, technical, health and safety and other management services related tothe vessels’ operation, and the charterer is responsible for bunkering and substantially all of the vessel voyage costs, including canal tolls and port charges.Pursuant to the Management Agreement dated May 28, 2010 and as amended in May 2012 and May 2014, the Manager provided commercial andtechnical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6,000 per MR2 product tanker and chemical tanker vessel; (b)$7,000 per LR1 product tanker vessel; and (c) $9,500 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6,350 per MR2 product tankerand chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC.Extraordinary costs and expenses include fees and costs resulting from: • time spent on insurance and salvage claims; • time spent vetting and pre-vetting the vessels by any charterers in excess of 10 days per vessel per year; • the deductible of any insurance claims relating to the vessels or for any claims that are within such deductible range; • the significant increase in insurance premiums which are due to factors such as “acts of God” outside the control of the Manager; • repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilder or by the insurance covering the vessels,resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents, collisions,damage or events are due to the fraud, gross negligence or willful misconduct of the Manager, its employees or its agents, unless and to theextent otherwise covered by insurance); • expenses imposed due to any improvement, upgrade or modification to, structural changes with respect to the installation of new equipmentaboard any vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicable laws, at therecommendation of the classification society for that vessel or otherwise; • costs associated with increases in crew employment expenses resulting from an introduction of new, or a change in the interpretation of,applicable laws or resulting from the early termination of the charter of any vessel; • any taxes, dues or fines imposed on the vessels or the Manager due to the operation of the vessels; • expenses incurred in connection with the sale or acquisition of a vessel such as inspections and technical assistance; and • any similar costs, liabilities and expenses that were not reasonably contemplated by us and the Manager as being encompassed by or acomponent of the fixed daily fees at the time the fixed daily fees were determined.Payment of any extraordinary fees or expenses to the Manager could significantly increase our vessel operating expenses and impact our results ofoperations.During the remaining term of the Management Agreement, we expect that we will reimburse the Manager for all of the actual operating costs andexpenses it incurs in connection with the management of our fleet.Administrative ServicesOn May 28, 2010, Navios Acquisition entered into the Administrative Services Agreement with Navios Holdings, initially set to expire on May 28,2015, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping, auditand accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of theseservices.In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020pursuant to its existing terms. 59Table of ContentsA. Operating resultsTrends and Factors Affecting Our Future Results of OperationsWe believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions thataffect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other key factors that willbe fundamental to our business, future financial condition and results of operations include: • the demand for seaborne transportation services; • the ability of Navios Holdings’ commercial and chartering operations to successfully employ our vessels at economically attractive rates,particularly as our fleet expands and our charters expire; • the effective and efficient technical management of our vessels; • Navios Holdings’ ability to satisfy technical, health, safety and compliance standards of major commodity traders; and • the strength of and growth in the number of our customer relationships, especially with major commodity traders.In addition to the factors discussed above, we believe certain specific factors will impact our combined and consolidated results of operations. Thesefactors include: • the charter hire earned by our vessels under our charters; • our access to capital required to acquire additional vessels and/or to implement our business strategy; • our ability to sell vessels at prices we deem satisfactory; • our level of debt and the related interest expense and amortization of principal; and • the level of any dividend to our stockholders.Period over Period ComparisonsYear Ended December 31, 2017 Compared to the Year Ended December 31, 2016The following table presents consolidated revenue and expense information for the years ended December 31, 2017 and 2016. This information wasderived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2017 Year endedDecember 31,2016 Revenue $227,288 $290,245 Time charter and voyage expenses (21,919) (4,980) Direct vessel expenses (4,198) (3,567) Management fees (entirely through related party transactions) (94,973) (97,866) General and administrative expenses (13,969) (17,057) Depreciation and amortization (56,880) (57,617) Interest income 10,042 4,767 Interest expenses and finance cost (76,438) (75,987) Gain on sale of vessels — 11,749 Equity/ (loss) in net earnings of affiliated companies (46,657) 15,499 Other income 82 377 Other expense (1,277) (2,685) Net (loss)/ income $(78,899) $62,878 Set forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2017 and 2016 that webelieve may be useful in better understanding Navios Acquisition’s financial position and results of operations. 60Table of Contents Year endedDecember 31,2017 Year endedDecember 31,2016 FLEET DATA Available days(1) 12,904 13,753 Operating days(2) 12,843 13,716 Fleet utilization(3) 99.5% 99.7% Vessels operating at period end 36 36 AVERAGE DAILY RESULTS Time Charter Equivalent (“TCE”) Rate per day (4) $17,186 $20,742 (1)Available days: Available days for the fleet are total calendar days the vessels were in Navios Acquisition’s possession for the relevant period aftersubtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure thenumber of days in a relevant period during which vessels should be capable of generating revenues.(2)Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hiredue to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in arelevant period during which vessels actually generate revenues.(3)Fleet utilization: Fleet utilization is the percentage of time that Navios Acquisition’s vessels were available for generating revenue, and is determinedby dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleetutilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are offhire for reasons other than scheduled repairs, dry dockings or special surveys.(4)TCE Rate: The TCE Rate per day is defined as voyage and time charter revenues less voyage expenses during a period divided by the number ofavailable days during the period. The TCE Rate per day is a standard shipping industry performance measure used primarily to present the actual dailyearnings generated by vessels of various types of charter contracts for the number of available days of the fleet.Revenue: Revenue for the year ended December 31, 2017 decreased by $63.0 million, or 21.7%, to $227.3 million, as compared to $290.2 million forthe same period of 2016. The decrease was mainly attributable to a: (i) decrease in the market rates during the year ended December 31, 2017, as compared tothe same period in 2016; and (ii) decrease in revenue by $10.8 million due to the sale of one MR2 product tanker in January 2016 and two chemical tankersin the fourth quarter of 2016. Available days of the fleet decreased to 12,904 days for the year ended December 31, 2017, as compared to 13,753 days for theyear ended December 31, 2016. The TCE Rate decreased to $17,186 for the year ended December 31, 2017, from $20,742 for the year ended December 31,2016.Time charter and voyage expenses: Time charter and voyage expenses for the year ended December 31, 2017 increased by approximately$16.9 million to $21.9 million, as compared to $5.0 million for the year ended December 31, 2016. The increase was attributable to a: (i) $16.4 millionbackstop commitment to Navios Midstream; and (ii) $1.0 million increase in bunkers and other voyage expenses; partially mitigated by a $0.6 milliondecrease in broker commission costs.Direct vessel expenses: Direct vessel expenses for the year ended December 31, 2017 increased by $0.6 million to $4.2 million as compared to$3.6 million for the year ended December 31, 2016. The increase was attributable to a $1.4 million increase in amortization of dry dock and special surveycost; partially mitigated by a $0.7 million decrease in expenses incurred in connection with specialized work performed on certain vessels of our fleet for theyear ended December 31, 2016.Management fees: Management fees for the year ended December 31, 2017 decreased by $2.9 million to $95.0 million, as compared to $97.9 millionfor the year ended December 31, 2016, attributable to the decrease in the number of vessels operating under Navios Acquisition’s fleet, partially mitigated bythe increase in management fees in effect as of May 29, 2016, described below. Pursuant to our Management Agreement, the Manager, a wholly ownedsubsidiary of Navios Holdings, provided commercial and technical management services to Navios Acquisition’s vessels for a daily fee of: (a) $6,000 perMR2 product tanker and chemical tanker vessel; (b) $7,000 per LR1 product tanker vessel; and (c) $9,500 per VLCC, through May 2016. Navios Acquisitionfixed the fees for commercial and technical ship management services of its fleet for two additional years from May 29, 2016 through May 2018, at a dailyfee of: (a) $6,350 per MR2 product tanker and chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC.General and administrative expenses: Total general and administrative expenses for the year ended December 31, 2017 decreased by approximately$3.1 million to $14.0 million compared to $17.1 million for the year ended December 31, 2016.The decrease was mainly attributable to a: (a) $2.0 million decrease of compensation to the directors and/ or officers of the Company; and(b) $0.6 million decrease in other general and administrative expenses, including professional fees and expenses.For the years ended December 31, 2017 and 2016, the expenses charged by Navios Holdings for administrative services were $9.0 million and$9.4 million, respectively. 61Table of ContentsThe remaining balance of $5.0 million and $7.6 million of general and administrative expenses for the years ended December 31, 2017 and 2016,respectively, related to stock based compensation and compensation expense, as well as legal, consulting, travel and professional fees including audit fees.Depreciation and amortization: Depreciation and amortization for the year ended December 31, 2017 decreased by $0.7 million to $56.9 million from$57.6 million compared to December 31, 2016, due to the sale of vessels mentioned above. Depreciation of a vessel is calculated using an estimated usefullife of 25 years from the date the vessel was originally delivered from the shipyard.Interest income: Interest income for year ended December 31, 2017 increased by $5.3 million to $10.0 million compared to $4.8 million for the yearended December 31, 2016. The increase was mainly attributable to the increase of the interest income accrued under the revolving loans granted to NaviosHoldings, Navios Europe I and Navios Europe II.Interest expense and finance cost: Interest expense and finance cost for the year ended December 31, 2017 increased by $0.5 million to $76.4 million,as compared to $76.0 million for the year ended December 31, 2016. The increase was due to the increase in the weighted average interest rate for the yearended December 31, 2017 to 6.45% from 6.0% for the year ended December 31, 2016 and to an increase of $0.6 million in the amortization and write-off ofdeferred finance cost to $4.4 million for the year ended December 31, 2017, as compared to $3.7 million for the same period of 2016. The averageoutstanding loan balance decreased to $428.1 million for the year ended December 31, 2017 as compared to $503.6 million for the year ended December 31,2016. As of December 31, 2017 and 2016, the outstanding loan balance under Navios Acquisition’s credit facilities was $1,077.7 million and$1,111.2 million, respectively.Gain on sale of vessels: There was no gain on sale of vessels for the year ended December 31, 2017, as compared to $11.7 million for the same period in2016, due to the sale of the Nave Constellation, the Nave Universe and the Nave Lucida to unaffiliated third parties for total net cash proceeds of$90.0 million.Equity/ (loss) in net earnings of affiliated companies: Equity in net earnings of affiliated companies decreased by $62.2 million to $46.7 million lossfor the year ended December 31, 2017, as compared to $15.5 million equity for the same period in 2016.The decrease mainly resulted from a: (i) $59.1 million non-cash “other-than-temporary impairment” (“OTTI”) loss relating to its investment in NaviosMidstream recognized during the year ended December 31, 2017; and (ii) $3.9 million decrease in equity in net earnings of Navios Midstream; partiallymitigated by a $0.9 million increase in the equity in net earnings of Navios Europe I and Navios Europe II.Other income: Other income amounted to $0.1 million for the year ended December 31, 2017, compared to $0.4 million for the year endedDecember 31, 2016.Other expense: Other expense decreased by $1.4 million to $1.3 million for the year ended December 31, 2017, as compared to $2.7 million for thesame period in 2016.Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015The following table presents consolidated revenue and expense information for the years ended December 31, 2016 and 2015. This information wasderived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2016 Year endedDecember 31,2015 Revenue $290,245 $313,396 Time charter and voyage expenses (4,980) (4,492) Direct vessel expenses (3,567) (1,532) Management fees (entirely through related party transactions) (97,866) (95,336) General and administrative expenses (17,057) (15,532) Depreciation and amortization (57,617) (57,623) Interest income 4,767 1,683 Interest expenses and finance cost (75,987) (73,561) Gain on sale of vessels 11,749 5,771 Equity in net earnings of affiliated companies 15,499 18,436 Other income 377 41 Other expense (2,685) (1,514) Net income $62,878 $89,737 62Table of ContentsSet forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2016 and 2015 that webelieve may be useful in better understanding Navios Acquisition’s financial position and results of operations. Year endedDecember 31,2016 Year endedDecember 31,2015 FLEET DATA Available days(1) 13,753 13,743 Operating days(2) 13,716 13,707 Fleet utilization(3) 99.7% 99.7% Vessels operating at period end 36 39 AVERAGE DAILY RESULTS Time Charter Equivalent (“TCE”) Rate per day (4) $20,742 $22,477 (1)Available days: Available days for the fleet are total calendar days the vessels were in Navios Acquisition’s possession for the relevant period aftersubtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure thenumber of days in a relevant period during which vessels should be capable of generating revenues.(2)Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hiredue to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in arelevant period during which vessels actually generate revenues.(3)Fleet utilization: Fleet utilization is the percentage of time that Navios Acquisition’s vessels were available for generating revenue, and is determinedby dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleetutilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are offhire for reasons other than scheduled repairs, dry dockings or special surveys.(4)TCE Rate: Time Charter Equivalent Rate per day is defined as voyage and time charter revenues less voyage expenses during a period divided by thenumber of available days during the period. The TCE Rate per day is a standard shipping industry performance measure used primarily to present theactual daily earnings generated by vessels of various types of charter contracts for the number of available days of the fleet.For the year ended December 31, 2016, Navios Acquisition had 13,753 available days, after it took delivery of four MR2 product tankers in 2015. Theeffect was partially mitigated by: (i) the sale of the outstanding shares of capital stock of two of its vessel-owning subsidiaries (Nave Celeste and C. Dream) toNavios Midstream (see Note 1) on June 18, 2015; and (ii) the sale of one MR2 product tanker and two chemical tankers in 2016.There were 13,743 available days in the comparative period in 2015.Revenue: Revenue for the year ended December 31, 2016 decreased by $23.2 million, or 7.4%, to $290.2 million, as compared to $313.4 million for2015. The decrease was mainly attributable to: (i) the decrease in revenue by $18.6 million due to the sale of two VLCCs in June 2015, one MR2 producttanker in January 2016 and two chemical tankers in October and November 2016; and (ii) the decrease in profit sharing by $24.5 million. The decrease waspartially mitigated by the increase in revenue following deliveries of four vessels during 2015. Available days of the fleet increased to 13,753 days for theyear ended December 31, 2016, as compared to 13,743 days for the year ended December 31, 2015. The TCE Rate decreased to $20,742 for the year endedDecember 31, 2016, from $22,477 for the year ended December 31, 2015.Time charter and voyage expenses: Time charter and voyage expenses for the year ended December 31, 2016 increased by approximately $0.5 millionto $5.0 million, as compared to $4.5 million for the year ended December 31, 2015. The increase was attributable to a $1.1 million increase in bunkers andother voyage expenses and was partially mitigated by a $0.5 million decrease in broker commission costs.Direct vessel expenses: Direct vessel expenses for the year ended December 31, 2016 increased by approximately $2.0 million to $3.6 million ascompared to $1.5 million for the year ended December 31, 2015. The increase was attributable to a: (i) $1.3 million increase in amortization of dry dock andspecial survey cost; and (ii) $0.7 million increase in expenses incurred in connection with specialized work performed on certain vessels of our fleet. 63Table of ContentsManagement fees: Management fees for the year ended December 31, 2016 increased by approximately $2.5 million to $97.9 million, as compared to$95.3 million for the year ended December 31, 2015. The increase was mainly attributable to the increased number of vessels and the increase in themanagement fees with effect as of May 29, 2016, described below. Pursuant to the Management Agreement, the Manager provided commercial and technicalmanagement services to Navios Acquisition’s vessels for a daily fee of: (a) $6,000 per MR2 product tanker and chemical tanker vessel; (b) $7,000 per LR1product tanker vessel; and (c) $9,500 per VLCC, through May 2016. Navios Acquisition fixed the fees for commercial and technical ship managementservices of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6,350 per MR2 product tanker and chemical tankervessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition, at cost.General and administrative expenses: Total general and administrative expenses for the year ended December 31, 2016 increased by approximately$1.5 million to $17.1 million compared to $15.5 million for the year ended December 31, 2015.The increase was mainly attributable to a $1.8 million increase in administrative expenses paid to Navios Holdings mainly due to the increased numberof vessels in Navios Acquisition’s fleet, partially mitigated by a: (i) $0.2 million decrease in compensation to the directors and/or officers of the Company;and (ii) $0.2 million decrease in other general and administrative expenses, including professional, other fees and travel expenses.For the years ended December 31, 2016 and 2015, the expenses charged by Navios Holdings for administrative services were $9.4 million and$7.6 million, respectively. The remaining balance of $7.6 million and $7.9 million of general and administrative expenses for the years ended December 31,2016 and 2015, respectively, related to stock based compensation and compensation expense, as well as legal, consulting, travel and professional feesincluding audit fees.Depreciation and amortization: Depreciation and amortization amounted to $57.6 million for each of the years ended December 31, 2016 andDecember 31, 2015. Depreciation of a vessel is calculated using an estimated useful life of 25 years from the date the vessel was originally delivered from theshipyard.Interest income: Interest income for year ended December 31, 2016 increased by approximately $3.1 million to $4.8 million compared to $1.7 millionfor the year ended December 31, 2015. The increase is mainly attributable to the increase of the interest income accrued under the revolving loans granted toNavios Holdings, Navios Europe I and Navios Europe II.Interest expense and finance cost: Interest expense and finance cost for the year ended December 31, 2016 increased by $2.4 million to $76.0 million,as compared to $73.6 million for the year ended December 31, 2015. The increase was mainly due to the increase in the average outstanding balance of ourborrowings, which amounted to $503.6 million for the year ended December 31, 2016 as compared to $487.7 million for the year ended December 31, 2015.The weighted average interest rate for the years ended December 31, 2016 and 2015 was 6.0%. As of December 31, 2016 and 2015, the outstanding balanceunder Navios Acquisition’s total borrowings was $1,111.2 million and $1,216.6 million, respectively.Gain on sale of vessels: The gain on sale of vessels for the year ended December 31, 2016 increased by approximately $6.0 million to $11.7 million, ascompared to $5.8 million.During 2016, Navios Acquisition sold the Nave Constellation, the Nave Universe and the Nave Lucida to unaffiliated third parties for total net cashproceeds of $90.0 million. As of June 30, 2016, the Nave Constellation and the Nave Universe were classified as vessels held for sale.The gain on sale of vessels for the year ended December 31, 2015, was $5.8 million and resulted from the sale of the Nave Celeste and the C. Dream toNavios Midstream for a total sale price of $100.0 million, of which $73.0 million was paid in cash and $27.0 million was paid in a new class of unitsdesignated as Subordinated Series A Units of Navios Midstream.Equity in net earnings of affiliated companies: Equity in net earnings of affiliated companies decreased by $2.9 million to $15.5 million for the yearended December 31, 2016, as compared to $18.4 million for the same period in 2015. The decrease resulted from the decrease in equity in earnings of NaviosMidstream which amounted to $1.6 million and of Navios Europe I and of Navios Europe II which amounted to $1.3 million.Other income: Other income amounted to $0.4 million for the year ended December 31, 2016 compared to $0.04 million for the year endedDecember 31, 2015. 64Table of ContentsOther expense: Other expense increased by $1.2 million to $2.7 million for the year ended December 31, 2016, as compared to $1.5 million for thesame period in 2015.B. Liquidity and Capital Resources and UsesOur primary short-term liquidity needs are to fund general working capital requirements, dry docking expenditures, minimum cash balancemaintenance as per our credit facility agreements and debt repayment, and other obligations from time to time, while our long-term liquidity needs primarilyrelate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capital expenditures areprimarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, whilemaintenance capital expenditures primarily consist of dry docking expenditures and expenditures to replace vessels in order to maintain the operatingcapacity of or revenue generated by our fleet. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows fromoperations, long-term borrowings and proceeds from asset sales. As of December 31, 2017, Navios Acquisition’s current assets totaled $119.7 million, whilecurrent liabilities totaled $74.6 million, resulting in a positive working capital position of $45.1 million. Navios Acquisition’s cash forecast indicates that itwill generate sufficient cash for at least the next 12 months following April 5, 2018 to make the required principal and interest payments on its indebtedness,provide for the normal working capital requirements of the business and remain in a positive working capital position. Generally, our long-term sources offunds derive from cash from operations, long-term bank borrowings and other debt or equity financings. We expect that we will rely upon cash fromoperations and upon external financing sources, including bank borrowings, to fund acquisitions, expansion and investment capital expenditures and othercommitments we have entered into. We cannot assure you that we will be able to secure adequate financing or obtaining additional funds on favorable terms,to meet our liquidity needs. Please also refer to “Item 3.D. Risk Factors — Risks Related to Our Indebtedness.”In the first quarter of 2018, Navios Acquisition paid to Navios Midstream the amount of $16.4 million concerning the backstop commitment.On March 31, 2018, Navios Acquisition entered into a sale and leaseback agreement in order to refinance $71.5 million outstanding on the existingfacility on four product tankers. Navios Acquisition has a purchase obligation at the end of the lease term and under ASC 842-40, the transaction is expectedto be accounted for as a failed sale and leaseback transaction and result in a finance lease. As a result of the refinancing, as of December 31, 2017, an amountof $32.8 million was reclassified from “Current portion of long-term debt, net of deferred finance cost” to “Long term debt, net of current portion, premiumand net of deferred finance cost”. The facility will be repayable in 24 equal consecutive quarterly installments of $1.5 million each, with a final balloonpayment of $35.8 million to be repaid on the last repayment date. The facility matures in March 2024 and bears interest at LIBOR plus 305 bps per annum.Navios Acquisition may use funds to repurchase its outstanding capital stock and/or indebtedness from time to time. Repurchases may be made in theopen market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on termsNavios Acquisition deems appropriate and subject to its cash requirements for other purposes, compliance with the covenants under Navios Acquisition’sdebt agreements, and other factors management deems relevant.In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25.0 million of Navios Acquisition’scommon stock, for two years. Stock repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privatelynegotiated transactions. The timing and amount of repurchases under the program will be determined by management based upon market conditions andother factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Theprogram does not require any minimum repurchase or any specific number or amount of shares of common stock and may be suspended or reinstated at anytime in Navios Acquisition’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject torestrictions under Navios Acquisition’s credit facilities and indenture. As of March 31, 2018, the Company has repurchased 5,166,544 shares of commonstock, for a total cost of approximately $4.2 million, out of which 5,021,764 shares of common stock have been cancelled.As of March 31, 2018 147,086,141 shares of common stock were issued and outstanding.Cash flows for the year ended December 31, 2017 compared to the year ended December 31, 2016:The following table presents cash flow information for the years ended December 31, 2017 and 2016. This information was derived from the auditedconsolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Net cash provided by operating activities $45,942 $92,945 Net cash provided by investing activities 52,378 43,505 Net cash used in financing activities (66,461) (141,963) Net increase/ (decrease) in cash and cash equivalents $31,859 $(5,513) 65Table of ContentsCash provided by operating activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Net cash provided by operating activities decreased by $47.0 million to $45.9 million for the year ended December 31, 2017 as compared to net cashprovided by operating activities of $92.9 million for the same period in 2016. The decrease is analyzed as follows:The net loss for the year ended December 31, 2017 was $78.9 million compared to income of $62.9 million for the year ended December 31, 2016. Indetermining net cash provided by operating activities for the year ended December 31, 2017, the net loss was adjusted for the effect of depreciation andamortization of $56.9 million, $56.9 million for equity/ (loss) in net earnings of affiliated companies, net of dividends received, $4.2 million for theamortization of drydock and special survey costs, $3.8 million for amortization and write-off of deferred finance costs and bond premium, $0.1 million stockbased compensation.Amounts due from related parties, short-term, decreased by $11.1 million to $13.9 million at December 31, 2017 from $25.0 million at December 31,2016. The balances related mainly to management fees in accordance with the Management Agreement. Please refer to the relevant discussion below, under“Related Party Transactions”.Payment for dry dock and special survey costs incurred in the years ended December 31, 2017 and December 31, 2016 was $14.9 million and$3.8 million, respectively, and related to drydock and special survey costs incurred for certain vessels of the fleet.Accounts receivable decreased by $8.1 million from $20.9 million for the year ended December 31, 2016, to $12.8 million for the year endedDecember 31, 2017. The decrease was attributed to the decrease in receivables due from charterers.Amounts due from related parties, long term, excluding the Navios Holdings Credit Facility, increased by $25.2 million from $29.4 million as ofDecember 31, 2016, to $54.6 million as of December 31, 2017, which mainly related to management fees in accordance with the Management Agreement andthe $13.7 million loan granted to Navios Europe II, classified under “Cash provided by / (used in) investing activities”. Please refer to the relevant discussionbelow, under “Related Party Transactions”.Accounts payable decreased by $1.0 million to $3.9 million at December 31, 2017 from $4.9 million at December 31, 2016.Amounts due to related parties, short-term as of December 31, 2017 and December 31, 2016 was $17.1 million and $0, respectively, and mainlyconsisted of backstop commitment liability of $16.4 million and other payables to Navios Midstream.Prepaid expenses and other current assets increased to $6.5 million for the year ended December 31, 2017 from $4.6 million for the year endedDecember 31, 2016, mainly due to working capital advances required under certain charter contracts, under the long-term assets.Other long-term assets amounted to $0.9 million for the each of the years ended December 31, 2017 and 2016.Accrued expenses increased by $1.2 million to $12.2 million for the year ended December 31, 2017, from $11.0 million on December 31, 2016. Theincrease was mainly attributable to the increase of accrued voyage and other expenses.Deferred revenue primarily relates to cash received from charterers prior to it being earned and also includes the current portion of deferred gain on saleof the Nave Celeste and the C. Dream to Navios Midstream. Deferred revenue relating to cash received from charterers was recognized as revenue over thevoyage or charter period. Deferred revenue decreased by $3.5 million to $5.0 million for the year ended December 31, 2017 from $8.5 million onDecember 31, 2016.Cash provided by investing activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Net cash provided by investing activities increased by $8.9 million to $52.4 million at December 31, 2017 from $43.5 million at December 31, 2016.Net cash provided by investing activities for the year ended December 31, 2017, resulted from: (i) $55.1 million loan repayment from Navios Holdings;and (ii) $11.0 million from dividends received from affiliates. The increase was mitigated by a: (a) $13.7 million loan granted to Navios Europe II (NaviosRevolving Loans II); and (b) $0.1 million investment in Navios Midstream in order to maintain the 2% general partner interest.Net cash provided by investing activities for the year ended December 31, 2016, resulted from: (i) $90.0 million net proceeds from sale of vessels; and(ii) $7.2 million from dividends received from affiliates. The increase was mitigated by a: (i) $49.3 million loan granted to Navios Holdings, net of issuancefees and costs; (ii) $4.3 million loan granted to Navios Europe II (Navios Revolving Loans II); and (iii) $0.1 million investment in Navios Midstream in orderto maintain the 2% general partner interest. 66Table of ContentsCash used in financing activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Net cash used in financing activities decreased by $75.5 million to a $66.5 million outflow at December 31, 2017 from a $142.0 million outflow in theyear ended December 31, 2016.Net cash used in financing activities for the year ended December 31, 2017, resulted from: (i) $84.2 million of loan repayments; (ii) $31.6 million ofdividends paid; (iii) a $2.5 million redemption of puttable common stock; and was partially mitigated by: (a) $49.8 million in loan proceeds, net of deferredfinance costs; and (b) a $2.1 million decrease in restricted cash.Net cash used in financing activities for the year ended December 31, 2016, resulted from: (i) $105.5 million of loan repayments; (ii) $31.7 million ofdividends paid; (iii) a $4.0 million for the redemption of puttable common stock; and (iv) a $0.8 million increase in restricted cash.Cash flows for the year ended December 31, 2016 compared to the year ended December 31, 2015:The following table presents cash flow information for the years ended December 31, 2016 and 2015. This information was derived from the auditedconsolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2016 Year EndedDecember 31,2015 Net cash provided by operating activities $92,945 $119,636 Net cash provided by/ (used in) investing activities 43,505 (104,510) Net cash used in financing activities (141,963) (14,814) Net (decrease)/ increase in cash and cash equivalents $(5,513) $312 Cash provided by operating activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Net cash provided by operating activities decreased by $26.7 million to $92.9 million for the year ended December 31, 2016 as compared to net cashprovided by operating activities of $119.6 million for the same period in 2015. The decrease is analyzed as follows:The net income for the year ended December 31, 2016 was $62.9 million compared to $89.7 million for the year ended December 31, 2015. Indetermining net cash provided by operating activities for the year ended December 31, 2016, the net income was adjusted for the effect of depreciation andamortization of $57.6 million, $11.7 million gain on sale of vessels, $3.7 million for amortization and write-off of deferred finance costs and bond premium,$2.8 million for the amortization of dry dock and special survey costs, $1.4 million for earnings in affiliates, net of dividend received, $0.9 million stockbased compensation and $0.4 million gain on debt repayment.Amounts due from related parties, short-term, increased by $7.2 million to $25.0 million at December 31, 2016 from $17.8 million at December 31,2015. The increase mainly related to payment of management fees for our vessels. Please refer to the relevant discussion below, under “Related PartyTransactions”.Payment for dry dock and special survey costs incurred in the years ended December 31, 2016 and December 31, 2015 was $3.8 million and$6.6 million, respectively, and related to drydock and special survey costs incurred for certain vessels of the fleet.Accounts receivable increased by $6.7 million from $14.2 million for the year ended December 31, 2015, to $20.9 million for the year endedDecember 31, 2016. The increase was attributed to the increase in receivables due from charterers.Restricted cash from operating activities decreased by approximately $0.2 million from $1.4 million for the year ended December 31, 2015 to$1.1 million for the year ended December 31, 2016 and related to the cash held in retention accounts for the payment of interest under our credit facilities.Amounts due from related parties, long-term, excluding the amounts related to the Navios Holdings Credit Facility, increased by $12.9 million from$16.5 million for the period ended December 31, 2015, to $29.4 million for the year ended December 31, 2016, which mainly related to payment of specialsurvey and dry docking expenses for certain vessels of our fleet and the increase of $4.3 million loan granted to Navios Europe II, classified under “Cashprovided by / (used in) investing activities”. Please refer to the relevant discussion below, under “Related Party Transactions”. 67Table of ContentsAccounts payable increased by $2.1 million to $4.9 million at December 31, 2016 from $2.8 million at December 31, 2015.Prepaid expenses and other current assets increased to $4.6 million for the year ended December 31, 2016 from $3.7 million for the year endedDecember 31, 2015, mainly due to reclassification of working capital advances required under certain charter contracts, under the long-term assets.Other long-term assets decreased by $1.0 million to $0.9 million for the year ended December 31, 2016 from $1.9 million for the year endedDecember 31, 2015, due to $1.0 million of working capital reclassified to current assets.Accrued expenses increased by $1.2 million to $11.0 million for the year ended December 31, 2016, from $9.8 million on December 31, 2015. Theincrease was mainly attributable to the increase of accrued voyage and other expenses.Deferred revenue primarily relates to cash received from charterers prior to it being earned and also includes the current portion of deferred gain on saleof the Nave Celeste and the C. Dream to Navios Midstream. Deferred revenue relating to cash received from charterers was recognized as revenue over thevoyage or charter period. Deferred revenue increased by $0.9 million to $8.5 million for the year ended December 31, 2016 from $7.6 million onDecember 31, 2015.Cash provided by/ (used in) investing activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Net cash provided by investing activities increased by $148.0 million to $43.5 million inflow at December 31, 2016 from $104.5 million outflow atDecember 31, 2015.Net cash provided by investing activities for the year ended December 31, 2016, resulted from: (i) $90.0 million net proceeds from sale of vessels; and(ii) $7.2 million from dividends received from affiliates. The increase was mitigated by a: (i) $49.3 million loan granted to Navios Holdings, net of issuancefees and costs; (ii) a $4.3 million loan granted to Navios Europe II (Navios Revolving Loans II); and (iii) a $0.1 million investment in Navios Midstream inorder to maintain the 2% general partner interest.Net cash used in investing activities for the year ended December 31, 2015, resulted from: (i) $71.2 million net proceeds from sale of vessel; and(ii) $2.6 million from dividends received from affiliates. The $73.8 million increase was mitigated by: (a) $163.8 million paid for the acquisition of vessels;(b) $7.2 million paid for investments in affiliates (from which $6.7 million related to the investment in Navios Europe II and approximately $0.6 million waspaid to Navios Midstream to acquire 32,509 general partner units in order for Navios Acquisition to maintain its 2.0% general partnership interest); and (c) a$7.3 million loan granted to Navios Europe II.Cash used in financing activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Net cash used in financing activities increased by $127.1 million to a $142.0 million outflow at December 31, 2016 from a $14.8 million outflow inthe year ended December 31, 2015.Net cash used in financing activities for the year ended December 31, 2016, resulted from: (i) $105.5 million of loan repayments; (ii) $31.7 million ofdividends paid; (iii) a $4.0 million for the redemption of puttable common stock; and (iv) a $0.8 million increase in restricted cash.Net cash used in financing activities for the year ended December 31, 2015, resulted from: (i) $140.9 million of loan repayments; (ii) $40.1 million ofdividends paid; (iii) a $11.3 million payment to a related party with respect to capitalized expenses of certain of the Company’s vessels, while these wereunder construction; (iv) $5.5 million for the redemption of convertible shares; and (v) $9.9 million for the acquisition of treasury stock, which was partiallyoffset by $192.9 million loan proceeds net of deferred finance costs; and a $0.1 million increase in restricted cash. 68Table of ContentsReconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities Year Year Year Ended Ended Ended December 31,2017 December 31,2016 December 31,2015 Expressed in thousands of U.S. dollars Net cash provided by operating activities $45,942 $92,945 $119,636 Net (decrease)/ increase in operating assets (4,093) 20,814 8,313 Net decrease/ (increase) in operating liabilities (13,803) (3,272) 10,610 Net interest cost 66,396 71,220 71,878 Amortization and write-off of deferred finance costs and bond premium (3,784) (3,656) (3,495) Gain on debt repayment — 350 — Equity/ (loss) in net earnings of affiliates (including OTTI loss), net ofdividends received (56,923) 1,438 3,821 Payments for dry dock and special survey costs 14,897 3,828 6,598 Gain on sale of vessels — 11,749 5,771 Stock-based compensation (57) (864) (2,362) EBITDA $48,575 $194,552 $220,770 OTTI loss 59,104 — — Gain on sale of vessels — (11,749) (5,771) Stock-based compensation 57 864 2,362 Gain on debt repayment — (350) — Adjusted EBITDA $107,736 $183,317 $217,361 YearEndedDecember 31,2017 YearEndedDecember 31,2016 YearEndedDecember 31,2015 Net cash provided by operating activities $45,942 $92,945 $119,636 Net cash provided by/ (used) in investing activities $52,378 $43,505 $(104,510) Net cash used in financing activities $(66,461) $(141,963) $(14,814) EBITDA in this document represents net (loss)/income before interest and finance costs, before depreciation and amortization and before income taxes.Adjusted EBITDA in this document represents EBITDA excluding certain items, such as stock-based compensation, gain on sale of vessels, gain/ (loss) ondebt repayment and OTTI loss on equity investment.We use Adjusted EBITDA as liquidity measure and reconcile EBITDA and Adjusted EBITDA to net cash provided by/ (used in) operating activities,the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by/(used in) operating activitiesadding back, when applicable and as the case may be, the effect of: (i) net increase/(decrease) in operating assets; (ii) net (increase)/decrease in operatingliabilities; (iii) net interest cost; (iv) amortization of deferred finance costs and other related expenses; (v) equity in net earnings of affiliated companies, netof dividends received; (vi) payments for dry dock and special survey costs; (vii) impairment charges; (viii) gain/ loss on sale of assets; (ix) gain/ (loss) on debtrepayment; and (x) stock- based compensation. Navios Acquisition believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity canbe assessed and present useful information to investors regarding Navios Acquisition’s ability to service and/or incur indebtedness, pay capital expenditures,meet working capital requirements and pay dividends. Navios Acquisition also believes that EBITDA and Adjusted EBITDA are used: (i) by potential lendersto evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interestedparties in the evaluation of companies in our industry.EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis ofNavios Acquisition’s results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cashrequirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortizedmay have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of theselimitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Acquisition’s performance. Furthermore, ourcalculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.Adjusted EBITDA, affected by the items described in the table above, excludes the $59.1 million other-than-temporary impairment loss, as discussedabove, and $0.1 million non-cash stock-based compensation and decreased by approximately $75.6 million to $107.7 million for the year endedDecember 31, 2017, as compared to $183.3 million for the same period of 2016. The decrease in Adjusted EBITDA was mainly due to a: (a) $63.0 milliondecrease in revenue, as described above; (b) $16.9 million 69Table of Contentsincrease in time charter expenses mainly due to the $16.4 million accrued backstop commitment to Navios Midstream; and (c) $3.1 million decrease inequity/ (loss) in net earnings of affiliated companies, (excluding the $59.1 million of non-cash impairment loss on equity investment in Navios Midstream),partially mitigated by a: (i) $2.3 million decrease in general and administrative expenses (excluding stock-based compensation); (ii) $2.9 million decrease inmanagement fees, mainly due to the sale of one MR2 product tanker in January 2016 and two chemical tankers in the fourth quarter of 2016; (iii)$1.4 million decrease in other expense; (iv) $0.7 million decrease in direct vessel expenses (excluding amortization of dry dock and special survey costs);and (v) $0.1 million increase in other income (excluding the $0.4 million gain on debt repayment incurred in 2016).Adjusted EBITDA for the year ended December 31, 2016 decreased by approximately $34.0 million to $183.3 million from $217.4 million in the sameperiod of 2015. The decrease in Adjusted EBITDA was mainly due to a: (a) $23.2 million decrease in revenue; (b) $2.9 million decrease in equity in netearnings of affiliated companies; (c) $2.5 million increase in management fees mainly due to the increased number of vessels and the increase in themanagement fees with effect as of May 29, 2016; (d) $3.0 million increase in general and administrative expenses (excluding stock based compensation); (e)$1.2 million increase in other expense; (f) $0.7 million increase in direct vessel expenses (excluding amortization of dry dock and special survey costs); and(g) $0.5 million increase in time charter expenses.Long-Term Debt Obligations and Credit ArrangementsShip Mortgage Notes:8 1/8% First Priority Ship Mortgages: On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc.(“Navios Acquisition Finance” and together with the Company, the “2021 Co-Issuers”) issued $610.0 million in first priority ship mortgage notes (the“Existing Notes”) due on November 15, 2021 at a fixed rate of 8.125%.On March 31, 2014, the Company completed a sale of $60.0 million of its first priority ship mortgage notes due in 2021 (the “Additional Notes,” andtogether with the Existing Notes, the “2021 Notes”). The terms of the Additional Notes are identical to the Existing Notes and were issued at 103.25% plusaccrued interest from November 13, 2013. The net cash received amounted to $59.6 million.The 2021 Co-Issuers currently have the option to redeem the 2021 Notes in whole or in part, at a fixed price of 106.094% of the principal amount,which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.In addition, upon the occurrence of certain change of control events, the holders of the 2021 Notes will have the right to require the 2021 Co-Issuers torepurchase some or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2021 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2021 Co-Issuers were in compliance with the covenants as of December 31, 2017.The Existing Notes and the Additional Notes are treated as a single class for all purposes under the indenture including, without limitation, waivers,amendments, redemptions and other offers to purchase and the Additional Notes rank evenly with the Existing Notes. The Additional Notes and the ExistingNotes have the same CUSIP number.GuaranteesThe Company’s 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’s subsidiaries with theexception of Navios Acquisition Finance (a co-issuer of the 2021 notes). The Company’s 2021 Notes are unregistered. The guarantees of our subsidiaries thatown mortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecuredguarantees. All subsidiaries, including Navios Acquisition Finance, are 100% owned. Navios Acquisition does not have any independent assets oroperations. Navios Acquisition does not have any subsidiaries that are not guarantors of the 2021 Notes.Credit FacilitiesCommerzbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: Navios Acquisition assumed a loan agreement dated April 7,2010, with Commerzbank AG, Alpha Bank A.E. and Credit Agricole Corporate and Investment Bank of up to $150.0 million (divided in six equal tranches of$25.0 million each) to partially finance the construction of two chemical tankers 70Table of Contentsand four product tankers. Each tranche of the facility is repayable in 12 equal semi-annual installments of $0.75 million each with a final balloon payment of$16.0 million to be repaid on the last repayment date. The repayment of each tranche started six months after the delivery date of the respective vessel whichthat tranche financed. It bears interest at a rate of LIBOR plus 250 bps. The loan also requires compliance with certain financial covenants. On October 27,2016, Navios Acquisition reduced the facility by $16.0 million through payment of $15.7 million in cash being the balloon instalment for one of the sixtranches, achieving a nominal benefit amount of $0.4 million. On January 27, 2017, Navios Acquisition repaid $16.0 million being the balloon instalmentfor another of the remaining five tranches. As of December 31, 2017, an amount of $71.5 million was outstanding.BNP Paribas S.A. Bank and DVB Bank S.E.: Navios Acquisition assumed a loan agreement dated April 8, 2010, of up to $75.0 million (divided in threeequal tranches of $25.0 million each) to partially finance the purchase price of three product tankers. Each of the tranches is repayable in 12 equal semi-annual installments of $0.75 million each with a final balloon payment of $16.0 million to be repaid on the last repayment date. The repayment date of eachtranche started six months after the delivery date of the respective vessel which that tranche finances. It bears interest at a rate of LIBOR plus 250 bps. Theloan also requires compliance with certain financial covenants. As of December 31, 2017, an amount of $56.3 million was outstanding.Eurobank Ergasias S.A.: On October 26, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52.2 million,of which $51.6 million has been drawn (divided into two tranches of $26.1 million and $25.5 million, respectively) to partially finance the acquisition costsof two LR1 product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $0.35 million and $0.34 million, respectively, witha final balloon payment of $15.1 million and $14.7 million, respectively, to be repaid on the last repayment date. The repayment of each tranche started threemonths after the delivery date of the respective vessel. The loan bears interest at a rate of LIBOR plus (i) 250 bps for the period prior to the delivery date inrespect of the vessel being financed, and (ii) thereafter 275 bps. The loan also requires compliance with certain financial covenants. The amount of$35.6 million was outstanding as of December 31, 2017, under this facility.Eurobank Ergasias S.A.: On December 6, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52.0 millionout of which $46.2 million has been drawn (divided into two tranches of $23.1 million each) to partially finance the acquisition costs of two LR1 producttanker vessels. Each tranche of the facility is repayable in 32 equal quarterly installments of $0.31 million each with a final balloon payment of$13.3 million, to be repaid on the last repayment date. The repayment of each tranche started three months after the delivery date of the respective vessel. Itbears interest at a rate of LIBOR plus 300 bps. The loan also requires compliance with certain financial covenants. The amount of $33.7 million wasoutstanding as of December 31, 2017, under this facility.Norddeutsche Landesbank Girozentrale: On December 29, 2011, Navios Acquisition entered into a loan agreement with Norddeutsche LandesbankGirozentrale of up to $28.1 million to partially finance the purchase price of one MR2 product tanker vessel. The facility is repayable in 32 quarterlyinstallments of $0.39 million each with a final balloon payment of $15.6 million to be repaid on the last repayment date. The repayment started three monthsafter the delivery of the vessel and bears interest at a rate of LIBOR plus: (a) up to but not including the drawdown date of, 175 bps per annum; (b) thereafteruntil, but not including, the tenth repayment date, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certainfinancial covenants. During the first quarter of 2015, the facility was fully drawn and as of December 31, 2017, an amount of $23.8 million was outstandingunder this loan agreement.DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: On December 29, 2011, Navios Acquisition entered into a loan agreement withDVB Bank SE and Investment Bank of up to $56.3 million (divided into two tranches of $28.1 million each) to partially finance the purchase price of twoMR2 product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $0.39 million each with a final balloon payment of$15.6 million to be repaid on the last repayment date. The repayment started three months after the delivery of the respective vessel and bears interest at a rateof LIBOR plus: (a) up to but not including the drawdown date of, 175 bps per annum; (b) thereafter until, but not including, the tenth repayment date, 250bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2017, anamount of $45.7 million was outstanding.ABN AMRO Bank N.V.: In February 2017, the Company drew $26.7 million under this credit facility with ABN AMRO Bank N.V., which was securedwith its two chemical tankers, following the full repayment of the previous financing arrangements. The facility was repayable in four equal consecutivequarterly installments of $0.7 million each, with a final balloon payment of the balance to be repaid on the last repayment date. The loan bore interest atLIBOR plus 400 bps per annum. In June, 2017, the Company prepaid the outstanding balance of $26.0 and an amount of $0.7million was written-off from the deferred finance costs. As of December 31, 2017, there was no outstanding amount under this facility and the loan matured inFebruary 2018.Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB: In November 2015, Navios Acquisition, entered into a termloan facility of up to $125.0 million (divided into five tranches) with Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda BankenAB for the: (i) financing of the purchase price of the Nave Spherical; and (ii) the refinancing of the existing facility with Deutsche Bank AG FilialeDeutschlandgescäft and Skandinaviska Enskilda Banken 71Table of ContentsAB, dated July 18, 2014. Four of the five tranches of the facility are repayable in 20 quarterly installments of between approximately $0.44 million and$1.9 million, each with a final balloon repayment to be made on the last repayment date. The fifth tranche is repayable in 16 quarterly installments ofbetween approximately $0.7 million and $0.8 million, each. The maturity date of the loan is in the fourth quarter of 2020. The credit facility bears interest atLIBOR plus 295 bps per annum.On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18.4 million. Navios Acquisitionprepaid $12.1 million being the respective tranche of the Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB facilitythat was drawn to finance the Nave Lucida. Following the prepayment in January 2016, an amount of $0.2 million was written-off from the deferred financingcost. As of December 31, 2017, an amount of $82.3 million was outstanding under this facility.On March 23, 2018, Navios Acquisition prepaid $26.8 million, being the respective tranche of the facility that was drawn to finance the Nave Equinoxand the Nave Pyxis.HSH Nordbank: In June 2017, Navios Acquisition entered into a loan facility for an amount of $24.0 million to refinance the credit facility with ABNAMRO Bank N.V. of its two chemical tankers. The facility is repayable in 17 equal consecutive quarterly installments of $0.6 million each, with a finalballoon payment of the balance to be repaid on the last repayment date. The facility matures in September 2021 and bears interest at LIBOR plus 300 bps perannum. As of December 31, 2017, the outstanding balance was $22.9 million.BNP Paribas S.A. Bank: On December 18, 2015, Navios Acquisition, through certain of its wholly owned subsidiaries, entered into a term loan facilityagreement of up to $44.0 million with BNP Paribas, as agent and the lenders named therein, for the partial post-delivery financing of a LR1 product tankerand a MR2 product tanker. The facility is repayable in 12 equal consecutive semi-annual installments in the amount of $2.0 million in aggregate, with a finalballoon payment of $20.0 million to be repaid on the last repayment date. The maturity date of the loan is in December 2021. The loan bears interest atLIBOR plus 230 bps per annum. As of December 31, 2017, an amount of $36.0 million was outstanding under this facility.HSH Nordbank AG: On August 20, 2013, Navios Acquisition entered into a loan agreement with HSH Nordbank AG of up to $40.3 million (divided intwo tranches of $20.2 million each), to partially finance the acquisition of two chemical tanker vessels. Each tranche of the facility was repayable in 28quarterly installments of $0.3 million with a final balloon payment of $11.3 million to be paid on the last repayment date. The facility bore interest at a rateof LIBOR plus 320 bps. The loan also required compliance with certain financial covenants. On October 4, 2016, Navios Acquisition sold the Nave Universeto an unaffiliated third party for net cash proceeds of $35.8 million. Navios Acquisition prepaid $16.4 million being the respective tranche of the HSHNordbank AG facility that was drawn to finance the acquisition of the Nave Universe. On November 15, 2016, Navios Acquisition sold the NaveConstellation to an unaffiliated third party for net cash proceeds of $35.8 million. Navios Acquisition prepaid $16.4 million being the respective tranche ofthe HSH Nordbank AG facility that was drawn to finance the acquisition of the Nave Constellation. Following these prepayments in 2016, an amount of$0.2 million was written-off from the deferred financing cost. As of each of December 31, 2017 and 2016, no amount was outstanding.The loan facilities include, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$40.0 million or $1.0 million per vessel; (ii) net worth ranging from $50.0 million to $135.0 million; and (iii) total liabilities divided by total assets, adjustedfor market values to be lower than 75%. It is an event of default under the credit facilities if such covenants are not complied with, including the loan to valueratios for which the Company may provide sufficient additional security to prevent such an event.As of December 31, 2017, the Company was in compliance with its covenants.Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed byeach vessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among otherthings: incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of NaviosAcquisition’s vessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; andsubordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payableunder the management agreement. The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintain validsafety management certificates and documents of compliance at all times. 72Table of ContentsSale and Leaseback AgreementOn March 31, 2018, Navios Acquisition entered into a sale and leaseback agreement in order to refinance $71.5 million outstanding on the existingfacility on four product tankers. Navios Acquisition has a purchase obligation at the end of the lease term and under ASC 842-40, the transaction is expectedto be accounted for as a failed sale and leaseback transaction and result in a finance lease. As a result of the refinancing, as of December 31, 2017, an amountof $32.8 million was reclassified from “Current portion of long-term debt, net of deferred finance cost” to “Long term debt, net of current portion, premiumand net of deferred finance cost”. The facility will be repayable in 24 equal consecutive quarterly installments of $1.5 million each, with a final balloonpayment of $35.8 million to be repaid on the last repayment date. The facility matures in March 2024 and bears interest at LIBOR plus 305 bps per annum.The agreement includes, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$1.0 million per vessel; (ii) net worth higher from $125.0 million; and (iii) total liabilities divided by total assets, adjusted for market values to be lower than80%. It is an event of default under the credit facilities if such covenants are not complied with, including the loan to value ratios for which the Companymay provide sufficient additional security to prevent such an event. C.Research and development, patents and licenses, etc.Not applicable. D.Trend informationOur results of operations depend primarily on the charter hire rates that we are able to realize for our vessels, which depend on the demand and supplydynamics characterizing the tanker market at any given time. For other trends affecting our business, please see other discussions in “Item 5. Operating andFinancial Review and Prospects”. E.Off-Balance Sheet ArrangementsCharter hire payments to third parties for chartered-in vessels are treated as operating leases for accounting purposes. As of December 31, 2017, NaviosAcquisition was contingently liable to charter-in certain vessels from Navios Midstream. Please see discussion in “Item 5F. Contractual Obligations andContingencies”. F.Contractual Obligations and ContingenciesThe following table summarizes our long-term contractual obligations as of December 31, 2017: Payments due by period (Unaudited)(1) (In thousands of U.S. dollars) Less than1 year 1-3 years 3-5 years More than5 years Total Long-term debt obligations(1) $37,712 $220,161 $777,377 $42,437 $1,077,687 Total contractual obligations $37,712 $220,161 $777,377 $42,437 $1,077,687 (1)The amount identified does not include interest costs associated with the outstanding credit facilities, which are based on LIBOR, plus the costs ofcomplying with any applicable regulatory requirements and a margin ranging from 250 bps to 325 bps per annum or the $670.0 million 2021 Noteswhich have a fixed rate of 8.125%.Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe I revolving loans up to $24.1 million to fund workingcapital requirements (collectively, the “Navios Revolving Loans I”). As of December 31, 2017, there was no amount undrawn under the Navios RevolvingLoans I. See Note 15 for the investment in Navios Europe I.Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolving loans up to $57.5 million to fundworking capital requirements (collectively, the “Navios Revolving Loans II”). As of December 31, 2017, the amount undrawn under the Navios RevolvingLoans II was $15.0 million, of which Navios Acquisition may be required to fund an amount ranging from $0 to $15.0 million. See Note 15 for the investmentin Navios Europe II.On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstopagreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the Nave Celeste, the Shinyo Oceanand the Shinyo Kannika from their original charters, at a net rate of $35,000, $38,400 and $38,025, respectively. Navios Midstream has currently entered intonew charter contracts for the above vessels with third parties upon their redelivery in first quarter of 2017. Those contracts provide for index linked charterrates or pool earnings as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstop rates. Please refer to“Related Party Transactions”. 73Table of ContentsThe backstop commitment for Shinyo Kannika terminated following the sale of this vessel in March 2018. Navios Acquisition agreed to extend thebackstop commitment of the Shinyo Kannika to the Nave Galactic, following the sale of the latter to Navios Midstream in March 2018.On September 19, 2016, Navios Acquisition entered into a $70.0 million secured loan facility with Navios Holdings. Please refer to the relevantdiscussion below, under “Related Party Transactions”.Critical Accounting PoliciesOur consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us tomake estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is adiscussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reported amount of assetsand liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results maydiffer from these estimates under different assumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results underdifferent assumptions and conditions. For a description of all of our significant accounting policies, see Note 2 to the Consolidated Financial Statements,included herein.Fair Value of Vessels: As of December 31, 2017, Navios Acquisition owned and operated a fleet of 36 vessels, with an aggregate carrying value of$1,271.0 million, including the unamortized portion of deferred drydock and special survey costs related to the vessel. On a vessel-by-vessel basis, as ofDecember 31, 2017, the carrying value of 30 of Navios Acquisition’s vessels (including the unamortized portion of deferred drydock and special survey costsrelated to the vessel) exceeds the estimated fair value of those same vessels by approximately $154.3 million in the aggregate (the unrealized loss).As of December 31, 2016, Navios Acquisition owned and operated a fleet of 36 vessels, with an aggregate carrying value of $1,317.1 million,including the unamortized portion of deferred drydock and special survey costs related to the vessel. On a vessel-by-vessel basis, as of December 31, 2016,the carrying value of 32 of Navios Acquisition’s vessels (including the unamortized portion of deferred drydock and special survey costs related to thevessel) exceeds the estimated fair value of those same vessels by approximately $211.9 million in the aggregate (the unrealized loss).A vessel-by-vessel summary as of December 31, 2017 follows (with an * indicating those individual vessels whose carrying value exceeds its estimatedfair value, including the related time charter, if any): Vessel name Date ofAcquisition PurchasePrice CarryingValue as ofDecember 31,2017 (In millions of U.S. dollars) Nave Cielo 6/29/2010 $44.2 $33.5*Nave Ariadne 7/2/2010 $44.1 $31.6*Nave Cosmos 10/27/2010 $31.8 $24.1*Nave Polaris 1/27/2011 $31.8 $24.4*Nave Orbit 7/12/2011 $37.3 $28.2*Nave Equator 7/18/2011 $37.3 $28.3*Nave Andromeda 11/14/2011 $44.3 $35.6*Nave Estella 1/20/2012 $44.6 $35.2*Nave Atria 7/31/2012 $37.6 $31.8*Nave Cassiopeia 8/31/2012 $43.8 $36.8*Nave Cetus 10/31/2012 $44.0 $37.4*Nave Aquila 11/9/2012 $37.8 $30.9*Nave Bellatrix 1/24/2013 $38.0 $32.6*Nave Orion 3/22/2013 $38.1 $31.6*Nave Rigel 2/13/2013 $47.9 $39.5* 74Table of ContentsNave Atropos 4/24/2013 $48.2 $40.1*Nave Titan 6/10/2013 $37.1 $31.1*Nave Capella 7/9/2013 $37.2 $31.2*Nave Alderamin 9/3/2013 $37.3 $31.6*Nave Equinox 6/26/2013 $23.5 $19.2*Nave Pulsar 7/9/2013 $23.6 $20.4 Bougainville 9/30/2013 $35.6 $30.2 Nave Dorado 9/24/2013 $16.8 $14.0*Nave Jupiter 5/7/2014 $39.6 $34.4*Nave Luminosity 9/19/2014 $39.6 $34.9*Nave Pyxis 11/20/2014 $33.4 $29.8*Nave Galactic 2/4/2014 $53.5 $45.4 Nave Quasar 2/12/2014 $54.7 $48.4 Nave Buena Suerte 3/10/2014 $57.2 $51.4 Nave Neutrino 6/16/2014 $43.7 $36.3*Nave Synergy 12/09/2014 $76.9 $67.0*Nave Electron 7/21/2014 $41.2 $36.7*Nave Sextans 1/8/2015 $33.4 $29.9 Nave Velocity 2/11/2015 $39.2 $35.2* Nave Spherical 11/6/2015 $69.2 $62.9*Nave Photon 12/2/2015 $65.2 $59.4* $1,508.7 $1,271.0 Although the aforementioned excess of carrying value over fair value represents an estimate of the loss that Navios Acquisition would sustain on ahypothetical disposition of those vessels as of December 31, 2017, the recognition of the unrealized loss absent a disposition (i.e., as an impairment) wouldrequire, among other things, that a triggering event had occurred and that the undiscounted cash flows attributable to the vessel are also less than the carryingvalue of the vessel (including the unamortized portion of deferred drydock and special survey costs related to the vessel).Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates andjudgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets and scrap value expectedfuture cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivable, provisions for legal disputes, andcontingencies and the valuation estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience andon various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under differentassumptions and/or conditions.Vessels, Net: Vessels are stated at historical cost, which consists of the contract price, delivery and acquisition expenses and capitalized interest costswhile under construction. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. Subsequent expenditures for majorimprovements and upgrading are capitalized, provided they appreciably extend the life, increase the earning capacity or improve the efficiency or safety ofthe vessels. Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value. Managementestimates the residual values of our tanker vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (LWT). Residualvalues are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect thedepreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. The management after considering currentmarket trends for scrap rates and 10-year average historical scrap rates of the residual values of the Company’s vessels, estimates scrap value at a rate of $360per LWT. Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulations placelimitations over the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective. 75Table of ContentsImpairment of long-lived Asset Group: Vessels, other fixed assets and other long-lived assets held and used by Navios Acquisition are reviewedperiodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fullyrecoverable. Navios Acquisition’s management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine ifevents or changes in circumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives andcarrying values of long-lived assets, certain indicators of potential impairment are reviewed such as, undiscounted projected operating cash flows, vesselsales and purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group (consisting of the individual vessel and the intangible, if any,with respect to the time charter agreement attached to that vessel) and compared to the vessel carrying value and related carrying value of the intangible withrespect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings; if any. Within the shipping industry, vesselsare often bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then currentmarket rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vesselindividual asset group.During the fourth quarter of fiscal 2017, management concluded that, market rates decreased during the year and events occurred and circumstanceshad changed, over previous years, which indicated the potential impairment of Navios Acquisition’s long-lived assets may exist. These indicators includedcontinued volatility in the charter market and the related impact of the tanker sector has on management’s expectation for future revenues. As a result, animpairment assessment of long-lived assets or identified asset groups was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of the related intangible. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysisincluded: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days(Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on the 10- year average historicalone year time charter rates) over the remaining economic life of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires,management fees fixed until May 2018 and thereafter assuming an annual increase of 3.0% and utilization rate of 99.6% based on the fleets historicalperformance.We determine projected cash flows for unfixed days using an estimated daily time charter rate based on the 10-year historical average (of the one-yearcharter rate for similar vessels or the 10-year average spot rate for chemical tankers since the 10-year average rates of a one-year time charter are not availablefor chemical tankers). We consider this approach to be reasonable and appropriate. However, for the purposes of presenting our investors with additionalinformation to determine how the Company’s future results of operations may be impacted, we set forth below an analysis that shows the five-year, three-yearand one-year historical averages (of the one-year charter rate for similar vessels or the average spot rate for chemical tankers) in lieu of the 10-year historicalaverage (of the one-year charter rate for similar vessels or the average spot rate for chemical tankers) and the effect the use of each of these rates would haveon the Company’s impairment analysis. December 31, 2017 December 31, 2016 Number ofvessels (*) Amount (U.S.millions) (**) Number ofvessels (*) Amount (U.S.millions) (**) 5-year historical average rate — — — — 3-year historical average rate — — — — 1-year historical average rate 21 146.0 — — (*)Number of vessels the carrying value of which would not have been recovered.(**)Aggregate carrying value that exceeds the estimated fair value (the unrealized loss).In connection with its impairment testing on its vessels as of December 31, 2017, the Company performed sensitivity analysis on the most sensitiveand/or subjective assumptions that have the potential to affect the outcome of the test, principally the projected charter rate used to forecast future cash flowfor unfixed days. In that regard, there would continue to be no impairment required to be recognized on any of the Company’s vessels when assuming adecline in the 10-year average (of the one-year charter rate for similar vessels), which is the rate that the Group uses to forecast future cash flows for unfixeddays, ranging from 9.0% to 46.0% (depending on the vessel).In addition, the Company compared the 10-year historical average (of the one-year charter rate for similar vessels) with the five-year historical average(of the one-year charter rate for similar vessels), three-year historical average (of the one-year charter rate for similar vessels), and one-year average (for similarvessels). The table below compares the 10-year historical average and the rates for five-year, three-year and one-year historical average, each as ofDecember 31, 2017: 76Table of Contents Historical Average of One-year CharterRates(over Various Periods) vs. the 10-year Historical Average (of the One-Year Charter Rate) 5-YearAverage 3-YearAverage 1-YearAverage (% above/ (below/ or above) the 10-yearaverage) Chemicals 3.0% 4.9% (19.6%) MR2s (2.6%) (0.3%) (14.2%) LR1s (4.1%) 2.2% (26.8%) VLCCs (10.6%) 4.3% (24.4%) As disclosed elsewhere, the fleet includes 30 vessels for which the carrying value exceeds the estimated fair value of those same vessels byapproximately $154.3 million in the aggregate (the unrealized loss). If testing for impairment using historical rates for five-year and three-year historicalaverage of the one-year charter rate (for similar vessels), in lieu of the 10-year historical average (of the one-year charter rate for similar vessels), the Companyestimates that none of its vessels, respectively, would have carrying values in excess of their projected undiscounted future cash flows. If testing forimpairment using historical rates for one-year charters historical average (of the one-year charter rate for similar vessels) in lieu of the 10-year historicalaverage (of the one-year charter rate for similar vessels), the Company estimates that 21 of its vessels, would have carrying values in excess of their projectedundiscounted future cash flows.The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, existed as of December 31, 2017, asthe undiscounted projected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and a charge would be recognized in the statements ofoperations calculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuationsperformed on an individual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of thecurrent market downturn vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future thatcould expose Navios Acquisition to material impairment charges in the future.There was no impairment loss recognized for the years ended December 31, 2017, 2016 and 2015.Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the priceis fixed or determinable, and collection is reasonably assured. Revenue is generated from the voyage charter and the time charter of vessels.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. Voyage expenses arerecognized as incurred. A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the dischargeof the current cargo. Estimated losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, a vessel is providedfor the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight-line basis as the average revenueover the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period oftime during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs such as for crews,maintenance and insurance are typically paid by the owner of the vessel.Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly or half-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accrualscannot be made due to the nature of the profit share elements, these are accounted for on the actual cash settlement. Profit sharing for the years endedDecember 31, 2017, December 31, 2016 and December 31, 2015 amounted to $0.9 million, $7.6 million and $32.1 million, respectively.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixedpercentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Companyand no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue. 77Table of ContentsPooling arrangements: For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net ofexpenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with anagreed-upon formula, which is determined by the margins awarded to each vessel in the pool based on the vessel’s age, design and other performancecharacteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price isfixed, service is provided and the collectability is reasonably assured. Revenue for vessels operating in pooling arrangements amounted to $46.6 million,$50.8 million and $43.4 million, for the years ended December 31, 2017, 2016 and 2015, respectively.The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material.Investments in Equity Securities: Navios Acquisition evaluates its investment in Navios Midstream, Navios Europe I and Navios Europe II for OTTI ona quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than the carrying value, (ii) the financialcondition and near-term prospects of Navios Midstream, Navios Europe I and Navios Europe II, and (iii) the intent and ability of the Company to retain itsinvestment in Navios Midstream, Navios Europe I and Navios Europe II for a period of time sufficient to allow for any anticipated recovery in fair value.Navios Acquisition considers whether the fair values of its equity method investments have declined below their carrying values whenever adverseevents or changes in circumstances indicate that the carrying value may not be recoverable. If we consider any such decline to be other-than-temporary(based on various factors, including historical financial results, economic and industry events resulting in changes in the affiliate’s trading performance andthe overall health of the affiliate’s industry), then we would write down the carrying amount of the investment to its estimated fair value.As of December 31, 2017 the carrying amount of the investment in Navios Midstream was $113.7 million or $9.02 per unit, which represented our totalownership interest in the Partnership of 59.0%. The estimated market value of this investment was determined with reference to the quoted price of thecommon units. As of June 30, 2017, the fair value of our investment in Navios Midstream had been below its carrying value for a period over twelve months,due to the decline in the quoted price of the common units of Navios Midstream and was considered as OTTI. During the year ended December 31, 2017, theCompany recognized a non-cash OTTI loss of $59.1 million relating to its investment in Navios Midstream and the amount was included in “Equity/ (loss) innet earnings of affiliated companies” in the accompanying consolidated statements of operations.Recent Accounting PronouncementsIn May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-09, “Compensation — StockCompensation (Topic 718)”. This update provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance inTopic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this update affect any entity that changes the terms orconditions of a share-based payment award and are effective for all entities for annual periods, and interim periods within those annual periods, beginningafter December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for whichfinancial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been made available forissuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this newaccounting standard is not expected to have material impact on the Company’s results of operations, financial position or cash flows.In February 2017, FASB issued ASU 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)”.This update clarifies the scope of Subtopic 610-20 “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets” and provides guidancefor partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, “Revenue from Contracts with Customers(Topic 606)”, provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments inASU 2017-05 are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, the amendments are effective for annualreporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The adoption of this new standard isnot expected to have material impact on the Company’s results of operations, financial position or cash flows.In January 2017, the FASB issued ASU 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and JointVentures (Topic 323)”. The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SECguidance that specifically relates to our consolidated financial statement was from the September 2016 meeting, where the SEC staff expressed theirexpectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior toadoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M.Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a 78Table of Contentsfuture period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered.The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three newstandards. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements.In December 2016, FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. Theamendments in this ASU affect narrow aspects of the guidance issued in ASU 2014-09, which is not yet effective, and are of a similar nature to the itemstypically addressed in the Technical Corrections and Improvements project. The effective date and transition requirements for the amendments are the sameas the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, “Revenue from Contractswith Customers (Topic 606): Deferral of the Effective Date”, defers the effective date of Update 2014-09 by one year, as noted below.In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This update addresses the classification andpresentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective for publicbusiness entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Retrospective transition method isrequired. Early adoption is permitted for all entities. The Company currently presents changes in restricted cash and cash equivalents depending on thenature of the cash flow within the consolidated statement of cash flows. The new guidance will not impact financial results, but will result in a change in thepresentation of restricted cash and cash equivalents within the statement of cash flows. The Company currently plans to adopt this guidance from January 1,2018.In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This updateaddresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for public businessentities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. Thisupdate was adopted as from January 1, 2018 and applied on a retrospective basis. The Company has assessed each of the eight specific presentation issuesand the adoption of this ASU does not have a material impact on the Company’s consolidated financial statements.In June 2016, FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience, currentconditions, and reasonable and supportable forecasts in order to record credit losses in a more timely matter. ASU 2016-13 also amends the accounting forcredit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard is effective for interim and annualreporting periods beginning after December 15, 2019, although early adoption is permitted for interim and annual periods beginning after December 15,2018. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 will apply to both capital (or finance) leases and operating leases.According to ASU 2016-02, lessees will be required to recognize assets (right of use) and liabilities (lease liabilities) on the balance sheet for both types ofleases, capital (or finance) leases and operating leases, with terms greater than 12 months. ASU 2016 – 02 is effective for fiscal years beginning afterDecember 15, 2018, including interim periods within those fiscal years. Early application is permitted. This guidance requires companies to identify leaseand non-lease components of a lease agreement. Lease components relate to the right to use the leased asset and non-lease components relate to payments forgoods or services that are transferred separately from the right to use the underlying asset. Total lease consideration is allocated to lease and non-leasecomponents on a relative standalone basis. The recognition of revenues related to lease components will be governed by ASC 842 while revenue related tonon-lease components will be subject to ASC 606.In January 2018, the FASB issued a proposed amendment to ASU 842, Leases, that would provide an entity the optional transition method to initiallyaccount for the impact of the adoption with a cumulative adjustment to accumulated deficit on the effective date of the ASU, January 1, 2019 rather thanJanuary 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. In addition, this proposed amendment, lessors canelect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. Ifadopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenuerecognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would beclassified as an operating lease. ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts areconsidered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases.On March 28, the FASB tentatively approved the new practical expedient for lessors adopting the new leases standard.The Company plans to early adopt the requirements of ASU 842, Leases, effective from January 1, 2018 and will elect the use of the practicalexpedients. Also, the Company plans to elect the transition method for adoption as described above.The Company is continuing its assessment of this ASU. Based on a preliminary assessment, the Company is expecting that the adoption will not have amaterial effect on its financial statements since the Company is primarily a lessor and the changes are fairly minor. If the proposed practical expedientmentioned above will be adopted and elected, and therefore good and services embedded in 79Table of Contentsthe charter contract that qualify as non-lease components will be combined under a single lease component presentation. However, without the proposedpractical expedient, the Company expects that it will continue to recognize the lease revenue component using an approach that is substantially equivalentto existing guidance. The components of the charter hire that are categorized as lease components will generally be a fixed rate per day with revenuerecognized straight line over the lease contract. Other goods and services that are categorized as non-lease components will be recognized at either a point intime or over time based on the pattern of transfer of the underlying goods or services to our charterers.The Company is continuing its assessment of other miscellaneous leases and may identify additional impacts this guidance will have on itsconsolidated financial statements and disclosures. The Company currently does not have any other miscellaneous leases that are greater than 12 months andthe Company is the lessee that would be impacted by the adoption of this standard.In January 2016, FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assetsand Financial Liabilities”. The amendments in this ASU require an entity (i) to measure equity investments (except those accounted for under the equitymethod of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (ii) to perform aqualitative assessment to identify impairment in equity investments without readily determinable fair values; (iii) to present separately in othercomprehensive income the fair value of a liability resulting from a change in the instrument-specific credit risk; and (iv) to present separately financial assetsand financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet. Theamendments also eliminate the requirement, for public business entities, to disclose the methods and significant assumptions used to estimate the fair valueof financial instruments measured at amortized cost on the balance sheet and clarify that an entity should evaluate the need for a valuation allowance on adeferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, ASU 2016-01is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new standard is notexpected to have a material impact on the Company’s results of operations, financial position or cash flows.In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, clarifying the method used to determine the timing andrequirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract,the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendmentsin this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cashflow arising from contracts. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 for all entities by one year. Thestandard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The Company willadopt the standard as of January 1, 2018 utilizing the modified retrospective approach and is expecting that the adoption will not have an effect on itsfinancial statements since the Company has chartered its vessels since inception in time charter agreements and in this respect revenue is accounted underASC 840 Leases. The Company also operates certain of its vessels under voyage contracts, contracts for which currently revenue is recognized ratably fromwhen a vessel becomes available for loading to the completion of the discharge of the current cargo, provided an agreed non-cancelable charter between theCompany and the charterer is in existence. Upon adoption, the Company will recognize revenue ratably from the vessel’s arrival at the loading port, asapplicable under the contract, to when the charterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” andrelate directly to the contract. The estimated impact of the adoption of this standard is expected to be a minimal change in operating revenues and expensesand net income/ (loss).Item 6. Directors, Senior Management and Employees A.Directors and Senior ManagementSet forth below are the names, ages and positions of Navios Acquisition’s directors, executive officers and key employees. Name Age PositionAngeliki Frangou 52 Chairman, Chief Executive Officer and DirectorLeonidas Korres 42 Chief Financial OfficerVasiliki Papaefthymiou 49 SecretaryAnna Kalathakis 47 Director, Senior Vice President — Legal Risk ManagementGeorge Galatis 54 DirectorBrigitte Noury 71 DirectorTed C. Petrone 62 DirectorNikolaos Veraros, CFA 47 DirectorEleni Warren 68 Director 80Table of ContentsAngeliki Frangou has been our Chairman and Chief Executive Officer since our inception. Ms. Frangou has also been Chairman and CEO of NaviosMaritime Holdings Inc. (NYSE: NM) — our sponsor — since August 2005. In addition, Ms. Frangou has been the Chairman and Chief Executive Officer ofNavios Maritime Partners L.P. (NYSE: NMM), an affiliated limited partnership, since August 2007, the Chairman and Chief Executive Officer of NaviosMaritime Midstream Partners L.P. (NYSE: NAP), an affiliated limited partnership, since October 2014 and the Chairman and Chief Executive Officer ofNavios Maritime Containers Inc (N-OTC: NMCI), an affiliated corporation since April, 2017. Ms. Frangou has been the Chairman of the Board of Directors ofNavios South American Logistics Inc. since its inception in December 2007. Previously, Ms. Frangou served as Chairman, Chief Executive Officer andPresident of International Shipping Enterprises Inc., which acquired Navios Holdings. From 1990 until August 2005, Ms. Frangou was the Chief ExecutiveOfficer of Maritime Enterprises Management S.A. and its predecessor company, which specialized in the management of dry cargo vessels. Ms. Frangou is thenon-executive Chairman of IRF European Finance Investments Ltd., listed on the SFM of the London Stock Exchange. Ms. Frangou is Member of the Boardof the United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited, Vice Chairman of China Classification Society MediterraneanCommittee, a member of the International General Committee and of the Hellenic and Black Sea Committee of Bureau Veritas, as well as a member of GreekCommittee of Nippon Kaiji Kyokai. Since March 2016, Ms. Frangou is a Member of the DNV GL Greek National Committee. Since May 2014, Ms. Frangouhas been a Member of the Board of The Hellenic Mutual War Risks Association (Bermuda) Limited. Since February 2015, Ms. Frangou has been a Member ofthe Board of the Union of Greek Shipowners. Since October 2015, Ms. Frangou has been a Member of the Board of Trustees of Fairleigh DickinsonUniversity. Since July 2013, Ms. Frangou has been a Member of the Board of Visitors of the Columbia University School of Engineering and AppliedScience. Ms. Frangou received a bachelor’s degree in Mechanical Engineering, summa cum laude, from Fairleigh Dickinson University and a master’s degreein Mechanical Engineering from Columbia University.Leonidas Korres has been our Chief Financial Officer since April 2010, and previously our Senior Vice President for Business Development fromJanuary 2010. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry of Economy and Finance of the Hellenic Republicfrom October 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served as Special Financial Advisor to the Minister ofEconomy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for the Olympic Games Athens 2004 S.A. From 2001 to2004, Mr. Korres worked as a senior financial advisor for KPMG Corporate Finance. From October 2007 until January 2010, Mr. Korres was a member of theboard of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of the Center for Employment and Entrepreneurship, anon-profit company. From June 2008 until February 2009, Mr. Korres served as a board member and audit committee member of HellenicTelecommunications Organization S.A. (trading on the Athens and New York Stock Exchanges). From June 2004 until November 2009, Mr. Korres served onthe board of Hellenic Olympic Properties S.A., which was responsible for operating the Olympic venues. Mr. Korres earned his bachelor’s degree inEconomics from the Athens University of Economics and Business and his master’s degree in Finance from the University of London.Vasiliki Papaefthymiou has been our Secretary since our inception. Ms. Papaefthymiou has also served as Navios Holdings’ Executive Vice President— Legal and a member of its Board of Directors since August 25, 2005, and prior to that was a member of the Board of Directors of ISE. Ms. Papaefthymiouhas also served as General Counsel for Maritime Enterprises Management S.A. since October 2001, where she has advised the company on shipping,corporate and finance legal matters. Ms. Papaefthymiou provided similar services as General Counsel to Franser Shipping from October 1991 to September2001. Ms. Papaefthymiou received her undergraduate degree from the Law School of the University of Athens and a master’s degree in maritime law fromSouthampton University in the United Kingdom. Ms. Papaefthymiou is admitted to practice law before the Bar in Piraeus, Greece.Anna Kalathakis has been a member of our Board of Directors and Senior Vice President — Legal Risk Management since May 2010. Ms. Kalathakishas been Chief Legal Risk Officer since November 2012 and Senior Vice President — Legal Risk Management of Navios Holdings from December 2005 untilOctober 2012. Before joining Navios Holdings, Ms. Kalathakis was the General Manager of the Greek office of A Bilbrough & Co. Ltd. (Managers of theLondon Steam-Ship Owners’ Mutual Insurance Association Limited, the “London P&I Club”) and an Associate Director of the London P&I Club where shegained experience in the handling of liability and contractual disputes in both the dry and tanker shipping sectors (including collisions, oil pollutionincidents, groundings, etc.). She previously worked for a U.S. maritime law firm in New Orleans, having qualified as a lawyer in Louisiana in 1995, and alsoserved in a similar capacity for a London maritime law firm. She qualified as a solicitor in England and Wales in 1999 and was admitted to the Piraeus Bar inGreece, in 2003. She received a bachelor’s degree in International Relations from Georgetown University and holds a master of business administrationdegree from European University in Brussels and a juris doctor degree from Tulane Law School.George Galatis has served as a member of our Board of Directors since July 2010. He is currently the Executive Vice President — ProductDevelopment at Demo Pharmaceutical Industry having served as a Senior Vice President — Project Development since 1999. Mr. Galatis also served as atechnical manager in Pharmaceutical Industry Projects at Telos Consulting Ltd. of London from 1994 to 1999. Previously, Mr. Galatis served as an engineer,technical manager and product manager at various shipping companies in the United States and the U.K. Mr. Galatis is a mechanical engineer and holds abachelor’s degree in Mechanical Engineering and master’s degree in robotics from the University of Newcastle upon Tyne. Mr. Galatis is also a member ofour Nominating Committee and is an independent director. 81Table of ContentsBrigitte Noury has been a member of our Board of Directors since May 2010. Ms. Noury served from March 2002 until December 2009 as Director ofCorporate & Investment Banking Asset & Recovery Management — Europe for Societe Generale. She also served from June 1989 until February 2002 asHead of Shipping at Societe Generale. In addition, she served as Vice President — Shipping at Banque Indosuez from 1987 to 1989. Before that Ms. Nouryserved as Financial Controller at Banque Internationale pour l’Afrique Occidentale (later acquired by BNP Paribas). Ms. Noury received a master’s degree inEconomic Sciences and a diploma in Business Administration from the University of Dijon. Ms. Noury is also a member of our Audit Committee andNominating Committee and is an independent director.Ted C. Petrone has been a member of our Board of Directors since our inception and was our President from our inception until December 2014. He hasalso been a director of Navios Holdings since May 2007, and served as President of Navios Corporation from September 2006 until December 2014. Hecurrently serves as Navios Corporation’s Vice Chairman, a position he has held since December 2014. Mr. Petrone has served in the maritime industry for 40years, 36 of which he has spent with Navios Holdings. After joining Navios Holdings as an assistant vessel operator, Mr. Petrone worked there in variousoperational and commercial positions. Mr. Petrone was previously responsible for all the aspects of the daily commercial activity, encompassing the tradingof tonnage, derivative hedge positions and cargoes. Mr. Petrone graduated from New York Maritime College at Fort Schuyler with a bachelor in sciencedegree in maritime transportation. He has also served aboard U.S. Navy (Military Sealift Command) tankers.Nikolaos Veraros, CFA, has been a member of our Board of Directors since June 2008. Mr. Veraros has over 18 years of experience in shipping financeand currently serves as a financial consultant to various shipping companies. He has also worked as a senior equity analyst for National Securities, S.A., asubsidiary of National Bank of Greece. Mr. Veraros is a Chartered Financial Analyst (CFA), a Certified Market Maker for Derivatives in the Athens StockExchange, and a Certified Analyst from the Hellenic Capital Market Commission. He is currently part time lecturer of shipping finance at King’s College ofthe University of London. Mr. Veraros received his bachelor of science degree in business administration from the Athens University of Economics andBusiness, from which he graduated as valedictorian, and his master of business administration degree in Finance and Accounting from the William E. SimonGraduate School of Business Administration at the University of Rochester. Mr. Veraros is also the Chairman of our Audit Committee and is an independentdirector.Eleni Warren has served as a member of our Board of Directors since June 2017. She is a lawyer by training with more than 35 years of experience inbanking and financial services. Mrs. Warren joined V&P Law Firm (the predecessor to the firm now known as PPT Legal) in 1986, where she was partner from2011 until April 2017. From 1986 Mrs. Warren was in-house legal advisor of Credit Commercial de France S.A., Athens. She was also the head of theCompliance Department of that bank for several years, overseeing compliance with the basic principles and criteria applicable to credit and financialinstitutions supervised by the Bank of Greece and with the internal rules applied by the Head Office of HSBC France (ex Credit Commercial de France S.A.).From 1981 to 2017, Mrs. Warren was a member of the Athens Bar. She obtained her law degree from the Law School of the University of Athens and alsoholds a bachelor degree in Political Sciences from Athens Pantion University. Mrs. Warren is an independent director. B.CompensationCompensationOur independent directors are entitled to receive $50,000 in cash per year, from the respective start of their service on our Board of Directors.Ms. Frangou receives a fee of $150,000 per year for acting as a director and as our Chairman of the Board. No other executive officer has received any cashcompensation for services rendered.For the year ended December 31, 2017 the compensation paid, in the aggregate, to our executive officers and directors was $0.4 million.In December 2017, Navios Acquisition authorized and issued, in the aggregate, 1,774,915 restricted shares of common stock, to its directors andofficers. These awards of restricted common stock are based on service conditions only and vest over four years.In October 2013, Navios Acquisition authorized and issued, in the aggregate, 2,100,000 restricted shares of common stock and options to purchase1,500,000 shares of common stock, having an exercise price of $3.91 per share, to its directors and/or officers. These awards of restricted common stock andstock options are based on service conditions only and vest over three years.There were 1,774,915 Shares of restricted common stock that were outstanding and not vested as of December 31, 2017.In December 2016 and during 2017, the Compensation Committee of Navios Acquisition authorized and approved an aggregate cash payment of$2.8 million subject to fulfillment of certain service conditions that were provided and completed during 2017 and an additional $1.8 million to the directorsand/or officers of the Company subject to fulfillment of certain service conditions in 2018. As of December 31, 2017 and 2016 an accrued amount of$1.7 million and $0.8 million is included in accrued legal and professional fees. The total amount of $2.8 million, $4.0 million and $2.8 million was recordedin general and administrative expenses on the statements of income for the years ended December 31, 2017, 2016 and 2015, respectively. 82Table of ContentsC.Board PracticesBoard ClassesOur Board of Directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term.The term of office of the first class of directors, currently consisting of George Galatis Brigitte Noury, and Eleni Warren, will expire at our 2018 annualmeeting of stockholders. The term of office of the second class of directors, consisting of Ted C. Petrone and Nikolaos Veraros, will expire at our 2019 annualmeeting of stockholders. The term of office of the third class of directors, consisting of Angeliki Frangou and Anna Kalathakis, will expire at our 2020 annualmeeting of stockholders, as their term was renewed for three years at our 2017 annual meeting.Director IndependenceOur Board of Directors has determined that Messrs. Veraros, Galatis, Ms. Noury and Ms. Warren are “independent directors” as defined in the NYSElisting standards and Rule 10A-3 of the Exchange Act. We will always seek to have a board of directors comprising of a majority of independent directors.Board committeesOur Board of Directors has an audit committee, a nominating committee and a compensation committee. Our Board of Directors has adopted a charterfor the audit committee as well as a code of conduct and ethics that governs the conduct of our directors and officers. From time to time the Board may createspecial committees to address particular situations or transactions, such as potential conflict of interest transactions that may arise with our affiliatedcompanies. The members’ duration and powers of any special committee will be as established by the Board as appropriate for the particular situation ortransaction.Audit committeeOur audit committee consists of Mr. Veraros, Mr. Galatis and Ms. Noury. Each member of our audit committee is financially literate under the currentlisting standards of the NYSE, and our Board of Directors has determined that Mr. Veraros qualifies as an “audit committee financial expert,” as such term isdefined by SEC rules.The audit committee reviews the professional services and independence of our independent registered public accounting firm and our accounts,procedures and internal controls. The audit committee also selects our independent registered public accounting firm, reviews and approves the scope of theannual audit, reviews and evaluates with the independent public accounting firm our annual audit and annual consolidated financial statements, reviews withmanagement the status of internal accounting controls, evaluates problem areas having a potential financial impact on us that may be brought to thecommittee’s attention by management, the independent registered public accounting firm or the board of directors, and evaluates all of our public financialreporting documents.Any expense reimbursements payable to members of our audit committee are reviewed and approved by our Board of Directors, with the interesteddirector or directors abstaining from such review and approval.Nominating committeeA nominating committee of the board of directors has been established, which consists of Messrs. Veraros, Galatis, and Ms. Noury, each of whom is anindependent director. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our Board of Directors.The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.Compensation committeeThe board of directors has established a compensation committee of two independent directors, Mr. Veraros, who serves as Chairman, and Mr. Galatis.The compensation committee is governed by a written charter, which was approved by the board of directors. The compensation committee is responsible forreviewing and approving the compensation of the Company’s executive officers, for establishing, reviewing and evaluating, in consultation with seniormanagement, the long-term strategy of employee compensation and approving any material change to existing compensation plans. 83Table of ContentsCode of conduct and ethicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securities laws and therules of the NYSE.Conflicts of InterestStockholders and potential investors should be aware of the following potential conflicts of interest: • None of our officers and directors is required to commit their full time to our affairs and, accordingly, they will have conflicts of interest inallocating management time among various business activities, including those related to Navios Holdings, Navios Partners, Navios Midstreamand Navios Containers. • Each of our directors has, or may come to have other fiduciary obligations. Angeliki Frangou, our Chairman and Chief Executive Officer, is theChairman and Chief Executive Officer of Navios Holdings, Navios Partners, Navios Midstream and Navios Containers. In addition, Ms. Frangouis the Chairman of the board of directors of IRF European Finance Investments, Ltd. Ted C. Petrone, a member of our Board of Directors, is thevice chairman of Navios Corporation, a subsidiary of Navios Holdings. Mr. Veraros is a senior analyst at Investments & Finance, Ltd., aninvestment banking firm specializing in the shipping industry. Ms. Kalathakis is Chief Legal Risk Officer of Navios Holdings. • We entered a Management Agreement, initially set to expire on May 28, 2015, with a subsidiary of Navios Holdings, pursuant to which suchsubsidiary provides certain commercial and technical ship management services for a fixed daily fee. In May 2014, Navios Acquisition extendedthe duration of its existing Management Agreement with Navios Holdings, until May 2020 for fixed daily fees. • Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial andtechnical ship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6,350 perMR2 product tanker and chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC. • We entered into an Administrative Services Agreement with Navios Holdings, initially set to expire on May 28, 2015, pursuant to which asubsidiary of Navios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping, auditand accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services,client and investor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. In May 2014, the duration of its existing Administrative Services Agreement was extended until May 2020 pursuantto its existing terms. • On September 19, 2016, Navios Acquisition entered into a $70.0 million secured loan facility with Navios Holdings. The loan facility is securedby all of Navios Holdings’ interest in Navios Acquisition and 78.5% of Navios Holdings’ interest in Navios Logistics, representing a majority ofthe shares outstanding of Navios Logistics. On November 3, 2017, Navios Holdings prepaid in full the outstanding amount of $55.1 million.Please see “Item 5.B. Liquidity and Capital Resources and Uses”.We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniaryinterest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Nor do we have a policy thatexpressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such parties mayhave an interest in certain transactions in which we are involved, and may also compete with us.We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.Navios Holdings has a significant ownership interest in us. As a result of Navios Holdings’ significant ownership stake in us and our commonmanagement, there are certain potential conflicts of interest, including potential competition as to acquisition targets and, after an acquisition has beenconsummated, potential competition and business relationships with each other.All ongoing and future transactions between us and any of our officers and directors or their respective affiliates, including Navios Holdings, will be onterms believed by us to be no less favorable than are available from unaffiliated third parties, and such transactions will require prior approval, in eachinstance, by a unanimous vote of our disinterested “independent” directors or the members of our board who do not have an interest in the transaction. 84Table of ContentsPlease see “Item 7. Major Stockholders and Related Party Transactions.”FacilitiesWe do not own any real estate or other physical property. Our principal executive office is located at 7 Avenue de Grande Bretagne, Office 11B2,Monte Carlo, MC 98000 Monaco. D.EmployeesEmployees of Navios Holdings and its subsidiaries provide assistance to us and our operating subsidiaries pursuant to the Management Agreement andthe Administrative Services Agreement; therefore Navios Acquisition does not employ additional staff.The Manager crews its vessels primarily with Greek, Filipino, Romanian, Russian, Ukrainian and Croatian officers and Filipino seamen. The Manageris responsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewing agencies. Navios Acquisitionrequires that all of its seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.Navios Holdings also provides on-shore advisory, operational and administrative support to us pursuant to service agreements. Please see “Item 7.Major Stockholders and Related Party Transactions.” E.Share OwnershipThe following table sets forth certain information regarding beneficial ownership, based on 147,086,141 shares of common stock outstanding as ofMarch 31, 2018, of our common stock held by Navios Holdings, each of our officers and directors (who own in excess of 1% of our outstanding shares ofcommon stock) and by all of our directors and officers as a group. The information is not necessarily indicative of beneficial ownership for any otherpurposes.Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of commonstock beneficially owned by them. Name and Address of Beneficial Owner(1) Amount ofBeneficialOwnership PercentageofCommonStock Navios Maritime Holdings Inc.(2) 65,301,220(2) 44.4% Angeliki Frangou(3) 6,597,543 4.4% All of our officers and directors as a group(3) 7,410,716 4.99% No other director or executive officer owns greater than 1% of our common stock. (1)Unless otherwise indicated, the business address of each of the individuals is c/o Navios Maritime Holdings Inc., 7 Avenue de Grande Bretagne, Office11B2, Monte Carlo, MC 98000 Monaco.(2)Navios Holdings is a U.S. public company controlled by its board of directors, which consists of the following seven members: Angeliki Frangou (ourChairman and Chief Executive Officer), Vasiliki Papaefthymiou, Shunji Sasada, Spyridon Magoulas, John Stratakis, Stathis Loizos and GeorgeMalanga. Shares of common stock are beneficially owned through Alpha Merit Corporation, a wholly-owned subsidiary of Navios Holdings.(3)Includes 1,502,628 shares held by Amadeus Maritime S.A. that may be deemed to be beneficially owned by Ms. Frangou and 1,500,000 options vestedbut not yet exercised.Item 7. Major Stockholders and Related Party Transactions A.Major StockholdersThe following table sets forth the beneficial ownership of our common stock by each person we know to beneficially own more than 5% of ourcommon stock based upon 147,086,141 shares of common stock outstanding as of March 31, 2018 and the amounts and percentages as are contained in thepublic filings of such persons and based on knowledge of the Company. The number of shares of common stock beneficially owned by each person isdetermined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, a personbeneficially owns any units as to which the person has or shares voting or investment power. In addition, a person beneficially owns any shares of commonstock that the person or entity has the right to acquire as of April 2, 2018 through the exercise of any right. All of the stockholders, including the stockholderslisted in this table, are entitled to one vote per share of common stock held. 85Table of ContentsName of Beneficial Owner Amount ofBeneficialOwnership PercentageofCommonStock Navios Maritime Holdings Inc.(1) 65,301,220(4) 44.4% A. Lawrence Carroll Trust(2) 14,325,000 9.7% Invesco Ltd. (3) 7,527,166 5.1% (1)The business address of the reporting person is offices at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. The foregoinginformation was derived from a Schedule 13D/A filed with the SEC on November 28, 2017.(2)The business address of the reporting person is 415 L’Ambiance Drive, #804, Longboat Key, FL 34228. The foregoing information was derived from aschedule 13G/A filed with the SEC on February 2, 2018.(3)The business address of the reporting person is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. The foregoing information was derived froma Schedule 13G filed with the SEC on February 14, 2018.(4)Beneficially owned through Alpha Merit Corporation, a wholly-owned subsidiary of Navios Holdings. B.Related Party TransactionsStock options and restricted sharesIn October 2013, Navios Acquisition authorized and issued to its directors in the aggregate of 2,100,000 restricted shares of common stock and optionsto purchase 1,500,000 shares of common stock having an exercise price of $3.91 per share and an expiration term of 10 years. These awards of restrictedcommon stock and stock options are based on service conditions only and vest ratably over a period of three years (33.33% each year). The holders ofrestricted stock are entitled to dividends paid on the same schedule as paid to the common stockholders of the company. The fair value of restricted stock wasdetermined by reference to the quoted stock price on the date of grant of $3.99 per share (or total fair value of $8.4 million).The fair value of stock option grants was determined with reference to the option pricing model, and principally adjusted Black-Scholes models, usinghistorical volatility, historical dividend yield, zero forfeiture rate, risk free rate equal to 10-year U.S. treasury bond and the simplified method for determiningthe expected option term since the Company did not have sufficient historical exercise data upon which to have a reasonable basis to estimate the expectedoption term. The fair value of stock options was calculated at $0.79 per option (or $1.2 million). Compensation expense is recognized based on a gradedexpense model over the vesting period of three years from the date of the grant.The effect of compensation expense arising from the stock based arrangements described above amounted to $0, $0.9 million and $2.4 million for theyears ended December 31, 2017, 2016 and 2015, respectively, and was reflected in general and administrative expenses on the statements of income. Therecognized compensation expense for the year was presented as an adjustment to reconcile net income to net cash provided by operating activities on thestatements of cash flows.On October 24, 2016, 2015 and 2014, 700,005, 700,001 and 699,994 shares of restricted stock, respectively, were vested.On each of October 24, 2016, 2015 and 2014, 500,000 stock options were vested. Accordingly, there were no non-vested shares of restricted stock andno non-vested stock options outstanding as of December 31, 2017 and December 31, 2016.The weighted average contractual life of stock options outstanding as of December 31, 2017 was 5.8 years.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years, starting in December 2018.The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the stock holders of the company. The fair value ofrestricted stock is determined by reference to the quoted stock price on the date of grant of $1.18 per share (or total fair value of $2.1 million).Compensation expense is recognized based on a graded expense model over the vesting period.The effect of compensation expense arising from the stock-based arrangements described above amounts to $0.06 million, as of December 31, 2017,and it is reflected in general and administrative expenses on the statement of operations. The recognized compensation expense for the year is presented asadjustment to reconcile net (loss)/ income to net cash provided by operating activities on the statements of cash flows. 86Table of ContentsThe estimated compensation cost relating to service conditions of non-vested restricted stock, not yet recognized was $2.0 million as of December 31,2017 and is expected to be recognized over the weighted average contractual life of stock options of 4.0 years.Navios MidstreamIn November 2014, Navios Midstream, a Company formed as a subsidiary of the Company, completed an IPO of its units in the United States and islisted on the NYSE.In connection with the IPO of Navios Midstream, the Company sold all of the outstanding shares of capital stock of four of its vessel-owningsubsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) all of the netproceeds from the IPO amounting to $110.4 million; (ii) $104.5 million of the $126.0 million borrowings under Navios Midstream’s credit facility withCredit Suisse; (iii) 9,342,692 subordinated units and 1,242,692 common units; and (iv) 381,334 general partner units, representing a 2.0% general partnerinterest in Navios Midstream, and all of the incentive distribution rights in Navios Midstream to the Navios Midstream General Partner.Following the IPO, the Company concluded that it does not hold a controlling financial interest in Navios Midstream and deconsolidated the vesselssold as of the IPO date. (See Note 8, “Investment in affiliates”).On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste and the C. Dreamfrom Navios Acquisition for an aggregate sale price of $100.0 million. The sale price consisted of $73.0 million cash consideration and the issuance of1,592,920 Subordinated Series A Units to Navios Acquisition. The gain on sale of vessels which was recognized in the Company’s statement of income forthe year ended December 31, 2015 amounted to $5.8 million.Participation in offerings of affiliatesOn July 29, 2016, Navios Midstream launched a continuous public offering of its common units for an aggregate offering of up to $25.0 million (Referalso to Note 8 “Investment in affiliates”).On September 30, 2016, December 30, 2016, February 16, 2017 and May 5, 2017 Navios Acquisition entered into securities purchase agreements withNavios Midstream pursuant to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655, 1,143, 6,446 and 412 generalpartnership interests, respectively, for an aggregate consideration of $0.2 million in order to maintain its 2.0% partnership interest in Navios Midstream inlight of such continuous offering sales program.The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by theinvestee. As a result, a net loss of $0.05 million and $0.2 million was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years endedDecember 31, 2017 and December 31, 2016, respectively.The Navios Holdings Credit FacilitiesOn September 19, 2016, Navios Acquisition entered into a $70.0 million secured loan facility with Navios Holdings. The loan facility is secured by allof Navios Holdings’ interest in Navios Acquisition and 78.5% of Navios Holdings’ interest in Navios South American Logistics Inc. “Navios Logistics”,representing a majority of the shares outstanding of Navios Logistics. The secured loan facility provided for an arrangement fee of $0.7 million, is availablefor up to five drawings and has a fixed interest rate of 8.75% with a maturity date of November 15, 2018. On November 3, 2017, Navios Holdings prepaid infull the outstanding amount with a payment of $55.1 million. The prepayment amount consisted of the $50.0 million drawn under the facility and$5.1 million of accrued interest. As of December 31, 2017 and December 31, 2016, the outstanding receivable balance of $0 and $50.7 million, respectively,consisted of the drawdown of $50.0 million on September 20, 2016 net of the arrangement fee, upon deduction of the applicable expenses for the originationof the loan facility and the accrued interest of $1.2 million, respectively, included in the consolidated balance sheets under “Due from related parties, long-term”. The arrangement fee was deferred and amortized using the effective interest rate method. 87Table of ContentsTotal interest income, including amortization of deferred fees, for the year ended December 31, 2017 and December 31, 2016 amounted to $4.5 million and$1.3 million, respectively.In March 2016, Navios Acquisition entered into the $50.0 million Revolver with Navios Holdings, which was available for multiple drawings up to alimit of $50.0 million. The Revolver had a margin of LIBOR plus 300bps and a maturity until December 2018. On April 14, 2016, Navios Acquisition andNavios Holdings announced that the Revolver was terminated. No borrowings had been made under the Revolver.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition mayborrow up to $200.0 million for general corporate purposes. The loan provided for an arrangement fee of $4.0 million and bore a fixed interest of 600 bps. OnNovember 13, 2014, the Company drew an amount of $169.7 million from the facility. The facility matured and was fully repaid by December 29, 2014.In 2010, Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings, which matured in December 2015. The facility wasavailable for multiple drawings up to a limit of $40.0 million and had a margin of LIBOR plus 300 basis points. As of its maturity date, December 31, 2015,all amounts drawn had been fully repaid.The Management AgreementWe have entered into Management Agreement with the Manager, pursuant to which the Manager provides certain commercial and technical shipmanagement services to us. These services will be provided in a commercially reasonable manner in accordance with customary ship management practiceand under our direction. The Manager will provide these services to us directly but may subcontract for certain of these services with other entities, includingother Navios Holdings subsidiaries.The commercial and technical management services will include: • the commercial and technical management of vessels: managing day-to-day vessel operations including negotiating charters and otheremployment contracts for the vessels and monitoring payments thereunder, ensuring regulatory compliance, arranging for the vetting of vessels,procuring and arranging for port entrance and clearance, appointing counsel and negotiating the settlement of all claims in connection with theoperation of each vessel, appointing adjusters and surveyors and technical consultants as necessary, and providing technical support; • vessel maintenance and crewing: including the supervision of the maintenance and general efficiency of vessels and ensuring the vessels are inseaworthy and good operating condition, arranging our hire of qualified officers and crew, arranging for all transportation, board and lodging ofthe crew, negotiating the settlement and payment of all wages; and • purchasing and insurance: purchasing stores, supplies and parts for vessels, arranging insurance for vessels (including marine hull andmachinery insurance, protection and indemnity insurance and war risk and oil pollution insurance).Pursuant to the Management Agreement dated May 28, 2010 as amended on May 4, 2012, a subsidiary of Navios Holdings provided for five years fromthe closing of the Company’s initial vessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily feethrough May 28, 2014. This daily fee covered all of the vessels’ operating expenses, other than certain fees and costs. Dry docking expenses were fixed forthe first four years under this agreement for up to $0.3 million per LR1 and MR2 product tanker vessel and were reimbursed at cost for VLCC vessels.In May 2014, Navios Acquisition extended the duration of its existing Management Agreement with Navios Holdings until May 2020 and fixed thefees for ship management services of its owned fleet for two additional years through May 2016 at same as previous rates for product tanker and chemicaltanker vessels, being $6,000 daily rate per MR2 product tanker and chemical tanker vessel and $7,000 daily rate per LR1 product tanker vessel and reducedthe rate by 5% to $9,500 daily rate per VLCC vessel. Dry docking expenses under this Management Agreement are reimbursed at cost for all vessels.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6,350 per MR2 product tankerand chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) $9,500 per VLCC.Total management fees for each of the years ended December 31, 2017, 2016 and 2015 amounted to $95.0 million, $97.9 million and $95.3 million,respectively. 88Table of ContentsThe Management Agreement may be terminated prior to the end of its term by us upon 120-days’ notice if there is a change of control of the Manageror by the Manager upon 120-days’ notice if there is a change of control of Navios Acquisition. In addition, the Management Agreement may be terminatedby us or by the Manager upon 120-days’ notice if: • the other party breaches the agreement; • a receiver is appointed for all or substantially all of the property of the other party; • an order is made to wind up the other party; • a final judgment or order that materially and adversely affects the other party’s ability to perform the Management Agreement is obtained orentered and not vacated or discharged; or • the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences anyreorganization proceedings.Furthermore, at any time after the first anniversary of the Management Agreement, the Management Agreement may be terminated prior to the end ofits initial term by us or by the Manager upon 365-days’ notice for any reason other than those described above.In addition to the fixed daily fees payable under the Management Agreement, the Management Agreement provides that the Manager will be entitledto reasonable supplementary remuneration for extraordinary fees and costs resulting from: • time spent on insurance and salvage claims; • time spent vetting and pre-vetting the vessels by any charterers in excess of 10 days per vessel per year; • the deductible of any insurance claims relating to the vessels or for any claims that are within such deductible range; • the significant increase in insurance premiums which are due to factors such as “acts of God” outside the control of the Manager; • repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilders or by the insurance covering thevessels, resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents,collisions, damage or events are due to the fraud, gross negligence or willful misconduct of the Manager, its employees or its agents, unless andto the extent otherwise covered by insurance); • expenses imposed due to any improvement, upgrade or modification to, structural changes with respect to the installation of new equipmentaboard any vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicable laws, at therecommendation of the classification society for that vessel or otherwise; • costs associated with increases in crew employment expenses resulting from an introduction of new, or a change in the interpretation of,applicable laws or resulting from the early termination of the charter of any vessel; • any taxes, dues or fines imposed on the vessels or the Manager due to the operation of the vessels; • expenses incurred in connection with the sale or acquisition of a vessel such as inspections and technical assistance; and • any similar costs, liabilities and expenses that were not reasonably contemplated by us and the Manager as being encompassed by or acomponent of the fixed daily fees at the time the fixed daily fees were determined.Under the Management Agreement, neither we nor the Manager will be liable for failure to perform any of our or its obligations, respectively, under theManagement Agreement by reason of any cause beyond our or its reasonable control.In addition, the Manager will have no liability for any loss arising in the course of the performance of the commercial and technical managementservices under the Management Agreement unless and to the extent that such loss is proved to have resulted solely from the fraud, gross negligence or willfulmisconduct of the Manager or its employees, in which case (except where such loss has resulted from the Manager’s intentional personal act or omission andwith knowledge that such loss would probably result) the Manager’s liability will be limited to $3.0 million for each incident or series of related incidents.Further, under our Management Agreement, we have agreed to indemnify the Manager and its employees and agents against all actions that may bebrought against them under the Management Agreement including, without limitation, all actions brought under the environmental laws of any jurisdiction,or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses they may suffer or incur due to defending orsettling such action; provided, however, that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence orwillful misconduct of the Manager or its employees or agents, or any breach of the Management Agreement by the Manager. 89Table of ContentsThe Administrative Services AgreementOn May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings, initially set to expire in May 2015 thatwas later extended until May 2020, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition, whichinclude bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services,advisory services, client and investor relations and other services.The Administrative Services Agreement may be terminated prior to the end of its term by us upon 120-days’ notice if there is a change of control ofNavios Holdings or by Navios Holdings upon 120-days’ notice if there is a change of control of us. In addition, the Administrative Services Agreement maybe terminated by us or by Navios Holdings upon 120-days’ notice if: • the other party breaches the agreement; • a receiver is appointed for all or substantially all of the property of the other party; • an order is made to wind up the other party; • a final judgment or order that materially and adversely affects the other party’s ability to perform the Administrative Services Agreement isobtained or entered and not vacated or discharged; or • the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences anyreorganization proceedings.Furthermore, at any time after the first anniversary of the Administrative Services Agreement, the Administrative Services Agreement may beterminated by us or by Navios Holdings upon 365-days’ notice for any reason other than those described above.The administrative services include: • bookkeeping, audit and accounting services: assistance with the maintenance of our corporate books and records, assistance with the preparationof our tax returns and arranging for the provision of audit and accounting services; • legal and insurance services: arranging for the provision of legal, insurance and other professional services and maintaining our existence andgood standing in necessary jurisdictions; • administrative and clerical services: providing office space, arranging meetings for our security holders, arranging the provision of IT services,providing all administrative services required for subsequent debt and equity financings and attending to all other administrative mattersnecessary to ensure the professional management of our business; • banking and financial services: providing cash management including assistance with preparation of budgets, overseeing banking services andbank accounts, arranging for the deposit of funds, negotiating loan and credit terms with lenders and monitoring and maintaining compliancetherewith; • advisory services: assistance in complying with United States and other relevant securities laws; • client and investor relations: arranging for the provision of, advisory, clerical and investor relations services to assist and support us in ourcommunications with our security holders; and client and investor relations; and • integration of any acquired businesses.We will reimburse Navios Holdings for reasonable costs and expenses incurred in connection with the provision of these services within 15 days afterNavios Holdings submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required.Under the Administrative Services Agreement, we have agreed to indemnify Navios Holdings and its employees against all actions which may bebrought against them under the Administrative Services. Agreement including, without limitation, all actions brought under the environmental laws of anyjurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however, thatsuch indemnity excludes any or all losses that may be caused by or due to the fraud, gross negligence or willful misconduct of Navios Holdings or itsemployees or agents.For each of the years ended December 31, 2017, 2016 and 2015 the expense arising from administrative services rendered by Navios Holdingsamounted to $9.0 million, $9.4 million and $7.6 million, respectively. 90Table of ContentsNavios Europe INavios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe I revolving loans up to $24.1 million to fund workingcapital requirements. See Note 8 for the investment in Navios Europe I.Balance due from Navios Europe I as of December 31, 2017 amounted to $19.4 million (December 31, 2016: $12.3 million) which included the NaviosRevolving Loans I of $11.8 million (December 31, 2016: $7.1 million), the non-current amount of $3.2 million (December 31, 2016: $2.2 million) related tothe accrued interest income earned under the Navios Term Loans I under the caption “Due from related parties, long-term” and the accrued interest incomeearned under the Navios Revolving Loans I of $4.5 million (December 31, 2016: $2.9 million) under the caption “Due from related parties, short-term.”The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 12.7% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, there was no amount undrawn under the Navios Revolving Loans I.Navios Europe IINavios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolving loans up to $43.5 million to fundworking capital requirements. In March 2017, the availability under the Navios Revolving Loans II was increased by $14.0 million. See Note 8 for theinvestment in Navios Europe II.Balance due from Navios Europe II as of December 31, 2017 amounted to $31.1 million (December 31, 2016: $16.4 million) which included theNavios Revolving Loans II of $20.7 million (December 31, 2016: $11.6 million), the non-current amount of $3.8 million (December 31, 2016: $2.1 million)related to the accrued interest income earned under the Navios Term Loans II under the caption “Due from related parties, long-term” and the accrued interestincome earned under the Navios Revolving Loans II of $6.7 million (December 31, 2016: $2.7 million) under the caption “Due from related parties, short-term.”The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 18% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, the amount undrawn under the Navios Revolving Loans II was$15.0 million, of which Navios Acquisition may be required to fund an amount ranging from $0 to $15.0 million.Registration RightsPursuant to a registration rights agreement between us and our initial stockholders entered into in connection with the IPO, the holders of the sponsorunits (and the common stock and warrants comprising such units and the common stock issuable upon exercise of such warrants), the sponsor warrants (andthe common stock issuable upon exercise of such warrants), the co-investment shares and such other shares of common stock purchased pursuant to the limitorders described above are entitled to three demand registration rights, “piggy-back” registration rights and short-form resale registration rights. We will bearthe expenses incurred in connection with any such registration statements other than underwriting discounts or commissions for shares not sold by us. Inaddition, we have registered the 1,677,759 shares of common stock issued in connection with the VLCC Acquisition. The resale registration statementbecame effective on January 19, 2011.In addition, in connection with the private placement of 17,702,491 shares that was completed on February 26, 2013, we have granted registrationrights to Navios Holdings and certain members of the management of Navios Acquisition, Navios Holdings and Navios Partners.In connection with the private placements of 16,438,356 shares and of 12,987,013 shares that were completed on May 21, 2013 and on September 16,2013, respectively, we have granted registration rights to Navios Holdings.The Acquisition Omnibus AgreementWe have entered an Acquisition Omnibus Agreement with Navios Holdings and Navios Partners. The following discussion describes certain provisionsof the Acquisition Omnibus Agreement. 91Table of ContentsNoncompetitionNavios Holdings and Navios Partners agree not to acquire, charter-in or own Liquid Shipment Vessels (as hereinafter defined). For purposes of theAcquisition Omnibus Agreement, “Liquid Shipment Vessels” means vessels intended primarily for the sea going shipment of liquid products, includingchemical and petroleum-based products, except for container vessels and vessels that will be employed primarily in operations in South America. Thisrestriction will not prevent Navios Holdings or any of its controlled affiliates or Navios Partners (other than us and our subsidiaries) from:(1) acquiring a Liquid Shipment Vessel(s) from us for fair market value;(2) acquiring a Liquid Shipment Vessel(s) as part of the acquisition of a controlling interest in a business or package of assets and owning thosevessels; provided, however, that:a. if less than a majority of the value of the total assets or business acquired is attributable to a Liquid Shipment Vessel(s) and related charters, asdetermined in good faith by the board of directors of Navios Holdings or Navios Partners, as the case may be, Navios Holdings or Navios Partners, as the casemay be, must offer to sell a Liquid Shipment Vessel(s) and related charters to us for their fair market value plus any additional tax or other similar costs toNavios Holdings that would be required to transfer a Liquid Shipment Vessel(s) and related charters to us separately from the acquired business; andb. if a majority or more of the value of the total assets or business acquired is attributable to a Liquid Shipment Vessel(s) and related charters, asdetermined in good faith by the board of directors of Navios Holdings or Navios Partners, as the case may be, Navios Holdings or Partners, as the case may be,shall notify us in writing, of the proposed acquisition. We shall, not later than the 15th calendar day following receipt of such notice, notify Navios Holdingsor Navios Partners, as the case may be, if we wish to acquire such a Liquid Shipment Vessel(s) and related charters forming part of the business or package ofassets in cooperation and simultaneously with Navios Holdings or Navios Partners, as the case may be, acquiring a Liquid Shipment Vessel(s) and relatedcharters forming part of that business or package of assets. If we do not notify Navios Holdings of our intent to pursue the acquisition within 15 calendardays, Navios Holdings may proceed with the acquisition as provided in (a) above.(3) acquiring a non-controlling interest in any company, business or pool of assets;(4) acquiring or owning a Liquid Shipment Vessel(s) and related charter if we do not fulfill our obligation, under any existing or future writtenagreement, to purchase such vessel in accordance with the terms of any such agreement;(5) acquiring or owning a Liquid Shipment Vessel(s) subject to the offers to us described in paragraphs (3) and (4) above pending our determinationwhether to accept such offers and pending the closing of any offers we accept;(6) providing ship management services relating to any vessel whatsoever, including to a Liquid Shipment Vessel(s) owned by the controlled affiliatesof Navios Holdings; or(7) acquiring or owning a Liquid Shipment Vessel(s) if we have previously advised Navios Holdings or Navios Partners, as the case may be, that weconsent to such acquisition, or if we have been offered the opportunity to purchase such vessel pursuant to the Acquisition Omnibus Agreement and failed todo so.If Navios Holdings or Navios Partners, as the case may be, or any of their respective controlled affiliates (other than us or our subsidiaries) acquires orowns a Liquid Shipment Vessel(s) pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other thanpursuant to those exceptions.In addition, under the Acquisition Omnibus Agreement we have agreed, and will cause our subsidiaries to agree, not to acquire, own, operate or charterdrybulk carriers (“Drybulk Carriers”). Pursuant to an agreement between them, Navios Holdings and Navios Partners may be entitled to a priority over eachother depending on the class and charter length of any Drybulk Carrier. This restriction will not:(1) prevent us or any of our subsidiaries from acquiring a Drybulk Carrier(s) and any related charters as part of the acquisition of a controlling interestin a business or package of assets and owning and operating or chartering those vessels; provided, however, that:(a) if less than a majority of the value of the total assets or business acquired is attributable to a Drybulk Carrier(s) and related charter(s), as determinedin good faith by us, we must offer to sell such Drybulk Carrier(s) and related charter to Navios Holdings or Navios Partners, as the case may be, for their fairmarket value plus any additional tax or other similar costs to us that would be required to transfer the Drybulk Carrier(s) and related charter(s) to NaviosHoldings or Navios Partners, as the case may be, separately from the acquired business; and(b) if a majority or more of the value of the total assets or business acquired is attributable to a Drybulk Carrier(s) and related charter(s), as determinedin good faith by us, we shall notify Navios Holdings or Navios Partners, as the case may be, in writing of the proposed acquisition. Navios Holdings or NaviosPartners, as the case may be, shall, not later than the 15th calendar day 92Table of Contentsfollowing receipt of such notice, notify us if it wishes to acquire the Drybulk Carrier(s) forming part of the business or package of assets in cooperation andsimultaneously with us acquiring the Non-Drybulk Carrier assets forming part of that business or package of assets. If Navios Holdings and Navios Partnersdo not notify us of their intent to pursue the acquisition within 15 calendar days, we may proceed with the acquisition as provided in (a) above.(2) prevent us or any of our subsidiaries from owning, operating or chartering a Drybulk Carrier(s) subject to the offer to Navios Holdings or NaviosPartners described in paragraph (1) above, pending their determination whether to accept such offer and pending the closing of any offer they accept; or(3) prevent us or any of our subsidiaries from acquiring, operating or chartering a Drybulk Carrier(s) if Navios Holdings and Navios Partners havepreviously advised us that they consent to such acquisition, operation or charter, or if they have previously been offered the opportunity to purchase suchDrybulk Carrier(s) and have declined to do so.If we or any of our subsidiaries owns, operates and charters Drybulk Carriers pursuant to any of the exceptions described above, neither we nor suchsubsidiary may subsequently expand that portion of our business other than pursuant to those exceptions.The Midstream Omnibus AgreementNavios Acquisition entered into an omnibus agreement (the “Midstream Omnibus Agreement”), with Navios Midstream, Navios Holdings and NaviosPartners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream, Navios Holdings, Navios Partners and theircontrolled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemicaltankers under time charters of five or more years without the consent of the Navios Midstream General Partner. The Midstream Omnibus Agreement containssignificant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of their controlled affiliates to compete with NaviosMidstream under specified circumstances.Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries will grant to Navios Acquisition a right of first offer on any proposedsale, transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and relatedcharters owned or acquired by Navios Midstream. Likewise, Navios Acquisition will agree (and will cause its subsidiaries to agree) to grant a similar right offirst offer to Navios Midstream for any of the VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under charter forfive or more years it might own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliatedsubsidiaries, or pursuant to the terms of any charter or other agreement with a charter party, or (b) merger with or into, or sale of substantially all of the assetsto, an unaffiliated third-party.Navios Containers Omnibus AgreementIn connection with the Navios Containers private placement and listing on the Norwegian over-the-counter market effective June 8, 2017, NaviosAcquisition entered into an omnibus agreement with Navios Containers, Navios Midstream, Navios Holdings and Navios Partners, pursuant to which NaviosAcquisition, Navios Holdings, Navios Partners and Navios Midstream have granted to Navios Containers a right of first refusal over any container vessels tobe sold or acquired in the future. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, NaviosPartners and Navios Midstream to compete with Navios Containers under specified circumstances.Backstop AgreementsOn November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstopagreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the Nave Celeste, the Shinyo Oceanand the Shinyo Kannika from their original charters, at a net rate of $35,000, $38,400 and $38,025, respectively. Navios Midstream has currently entered intonew charter contracts for the above vessels with third parties upon their redelivery in the first quarter of 2017. Those contracts provide for index linkedcharter rates or pool earnings as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstop rates. TheCompany has recognized a liability of $16.4 million ($0 for the same period in 2016), under “Time charter and voyage expenses” in the consolidatedstatements of operations for the year ended December 31, 2017, which the Company believes represents a reasonable estimate of the loss for the backstopagreements. In the first quarter of 2018 the Company paid $16.4 million to Navios Midstream. The backstop commitment for Shinyo Kannika terminatedfollowing the sale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic,following the sale of the latter to Navios Midstream in March 2018. 93Table of ContentsNavios Midstream General Partner Option Agreement with Navios HoldingsNavios Acquisition entered into an option agreement, dated November 18, 2014, with Navios Holdings under which Navios Acquisition grants NaviosHoldings the option to acquire any or all of the outstanding membership interests in Navios Midstream General Partner and all of the incentive distributionrights in Navios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions are met. Theoption shall expire on November 18, 2024. Any such exercise shall relate to not less than twenty-five percent of the option interest and the purchase price forthe acquisition of all or part of the option interest shall be an amount equal to its fair market value.Option VesselsIn connection with the IPO of Navios Midstream, Navios Acquisition granted options to Navios Midstream, initially exercisable until November 18,2016, to purchase seven VLCCs (two of which, the Nave Celeste and the C. Dream, were sold to Navios Midstream in June 2015 pursuant to such option)from Navios Acquisition at fair market value. On October 25, 2016, Navios Acquisition extended the option periods on three of the five remaining VLCCs,the Nave Buena Suerte, the Nave Neutrino and the Nave Electron, for an additional two-year period expiring on November 18, 2018. The purchase optionspursuant to the extended period do not include any backstop commitments from Navios Acquisition.Sale of C. Dream and Nave CelesteOn June 18, 2015, Navios Acquisition sold the vessel-owning subsidiaries of the C. Dream and the Nave Celeste to Navios Midstream for a sale price of$100.0 million in total. Out of the $100.0 million purchase price, $73.0 million was paid in cash and the remaining amount was paid through the issuance of1,592,920 subordinated Series A Units of Navios Midstream. In conjunction with the transaction, Navios Midstream also issued 32,509 general partner unitsto the General Partner, in order for the General Partner to maintain its 2.0% general partnership interest, for $0.6 million. Please see Note 15: “Transactionswith related parties”.Sale of Nave GalacticOn March 15, 2018, Navios Acquisition agreed to sell to Navios Midstream the Nave Galactic, a 2009 built VLCC vessel of 297,168 dwt, for a totalsale price of $44.5 million the delivery of which completed on March 29, 2018. As of March 31, 2018, the estimated loss due to the sale is expected to beapproximately $0.3 million.Rights of First OfferUnder the Acquisition Omnibus Agreement, we and our subsidiaries will grant to Navios Holdings and Navios Partners, as the case may be, a right offirst offer on any proposed sale, transfer or other disposition of any of our Drybulk Carriers and related charters owned or acquired by us. Likewise, NaviosHoldings and Navios Partners will agree (and will cause its subsidiaries to agree) to grant a similar right of first offer to us for any Liquid Shipment Vessels itmight own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to theterms of any charter or other agreement with a counterparty; or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.Prior to engaging in any negotiation regarding any vessel disposition with respect to a Liquid Shipment Vessel(s) with a non-affiliated third party orany Drybulk Carrier(s) and related charter, we, Navios Holdings, or Navios Partners, as the case may be, will deliver a written notice to the other parties settingforth the material terms and conditions of the proposed transaction. During the 15-day period after the delivery of such notice, we, Navios Holdings or NaviosPartners, as the case may be, will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement within such 15-day period,we or Navios Holdings or Navios Partners, as the case may be, will be able within the next 180 calendar days to sell, transfer or dispose of the vessel to a thirdparty (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to us or Navios Holdings, as the case maybe, than those offered pursuant to the written notice.Upon a change of control of Navios Partners, the noncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement willterminate immediately as to Navios Partners, but shall remain binding on us and Navios Holdings. Upon a change of control of Navios Holdings, thenoncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement shall terminate; provided, however, that in no event shall thenoncompetition and the rights of first refusal terminate upon a change of control of Navios Holdings prior to the fourth anniversary of the AcquisitionOmnibus Agreement. Upon change of control of us, the noncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement willterminate immediately as to all parties of the Acquisition Omnibus Agreement. C.Interest of Experts and CounselNot Applicable. 94Table of ContentsItem 8. Financial InformationA. Consolidated Statements and Other Financial InformationConsolidated Financial Statements: See Item 18.Legal ProceedingsThe Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonablyestimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of thesematters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity.Dividend PolicyAt the present time, Navios Acquisition intends to retain most of its available earnings generated by operations for the development and growth of thebusiness. The continued declaration and payment of any dividend remains subject to the discretion of the Board of Directors, and will depend on, amongother things, Navios Acquisition’s cash requirements as measured by market opportunities and conditions. In addition, the terms and provisions of our currentsecured credit facilities and our indenture limit our ability to pay dividends in excess of certain amounts or if certain covenants are not met. (See also “Long-Term Debt Obligations and Credit Arrangements.”)On February 3, 2017, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2016 of $0.05 per share of commonstock payable on March 14, 2017 to stockholders of record as of March 7, 2017. A dividend in the aggregate amount of $7.9 million was paid on March 14,2017 out of which $7.5 million was paid to the stockholders of record as of March 7, 2017 and $0.4 million was paid to Navios Holdings, the holder of the1,000 shares of Series C Preferred Stock.On May 12, 2017, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2017 of $0.05 per share of common stockpayable on June 14, 2017 to stockholders of record as of June 7, 2017. A dividend in the aggregate amount of $7,9 million was paid on June 14, 2017 out ofwhich $7.5 million was paid to the stockholders of record as of June 7, 2017 and $0.4 million was paid to Navios Holdings, the holder of the 1,000 shares ofSeries C Preferred Stock.On August 9, 2017, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2017 of $0.05 per share of commonstock payable on September 14, 2017 to stockholders of record as of September 7, 2017. A dividend in the aggregate amount of $7.9 million was paid onSeptember 14, 2017 out of which $7.5 million was paid to the stockholders of record as of September 7, 2017 and $0.4 million was paid to Navios Holdings,the holder of the 1,000 shares of Series C Preferred Stock.On October 25, 2017, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2017 of $0.05 per share of commonstock payable on December 12, 2017 to stockholders of record as of December 6, 2017. A dividend in the aggregate amount of $7.9 million was paid onDecember 12, 2017 out of which $7.5 million was paid to the stockholders of record as of December 6, 2017 and $0.4 million was paid to Navios Holdings,the holder of the 1,000 shares of Series C Preferred Stock.For the years ended December 31, 2017 and December 31, 2016, Navios Acquisition had no outstanding Series B and Series D Preferred Stock. For theyear ended December 31, 2015, Navios Acquisition paid dividend in the aggregate of $0.4 million to the holders of the Series B and Series D Preferred Stock.On January 26, 2018, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2017 of $0.02 per share of commonstock, which was paid on March 27, 2018 to stockholders of record as of March 22, 2018. The declaration and payment of any further dividends remainsubject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by marketopportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. 95Table of ContentsB. Significant ChangesNot Applicable.Item 9. Listing DetailsOur shares of common stock are traded on the NYSE under the symbol “NNA.”The following table sets forth the high and low closing sales prices of Navios Acquisition’s common stock on the NYSE. Price RangeCommonStock High Low Year Ended: December 31, 2017 $2.08 $1.11 December 31, 2016 $2.83 $1.20 December 31, 2015 $4.33 $2.82 December 31, 2014 $4.85 $2.47 December 31, 2013 $4.50 $2.45 Quarter Ended: March 31, 2018 $1.15 $0.68 December 31, 2017 $1.38 $1.11 September 30, 2017 $1.49 $1.14 June 30, 2017 $1.74 $1.40 March 31, 2017 $2.08 $1.60 December 31, 2016 $1.80 $1.22 September 30, 2016 $1.62 $1.20 June 30, 2016 $1.97 $1.52 March 31, 2016 $2.83 $1.55 Month Ended: April 30, 2018 (through April 3, 2018) $0.77 $0.75 March 31, 2018 $0.92 $0.75 February 28, 2018 $0.84 $0.68 January 31, 2018 $1.15 $0.78 December 31, 2017 $1.36 $1.11 November 30, 2017 $1.38 $1.25 October 31, 2017 $1.29 $1.22 September 30, 2017 $1.27 $1.21 Item 10. Additional InformationA. Share CapitalNot applicable.B. Memorandum and Articles of AssociationPlease refer to the filings on Form 6-K (file number 001-34104) filed with the Securities and Exchange Commission: Exhibit 99.9 of Form 6-K filed onJune 4, 2010, Exhibit 3.1 of Form 6-K filed on February 10, 2011, Exhibit 1.1 of Form 6-K filed on September 21, 2010, Exhibit 1.1 of Form 6-K filed onNovember 9, 2010, and Exhibit 1.1 to Form 6-K filed on April 12, 2011, which the Company hereby incorporates by reference.C. Material ContractsThe following is a summary of each material contract, other than material contracts entered into in the ordinary course of business, to which we or anyof our subsidiaries is a party, for the two years immediately preceding the date of this Annual Report, each of which is included in the list of exhibits inItem 19. 96Table of Contents • Indenture, dated November 13, 2013, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and Wells FargoBank, National Association, as trustee and collateral trustee. • Acquisition Agreement, dated April 8, 2010, between Navios Acquisition and Navios Holdings. • Management Agreement, dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • Amendment to the Management Agreement dated May 4, 2012. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Amendment to the Management Agreement dated May 14, 2014. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Amendment to the Management Agreement dated May 19, 2016. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Administrative Services Agreement, dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7.Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Amendment to the Administrative Services Agreement dated May 14, 2014. Please read “Item 7. Major Stockholders and Related PartyTransactions” for a summary of certain contract terms. • Acquisition Omnibus Agreement dated May 28, 2010 among Navios Acquisition, Navios Holdings and Navios Partners. Please read “Item 7.Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Midstream Omnibus Agreement dated November 18, 2014 among Navios Midstream, Navios Holdings and Navios Partners in connection withthe Navios Midstream IPO. • Navios Containers Omnibus Agreement, dated June 8, 2017, between Navios Containers, Navios Holdings and Navios Partners. • Securities Purchase Agreement, dated July 18, 2010, between Navios Acquisition and Vanship Holdings Limited, entered into in connectionwith the VLCC Acquisition. • Credit Agreement, dated April 7, 2010, among certain vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha Bank A.E. and CreditAgricole Corporate and Investment Bank. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contractterms. • Credit Agreement, dated April 8, 2010, among certain vessel-owning subsidiaries and DVB Bank S.E. and Fortis Bank. Please read “Item 5.Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $52.2 million term loan facility, dated October 26, 2010, between Navios Acquisition and Eurobank Ergasias S.A. Pleaseread “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $52.0 million term loan facility, dated December 6, 2010, between Navios Acquisition and Eurobank Ergasias S.A. Pleaseread “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for up to $28.1 million term loan facility, dated December 29, 2011, between Navios Acquisition and NorddeutscheLandesbank Girozentrale. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $56.3 million term loan facility, dated December 29, 2011, among Navios Acquisition, DVB Bank SE and Emporiki Bankof Greece S.A. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Loan Agreement for $40.0 million, dated September 7, 2010, between Navios Acquisition and Navios Holdings (the “Loan Agreement”). Pleaseread “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Letter Agreement Nr. 1 to the Loan Agreement, dated as of October 21, 2010, which provided that the loan would be a revolving facility. 97Table of Contents • Letter Agreement Nr. 2 to the Loan Agreement, dated November 8, 2011, pursuant to which Navios Holdings agreed to extend the maturity datefrom April 1, 2012 to December 31, 2014. • Facility Agreement for $51.0 million term loan facility, dated February 6, 2014, between Navios Acquisition (through Tinos ShippingCorporation and Thera Shipping Corporation, its wholly-owned subsidiaries) and HSH Nordbank AG. • Loan Agreement between Navios Europe I, Navios Acquisition, Navios Holdings. and Navios Partners, as lenders, Navios Partners EuropeFinance Inc., as agent, Navios Acquisition Europe Finance Inc., a wholly owned subsidiary of Navios Acquisition, as arranger and NaviosHoldings Europe Finance Inc., as security trustee, dated December 13, 2013 relating to a term facility of up to $10.0 million and a revolvingfacility of up to $24.1 million entered into for the purpose of partly financing the acquisition cost of ten vessels by the term facility and forproviding additional working capital to Navios Europe I pursuant to the Master Agreement, dated December 13, 2013, between Navios Europe Iand HSH Nordbank AG. • Term loan facility agreement of up to $132.4 million, dated July 18, 2014, with Deutsche Bank AG Filiale Deutschlandgeschäft andSkandinaviska Enskilda Banken AB. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contractterms. • Short term credit facility for up to $200.0 million, dated November 11, 2014, with Navios Holdings for general corporate purposes. Please read“Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Securities Purchase Agreement, dated February 26, 2013, between Navios Acquisition and Navios Holdings for the purchase by Navios Holdingsof 17,544,300 shares of common stock of Navios Acquisition for $2.85 per share in a private placement that was completed on February 26,2013. • Form of Co-Investment Share Purchase Agreement, which was entered into by Navios Acquisition and certain members of the management ofNavios Acquisition, Navios Holdings and Navios Partners for the purchase of an aggregate of 158,191 shares of common stock of NaviosAcquisition for $2.85 per share in a private placement that was completed on February 26, 2013. • Registration Rights Agreement, dated February 26, 2013, between Navios Acquisition and Navios Holdings and the management investors partythereto. Please read “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Securities Purchase Agreement, dated May 21, 2013, between Navios Acquisition and Navios Holdings for the purchase by Navios Holdings of16,438,356 shares of common stock of Navios Acquisition for $3.65 per share in a private placement that was completed on May 21, 2013. • Registration Rights Agreement, dated May 21, 2013, between Navios Acquisition and Navios Holdings. Please read “Item 7. Major Stockholdersand Related Party Transactions” for a summary of certain contract terms. • Securities Purchase Agreement, dated September 16, 2013, between Navios Acquisition and Navios Holdings for the purchase by NaviosHoldings of 12,897,013 shares of common stock of Navios Acquisition for $3.85 per share in a private placement that was completed onSeptember 16, 2013. • Registration Rights Agreement, dated September 16, 2013, between Navios Acquisition and Navios Holdings. Please read “Item 7. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • First Supplemental Indenture, dated January 8, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. • Second Supplemental Indenture, dated February 20, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party theretoand Wells Fargo Bank, National Association, as trustee and collateral trustee. • Third Supplemental Indenture, dated March 31, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. • Fourth Supplemental Indenture dated May 28, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. • Fifth Supplemental Indenture dated December 4, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. 98Table of Contents • Backstop Agreement, dated November 18, 2014, with Navios Midstream providing for a backstop commitment relating to Shinyo Ocean andShinyo Kannika and for three of the seven option vessels. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Navios Midstream General Partner Option Agreement, dated November 18, 2014, between Navios Acquisition and Navios Holdings. Please read“Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Option Vessels Backstop Agreement, dated as of November 18, 2014, between Navios Midstream and Navios Acquisition. Please read “Item 7.Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Amended and Restated Facility Agreement for $125.0 million term loan facility, dated November 4, 2015, between Navios Acquisition (throughLimnos Shipping Corporation, Paxos Shipping Corporation, Skyros Shipping Corporation, Thasos Shipping Corporation and Tilos ShippingCorporation, its wholly-owned subsidiaries) and Deutsche Bank AG Filiale Deutschlandgeschäft. Please read “Item 5. Operating and FinancialReview and Prospects” for a summary of certain contract terms. • Sixth Supplemental Indenture, dated November 17, 2015, among Navios Acquisition, Navios Acquisition Finance (US) Inc., the guarantorsnamed therein and Wells Fargo Bank, National Association, as trustee and collateral trustee. • Facility Agreement for up to $44.0 million term loan facility, dated December 18, 2015, between Navios Acquisition and BNP Paribas, datedDecember 18, 2015. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Loan Agreement for a Revolving Loan Facility of up to $50.0 million, dated as of March 9, 2016, by and between Navios Acquisition andNavios Maritime Holdings Inc. Please read “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Loan Agreement for up to $70.0 million with Navios Maritime Holdings Inc., dated as of September 19, 2016. Please read “Item 7. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • Share Purchase Agreement, dated November 18, 2014, between Navios Maritime Midstream Partners L.P. and Aegean Sea Maritime Holdings Inc.Please read “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • First Amendment to Share Purchase Agreement, dated October 25, 2016, between Navios Maritime Midstream Partners L.P. and Aegean SeaMaritime Holdings Inc. Please read “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Credit Agreement, dated January 31, 2017, among certain vessel-owning subsidiaries and ABN AMRO Bank N.V. Please read “Item 5. Operatingand Financial Review and Prospects” for a summary of certain contract terms. • Loan Agreement for $24.0 million term loan facility, dated June 7, 2017, among Amorgos Shipping Corporation and Andros ShippingCorporation, HSH Nordbank AG, and the Banks and Financial Institutions listed therein (Previously filed as an exhibit to a Report on Form 6-K,filed on August 17, 2017, and hereby incorporated by reference). • Omnibus Agreement, effective as of June 8, 2017, among Navios Maritime Acquisition Corporation, Navios Maritime Holdings Inc., NaviosMaritime Partners L.P., Navios Maritime Midstream Partners L.P., Navios Maritime Containers Inc. and Navios Partners Containers Finance Inc.(Previously filed as an exhibit to a Report on Form 6-K, filed on August 17, 2017, and hereby incorporated by reference). • $71.5 million new term loan facility • Bareboat charters and Memoranda of Agreement, by and among Sea 66 Leasing Co. Limited, Sea 67 Leasing Co. Limited, Sea 68 Leasing Co.Limited and Sea 69 Leasing Co. Limited wholly owned subsidiaries of China Merchants Bank Limited, dated March 31, 2018, providing for thesale and leaseback of the NAVE ATRIA, NAVE AQUILA, NAVE BELLATRIX and NAVE ORION respectively (filed as an exhibit to this report).D. Exchange controlsUnder the laws of the of the Marshall Islands, Cayman Islands, Hong Kong and the British Virgin Islands, the countries of incorporation of theCompany and its subsidiaries, there are currently no restrictions on the export or import of capital, including foreign exchange controls, or restrictions thataffect the remittance of dividends, interest or other payments to non-resident holders of our common stock.E. Taxation of Holders 99Table of ContentsMATERIAL INCOME TAX CONSIDERATIONSMarshall Islands Tax ConsiderationsWe are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no MarshallIslands withholding tax will be imposed upon payments of dividends by us to our stockholders. Under the laws of Marshall Islands, of the companies’incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes which have been included in the daily management fee.Other JurisdictionsThe Marshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. As of January 1,2014, foreign-flagged vessels that are managed by Greek or foreign ship management companies in Greece are subject to duties towards the Greek state whichare calculated on the basis of the relevant vessels’ tonnage. The payment of such duties exhausts the tax liability of the foreign ship owning company and therelevant manager against any tax duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.Material U.S. Federal Income Tax ConsequencesThe following discussion addresses the material U.S. federal income tax consequences relating to the purchase, ownership and disposition of shares ofour common stock by beneficial owners of such shares. This discussion is based on current provisions of the Code, treasury regulations promulgated underthe Code (“Treasury Regulations”), Internal Revenue Service (“IRS”) rulings and pronouncements, and judicial decisions now in effect, all of which aresubject to change at any time by legislative, judicial or administrative action. Any such changes may be applied retroactively. No rulings from the IRS havebeen or will be sought with respect to the U.S. federal income tax consequences discussed below. The discussion below is not in any way binding on the IRSor the courts nor does it in any way constitute an assurance that the U.S. federal income tax consequences discussed herein will be accepted by the IRS or thecourts.The U.S. federal income tax consequences to a beneficial owner of shares of our common stock may vary depending upon such beneficial owner’sparticular situation or status. This discussion is limited to beneficial owners of shares of our common stock who hold such shares as capital assets, and it doesnot address aspects of U.S. federal income taxation that may be relevant to such beneficial owners that are subject to special treatment under U.S. federalincome tax laws, including but not limited to: dealers in securities; banks and other financial institutions; insurance companies; tax-exempt organizations,plans or accounts; persons holding shares of our common stock as part of a “hedge,” “straddle” or other risk reduction transaction; persons holding shares ofour common stock through partnerships, trusts or other entities; beneficial owners of shares of our common stock that own 2% or more (by vote or value) ofour outstanding capital stock; U.S. Holders (as defined below) whose functional currency is not the U.S. dollar; and controlled foreign corporations or passiveforeign investment companies, as those terms are defined in the Code. In addition, this discussion does not consider the effects of any applicable foreign,state, local or other tax laws, or estate or gift tax considerations, or the alternative minimum tax.For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of our common stock that is, for U.S. federal income tax purposes: acitizen or resident of the United States; a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) created ororganized in or under the laws of the United States or any state thereof (including the District of Columbia); an estate the income of which is subject to U.S.federal income tax regardless of its source; or a trust, if a court within the United States can exercise primary supervision over its administration, and one ormore “United States persons” (as defined in the Code) have the authority to control all of the substantial decisions of that trust (or the trust was in existenceon August 20, 1996, was treated as a domestic trust on August 19, 1996 and validly elected to continue to be treated as a domestic trust).For purposes of this discussion, a beneficial owner of shares of our common stock (other than a partnership or an entity or arrangement treated as apartnership for U.S. federal income tax purposes) that is not a U.S. Holder is a “Non-U.S. Holder.”If a partnership or other entity or arrangement classified as a partnership for U.S. federal income tax purposes holds shares of our common stock, the taxtreatment of its partners generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partnerlevel. If you are a partner in a partnership holding shares of our common stock, you should consult your own tax advisor regarding the tax consequences toyou of the partnership’s ownership of shares of our common stock.We urge beneficial owners of shares of our common stock to consult their own tax advisers as to the particular tax considerations applicable tothem relating to the purchase, ownership and disposition of shares of our common stock, including the applicability of U.S. federal, state and local taxlaws and non-U.S. tax laws.U.S. Federal Income Taxation of Navios Acquisition 100Table of ContentsNavios Acquisition is a foreign company that is treated as a corporation for U.S. federal income tax purposes and it neither has made, nor intends tomake, an election to be treated as other than a corporation for U.S. federal income tax purposes. Consequently, among other things, U.S. Holders will notdirectly be subject to U.S. federal income tax on their shares of our income, but rather will be subject to U.S. federal income tax on distributions received fromus and dispositions of shares of our common stock as described below.Taxation of Operating Income: In GeneralUnder the Code, income derived from, or in connection with, the use (or hiring or leasing for use) of a vessel, or the performance of services directlyrelated to the use of a vessel, is treated as “Transportation Income.” Such Transportation Income can arise, for example, from the use (or hiring or leasing foruse) 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 ofservices directly related to those uses.Transportation Income that is attributable to transportation that either begins or ends, but that does not both begin and end, in the United States isconsidered to be 50.0% derived from sources within the United States (“U.S. Source International Transportation Income”). Transportation Incomeattributable to transportation that both begins and ends in the United States is considered to be 100.0% derived from sources within the United States (“U.S.Source Domestic Transportation Income”). Navios Acquisition is not permitted by law to engage in transportation that produces income which is consideredto be 100% from sources within the United States. Transportation Income that is attributable to transportation exclusively between non-U.S. destinations isconsidered to be 100.0% derived from sources outside the United States. Transportation Income derived from sources outside the United States generally isnot subject to U.S. federal income tax.U.S. Source International Transportation Income generally is subject to a 4.0% U.S. federal income tax without allowance for deduction or, if such U.S.Source International Transportation Income is effectively connected with the conduct of a trade or business in the United States, U.S. federal corporateincome tax (presently imposed at a 21.0% rate) as well as a branch profits tax (presently imposed at a 30.0% rate on effectively connected earnings), unlessthe non-U.S. corporation qualifies for exemption from tax under Section 883 of the Code.Exemption of Operating Income From U.S. Federal Income TaxationIn general, the exemption from U.S. federal income taxation under Section 883 of the Code provides that if a non-U.S. corporation satisfies therequirements of Section 883 of the Code and the Treasury Regulations thereunder, it will not be subject to the net basis and branch profits taxes or the 4%gross basis tax (each as described below) on its U.S. Source International Transportation income.Under Section 883 of the Code, we will be exempt from U.S. federal income taxation on our U.S. Source International Transportation income if:1. we and our vessel-owning subsidiaries are organized in a foreign country (“country of organization”) that grants an “equivalent exemption” tocorporations organized in the United States; and2. either: • more than 50% of the value of our stock is owned, directly or indirectly, for at least half the number of days during the taxable year by(i) individuals who are “residents” of our country of organization or of another foreign country that grants an “equivalent exemption” tocorporations organized in the United States, (ii) non-U.S. corporations that meet the “Publicly Traded Test” discussed below and areorganized in a foreign country that grants an “equivalent exemption” to corporations organized in the United States or (iii) certain otherqualified persons described in the applicable regulations, which we refer to as the “Qualified Shareholder Stock 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 U.S. corporations, or in the United States, which we refer to as the “Publicly-Traded Test”; and 101Table of Contents3. we meet certain substantiation, reporting and other requirements.Currently, the jurisdiction where we are incorporated, as well as the jurisdictions where our vessel-owning subsidiaries are incorporated, namely, theRepublic of the Marshall Islands, the Cayman Islands, Hong Kong and the British Virgin Islands, grant an “equivalent exemption” to U.S. corporations.Therefore, at present, we will be exempt from U.S. federal income taxation with respect to our U.S. Source International Transportation income if we satisfyeither the Qualified Shareholder Stock Ownership Test or the Publicly-Traded Test. Our ability to satisfy the Qualified Shareholder Stock Ownership Test andPublicly-Traded Test is discussed below.The Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an establishedsecurities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that countryexceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Our commonstock is currently “primarily traded” on the NYSE.Under the Treasury Regulations, our stock is considered to be “regularly traded” on an established securities market if one or more classes of our stockrepresenting more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on themarket during the taxable year, which we refer to as the listing threshold. Since our common stock, which represents more than 50% of our outstanding sharesby vote and value, is currently listed on the NYSE, we currently satisfy the listing requirement.It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of stock is traded on the market, otherthan de minimis quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year; and (ii) the aggregate number of shares ofsuch 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 duringsuch year or as appropriately adjusted in the case of a short taxable year. We currently satisfy the trading frequency and trading volume tests. Even if thiswere not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied by a class of stock if such class ofstock is traded during the taxable year on an established market in the United States and such class of stock is regularly quoted by dealers making a market insuch stock, which condition our common stock currently meets.Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that our common stock will not be considered to be “regularlytraded” on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of our common stockare owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5%or more of the vote and value of our common stock, which we refer to as the “5% Override Rule.”For purposes of being able to determine the persons who owns 5% or more of our common stock, or “5% Stockholders,” the Treasury Regulationspermit us to rely on Schedule 13G and Schedule 13D filings with the SEC to identify persons who have a 5% or more beneficial interest in our commonstock. The Treasury Regulations further provide that an investment company that is registered under the Investment Company Act will not be treated as a 5%Stockholder for such purposes.If our 5% Stockholders did own more than 50% of our common stock, then we would be subject to the 5% Override Rule unless we were able toestablish that among the closely-held group of 5% Stockholders, there are sufficient 5% Stockholders that are qualified stockholders for purposes ofSection 883 to preclude non-qualified 5% Stockholders in the closely-held group from owning 50% or more of the total value of each class of our stock formore than half the number of days during the taxable year. In order to establish this, sufficient 5% Stockholders that are qualified stockholders would have tocomply with certain documentation and certification requirements designed to substantiate their identity as qualified stockholders. These requirements areonerous and there is no guarantee that we would be able to satisfy them in all cases.Alpha Merit Corporation (a Marshall Islands corporation) owns approximately 43.0% of our common stock. Navios Holdings (a Marshall Islandscorporation) currently owns 100% of Alpha Merit Corporation. For more than half the days during 2017, Navios Holdings directly owned approximately43.0% of our common stock for U.S. federal income tax purposes. Navios Holdings has represented to us that it presently meets the Publicly Traded Test andhas agreed to comply with the documentation and certification requirements described above. Accordingly, we anticipate that we will not be subject to the5% Override Rule. However, there can be no assurance that Navios Holdings will continue to meet the Publicly Traded Test or continue to be able to complywith the documentation and certification requirements described above. Consequently, there can be no assurance that we will not be subject to the 5%Override Rule in the future. Effective as of January 1, 2018, Alpha Merit Corporation became a disregarded entity of Navios Holdings for U.S. federal incometax purposes, and therefore, Navios Holdings is treated for U.S. federal income tax purposes as directly owning approximately 43.0% of our common stock.Taxation in Absence of ExemptionTo the extent the benefits of Section 883 are unavailable, our U.S. Source International Transportation Income, to the extent not considered to be“effectively connected” with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Codeon a gross basis, without the benefit of deductions. 102Table of ContentsSince under the sourcing rules described above, no more than 50% of our U.S. Source International Transportation Income would be treated as beingderived from U.S. sources, the maximum effective rate of U.S. federal income tax on our U.S. Source International Transportation Income would never exceed2% of our gross income under the 4% gross basis tax regime.To the extent the benefits of the Section 883 exemption are unavailable and our U.S. Source International Transportation Income is considered to be“effectively connected” with the conduct of a U.S. trade or business, as described below, any such “effectively connected” U.S. Source InternationalTransportation Income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at a 21.0 rate%. In addition,we may be subject to the 30% “branch profits” tax on any earnings and profits effectively connected with the conduct of such trade or business, asdetermined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our U.S. trade or business.Our U.S. Source International Transportation Income would be considered “effectively connected” with the conduct of a U.S. 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 International Transportation Income is attributable to regularly scheduled transportation, such as theoperation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that beginor end in the United States.We do not intend to have, or permit circumstances that would result in having any vessel operating to the United States on a regularly scheduled basis.Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S. Source InternationalTransportation Income will be “effectively connected” with the conduct of a U.S. trade or business.United States Taxation of Gain on Sale of VesselsRegardless of whether we will qualify for exemption under Section 883, we should not be subject to U.S. federal income taxation with respect to gainrealized on a sale of a vessel, provided that we did not depreciate the vessel for U.S. federal income tax purposes. If we took depreciation deductions withrespect to the vessel for U.S. federal income tax purposes (which would be the case if the vessel had produced effectively connected income), upon the sale ofsuch vessel, a portion of any gain realized on the sale would be sourced to the U.S. in proportion to the depreciation deductions taken in the U.S. compared tothe total depreciation of the vessel.United States Federal Income Taxation of U.S. HoldersDistributionsSubject to the discussion of the rules applicable to a PFIC below, any distributions made by us with respect to our common stock to a U.S. Holder willconstitute dividends, which will be taxable as ordinary income, to the extent of our current or accumulated earnings and profits, as determined under U.S.federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will be treated first as a nontaxable return of capitalto the extent of the U.S. Holder’s tax basis in our common stock on a dollar-for-dollar basis and thereafter as capital gain, which will be either long-term orshort-term capital gain depending upon whether the U.S. Holder held the common shares for more than one year. Because Navios Acquisition is not a U.S.corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive fromus. Dividends paid with respect to Navios Acquisition’s common stock will be treated as foreign source income and generally will be “passive categoryincome” for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.Dividends received by a non-corporate U.S. Holder are taxed at ordinary income tax rates (currently, a maximum 37.0%) unless such dividendsconstitute “qualified dividend income.” “Qualified dividend income” generally includes a dividend paid by a foreign corporation if (i) the stock with respectto which such dividend was paid is readily tradable on an established securities market in the U.S., (ii) the foreign corporation is not a PFIC for the taxableyear during which the dividend is paid and the immediately preceding taxable year (which we do not believe we have been for 2017, or will be forsubsequent years, as discussed below), (iii) the non-corporate U.S. Holder has owned the stock for more than 60 days during the 121-day period beginning 60days before the date on which the stock become ex-dividend (and has not entered into certain risk limiting transactions with respect to such stock), and(iv) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.Qualified dividend income is subject to the long-term capital gain tax rate, which is currently a maximum of 20%. In addition, a 3.8% tax may apply tocertain investment income. See “Medicare Tax” below. Because the common stock of Navios Acquisition was traded on the NYSE during 2017, dividendspaid during 2017 to U.S. Holders that are U.S. citizens or individual residents should generally be qualified dividend income subject to the long-term capitalgains tax rate. However if the NYSE were to delist our shares from trading on its exchange, future dividends may not constitute qualified dividend income.See “Risk Factors” above. 103Table of ContentsSpecial rules may apply to any amounts received in respect of our common stock that are treated as “extraordinary dividends.” In general, anextraordinary dividend is a dividend with respect to a share of common stock that is equal to or in excess of 10.0% of a U.S. Holder’s adjusted tax basis (orfair market value upon the U.S. Holder’s election) in such share. In addition, extraordinary dividends include dividends received within a one year periodthat, in the aggregate, equal or exceed 20.0% of a U.S. Holder’s adjusted tax basis (or fair market value). If we pay an “extraordinary dividend” on ourcommon stock that is treated as “qualified dividend income,” then any loss recognized by an individual U.S. Holder from the sale or exchange of suchcommon stock will be treated as long-term capital loss to the extent of the amount of such dividend.Sale, Exchange or Other Disposition of Common StockSubject to the discussion of PFICs below, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or other disposition of ashare 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 dispositionand the U.S. Holder’s adjusted tax basis in such stock. The U.S. Holder’s initial tax basis in a share of our common stock generally will be the U.S. Holder’spurchase price for the share and that tax basis will be reduced (but not below zero) by the amount of any distributions on our common stock that are treated asnon-taxable returns of capital (as discussed under “— Distributions” above). Such gain or loss will 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 asU.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes.A corporate U.S. Holder’s capital gains, long-term and short-term, are taxed at ordinary income tax rates. If a corporate U.S. Holder recognizes a lossupon the disposition of our common stock, the corporate U.S. Holder is limited to using the loss to offset other capital gain. If a corporate U.S. Holder has noother capital gain in the tax year of the loss, it may carry the capital loss back three years and forward five years.As described above, long-term capital gains of non-corporate U.S. Holders are subject to the current favorable maximum tax rate of 20%. In addition, a3.8% tax may apply to certain investment income. See “Medicare Tax” below. A non-corporate U.S. Holder may deduct a capital loss resulting from adisposition of our common stock to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate tax returns) and may carryforward capital losses indefinitely.Passive Foreign Investment Company Status and Significant Tax ConsequencesIn 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 otherthan in the active conduct of a rental business); or • at least 50% of the average value of the assets held by us during such taxable year produce, or are held for the production of, passive income.For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets,respectively, of any subsidiary corporation in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us inconnection with the performance of services will not constitute passive income. By contrast, rental income will constitute “passive income” unless we aretreated as deriving our rental income in the active conduct of a trade or business under applicable rules.Based on our current and projected methods of operations, and an opinion of counsel, we believe that we were not a PFIC for the 2011 through 2017taxable years (we were treated as a PFIC for the 2008 through 2010 taxable years), and we do not believe that we will be a PFIC for 2018 and subsequenttaxable years. For post-2010 taxable years, our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from the time charteringactivities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income fromtime charters exceeds 25.0% of our gross income for each taxable year after our 2010 taxable year and the value of our vessels contracted under time chartersexceeds 50.0% of the average value of our assets for each taxable year after our 2010 taxable year, we should not be a PFIC for any taxable year after our2010 taxable year. This opinion is based on representations and projections provided to our counsel by us regarding our assets, income and charters, and itsvalidity is conditioned on the accuracy of such representations and projections.Our counsel’s opinion is based principally on their conclusion that, for purposes of determining whether we are a PFIC, the gross income we derive (orare deemed to derive from any subsidiary in which we own at least 25% by value of the subsidiary’s stock) from time chartering activities should constituteservices income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we own and operate (orthat we are deemed to own and operate through any subsidiary 104Table of Contentsin which we own at least 25% by value of the subsidiary’s stock) in connection with the production of such income, in particular, the vessels we own (or weare deemed to own) that are subject to time charters, should not constitute passive assets for purposes of determining whether we are or have been a PFIC. Weexpect that all of the vessels in our fleet will be engaged in time chartering activities and intend to treat our income from those activities as non-passiveincome, and the vessels engaged in those activities as non-passive assets, for PFIC purposes.Our counsel has advised us that there is a significant amount of legal authority consisting of the Code, legislative history, IRS pronouncements andrulings supporting our position that the income from our time chartering activities constitutes services income (rather than rental income). There is, however,no direct legal authority under the PFIC rules addressing whether income from time chartering activities is services income or rental income. Moreover, in acase not interpreting the PFIC rules, Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), the Fifth Circuit held that the vessel time charters at issuegenerated predominantly rental income rather than services income. However, the IRS stated in an Action on Decision (AOD 2010-001) that it disagrees with,and will not acquiesce to, the way that the rental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated thatthe time charters at issue in Tidewater would be treated as producing services income for PFIC purposes. The IRS’s AOD, however, is an administrative actionthat cannot be relied upon or otherwise cited as precedent by taxpayers.The opinion of our counsel is not binding on the IRS or any court. Thus, while we have received an opinion of our counsel in support of our position,there is a possibility that the IRS or a court could disagree with this position and the opinion of our counsel. In addition, although we intend to conduct ouraffairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not changein the future.As discussed more fully below, if we were to be treated as a PFIC for any taxable year in which a U.S. Holder owned our common stock, the U.S. Holderwould be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund,” which we referto as a “QEF election.” (As previously discussed, we were not a PFIC for the 2011 through 2017 taxable years and we do not believe that we will be treated asa PFIC for 2018 and subsequent taxable years.) As an alternative to making a QEF election, the U.S. Holder may be able to make a “mark-to-market” electionwith respect to our common stock, as discussed below. In addition, if we were treated as a PFIC for any taxable year in which a U.S. Holder owned ourcommon stock, the U.S. Holder generally would be required to file IRS Form 8621 with the U.S. Holder’s U.S. federal income tax return for each year to reportthe U.S. Holder’s ownership of such common stock. It should also be noted that, if we were treated as a PFIC for any taxable year in which a U.S. Holderowned our common stock and any of our non-U.S. subsidiaries were also a PFIC, the U.S. Holder would be treated as owning a proportionate amount (byvalue) of the shares of the lower-tier PFIC for purposes of the application of these rules.Taxation of U.S. Holders Making a Timely QEF ElectionIf we were to be treated as a PFIC for any taxable year and a U.S. Holder makes a timely QEF election (any such U.S. Holder, an “Electing Holder”), theElecting Holder must report for U.S. federal income tax purposes its pro rata share of our ordinary earnings and net capital gain, if any, for our taxable yearthat ends with or within the Electing Holder’s taxable year, regardless of whether or not the Electing Holder received any distributions from us in that year.Such income inclusions would not be eligible for the preferential tax rates applicable to “qualified dividend income.” The Electing Holder’s adjusted taxbasis in our common stock will be increased to reflect taxed but undistributed earnings and profits. Distributions to the Electing Holder of our earnings andprofits that were previously taxed will result in a corresponding reduction in the Electing Holder’s adjusted tax basis in our common stock and will not betaxed again once distributed. The Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with respectto any year. An Electing Holder generally will recognize capital gain or loss on the sale, exchange or other disposition of our common stock.Even if a U.S. Holder makes a QEF election for one of our taxable years, if we were a PFIC for a prior taxable year during which the U.S. Holder ownedour common stock and for which the U.S. Holder did not make a timely QEF election, the U.S. Holder would also be subject to the more adverse rulesdescribed below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.” However, under certain circumstances, a U.S.Holder may be permitted to make a retroactive QEF election with respect to us for any open taxable years in the U.S. Holder’s holding period for our commonstock in which we are treated as a PFIC. Additionally, to the extent that any of our subsidiaries is a PFIC, a U.S. Holder’s QEF election with respect to uswould not be effective with respect to the U.S. Holder’s deemed ownership of the stock of such subsidiary and a separate QEF election with respect to suchsubsidiary would be required.A U.S. Holder makes a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with the U.S. Holder’s U.S. federal income taxreturn. If, contrary to our expectations, we were to determine that we are treated as a PFIC for any taxable year, we would notify all U.S. Holders and wouldprovide all necessary information to any U.S. Holder that requests such information in order to make the QEF election described above with respect to us andthe relevant subsidiaries. A QEF election would not apply to any taxable year for which we are not a PFIC, but would remain in effect with respect to anysubsequent taxable year for which we are a PFIC, unless the IRS consents to the revocation of the election. 105Table of ContentsTaxation of U.S. Holders Making a “Mark-to-Market” ElectionIf we were to be treated as a PFIC for any taxable year and, subject to the possibility that our common stock may be delisted by a qualifying exchange,our common stock were treated as “marketable stock,” then, as an alternative to making a QEF election, a U.S. Holder would be allowed to make a“mark-to-market” election with respect to our common stock, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevantinstructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year theexcess, if any, of the fair market value of the U.S. Holder’s common stock at the end of the taxable year over the holder’s adjusted tax basis in the commonstock. The U.S. Holder also would be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in the common stockover the fair market value thereof at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of themark-to-market election. A U.S. Holder’s tax basis in the U.S. Holder’s common stock would be adjusted to reflect any such income or loss recognized. Gainrecognized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss recognized on the sale,exchange or other disposition of the common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-marketgains previously included in income by the U.S. Holder. A mark-to-market election would not apply to our common stock owned by a U.S. Holder in anytaxable year during which we are not a PFIC, but would remain in effect with respect to any subsequent taxable year for which we are a PFIC, unless ourcommon stock is no longer treated as “marketable stock” or the IRS consents to the revocation of the election.Even if a U.S. Holder makes a “mark-to-market” election for one of our taxable years, if we were a PFIC for a prior taxable year during which the U.S.Holder owned our common stock and for which the U.S. Holder did not make a timely mark-to-market election or a timely QEF election, the U.S. Holderwould also be subject to the more adverse rules described below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.”Additionally, to the extent that any of our subsidiaries is a PFIC, a “mark-to-market” election with respect to our common stock would not apply to theU.S. Holder’s deemed ownership of the stock of such subsidiary.Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market ElectionIf we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a timely QEF election or a timely “mark-to-market”election for that year (i.e., the taxable year in which the U.S. Holder’s holding period commences), whom we refer to as a “Non-Electing Holder,” would besubject to special rules resulting in increased tax liability with respect to (1) any excess distribution (i.e., the portion of any distributions received by theNon-Electing Holder on our common stock in a taxable year in excess of 125.0% of the average annual distributions received by the Non-Electing Holder inthe three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common stock), and (2) any gain realized on the sale,exchange or other disposition of our common stock. Under these special rules: • the excess distribution and any gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common stock; • the amount allocated to the current taxable year and any year prior to the year we were first treated as a PFIC with respect to the Non-ElectingHolder would be taxed as ordinary income; and • the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class oftaxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable toeach such other taxable year.Moreover, (i) any dividends received by a non-corporate U.S. Holder in a year in which we are a PFIC (or in which we were a PFIC in the precedingyear) will not be treated as “qualified dividend income” and will be subject to tax at rates applicable to ordinary income and (ii) if a Non-Electing Holderwho is an individual dies while owning our common stock, such holder’s successor generally would not receive a step-up in tax basis with respect to suchstock. Additionally, to the extent that any of our subsidiaries is a PFIC, the foregoing consequences would apply to the U.S. Holder’s deemed receipt of anyexcess distribution on, or gain deemed realized on the disposition of, the stock of such subsidiary deemed owned by the U.S. Holder.If we are treated as a PFIC for any taxable year during the holding period of a U.S. Holder, unless the U.S. Holder makes a timely QEF election,or a timely “mark-to-market” election, for the first taxable year in which the U.S. Holder holds our common stock and in which we are a PFIC, we willcontinue to be treated as a PFIC for all succeeding years during which the U.S. Holder owns our common stock even if we are not a PFIC for such years.U.S. Holders are encouraged to consult their tax advisers with respect to any available elections that may be applicable in such a situation. In thisregard, while it is our position and our U.S. counsel’s position that we should not be a PFIC for taxable years 2011 through 2017 and we believe that wewill not be a PFIC for subsequent taxable years, there is no assurance that these positions are correct. In addition, U.S. Holders should consult their taxadvisers regarding the IRS information reporting and filing obligations that may arise as a result of the ownership of shares in a PFIC. 106Table of ContentsControlled Foreign CorporationAlthough we believe that Navios Acquisition likely was not a controlled foreign corporation (a “CFC”) as of December 31, 2017, we believe that taxrules recently enacted by the Tax Cuts and Jobs Act may result in Navios Acquisition being treated as a CFC for U.S. federal income tax purposes in thefuture. Navios Acquisition’s status as a CFC depends in large part on the percentage of our equity held by Navios Holdings (either directly or indirectlythrough Alpha Merit Corporation), whether one or more U.S. Holders own 10.0% or more (by vote or value) of the equity of Navios Acquisition, and variousother factors. Any U.S. Holder of Navios Acquisition or Navios Holdings that owns 10% or more (by vote or value) of the equity of Navios Acquisition orNavios Holdings, as the case may be, should consult its own tax advisor regarding U.S. federal tax consequences that may result from Navios Acquisitionbeing treated as a CFC.Medicare TaxA U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will generally besubject to a 3.8% tax on the lesser of (i) the U.S. Holder’s “net investment income” for a taxable year and (ii) the excess of the U.S. Holder’s modified adjustedgross income for such taxable year over $200,000 ($250,000 in the case of joint filers). For these purposes, “net investment income” will generally includedividends paid with respect to our common stock and net gain attributable to the disposition of our common stock (in each case, unless such common stockis held in connection with certain trades or businesses), but will be reduced by any deductions properly allocable to such income or net gain.United States Federal Income Taxation of Non-U.S. HoldersDistributionsA Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on distributions received with respect to our commonstock if the Non-U.S. Holder is not engaged in a U.S. trade or business. If the Non-U.S. Holder is engaged in a U.S. trade or business, our distributions will besubject to U.S. federal income tax to the extent they constitute income effectively connected with the Non-U.S. Holder’s U.S. trade or business (and acorporate Non-U.S. Holder may also be subject to U.S. federal branch profits tax). However, distributions paid to a Non-U.S. Holder who is engaged in a tradeor business may be exempt from taxation under an income tax treaty if the income arising from the distribution is not attributable to a U.S. permanentestablishment maintained by the Non-U.S. Holder.Sale, Exchange or other Disposition of Common StockIn general, a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on any gain resulting from the disposition of ourcommon stock provided the Non-U.S. Holder is not engaged in a U.S. trade or business. A Non-U.S. Holder that is engaged in a U.S. trade or business will besubject to U.S. federal income tax in the event the gain from the disposition of our common stock is effectively connected with the conduct of such U.S. tradeor business (provided, in the case of a Non-U.S. Holder entitled to the benefits of an income tax treaty with the United States, such gain also is attributable toa U.S. permanent establishment). However, even if not engaged in a U.S. trade or business, individual Non-U.S. Holders may be subject to tax on gainresulting from the disposition of our common stock if they are present in the United States for 183 days or more during the taxable year of the disposition andmeet certain other requirements.Certain Information Reporting RequirementsIndividual U.S. Holders (and to the extent specified in applicable Treasury Regulations, certain individual Non-U.S. Holders and certain U.S. Holdersthat are entities) that hold “specified foreign financial assets,” including our common stock, whose aggregate value exceeds $75,000 at any time during thetaxable year or $50,000 on the last day of the taxable year (or such higher amounts as prescribed by applicable Treasury Regulations) are required to file areport on IRS Form 8938 with information relating to the assets for each such taxable year. Specified foreign financial assets would include, among otherthings, our common stock, unless such common stock is held in an account maintained by a U.S. “financial institution” (as defined). Substantial penaltiesapply 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, in theevent an individual U.S. Holder (and to the extent specified in applicable Treasury Regulations, an individual Non-U.S. Holder or a U.S. entity) that isrequired to file IRS Form 8938 does not file such form, the statute of limitations on the assessment of U.S. federal income taxes of such holder for the relatedtax year may not close until three years after the date that the required information is filed. U.S. Holders (including U.S. entities) and Non-U.S. Holders shouldconsult their own tax advisors regarding their reporting obligations. 107Table of ContentsU.S. Backup Withholding Tax and Related Information Reporting RequirementsIn general, dividend payments and payments of proceeds from the disposition of our common stock made to a non-corporate U.S. Holder may besubject to information reporting requirements. Such payments may also be subject to backup withholding tax (currently at a rate of 24%) if you are anon-corporate U.S. Holder and you: • fail to provide an accurate taxpayer identification number; • are notified by the IRS that you are subject to backup withholding because you have previously failed to report all interest or dividends requiredto be shown on your federal income tax returns; or • fail to comply with applicable certification requirements.A U.S. Holder generally is required to certify its compliance with the backup withholding rules on IRS Form W-9.Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on anapplicable IRS Form W-8.Backup withholding tax is not an additional tax. Rather, you generally may obtain a credit of any amounts withheld against your liability for U.S.federal income tax (and obtain a refund of any amounts withheld in excess of such liability) by timely filing a U.S. federal income tax return with the IRS.F. Dividends and paying agentsNot applicable.G. Statements by expertsNot applicable.H. Documents on displayWe file reports and other information with the SEC. These materials, including this Annual Report and the accompanying exhibits, may be inspectedand copied at the public 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. Youmay 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 informationNot applicable.Item 11. Quantitative and Qualitative Disclosures about Market RisksForeign Exchange RiskOur functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations mayexpose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than U.S.dollar are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date atransaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized. Expenses incurred inforeign currencies against which the U.S. Dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increases in value.For example, during the year ended December 31, 2017, the value of U.S. dollar decreased by approximately 12.3% as compared to the Euro.Interest Rate RiskIn each of December 31, 2017 and 2016, Navios Acquisition had a total of $1.1 billion, in short term and long-term indebtedness. The debt is U.S.dollar-denominated. Borrowings under our credit facilities bear interest at rates based on a premium over U.S. $ LIBOR except for the interest rate on theNotes which is fixed. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the year ended December 31, 2017,2016 and 2015 we paid interest on our outstanding debt at a weighted average interest rate of 6.5%, 6.0% and 6.0%, respectively. A 1% increase in LIBORwould have increased our interest expense for the years ended December 31, 2017, 2016 and 2015 by $4.3 million, $5.1 million and $4.9 million,respectively. 108Table of ContentsConcentration of Credit RiskFinancial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. Weclosely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history.Our major customers during 2015 were: Navig8, Shell and Mansel. For the year ended December 31, 2015, these three customers accounted for 35.2%, 13.6%and 10.8%, respectively, of Navios Acquisition’s revenue. Our major customers during 2016 were: Navig8, Shell and Mansel. For the year endedDecember 31, 2016, these three customers accounted for 33.0%, 20.0% and 14.7%, respectively, of Navios Acquisition’s revenue. Our major customersduring 2017 were: Navig8, Shell and Mansel. For the year ended December 31, 2017, Navig8, Mansel and Shell accounted for 31.9%, 14.3% and 13.7%,respectively, of Navios Acquisition’s revenue.Cash and Cash EquivalentsCash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits.The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.InflationInflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not consider inflationto be a significant risk to direct expenses in the current and foreseeable economic environment.Item 12. Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesNone.Item 14. Material Modifications to the Rights of Shareholders and Use of ProceedsNone.Item 15. Controls and ProceduresA. Disclosure Controls and ProceduresThe management of Navios Acquisition, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation,pursuant to Rule 13a-15 promulgated under the Securities Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls andprocedures as of December 31, 2017. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controlsand procedures were effective as of December 31, 2017.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us inthe reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’srules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated andcommunicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriateto allow timely decisions regarding required disclosures. 109Table of ContentsB. Management’s annual report on internal control over financial reportingThe management of Navios Acquisition is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) or 15d-15(f) of the Exchange Act. Navios Acquisition’s internal control system was designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples in the United States (“GAAP”).Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.Navios Acquisition’s management assessed the effectiveness of Navios Acquisition’s internal control over financial reporting as of December 31, 2017.In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in InternalControl — Integrated Framework (2013). Based on its assessment, management concluded that, as of December 31, 2017, Navios Acquisition’s internalcontrol over financial reporting is effective based on those criteria.Navios Acquisition’s independent registered public accounting firm has issued an attestation report on Navios Acquisition’s internal control overfinancial reporting.C. Attestation report of the registered public accounting firmNavios Acquisition’s independent registered public accounting firm has issued an audit report on Navios Acquisition’s internal control over financialreporting. This report appears on Page F-2 of the consolidated financial statements.D. Changes in internal control over financial reportingThere have been no changes in internal controls over financial reporting (identified in connection with management’s evaluation of such internalcontrols over financial reporting) that occurred during the year covered by this Annual Report that have materially affected, or are reasonably likely tomaterially affect, Navios Acquisition’s internal controls over financial reporting.Item 16A. Audit Committee Financial ExpertOur audit committee currently consists of three independent directors, Mr. Veraros, Mr. Galatis and Ms. Noury. Each member of our audit committee isfinancially literate under the current listing standards of the NYSE, and our board of directors has determined that Mr. Veraros qualifies as an “auditcommittee financial expert,” as such term is defined by the SEC. Mr. Veraros is independent under applicable NYSE and SEC standards.Item 16B. Code of EthicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securities laws and therules of the NYSE. The code is available for review on our website at http://www.navios-acquisition.com.Item 16C. Principal Accountant Fees and ServicesAudit FeesOur principal accountants for the fiscal years 2017 and 2016 were PricewaterhouseCoopers S.A. The audit fees for the audit for each of the years endedDecember 31, 2017 and 2016 were $0.2 million and $0.3 million, respectively.Audit-Related FeesThere were no audit-related fees billed in 2017 and 2016. 110Table of ContentsTax FeesThere were no tax fees billed in 2017 and 2016.Other FeesThere were no other fees billed in 2017 and 2016.Audit CommitteeThe Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independentauditors. As part of this responsibility, the audit committee pre-approves the audit and non-audit services performed by the independent auditors in order toassure that they do not impair the auditors’ independence from Navios Acquisition. The Audit Committee has adopted a policy which sets forth theprocedures and the conditions pursuant to which services proposed to be performed by the independent auditors may be pre-approved.The Audit Committee separately pre-approved all engagements and fees paid to our principal accountants in 2017 and 2016.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone.Item 16F. Change in Registrant’s Certifying AccountantNot applicable.Item 16G. Corporate GovernancePursuant to an exception for foreign private issuers, we are not required to comply with the corporate governance practices followed by U.S. companiesunder the NYSE listing standards. However, we have voluntarily adopted all of the NYSE required practices.Item 16H. Mine Safety DisclosuresNot applicable.Item 17. Financial StatementsSee Item 18.Item 18. Financial StatementsThe financial information required by this Item is set forth on pages F-1 to F-42 and are filed as part of this annual report.Separate consolidated financial statements and notes thereto for Navios Midstream for each of the years ended December 31, 2017, 2016 and 2015 arebeing provided as a result of Navios Midstream meeting a significance test pursuant to Rule 3-09 of Regulation S-X and, accordingly, the financialstatements of Navios Midstream for the year ended December 31, 2017 are required to be filed as part of this Annual Report on Form 20-F. See Exhibit 15.3 tothis Annual Report on Form 20-F. 111Table of ContentsItem 19. Exhibits ExhibitNo. Description 1.1 Amended and Restated Articles of Incorporation (Previously filed as an exhibit to a Report on Form 6-K filed on June 4, 2010 and herebyincorporated by reference.) 1.2 Articles of Amendment to the Amended and Restated Articles of Incorporation (Previously filed as an exhibit to a Report on Form 6-K filed onFebruary 10, 2011, and hereby incorporated by reference.) 1.3 By-laws (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (File No 333-151707) andhereby incorporated by reference.) 2.1 Specimen Unit Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (File No333-151707) and hereby incorporated by reference.) 2.2 Specimen Common Stock Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended(File No 333-151707) and hereby incorporated by reference.) 2.3 Specimen Warrant Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (File No333-151707) and hereby incorporated by reference.) 2.4 Form of Amendment to Warrant Agreement between Continental Stock Transfer & Trust Company and Navios Acquisition (Previously filed asan exhibit to a Report on Form 6-K filed on July 29, 2010, and hereby incorporated by reference.) 2.5 Certificate of Designation of the Series A Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on September 16, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on September 21, 2010, and hereby incorporated byreference.) 2.6 Certificate of Designation of the Series B Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on October 29, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on November 9, 2010, and hereby incorporated byreference.) 2.7 Certificate of Designation of the Series C Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on March 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2011, and hereby incorporated byreference.) 2.8 Indenture dated November 13, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed on December 9, 2013, and hereby incorporatedby reference.) 2.9 Certificate of Designation of the Series D Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on August 24, 2012 (Previously filed as an exhibit to a Report on Form 6-K filed on November 16, 2012, and hereby incorporated byreference.) 2.10 Form of Indenture (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-3 filed on November 21, 2016, andhereby incorporated by reference). 4.1 Form of Right of First Refusal Agreement among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed as an exhibit to theNavios Acquisition Registration Statement on Form F-1, as amended (File No 333-151707) and hereby incorporated by reference.) 4.2 Repurchase Plan dated April 8, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2010, and hereby incorporated byreference.) 4.3 Amended Co-Investment Shares Subscription Agreement dated April 8, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onApril 12, 2010, and hereby incorporated by reference.) 4.4 Acquisition Agreement, dated April 8, 2010 between Navios Acquisition and Navios Holdings (Previously filed as an exhibit to a Report onForm 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.5 Management Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed as an exhibit to aReport on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.6 Administrative Services Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.7 Acquisition Omnibus Agreement dated May 28, 2010 among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 112Table of Contents 4.8 Midstream Omnibus Agreement dated November 18, 2014 among Navios Midstream, Navios Holdings and Navios Partners (Previously filed as anexhibit to a Registration Statement on Form S-1 for Navios Maritime Midstream Partners LP filed on October 27, 2014, and hereby incorporatedby reference.) 4.9 Navios Containers Agreement dated June 8, 2017 among Navios Containers, Navios Acquisition, Navios Midstream, Navios Holdings and NaviosPartners (Previously filed as an exhibit to a Report on Form 6-K filed on August 1, 2017, and hereby incorporated by reference.) 4.10 Securities Purchase Agreement dated July 18, 2010 between Navios Acquisition and Vanship Holdings Limited (Previously filed as an exhibit toa Report on Form 6-K filed on July 26, 2010, and hereby incorporated by reference.) 4.11 Credit Agreement, dated April 7, 2010, among certain vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha Bank A.E. and CreditAgricole Corporate and Investment Bank (Previously filed as an exhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporatedby reference.) 4.12 Credit Agreement, dated April 8, 2010, among certain vessel-owning subsidiaries and DVB Bank SE and Fortis Bank (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.13 Facility Agreement for $52.2 million term loan facility, dated October 26, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onNovember 9, 2010, and hereby incorporated by reference.) 4.14 Facility Agreement for $52.0 million term loan facility, dated December 6, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onJanuary 12, 2012, and hereby incorporated by reference.) 4.15 Registration Rights Agreement dated May 26, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27, 2011, and herebyincorporated by reference.) 4.16 Loan Agreement for $40.0 million with Navios Maritime Holdings Inc., dated September 7, 2010 (Previously filed as an exhibit to a Report onForm 6-K filed on May 27, 2011, and hereby incorporated by reference.) 4.17 Letter Agreement Nr. 1 to Loan Agreement, dated as of October 21, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27,2011, and hereby incorporated by reference.) 4.18 Letter Agreement Nr. 2 to Loan Agreement, dated November 8, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed onNovember 15, 2011, and hereby incorporated by reference.) 4.19 Facility Agreement for up to $28.1 million term loan facility, dated December 29, 2011 (Previously filed as an exhibit to a Report on Form 6-Kfiled on February 22, 2012, and hereby incorporated by reference.) 4.20 Facility Agreement for $56.3 million term loan facility, dated December 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed onFebruary 22, 2012, and hereby incorporated by reference.) 4.21 Facility Agreement for $51.0 million term loan facility, dated February 6, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed onFebruary 13, 2014, and hereby incorporated by reference.) 4.22 Loan Agreement between Navios Europe Inc., Navios Acquisition, Navios Maritime Holdings Inc. and Navios Maritime Partners L.P., as lenders,Navios Partners Europe Finance Inc., as agent, Navios Acquisition Europe Finance Inc., a wholly owned subsidiary of Navios Acquisition, asarranger and Navios Holdings Europe Finance Inc., as security trustee, dated December 13, 2013 (Previously filed as an exhibit to a Report onForm 6-K filed on February 13, 2014, and hereby incorporated by reference.) 4.23 Amendment to the Management Agreement dated May 4, 2012 (Previously filed as an exhibit to a Report on Form 6-K filed on May 15, 2012, andhereby incorporated by reference.) 4.24 Term Loan Facility Agreement for $132.4 million loan facility, dated July 18, 2014 (Previously filed as an exhibit to a Report on Form 6-K filedon August 12, 2014, and hereby incorporated by reference.) 4.25 Short Term Credit Facility for up to $200.0 million, dated November 11, 2014, with Navios Maritime Holdings Inc. (Previously filed as an exhibitto a Report on Form 20-F filed on March 30, 2015, and hereby incorporated by reference.) 4.26 Securities Purchase Agreement, dated February 26, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and hereby incorporated by reference.) 4.27 Form of Co-Investment Share Purchase Agreement (Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and herebyincorporated by reference.) 4.28 Registration Rights Agreement, dated February 26, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.and the management investors party thereto (Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and herebyincorporated by reference.) 4.29 Securities Purchase Agreement, dated May 21, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on May 30, 2013, and hereby incorporated by reference.) 113Table of Contents 4.30 Registration Rights Agreement, dated May 21, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on May 30, 2013, and hereby incorporated by reference.) 4.31 Securities Purchase Agreement, dated September 16, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on September 18, 2013, and hereby incorporated by reference.) 4.32 Registration Rights Agreement, dated September 16, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime HoldingsInc. (Previously filed as an exhibit to a Report on Form 6-K filed on September 18, 2013, and hereby incorporated by reference.) 4.33 First Supplemental Indenture dated January 8, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, and herebyincorporated by reference.) 4.34 Second Supplemental Indenture dated February 20, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, andhereby incorporated by reference.) 4.35 Third Supplemental Indenture dated March 31, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, and herebyincorporated by reference.) 4.36 Fourth Supplemental Indenture dated May 28, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on August 12, 2014, and herebyincorporated by reference.) 4.37 Fifth Supplemental Indenture dated December 4, 2014 (Previously filed as an exhibit to a Report on Form 20-F filed on March 30, 2015, andhereby incorporated by reference.) 4.38 Backstop Agreement, dated November 18, 2014, with Navios Maritime Midstream Partners LP (Previously filed as an exhibit to a Report on Form20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.39 Navios Midstream General Partner Option Agreement, dated November 18, 2014, with Navios Maritime Holdings Inc. (Previously filed as anexhibit to a Report on Form 20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.40 General Partner Option Agreement, dated as of November 18, 2014, with Navios Maritime Holdings Inc. (Previously filed as an exhibit to aReport on Form 20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.41 Amendment to the Management Agreement dated May 14, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on May 22, 2014,and hereby incorporated by reference.) 4.42 Amendment to the Administrative Services Agreement dated May 14, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed onMay 22, 2014, and hereby incorporated by reference.) 4.43 Amended and Restated Facility Agreement for $125.0 million term loan facility, dated November 4, 2015 (Previously filed as an exhibit to aReport on Form 6-K filed on November 13, 2015, and hereby incorporated by reference.) 4.44 Sixth Supplemental Indenture, dated November 17, 2015 (Previously filed as an exhibit to a Report on Form 6-K filed on January 6, 2016, andhereby incorporated by reference.) 4.45 Facility Agreement for up to $44.0 million term loan facility, dated December 18, 2015 (Previously filed as an exhibit to a Report on Form 6-Kfiled on January 6, 2016, and hereby incorporated by reference.) 4.46 Loan Agreement for up to $70.0 million with Navios Maritime Holdings Inc., dated as of September 19, 2016 (Previously filed as an exhibit to aReport on Form 6-K filed on September 21, 2016, and hereby incorporated by reference.) 4.47 Share Purchase Agreement, dated November 18, 2014, between Navios Maritime Midstream Partners L.P. and Aegean Sea Maritime Holdings Inc.(Previously filed as an exhibit to a Registration Statement on Form F-1 filed on October 27, 2014, and hereby incorporated by reference). 4.48 First Amendment to Share Purchase Agreement, dated October 25, 2016, between Navios Maritime Midstream Partners L.P. and Aegean SeaMaritime Holdings Inc. (Previously filed as an exhibit to a Report on Form 6-K filed on November 21, 2016, and hereby incorporated byreference). 4.49 Facility Agreement for $26.7 million term loan facility, dated January 31, 2017, among certain vessel-owning subsidiaries and ABN AMRO BankN.V. (Previously filed as an exhibit to a Report on Form 20-F, filed on April 5, 2017, and hereby incorporated by reference). 4.50 Loan Agreement for $24.0 million term loan facility, dated June 7, 2017, among Amorgos Shipping Corporation and Andros ShippingCorporation, HSH Nordbank AG, and the Banks and Financial Institutions listed therein (Previously filed as an exhibit to a Report on Form 6-K,filed on August 17, 2017, and hereby incorporated by reference). 114Table of Contents 4.51 Omnibus Agreement, effective as of June 8, 2017, among Navios Maritime Acquisition Corporation, Navios Maritime Holdings Inc., NaviosMaritime Partners L.P., Navios Maritime Midstream Partners L.P., Navios Maritime Containers Inc. and Navios Partners Containers Finance Inc.(Previously filed as an exhibit to a Report on Form 6-K, filed on August 17, 2017, and hereby incorporated by reference). 4.52 Bareboat charters and Memoranda of Agreement, by and among Sea 66 Leasing Co. Limited, Sea 67 Leasing Co. Limited, Sea 68 Leasing Co.Limited and Sea 69 Leasing Co. Limited wholly owned subsidiaries of China Merchants Bank Limited, dated March 31, 2018, providing for thesale and leaseback of the NAVE ATRIA, NAVE AQUILA, NAVE BELLATRIX and NAVE ORION respectively.* 8.1 List of subsidiaries.*12.1 Certification by principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*12.2 Certification by principal financial officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*13.1 Certification by principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +15.1 Consent of PricewaterhouseCoopers S.A.*15.2 Consent of Ernst & Young (Hellas) Certified Auditors Accountants S.A.*15.3 Financial statements of Navios Maritime Midstream Partners L.P. for the fiscal years ended December 31, 2017, 2016 and 2015.*101 The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017, formatted in eXtensibleBusiness Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2017 and 2016; (ii) Consolidated Statements ofOperations for each of the years ended December 31, 2017, 2016 and 2015; (iii) Consolidated Statements of Cash Flows for each of the yearsended December 31, 2017, 2016 and 2015; (iv) Consolidated Statements of Changes in Equity for each of the years ended December 31, 2017,2016 and 2015; and (v) the Notes to the Consolidated Financial Statements as blocks of text. *Filed herewith.+Furnished herewith.SignaturesNavios Maritime Acquisition Corporation hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this Annual Report on its behalf. Navios Maritime Acquisition Corporation/s/ Angeliki FrangouBy: Angeliki FrangouIts: Chairman and Chief Executive OfficerDate: April 5, 2018 115Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2017 AND 2016 F-3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-7 F-1Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of Directors ofNavios Maritime Acquisition Corporation:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Navios Maritime Acquisition Corporation and its subsidiaries (the “Company”) as ofDecember 31, 2017 and 2016, and the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in theperiod ended December 31, 2017, including the related notes (collectively referred to as the consolidated financial statements”). We also have audited theCompany’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework(2013) issued by the COSO.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting andfor its assessment of the effectiveness of internal control over financial reporting, included in “Management’s Annual Report on Internal Control overFinancial Reporting” appearing under Item 15(b) of the Company’s 2017 Annual Report on Form 20-F. Our responsibility is to express opinions on theCompany’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a publicaccounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respectto the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, 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 consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 5, 2018We have served as the Company’s auditor since 2010. F-2Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars except share data) Notes December 31,2017 December 31,2016 ASSETS Current assets Cash and cash equivalents 3 $81,151 $49,292 Restricted cash 3 5,307 7,366 Accounts receivable, net 4 12,810 20,933 Due from related parties, short term 15 13,931 25,047 Prepaid expenses and other current assets 6,534 4,644 Total current assets 119,733 107,282 Vessels, net 5 1,250,043 1,306,923 Goodwill 7 1,579 1,579 Other long-term assets 900 900 Deferred dry dock and special survey costs, net 20,871 10,172 Investment in affiliates 8,15 125,062 196,695 Due from related parties, long-term 8,15 54,593 80,068 Total non-current assets 1,453,048 1,596,337 Total assets $1,572,781 $1,703,619 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable 9 $3,862 $4,855 Accrued expenses 11 12,211 11,047 Due to related parties, short-term 8,15 17,107 — Deferred revenue 5,028 8,519 Current portion of long-term debt, net of deferred finance costs 12 36,410 55,000 Total current liabilities 74,618 79,421 Long-term debt, net of current portion, premium and net of deferred finance costs 12 1,028,959 1,040,938 Deferred gain on sale of assets 5,15 6,729 7,829 Total non-current liabilities 1,035,688 1,048,767 Total liabilities $1,110,306 $1,128,188 Commitments and contingencies 16 — — Puttable common stock 0 and 250,000 shares issued and outstanding with $0 and $2,500 redemptionamount as of December 31, 2017 and December 31, 2016, respectively 17 — 2,500 Stockholders’ equity Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 1,000 series C shares issued and outstandingas of December 31, 2017 and December 31, 2016 17 — — Common stock, $0.0001 par value; 250,000,000 shares authorized; 152,107,905 and 150,582,990 issued andoutstanding as of December 31, 2017 and December 31, 2016, respectively 17 15 15 Additional paid-in capital 17 518,071 541,720 (Accumulated deficit)/ Retained earnings (55,611) 31,196 Total stockholders’ equity 462,475 572,931 Total liabilities and stockholders’ equity $1,572,781 $1,703,619 See notes to consolidated financial statements. F-3Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Expressed in thousands of U.S. dollars- except share and per share data) Notes Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Revenue 18 $227,288 $290,245 $313,396 Time charter and voyage expenses 15 (21,919) (4,980) (4,492) Direct vessel expenses 15 (4,198) (3,567) (1,532) Management fees (entirely through related party transactions) 15 (94,973) (97,866) (95,336) General and administrative expenses 15,17 (13,969) (17,057) (15,532) Depreciation and amortization 5,6 (56,880) (57,617) (57,623) Interest income 8,15 10,042 4,767 1,683 Interest expenses and finance cost 12 (76,438) (75,987) (73,561) Gain on sale of vessels 5,15 — 11,749 5,771 Equity/ (loss) in net earnings of affiliated companies 8 (46,657) 15,499 18,436 Other income 82 377 41 Other expense (1,277) (2,685) (1,514) Net (loss)/ income $(78,899) $62,878 $89,737 Dividend on preferred shares Series B — — (78) Dividend on preferred shares Series D — — (281) Dividend on restricted shares (89) (105) (245) Undistributed loss/ (income) attributable to Series C participating preferredshares 3,835 (3,058) (4,337) Net (loss)/ income attributable to common stockholders, basic 19 $(75,153) $59,715 $84,796 Plus: Dividend on preferred shares Series B — — 78 Dividend on preferred shares Series D — — 281 Dividend on restricted shares — 105 245 Net (loss)/ income attributable to common stockholders, diluted 19 (75,153) 59,820 $85,400 Net (loss)/ income per share, basic 19 $(0.50) $0.40 $0.57 Weighted average number of shares, basic 150,412,031 149,932,713 150,025,086 Net (loss)/ income per share, diluted 19 $(0.50) $0.40 $0.56 Weighted average number of shares, diluted 150,412,031 150,736,156 153,300,395 See notes to consolidated financial statements. F-4Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Operating Activities Net (loss)/ income $(78,899) $62,878 $89,737 Adjustments to reconcile net (loss)/ income to net cash provided by operatingactivities: Depreciation and amortization 5,6 56,880 57,617 57,623 Amortization and write-off of deferred finance costs and bond premium 12 3,784 3,656 3,495 Gain on debt repayment — (350) — Amortization of dry dock and special survey costs 4,198 2,837 1,532 Stock based compensation 17 57 864 2,362 Gain on sale of vessels 5 — (11,749) (5,771) Equity/ (loss) in earnings of affiliates, net of dividends received 8 56,923 (1,438) (3,821) Changes in operating assets and liabilities: (Increase)/ decrease in prepaid expenses and other current assets (2,390) (479) 5,067 Decrease/ (increase) in accounts receivable 8,123 (6,731) 4,367 Decrease/ (increase) in due from related parties short-term 11,116 (7,210) — (Increase)/ decrease in restricted cash (26) 224 (41) Decrease/ (increase) in other long term assets — 1,020 (1,230) (Decrease)/ increase in accounts payable (993) 2,102 1,246 Increase/ (decrease) in accrued expenses 1,164 1,245 (293) Payments for dry dock and special survey costs (14,897) (3,828) (6,598) Increase/ (decrease) in due to related parties 17,107 — (17,763) Increase in due from related parties long-term (12,730) (7,638) (16,476) (Decrease)/ increase in deferred revenue (3,475) (75) 6,200 Net cash provided by operating activities $45,942 $92,945 $119,636 Investing Activities Loan repayment from affiliated companies 15 55,132 — — Acquisition of vessels 5 — — (163,791) Net cash proceeds from sale of vessels 5,8 — 89,988 71,224 Investment in affiliates (84) (89) (7,201) Loans receivable from affiliates (13,706) (4,275) (7,327) Loan receivable from affiliate, net of issuance fee and costs 15 — (49,342) — Dividends received from affiliates 11,036 7,223 2,585 Net cash provided by/ (used in) investing activities $52,378 $43,505 $(104,510) Financing Activities Loan proceeds, net of deferred finance costs 12 49,764 — 192,930 Loan repayments 12 (84,196) (105,531) (140,861) Dividend paid 10 (31,614) (31,682) (40,084) Decrease/ (increase) in restricted cash 2,085 (750) (130) Payment to related party 15 — — (11,265) Redemption of Convertible shares and puttable common stock 17 (2,500) (4,000) (5,500) Acquisition of treasury stock 17 — — (9,904) Net cash used in financing activities $(66,461) $(141,963) $(14,814) Net increase/ (decrease) in cash and cash equivalents 31,859 (5,513) 312 Cash and cash equivalents, beginning of year 49,292 54,805 54,493 Cash and cash equivalents, end of year $81,151 $49,292 $54,805 Supplemental disclosures of cash flow information Cash interest paid, net of capitalized interest $71,966 $72,478 $70,130 Non-cash investing activities Capitalized financing costs $— $— $19 Investment in affiliates received upon sale of vessels $— $— $27,111 Accrued interest on loan to affiliates $2,643 $3,498 $1,357 Deferred gain on sale of assets $— $8,823 $8,971 Non-cash financing activities Acquisition of vessels $— $— $(914) Due to related party $— $— $(914) Stock based compensation $57 $864 $2,362 See notes to consolidated financial statements. F-5Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of U.S. dollars, except share data) Preferred Stock Common Stock Notes Number ofPreferredShares Amount Number ofCommonShares Amount AdditionalPaid-inCapital (AccumulatedDeficit)/RetainedEarnings TotalStockholders’Equity Balance, December 31, 2014(Revised) 4,540 $— 151,664,942 $15 $557,125 $(66,347) $490,793 Conversion of preferred stock intoputtable common stock 17 — — 800,000 — — — — Redemption of puttable commonstock 17 — — (150,000) — — — — Conversion of preferred stock intocommon stock 17 (540) — 172,800 — — — — Acquisition of treasury stock 17 — — (2,704,752) — (9,904) — (9,904) Stock based compensation 17 — — — — 2,362 — 2,362 Dividend paid/ declared 10 — — — — (8,727) (23,390) (32,117) Net income — — — — — 89,737 89,737 Balance, December 31, 2015 4,000 $— 149,782,990 $15 $540,856 $— $540,871 Redemption of puttable commonstock 17 — — (400,000) — — — — Conversion of Series A preferredstock into common stock 17 (3,000) — 1,200,000 — — — — Stock based compensation 17 — — — — 864 — 864 Dividend paid/ declared 10 — — — — — (31,682) (31,682) Net income — — — — — 62,878 62,878 Balance, December 31, 2016 1,000 $— 150,582,990 $15 $541,720 $31,196 $572,931 Redemption of puttable commonstock 17 — — (250,000) — — — — Stock based compensation 17 — — 1,774,915 — 57 — 57 Dividend paid/ declared 10 — — — — (23,706) (7,908) (31,614) Net (loss) — — — — — (78,899) (78,899) Balance, December 31, 2017 1,000 $— 152,107,905 $15 $518,071 $(55,611) $462,475 See notes to consolidated financial statements. F-6Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data)NOTE 1: DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONSNavios Maritime Acquisition Corporation (“Navios Acquisition” or the “Company”) (NYSE: NNA) owns a large fleet of modern crude oil, refinedpetroleum product and chemical tankers providing world-wide marine transportation services. The Company’s strategy is to charter its vessels tointernational oil companies, refiners and large vessel operators under long, medium and short-term contracts. The Company is committed to providingquality transportation services and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition aremanaged by a subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”).Navios Acquisition was incorporated in the Republic of the Marshall Islands on March 14, 2008. On July 1, 2008, Navios Acquisition completed itsinitial public offering (“IPO”). On May 28, 2010, Navios Acquisition consummated the vessel acquisition which constituted its initial business combination.Following such transaction, Navios Acquisition commenced its operations as an operating company.In November 2014, Navios Maritime Midstream Partners L.P. (“Navios Midstream”), a company formed as a subsidiary of Navios Acquisition,completed an IPO of its units in the United States and is listed on the NYSE under the symbol “NAP”. (Refer to Note 8, “Investment in affiliates”). NaviosMidstream is a publicly traded master limited partnership which owns, operates and acquires crude oil tankers, refined petroleum product tankers, chemicaltankers and liquefied petroleum gas tankers under long-term employment contracts.On November 16, 2017, in accordance with the terms of the Navios Midstream Partnership Agreement all of the issued and outstanding 9,342,692subordinated units of Navios Midstream converted into common units on a one-for-one basis. Following their conversion into common units, these units willhave the same distribution rights as all other common units.As of December 31, 2017, Navios Acquisition owned a 59.0% limited partner interest in Navios Midstream, which included a 2.0% general partnerinterest.As of December 31, 2017, Navios Holdings had 42.9% of the voting power and 46.2% of the economic interest in Navios Acquisition.As of December 31, 2017, Navios Acquisition had outstanding: 152,107,905 shares of common stock and 1,000 shares of Series C ConvertiblePreferred Stock held by Navios Holdings.NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generallyaccepted in the United States of America (GAAP).(b) Principles of consolidation: The accompanying consolidated financial statements include the accounts of Navios Acquisition, a Marshall Islandscorporation, and its majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidatedstatements.The Company also consolidates entities that are determined to be variable interest entities (“VIEs”) as defined in the accounting guidance, if itdetermines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack thecharacteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equityholders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or(c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expectedresidual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that hasdisproportionately few voting rights. F-7Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, management believes thatthe Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expendituresand debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, theCompany continues to adopt the going concern basis in preparing its financial statements.(c) Equity method investments: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over whichthe Company has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of theearnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received from anaffiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates,provided that the issuance of such shares qualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals or exceeds its interest inthe affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.Navios Acquisition evaluates its equity method investments, for other than temporary impairment, on a quarterly basis. Consideration is given to(1) the length of time and the extent to which the fair value has been less than the carrying value, (2) the financial condition and near-term prospects and(3) the intent and ability of the Company to retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value.(d) Subsidiaries: Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights and/or otherwise haspower to govern the financial and operating policies. The acquisition method of accounting is used to account for the acquisition of subsidiaries if deemed tobe a business combination. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date ofacquisition. The excess of the cost of acquisition over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill.As of December 31, 2017, the entities included in these consolidated financial statements were: Navios Maritime AcquisitionCorporation and Subsidiaries: Nature Country ofIncorporation 2017 2016 2015Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Amorgos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Andros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antikithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antiparos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Amindra Navigation Co. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Crete Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Folegandros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ikaria Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ios Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Mytilene Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Maritime Acquisition Corporation Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Acquisition Finance (U.S.) Inc. Co-Issuer Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rhodes Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Serifos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Dream Limited Vessel-Owning Company(3) Hong Kong — — 1/1 - 6/17Shinyo Loyalty Limited Former Vessel-Owning Company(1) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Navigator Limited Former Vessel-Owning Company(2) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Sifnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Skiathos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 F-8Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Skopelos Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Syros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Thera Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Tinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Oinousses Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Psara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antipsara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Samothrace Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Thasos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Limnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Skyros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Alonnisos Shipping Corporation Former Vessel-Owning Company(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Makronisos Shipping Corporation Former Vessel-Owning Company(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Iraklia Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Paxos Shipping Corporation Former Vessel-Owning Company(5) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Donoussa Shipping Corporation Former Vessel-Owning Company(6) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Schinousa Shipping Corporation Former Vessel-Owning Company(7) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Sikinos Shipping Corporation Vessel-Owning Company(3) Marshall Is. — — 1/1 - 6/17Kerkyra Shipping Corporation Vessel-Owning Company(8) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Lefkada Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Leros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kimolos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Samos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Tilos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31Delos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 (1)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(2)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(3)Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary.(4)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts wereterminated, with no exposure to Navios Acquisition, due to the shipyard’s inability to issue a refund guarantee.(5)Former vessel-owner of the Nave Lucida which was sold to an unaffiliated third party on January 27, 2016.(6)Former vessel-owner of the Nave Universe which was sold to an unaffiliated third party on October 4, 2016.(7)Former vessel-owner of the Nave Constellation which was sold to an unaffiliated third party on November 15, 2016.(8)The vessel Nave Galactic was sold to Navios Midstream on March 29, 2018 (see Note 22).(e) Use of estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates andjudgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets and scrap value, expectedfuture cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes andcontingencies and the valuations estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience andon various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under differentassumptions and/or conditions.(f) Cash and Cash equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquidinvestments with original maturities of three months or less. F-9Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (g) Restricted Cash: As of December 31, 2017 and 2016, restricted cash consisted of $5,307 and $7,366, respectively, which related to amounts held inretention account in order to service debt and interest payments, as required by certain of Navios Acquisition’s credit facilities.(h) Accounts Receivable, net: The amount shown as accounts receivable, net at each balance sheet date includes receivables from charterers for hire,freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessedindividually for purposes of determining the appropriate provision for doubtful accounts.(i) Other long term assets: As of December 31, 2017 and 2016, the amounts shown as other long term assets reflected the advances of $900 and $900,respectively, to certain unrelated counterparties for working capital purposes as per charters entered with them.(j) Vessels, net: Vessels are stated at historical cost, which consists of the contract price, delivery and acquisition expenses and capitalized interest costswhile under construction. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. Subsequent expenditures for majorimprovements and upgrading are capitalized, provided they appreciably extend the life, increase the earning capacity or improve the efficiency or safety ofthe vessels. Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value. Managementestimates the residual values of our tanker vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (LWT). Residualvalues are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect thedepreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. The management after considering currentmarket trends for scrap rates and 10-year average historical scrap rates of the residual values of the Company’s vessels, estimates scrap value at a rate of $360per LWT.Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationsover the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective.(k) Vessels held for sale: Vessels are classified as “Vessels held for sale” when all of the following criteria are met: management has committed to aplan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels;an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; the sale of the vessel is probableand transfer of the vessel is expected to qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a price thatis reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan willbe 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 cost to sell.These vessels are not depreciated once they meet the criteria to be held for sale.(l) Deposits for vessels acquisitions: This represents amounts paid by the Company in accordance with the terms of the purchase agreements for theconstruction of long-lived fixed assets. Interest costs incurred during the construction (until the asset is substantially complete and ready for its intended use)are capitalized. Capitalized interest amounted to $0, $0 and $104 as of December 31, 2017, 2016 and 2015, respectively.(m) Impairment of long-lived asset group: Vessels, other fixed assets and other long-lived assets held and used by Navios Acquisition are reviewedperiodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fullyrecoverable. Navios Acquisition’s management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine ifevents or changes in circumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives andcarrying values of long-lived assets, certain indicators of potential impairment are reviewed such as, undiscounted projected operating cash flows, vesselsales and purchases, business plans and overall market conditions. F-10Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Undiscounted projected net operating cash flows are determined for each asset group (consisting of the individual vessel and the intangible, if any,with respect to the time charter agreement attached to that vessel) and compared to the vessel carrying value and related carrying value of the intangible withrespect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings, if any. Within the shipping industry, vesselsare often bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then currentmarket rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vesselindividual asset group.During the fourth quarter of fiscal 2017, management concluded that, market rates decreased during the year and events occurred and circumstanceshad changed, over previous years, which indicated the potential impairment of Navios Acquisition’s long-lived assets may exist. These indicators includedcontinued volatility in the charter market and the related impact of the tanker sector has on management’s expectation for future revenues. As a result, animpairment assessment of long-lived assets or identified asset groups was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of the related intangible. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysisincluded: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days(Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on the 10-year average historicalone year time charter rates) over the remaining economic life of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires,management fees fixed until May 2018 and thereafter assuming an annual increase of 3.0% and utilization rate of 99.6% based on the fleet historicalperformance.The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, existed as of December 31, 2017, asthe undiscounted projected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and a charge would be recognized in the statements ofoperations calculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuationsperformed on an individual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of thecurrent market downturn vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future thatcould expose Navios Acquisition to material impairment charges in the future.There was no impairment loss was recognized for the years ended December 31, 2017, 2016 and 2015, respectively.(n) Deferred Finance Costs: Deferred finance costs include fees, commissions and legal expenses associated with obtaining loan facilities and arepresented as a deduction from the corresponding liability, consistent with debt discount. These costs are amortized over the life of the related debt using theeffective interest rate method, and are included in interest expense. Amortization of deferred finance costs for each of the years ended December 31, 2017,2016 and 2015 was $3,905, $3,501 and $3,183, respectively.(o) Goodwill: Goodwill acquired in a business combination is not to be amortized. Goodwill is tested for impairment at the reporting unit level at leastannually and written down with a charge to the statements of operations if the carrying amount exceeds the estimated implied fair value.The Company evaluates impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit is compared to itscarrying amount, including goodwill. The Company determines the fair value of the reporting unit based on a combination of discounted cash flow analysisand an industry market multiple.If the fair value exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fair value, then theCompany must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it with its carrying amount.The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities of that unit, as if the unit hadbeen acquired in a business combination and the fair value of the unit was the purchase price. If the carrying amount of the goodwill exceeds the implied fairvalue, then goodwill impairment is recognized by writing the goodwill down to its implied fair value.Navios Acquisition has one reporting unit. No impairment loss was recognized for any of the periods presented. F-11Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (p) Intangibles other than goodwill: Navios Acquisition’s intangible assets and liabilities consisted of favorable lease terms and unfavorable leaseterms. When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset isrecorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than marketcharter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. Thedetermination of the fair value of acquired assets and assumed liabilities requires us to make significant assumptions and estimates of many variablesincluding market charter rates, expected future charter rates, the level of utilization of its vessels and its weighted average cost of capital. The use of differentassumptions could result in a material change in the fair value of these items, which could have a material impact on Navios Acquisition’s financial positionand results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the statements of operations in the depreciation and amortization line item. The amortizable value of favorable leases would be consideredimpaired if their fair market values could not be recovered from the future undiscounted cash flows associated with the asset. If a vessel purchase option isexercised the portion of this asset will be capitalized as part of the cost of the vessel and will be depreciated over the remaining useful life of the vessel. As ofDecember 31, 2017 and 2016, Navios Acquisition did not have any intangible assets or liabilities.Management, after considering various indicators performed impairment tests on asset groups which included intangible assets and liabilities asdescribed in paragraph (m) above. As of December 31, 2017 and 2016, there was no impairment of intangible assets.(q) Preferred shares Series D: Navios Acquisition issued shares of its authorized Series D Preferred Stock (nominal and fair value $12,000) to ashipyard, in partial settlement of the purchase price of its newbuild vessels. The preferred stock contains a 6% per annum dividend payable quarterly, startingone year after delivery of the vessel. The Series D Preferred Stock mandatorily converted into shares of common stock 30 months after issuance at a price pershare of common stock equal to $10.00. The holder of the preferred stock had the right to convert the shares of preferred stock into common stock prior to thescheduled maturity dates at a price of $7.00 per share of common stock. The preferred stock did not have any voting rights. Navios Acquisition was obligatedto redeem the Series D Preferred Stock (or converted common shares) at holder’s option exercisable beginning on 18 months after issuance, at par payable atup to 12 equal quarterly installments.The fair value of the series D Preferred Stock, was determined using a combination of Black Scholes model and discounted projected cash flows for theconversion option and put, respectively. The model used took into account the credit spread of Navios Acquisition, the volatility of its stock, as well as theprice of its stock at the issuance date. The convertible preferred stock was classified as temporary equity (i.e., apart from permanent equity) as a result of theredemption feature upon exercise of the put option granted to the holder of the preferred stock.(r) Investments in Equity Securities: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or overwhich the Company has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of theearnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received from anaffiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates,provided that the issuance of such shares qualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals or exceeds its interest inthe affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.Navios Acquisition evaluates its investments in Navios Midstream, Navios Europe I Inc. (“Navios Europe I”) and Navios Europe II Inc. (“NaviosEurope II”) for “other-than-temporary impairment” (“OTTI”) on a quarterly basis. Consideration is given to (i) the length of time and the extent to which thefair value has been less than the carrying value, (ii) the financial condition and near-term prospects of Navios Midstream, Navios Europe I and Navios EuropeII, and (iii) the intent and ability of the Company to retain its investment in Navios Midstream, Navios Europe I and Navios Europe II for a period of timesufficient to allow for any anticipated recovery in fair value.As of June 30, 2017, the Company considered the decline in fair value of its investment in Navios Midstream as “other-than- temporary” and therefore,recognized a non-cash loss of $59,104 based on its quoted unit price of $9.36, as of June 30, 2017. The respective loss was included in “Equity/ (loss) in netearnings of affiliated companies” in the accompanying consolidated statement of Operations. F-12Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (s) Deferred Dry dock and Special Survey Costs: Navios Acquisition’s vessels are subject to regularly scheduled drydocking and special surveys whichare carried out every 30 or 60 months to coincide with the renewal of the related certificates issued by the classification societies, unless a further extension isobtained in rare cases and under certain conditions. The costs of drydocking and special surveys is deferred and amortized over the above periods or to thenext drydocking or special survey date if such has been determined. Unamortized drydocking or special survey costs of vessels sold are written off to incomein the year the vessel is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, spare parts, paints, lubricantsand services incurred solely during the drydocking or special survey period. For each of the years ended December 31, 2017, 2016 and 2015, theamortization expense was $4,198, $2,837 and $1,532, respectively. Accumulated amortization as of December 31, 2017 and 2016 amounted to $8,360 and$4,995, respectively.(t) Foreign currency translation: Navios Acquisition’s functional and reporting currency is the U.S. dollar. Navios Acquisition engages in worldwidecommerce with a variety of entities. Although, its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S.dollar denominated. Additionally, Navios Acquisition’s wholly owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however,all of the subsidiaries’ primary cash flows are U.S. dollar-denominated. Transactions in currencies other than the functional currency are translated at theexchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in aforeign currency is consummated and the date on which it is either settled or translated, are recognized in the statements of operations.(u) Provisions: Navios Acquisition, in the ordinary course of its business, is subject to various claims, suits and complaints. Management, inconsultation with internal and external advisors, will provide for a contingent loss in the financial statements if the contingency had been incurred at the dateof the financial statements and the amount of the loss was probable and can be reasonably estimated. If Navios Acquisition has determined that thereasonable estimate of the loss is a range and there is no best estimate within the range, Navios Acquisition will provide the lower amount of the range.Navios Acquisition, through the Management Agreement with the Manager, participates in Protection and Indemnity (P&I) insurance coverage plansprovided by mutual insurance societies known as P&I clubs. Services such as the ones described above are provided by the Manager under the ManagementAgreement dated May 28, 2010, as recently amended in May 2016, and are included as part of the daily fee of $6.35 for each MR2 product tanker andchemical tanker vessel, $7.15 per LR1 product tanker vessel and $9.5 per VLCC vessel. (See Note 15).(v) Segment Reporting: Navios Acquisition reports financial information and evaluates its operations by charter revenues and not by the length of shipemployment for its customers or vessel type. Navios Acquisition does not use discrete financial information to evaluate operating results for each type ofcharter. Management does not identify expenses, profitability or other financial information by charter type. As a result, management reviews operatingresults solely by revenue per day and operating results of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.(w) Revenue and Expense Recognition:Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the priceis fixed or determinable, and collection is reasonably assured. Revenue is generated from the voyage charter and the time charter of vessels.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. Voyage expenses arerecognized as incurred. A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the dischargeof the current cargo. Estimated losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, a vessel is providedfor the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight-line basis as the average revenueover the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period oftime during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs such as for crews,maintenance and insurance are typically paid by the owner of the vessel. F-13Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly or half-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accrualscannot be made due to the nature of the profit share elements, these are accounted for on the actual cash settlement. Profit sharing for the years endedDecember 31, 2017, December 31, 2016 and December 31, 2015 amounted to $918, $7,603 and $32,060, respectively.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixedpercentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Companyand no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.Pooling arrangements: For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net ofexpenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with anagreed-upon formula, which is determined by the margins awarded to each vessel in the pool based on the vessel’s age, design and other performancecharacteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price isfixed, service is provided and the collectability is reasonably assured. Revenue for vessels operating in pooling arrangements amounted to $46,626, $50,832and $43,406, for the years ended December 31, 2017, 2016 and 2015, respectively.The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material.Time Charter and Voyage Expenses: Time charter and voyage expenses comprise all expenses related to each particular voyage, including timecharter hire paid and bunkers, port charges, canal tolls, cargo handling, agency fees, brokerage commissions and the reasonable estimate of the loss forbackstop agreements. Time charter expenses are expensed over the period of the time charter and voyage expenses are recognized as incurred.Direct Vessel Expense: Direct vessel expenses comprise of the amortization of drydock and special survey costs of certain vessels of NaviosAcquisition’s fleet.Management fees: Pursuant to the Management Agreement dated May 28, 2010 and as previously amended in May 2012 and May 2014, the Managerprovided commercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6.0 per MR2 product tanker andchemical tanker vessel; (b) $7.0 per LR1 product tanker vessel; and (c) $9.5 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6.35 per MR2 product tanker andchemical tanker vessel; (b) $7.15 per LR1 product tanker vessel; and (c) $9.5 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition at cost.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with NaviosHoldings, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping,audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of theseservices. In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020.Deferred Revenue: Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized asrevenue over the voyage or charter period.Prepaid Expense and Other Current Assets: Prepaid expenses relate primarily to cash paid in advance for expenses associated with voyages. Theseamounts are recognized as expense over the voyage or charter period.(x) Financial Instruments: Financial instruments carried on the balance sheet include trade receivables and payables, other receivables and otherliabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significantpolicy description of each item, or included below as applicable. F-14Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Financial risk management: Navios Acquisition’s activities expose it to a variety of financial risks including fluctuations in future freight rates, timecharter hire rates, and fuel prices, credit and interest rate risk. Risk management is carried out under policies approved by executive management. Guidelinesare established for overall risk management, as well as specific areas of operations.Credit risk: Navios Acquisition closely monitors its exposure to customers and counterparties for credit risk. Navios Acquisition has entered into theManagement Agreement with the Manager, pursuant to which the Manager agreed to provide commercial and technical management services to NaviosAcquisition. When negotiating on behalf of Navios Acquisition various employment contracts, the Manager has policies in place to ensure that it trades withcustomers and counterparties with an appropriate credit history. For the year ended December 31, 2017, Navios Acquisition’s customers representing 10% ormore of total revenue were Navig8 Group of Companies (“Navig8”), Mansel LTD (“Mansel”) and Shell Tankers Singapore Private LTD (“Shell”), whichaccounted for 31.9%, 14.3% and 13.7%, respectively. For the year ended December 31, 2016, Navios Acquisition’s customers representing 10% or more oftotal revenue were Navig8, Shell and Mansel, which accounted for 33.0%, 20.0% and 14.7%, respectively. For the year ended December 31, 2015, NaviosAcquisition’s customers representing 10% or more of total revenue were Navig8, Shell and Mansel, which accounted for 35.2%, 13.6% and 10.8%,respectively.No other customers accounted for 10% or more of total revenue for any of the years presented.Foreign exchange risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominatedin foreign currencies are recognized in the consolidated statements of operations.(y) Earnings per Share: Basic earnings per share is computed by dividing net income attributable to Navios Acquisition’s common stockholders by theweighted average number of common shares outstanding during the periods presented. Diluted earnings per share reflect the potential dilution that wouldoccur if securities or other contracts to issue common stock were exercised. Dilution has been computed by the treasury stock method whereby all of theCompany’s dilutive securities (the warrants and preferred shares and the stock options) are assumed to be exercised and the proceeds used to repurchaseshares of common stock at the weighted average market price of the Company’s common stock during the relevant periods. Convertible shares are includedin the diluted earnings per share, based on the weighted average number of convertible shares assumed to be outstanding during the period. The incrementalshares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of thediluted earnings per share computation. Restricted stock and restricted stock units (vested and unvested) are included in the calculation of the dilutedearnings per share, based on the weighted average number of restricted stock and restricted stock units assumed to be outstanding during the period.Net (loss)/ income for the years ended December 31, 2017, 2016 and 2015 was adjusted for the purposes of earnings per share calculation, for thedividends on the Series B Preferred Shares, the Series D Preferred Shares, the restricted common stock and for the undistributed income that is attributable tothe Series C Convertible Preferred Stock.(z) Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared.(za) Stock based Compensation: In October 2013, Navios Acquisition authorized the issuance of shares of restricted common stock and stock optionsfor its directors. These awards of restricted common stock and stock options are based on service conditions only and vest over three years.The fair value of stock option grants is determined with reference to option pricing model, and principally adjusted Black-Scholes models. The fairvalue of restricted stock is determined by reference to the quoted stock price on the date of grant. Compensation expense is recognized based on a gradedexpense model over the vesting period.The effect of compensation expense arising from the restricted shares and stock options described above amounted to $0, $864 and $2,362 as ofDecember 31, 2017, 2016 and 2015, respectively, and it is reflected in general and administrative expenses on the statements of operations.There were no shares of restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017. F-15Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 24, 2016, 2015 and 2014, 700,005, 700,001 and 699,994 shares of restricted stock that had been granted in October 2013, respectively,were vested. Accordingly, there were no unvested restricted shares outstanding as of December 31, 2017 and as of December 31, 2016.On each of October 24, 2016, 2015 and 2014, 500,000 stock options were vested. Accordingly, there were no unvested stock options outstandingand non-vested as of December 31, 2017 and as of December 31, 2016.The weighted average contractual life of stock options outstanding as of December 31, 2017 was 5.8 years.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the stock holders of the company. The fair value ofrestricted stock is determined by reference to the quoted stock price on the date of grant of $1.18 per share (or total fair value of $2,094).Compensation expense is recognized based on a graded expense model over the vesting period.The effect of compensation expense arising from the stock-based arrangements described above amounts to $57, as of December 31, 2017, and it isreflected in general and administrative expenses on the statement of operations. The recognized compensation expense for the year is presented as adjustmentto reconcile net (loss)/ income to net cash provided by operating activities on the statements of cash flows.There were no shares of restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017.Restricted Stock outstanding and not vested amounted to 1,774,915 shares as of December 31, 2017.The estimated compensation cost relating to service conditions of non-vested restricted stock, not yet recognized was $2,038 as of December 31, 2017and is expected to be recognized over the weighted average period of 4.0 years.NOTE 3: CASH AND CASH EQUIVALENTS AND RESTRICTED CASHCash and cash equivalents consisted of the following: December 31, 2017 December 31, 2016 Cash on hand and at banks $60,088 $39,286 Short-term deposits 21,063 10,006 Total cash and cash equivalents $81,151 $49,292 Short-term deposits and highly liquid funds relate to amounts held in banks for general financing purposes and represent deposits with an originalmaturity of less than three months.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits.The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.In restricted cash there was an amount of $5,307 for 2017 and $7,366 for 2016 held in retention accounts in order to service debt and interest payments,as required by certain of Navios Acquisition’s credit facilities. F-16Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 4: ACCOUNTS RECEIVABLE, NETAccounts receivable consisted of the following: December 31, 2017 December 31, 2016 Accounts receivable $12,810 $20,933 Less: Provision for doubtful accounts — — Accounts receivable, net $12,810 $20,933 Financial instruments that potentially subject Navios Acquisition to concentrations of credit risk are accounts receivable. Navios Acquisition does notbelieve its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.NOTE 5: VESSELS, NET Vessels Cost AccumulatedDepreciation Net BookValue Balance at December 31, 2015 $1,590,332 $(148,697) $1,441,635 Additions — (57,617) (57,617) Disposals (including vessels held for sale) (85,319) 8,224 (77,095) Balance at December 31, 2016 $1,505,013 $(198,090) $1,306,923 Additions — (56,880) (56,880) Balance at December 31, 2017 $1,505,013 $(254,970) $1,250,043 Acquisition of vessels2015On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliated thirdparty for a total cost of $33,373. Cash paid was $17,750 and $15,623 was transferred from vessel deposits.On February 11, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliatedthird party for a total cost of $39,233. Cash paid was $12,591 and $26,642 was transferred from vessel deposits.On November 6, 2015, Navios Acquisition took delivery of the Nave Spherical, a 2009-built, 297,188 dwt VLCC, from an unaffiliated third party for atotal cost of $69,198.On December 2, 2015, Navios Acquisition took delivery of the Nave Photon, a 2008-built, 297,395 dwt VLCC from an unaffiliated third party for atotal cost of $65,196.Disposal of vessels2016On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18,449. The gain on sale of thevessel, upon write-off of the unamortized dry-docking, was $2,282.On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated third party for net cash proceeds of $35,768 and prepaid $16,372being the respective tranche of the HSH Nordbank AG facility that was drawn to finance its acquisition. As of June 30, 2016, the vessel was classified as heldfor sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4,847.On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for net cash proceeds of $35,771 and prepaid$16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn to finance its acquisition. As of June 30, 2016, the vessel wasclassified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4,620. F-17Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 2015On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste, a 2003-built of298,717 dwt VLCC, and the C. Dream, a 2000 built VLCC of 298,570 dwt, from Navios Acquisition for an aggregate sale price of $100,000. The sale priceconsisted of $73,000 cash consideration and the issuance of 1,592,920 Subordinated Series A Units to Navios Acquisition. Refer to Note 15. The gain on saleof vessels amounted to $5,771 and was calculated as follows: Proceeds received: Net Cash proceeds received from sale of assets $71,224 Subordinated Series A Units 27,111 98,335 Carrying Value of assets sold: Vessels and deferred dry dock and special survey costs, net (84,184) Favorable & unfavorable leases 37 Working capital 554 (83,593) 14,742 Deferred gain on sale of assets 8,971 Gain on sale of vessels $5,771 This gain is included in “Gain on sale of vessels” in the consolidated statements of operations. Navios Midstream was deconsolidated from the date ofits IPO. Refer to Note 8, “Investment in affiliates”.For the years ended December 31, 2017, 2016 and 2015, capitalized interest amounted to $0, $0 and $104, respectively.NOTE 6: INTANGIBLE ASSETS OTHER THAN GOODWILLAs of December 31, 2017 and 2016, Navios Acquisition did not have any intangible assets or liabilities.Amortization (expense) /income of favorable and unfavorable lease terms for the years ended December 31, 2017, 2016 and 2015 is presented in thefollowing table: December 31,2017 December 31,2016 December 31,2015 Unfavorable lease terms $— $— $317 Favorable lease terms charter-out — — (776) Total $— $— $(459) NOTE 7: GOODWILLGoodwill as of December 31, 2017 and December 31, 2016 amounted to: Balance at January 1, 2016 $1,579 Balance at December 31, 2016 $1,579 Balance at December 31, 2017 $1,579 F-18Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 8: INVESTMENT IN AFFILIATESNavios Europe IOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Maritime Partners L.P. (“Navios Partners”) established Navios Europe I and hadeconomic interests of 47.5%, 47.5% and 5.0%, respectively. On December 18, 2013, Navios Europe I acquired ten vessels for aggregate considerationconsisting of (i) cash which was funded with the proceeds of senior loan facility (the “Senior Loan I”) and loans aggregating $10,000 from Navios Holdings,Navios Acquisition and Navios Partners (collectively, the “Navios Term Loans I”) and (ii) the assumption of a junior participating loan facility (the “JuniorLoan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe Irevolving loans up to $24,100 to fund working capital requirements (collectively, the “Navios Revolving Loans I”). Effective November 2014 and as ofDecember 31, 2017, Navios Holdings, Navios Acquisition and Navios Partners had a voting interest of 50%, 50% and 0%, respectively.On an ongoing basis, Navios Europe I is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms ofthe Senior Loan I and repayments of the Navios Revolving Loans I) according to a defined waterfall calculation.The Navios Term Loans I will be repaid from the future sale of vessels owned by Navios Europe I and is deemed to be the initial investment by NaviosAcquisition. Navios Acquisition evaluated its investment in Navios Europe I under ASC 810 and concluded that Navios Europe I is a VIE and that theCompany is not the party most closely associated with Navios Europe I and, accordingly, is not the primary beneficiary of Navios Europe I.Navios Acquisition further evaluated its investment in the common stock of Navios Europe I under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Europe I and, therefore, its investment in Navios Europe I is accounted forunder the equity method.The fleet of Navios Europe I is managed by subsidiaries of Navios Holdings.As of December 31, 2017 and December 31, 2016, the estimated maximum potential loss by Navios Acquisition in Navios Europe I would have been$24,147 and $18,268, respectively, which represented the Company’s carrying value of its investment of $4,750 (December 31, 2016: $5,967) theCompany’s portion of the carrying balance of the Navios Revolving Loans I including accrued interest on the Navios Term Loans I of $14,944 (December 31,2016: $9,356), which is included under “Due from related parties, long- term” and the accrued interest income on the Navios Revolving Loans I in theamount of $4,453 (December 31, 2016: $2,945) which is included under “Due from related parties, short-term”. Refer to Note 15 for the terms of the NaviosRevolving Loans I.Loss of $274, and income of $1,302 and $1,294 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years endedDecember 31, 2017, 2016 and 2015, respectively.Accounting for basis differenceThe initial investment in Navios Europe I recorded under the equity method of $4,750, at the inception included the Company’s share of the basisdifference between the fair value and the underlying book value of the assets of Navios Europe I, which amounted to $6,763. This difference is amortizedthrough “Equity/ (loss) in net earnings of affiliated companies” over the remaining life of Navios Europe I. As of December 31, 2017 and December 31, 2016,the unamortized difference between the carrying amount of the investment in Navios Europe I and the amount of the Company’s underlying equity in netassets of Navios Europe I was $4,034, and $4,710, respectively.Navios Europe IIOn February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II Inc. and had in such entity economicinterests of 47.5%, 47.5% and 5.0%, respectively, and voting interests of 50.0%, 50.0 and 0%, respectively. From June 8, 2015 through December 31, 2015,Navios Europe II acquired fourteen vessels for: (i) cash consideration of $145,550 (which was funded with the proceeds of $131,550 of senior loan facilities(the “Senior Loans II”) and loans aggregating $14,000 from Navios Holdings, Navios Acquisition and Navios Partners (collectively, the “Navios Term LoansII”) and (ii) the assumption of a junior participating loan facility (the “Junior Loan II”) with a face amount of $182,150 and fair value of $99,147. In additionto the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe II revolving loans up to$57,500 to fund working capital requirements (collectively, the “Navios Revolving Loans II”). F-19Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On an ongoing basis, Navios Europe II is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms ofthe Senior Loans and repayments of the Navios Revolving Loans II) according to a defined waterfall calculation.The Navios Term Loans II will be repaid from the future sale of vessels owned by Navios Europe II and is deemed to be the initial investment by NaviosAcquisition. Navios Acquisition evaluated its investment in Navios Europe II under ASC 810 and concluded that Navios Europe II is a “VIE” and that theCompany is not the party most closely associated with Navios Europe II and, accordingly, is not the primary beneficiary of Navios Europe II.Navios Acquisition further evaluated its investment in the common stock of Navios Europe II under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Europe II and, therefore, its investment in Navios Europe II is accounted forunder the equity method.The fleet of Navios Europe II is managed by subsidiaries of Navios Holdings.As of December 31, 2017, the estimated maximum potential loss by Navios Acquisition in Navios Europe II would have been $37,741 (December 31,2016: $22,287), which represented the Company’s carrying value of the investment of $6,650 (December 31, 2016: $5,894), the Company’s balance of theNavios Revolving Loans II including accrued interest on the Navios Term Loans II of $24,412 (December 31, 2016: $13,652), which is included under “Duefrom related parties, long-term”, and the accrued interest income on the Navios Revolving Loans II in the amount of $6,679 (December 31, 2016: $2,741),which is included under “Due from related parties, short-term”. Refer to Note 15 for the terms of the Navios Revolving Loans II.Income recognized in “Equity/ (loss) in net earnings of affiliated companies” for the year ended December 31, 2017 was $2,456. Loss of $22 in totaland a total income of $1,317 were recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31, 2016 and 2015,respectively.Accounting for basis differenceThe initial investment in Navios Europe II recorded under the equity method of $6,650, at the inception included the Company’s share of the basisdifference between the fair value and the underlying book value of the assets of Navios Europe II, which amounted to $9,419. This difference is amortizedthrough “Equity/ (loss) in net earnings of affiliated companies” over the remaining life of Navios Europe II. As of December 31, 2017, and December 31,2016 the unamortized difference between the carrying amount of the investment in Navios Europe II and the amount of the Company’s underlying equity innet assets of Navios Europe II was $7,011 and $7,953, respectively.Navios MidstreamOn October 13, 2014, the Company formed Navios Midstream under the laws of Marshall Islands. Navios Maritime Midstream Partners GP L.L.C. (the“Navios Midstream General Partner”), a wholly owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of NaviosMidstream and received a 2.0% general partner interest.In connection with the IPO of Navios Midstream in November 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four ofNavios Acquisition’s vessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) inexchange for: (i) all of the estimated net cash proceeds from the IPO amounting to $110,403; (ii) $104,451 of the $126,000 borrowings under NaviosMidstream’s credit facility; (iii) 9,342,692 subordinated units and 1,242,692 common units; and (iv) 381,334 general partner units, representing a 2.0%general partner interest in Navios Midstream, and all of the incentive distribution rights in Navios Midstream to the Navios Midstream General Partner.The Company evaluated its investment in Navios Midstream (NYSE: NAP) under ASC 810 and concluded that Navios Midstream is not a “VIE”. TheCompany further evaluated the power to control the board of directors of Navios Midstream under the voting interest model. As of the IPO date, NaviosAcquisition, as the general partner, delegated all its powers to the board of directors of Navios Midstream and does not have the right to remove or replace theelected directors from the board of directors. Elected directors were appointed by the general partner, but as of the IPO date are deemed to be elected directors.The elected directors represent the majority of the board of directors of Midstream and therefore, the Company concluded that it does not hold a controllingfinancial interest in Navios Midstream but concluded that it does maintain significant influence and deconsolidated the vessels sold as of the IPO date. F-20Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Following the deconsolidation of Navios Midstream, the Company accounts for all of its interest in the general partner and in each of the common andsubordinated units under the equity method of accounting.In connection with the sale of the Nave Celeste and the C. Dream to Navios Midstream in June 2015, Navios Acquisition received 1,592,920Subordinated Series A Units of Navios Midstream, as part of the sales price. In conjunction with the transaction, Navios Midstream also issued 32,509 generalpartner units to the General Partner for $551, in order for the General Partner to maintain its 2.0% general partnership interest. The Company analyzed itsinvestment in the subordinated Series A units and concluded that this is to be accounted for under the equity method on the basis that the Company hassignificant influence over Navios Midstream. The Company’s investment in the subordinated Series A units was fair valued at $17.02 per unit, in total$27,111 on the date of the sale of the vessels to Navios Midstream.On July 29, 2016, Navios Midstream launched a continuous offering sales program of its common units for an aggregate offering of up to $25,000.On September 30, 2016, December 30, 2016, February 16, 2017 and May 5, 2017 Navios Acquisition entered into securities purchase agreements withNavios Midstream pursuant to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655, 1,143, 6,446 and 412 generalpartnership interests, respectively, for a consideration of $75, $14, $79 and $5, respectively, in order to maintain its 2.0% partnership interest in NaviosMidstream in light of such continuous offering sales program.The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by theinvestee. As a result, a net loss of $54 and $246 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31,2017 and December 31, 2016, respectively.On November 16, 2017, in accordance with the terms of the Navios Midstream Partnership Agreement all of the 9,342,692 subordinated units of NaviosMidstream converted into common units on a one-for-one basis. Following their conversion into common units, these units will have the same distributionrights as all other common units.As of December 31, 2017, the Company owned a 2.0% general partner interest in Navios Midstream through the Navios Midstream General Partner anda 57.0% limited partnership interest through the ownership of common units (49.5%) and subordinated series A units (7.5%), based on all of the outstandingcommon, subordinated and general partner units.For the year ended December 31, 2017, 2016 and 2015, total equity method income from Navios Midstream recognized in “Equity/ (loss) in netearnings of affiliated companies” was $10,265, $14,219 and $15,825, respectively. Dividends received during the year ended December 31, 2017, 2016 and2015 were $21,301, $21,283 and $17,202, respectively.As of December 31, 2017 and December 31, 2016, the carrying amount of the investment in Navios Midstream was $113,662 and $184,834,respectively. As of June 30, 2017 the fair value of our investment in Navios Midstream has been below its carrying value for a period over twelve months, dueto the decline in the quoted price of the common units of Navios Midstream. During the year ended December 31, 2017, the Company recognizeda non-cash OTTI loss of $59,104 relating to its investment in Navios Acquisition and the amount was included in “Equity/ (loss) in net earnings of affiliatedcompanies”.As of December 31, 2017 the market value of the investment in Navios Midstream was $120,007.Accounting for basis differenceThe initial investment in Navios Midstream following the completion of the IPO recorded under the equity method of $183,141, as of thedeconsolidation date included the Company’s share of the basis difference between the fair value and the underlying book value of Navios Midstream’sassets, which amounted to $20,169. Of this difference, an amount of $(332) was allocated on the intangibles assets and $20,501 was allocated on the tangibleassets. This difference is amortized through “Equity / (loss) in net earnings of affiliated companies” over the remaining life of Navios Midstream’s tangibleand intangible assets. F-21Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) In connection with the sale of the Nave Celeste and the C. Dream, the Company recognized its incremental investment upon the receipt of theSubordinated series A units in Navios Midstream, which amounted to $27,665 under “Investment in affiliates”. The investment was recognized at fair valueat $17.02 per unit. The incremental investment included the Company’s share of the basis difference between the fair value and the underlying book value ofNavios Midstream’s assets at the transaction date, which amounted to $2,554. Of this difference an amount of $(72) was allocated to the intangible assets and$2,626 was allocated to the tangible assets. This difference is amortized through “Equity/ (loss) in net earnings of affiliated companies” over the remaininglife of Navios Midstream’s tangible and intangible assets.As of December 31, 2017 and December 31, 2016, the unamortized difference between the carrying amount of the investment in Navios Midstream andthe amount of the Company’s underlying equity in net assets of Navios Midstream was $37,158 and $21,221, respectively. As a result of the other-than-temporary-impairment loss recorded as at June 30, 2017, the Company has recomputed a negative difference which is amortized through “Equity/ (loss) innet earnings of affiliated companies” over the remaining life of Navios Midstream’s tangible and intangible assets.Summarized financial information of the affiliated companies is presented below: December 31, 2017 December 31, 2016 Balance Sheet NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II Cash and cash equivalents, including restricted cash $37,086 $19,185 $16,882 $52,791 $10,785 $16,916 Current assets $62,551 $22,417 $28,403 $61,087 $15,980 $19,487 Non-current assets $393,996 $145,940 $195,784 $414,694 $169,925 $232,363 Current liabilities $4,977 $21,284 $25,805 $6,143 $18,490 $24,126 Long-term debt including current portion, net of deferred finance costs anddiscount $196,514 $75,472 $109,223 $197,176 $86,060 $119,234 Non-current liabilities $195,839 $125,283 $164,276 $196,515 $155,387 $184,530 Year EndedDecember 31, 2017 Year EndedDecember 31, 2016 Year EndedDecember 31, 2015 Income Statement NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II Revenue $83,052 $37,468 $38,633 $91,834 $40,589 $30,893 $83,362 $41,437 $20,767 Net income/ (loss) before non-cash changein fair value of Junior Loan $14,631 $(20,778) $(40,921) $24,890 $(2,174) $(25,062) $27,072 $(1,347) $1,673 Net income/ (loss) $14,631 $9,762 $(9,086) $24,890 $16,137 $(34,059) $27,072 $(1,118) $77,252 NOTE 9: ACCOUNTS PAYABLEAccounts payable as of December 31, 2017 and 2016 consisted of the following: December 31,2017 December 31,2016 Creditors $1,503 $1,625 Brokers 2,005 2,031 Professional and legal fees 354 1,199 Total accounts payable $3,862 $4,855 NOTE 10: DIVIDENDS PAYABLEOn October 31, 2014, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2014 of $0.05 per share of commonstock payable on January 6, 2015 to stockholders of record as of December 17, 2014. A dividend in the aggregate amount of $7,967 was paid on January 6,2015 out of which $7,583 was paid to the stockholders of record as of December 17, 2014 and $384 was paid to Navios Holdings, the holder of the 1,000shares of the Series C Preferred Stock. F-22Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On February 6, 2015, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2014 of $0.05 per share of commonstock payable on April 2, 2015 to stockholders of record as of March 18, 2015. A dividend in the aggregate amount of $7,977 was paid on April 2, 2015 outof which $7,593 was paid to the stockholders of record as of March 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of theSeries C Preferred Stock.On May 11, 2015, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2015 of $0.05 per share of common stockpayable on July 2, 2015 to stockholders of record as of June 18, 2015. A dividend in the aggregate amount of $7,986 was paid on July 2, 2015 out of which$7,602 was paid to the stockholders of record as of June 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series CPreferred Stock.On August 13, 2015, the Board of Directors declared a quarterly cash dividend for the second quarter of 2015 of $0.05 per share of common stockpayable on September 24, 2015 to stockholders of record as of September 18, 2015. A dividend in the aggregate amount of $7,922 was paid on September 24,2015 out of which $7,538 was paid to the stockholders of record as of September 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000shares of the Series C Preferred Stock.On November 6, 2015, the Board of Directors declared a quarterly cash dividend for the third quarter of 2015 of $0.05 per share of common stockpayable on December 23, 2015 to stockholders of record as of December 17, 2015. A dividend in the aggregate amount of $7,873 was paid on December 23,2015 out of which $7,489 was paid to the stockholders of record as of December 17, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000shares of the Series C Preferred Stock.On February 4, 2016, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2015 of $0.05 per share of commonstock payable on March 23, 2016 to stockholders of record as of March 17, 2016. A dividend in the aggregate amount of $7,928 was paid on March 23, 2016out of which $7,544 was paid to the stockholders of record as of March 17, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofSeries C Preferred Stock.On May 11, 2016, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2016 of $0.05 per share of common stockpayable on June 22, 2016 to stockholders of record as of June 17, 2016. A dividend in the aggregate amount of $7,923 was paid on June 22, 2016 out ofwhich $7,539 was paid to the stockholders of record as of June 17, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series CPreferred Stock.On August 10, 2016, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2016 of $0.05 per share of commonstock payable on September 21, 2016 to stockholders of record as of September 14, 2016. A dividend in the aggregate amount of $7,918 was paid onSeptember 21, 2016 out of which $7,534 was paid to the stockholders of record as of September 14, 2016 and $384 was paid to Navios Holdings, the holderof the 1,000 shares of Series C Preferred Stock.On November 4, 2016, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2016 of $0.05 per share of commonstock payable on December 21, 2016 to stockholders of record as of December 14, 2016. A dividend in the aggregate amount of $7,913 was paid onDecember 21, 2016 out of which $7,529 was paid to the stockholders of record as of December 14, 2016 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock.On February 3, 2017, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2016 of $0.05 per share of commonstock payable on March 14, 2017 to stockholders of record as of March 7, 2017. A dividend in the aggregate amount of $7,908 was paid on March 14, 2017out of which $7,524 was paid to the stockholders of record as of March 7, 2017 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofSeries C Preferred Stock.On May 12, 2017, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2017 of $0.05 per share of common stockpayable on June 14, 2017 to stockholders of record as of June 7, 2017. A dividend in the aggregate amount of $7,904 was paid on June 14, 2017 out of which$7,520 was paid to the stockholders of record as of June 7, 2017 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series C PreferredStock.On August 9, 2017, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2017 of $0.05 per share of commonstock payable on September 14, 2017 to stockholders of record as of September 7, 2017. A dividend in the aggregate amount of $7,902 was paid onSeptember 14, 2017 out of which $7,518 was paid to the stockholders of record as of September 7, 2017 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock. F-23Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 25, 2017, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2017 of $0.05 per share of commonstock payable on December 12, 2017 to stockholders of record as of December 6, 2017. A dividend in the aggregate amount of $7,900 was paid onDecember 12, 2017 out of which $7,516 was paid to the stockholders of record as of December 6, 2017 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock.For the years ended December 31, 2017 and December 31, 2016, Navios Acquisition had no outstanding Series B and Series D Preferred Stock. For theyear ended December 31, 2015, Navios Acquisition paid dividend in the aggregate of $359 to the holders of the Series B and Series D Preferred Stock.The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among otherthings, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligationsand such other factors as the Board of Directors may deem advisable.NOTE 11: ACCRUED EXPENSESAccrued expenses as of December 31, 2017 and December 31, 2016 consisted of the following: December 31,2017 December 31,2016 Accrued voyage expenses $1,437 $1,369 Accrued loan interest 8,910 8,800 Accrued legal and professional fees 1,864 878 Total accrued expenses $12,211 $11,047 In December 2016 and during 2017, the Compensation Committee of Navios Acquisition authorized and approved an aggregate cash payment of$2,805 subject to fulfillment of certain service conditions that were provided and completed during 2017 and an additional $1,805 to the directors and/orofficers of the Company subject to fulfillment of certain service conditions in 2018. As of December 31, 2017 and 2016 an accrued amount of $1,675 and$750 is included in accrued legal and professional fees. The total amount of $2,805, $4,010 and $2,750 was recorded in general and administrative expenseson the statements of income for the years ended December 31, 2017, 2016 and 2015, respectively.NOTE 12: BORROWINGS December 31,2017 December 31,2016 Commerzbank AG, Alpha Bank AE, Credit Agricole Corporate and InvestmentBank $71,500 $94,250 BNP Paribas S.A. and DVB Bank S.E. 56,250 60,750 Eurobank Ergasias S.A. $52,200 35,569 38,297 Eurobank Ergasias S.A. $52,000 33,654 36,102 Norddeutsche Landesbank Girozentrale 23,828 25,391 DVB Bank S.E. and Credit Agricole Corporate and Investment Bank 45,703 48,828 Ship Mortgage Notes $670,000 670,000 670,000 Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska EnskildaBanken AB 82,327 97,615 BNP Paribas $44,000 36,000 40,000 HSH $24,000 22,856 — 1,077,687 1,111,233 Less: Deferred finance costs, net (13,470) (16,685) Add: bond premium 1,152 1,390 Total borrowings $1,065,369 $1,095,938 Less: current portion, net of deferred finance costs (36,410) (55,000) Total long-term borrowings, net of current portion, bond premium anddeferred finance costs $1,028,959 $1,040,938 F-24Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Long-Term Debt Obligations and Credit ArrangementsShip Mortgage Notes:8 1/8% First Priority Ship Mortgages: On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc.(“Navios Acquisition Finance” and together with the Company, the “2021 Co-Issuers”) issued $610,000 in first priority ship mortgage notes (the “ExistingNotes”) due on November 15, 2021 at a fixed rate of 8.125%.On March 31, 2014, the Company completed a sale of $60,000 of its first priority ship mortgage notes due in 2021 (the “Additional Notes,” andtogether with the Existing Notes, the “2021 Notes”). The terms of the Additional Notes are identical to the Existing Notes and were issued at 103.25% plusaccrued interest from November 13, 2013.The 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of Navios Acquisition’s subsidiaries with the exception ofNavios Acquisition Finance (a co-issuer of the 2021 Notes).The 2021 Co-Issuers currently have the option to redeem the 2021 Notes in whole or in part, at a fixed price of 106.094% of the principal amount,which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.In addition, upon the occurrence of certain change of control events, the holders of the 2021 Notes will have the right to require the 2021 Co-Issuers torepurchase some or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2021 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2021 Co-Issuers were in compliance with the covenants as of December 31, 2017.The Existing Notes and the Additional Notes are treated as a single class for all purposes under the indenture including, without limitation, waivers,amendments, redemptions and other offers to purchase and the Additional Notes rank evenly with the Existing Notes. The Additional Notes and the ExistingNotes have the same CUSIP number.GuaranteesThe Company’s 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’s subsidiaries with theexception of Navios Acquisition Finance (a co-issuer of the 2021 Notes). The Company’s 2021 Notes are unregistered. The guarantees of our subsidiaries thatown mortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecuredguarantees. All subsidiaries, including Navios Acquisition Finance, are 100% owned. Navios Acquisition does not have any independent assets oroperations. Except as provided above, Navios Acquisition does not have any subsidiaries that are not guarantors of the 2021 Notes.Credit FacilitiesCommerzbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: Navios Acquisition assumed a loan agreement dated April 7,2010, with Commerzbank AG, Alpha Bank A.E. and Credit Agricole Corporate and Investment Bank of up to $150,000 (divided in six equal tranches of$25,000 each) to partially finance the construction of two chemical tankers and four product tankers. Each tranche of the facility is repayable in 12 equalsemi-annual installments of $750 each with a final balloon payment of $16,000 to be repaid on the last repayment date. The repayment of each tranchestarted six months after the delivery date of the respective vessel which that tranche financed. It bears interest at a rate of LIBOR plus 250 bps. The loan alsorequires compliance with certain financial covenants. On October 27, 2016, Navios Acquisition reduced the facility by $16,000 through payment of $15,650in cash being the balloon instalment for one of the six tranches, achieving a nominal benefit amount of $350. On January 27, 2017, Navios Acquisitionrepaid $16,000 being the balloon instalment for another of the remaining five tranches. As of December 31, 2017, an amount of $71,500 was outstanding.BNP Paribas S.A. Bank and DVB Bank S.E.: Navios Acquisition assumed a loan agreement dated April 8, 2010, of up to $75,000 (divided in threeequal tranches of $25,000 each) to partially finance the purchase price of three product tankers. Each of the tranches is repayable in 12 equal semi-annualinstallments of $750 each with a final balloon payment of $16,000 to be repaid on the last repayment date. The repayment date of each tranche started sixmonths after the delivery date of the respective vessel which that tranche finances. It bears interest at a rate of LIBOR plus 250 bps. The loan also requirescompliance with certain financial covenants. As of December 31, 2017, an amount of $56,250 was outstanding. F-25Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Eurobank Ergasias S.A.: On October 26, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52,200, ofwhich $51,600 has been drawn (divided into two tranches of $26,100 and $25,500, respectively) to partially finance the acquisition costs of two LR1 producttanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $345 and $337, respectively, with a final balloon payment of $15,060and $14,716, respectively, to be repaid on the last repayment date. The repayment of each tranche started three months after the delivery date of therespective vessel. The loan bears interest at a rate of LIBOR plus (i) 250 bps for the period prior to the delivery date in respect of the vessel being financed,and (ii) thereafter 275 bps. The loan also requires compliance with certain financial covenants. The amount of $35,569 was outstanding as of December 31,2017, under this facility.Eurobank Ergasias S.A.: On December 6, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52,000 out ofwhich $46,200 has been drawn (divided into two tranches of $23,100 each) to partially finance the acquisition costs of two LR1 product tanker vessels. Eachtranche of the facility is repayable in 32 equal quarterly installments of $306 each with a final balloon payment of $13,308, to be repaid on the lastrepayment date. The repayment of each tranche started three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus300 bps. The loan also requires compliance with certain financial covenants. The amount of $33,654 was outstanding as of December 31, 2017, under thisfacility.Norddeutsche Landesbank Girozentrale: On December 29, 2011, Navios Acquisition entered into a loan agreement with Norddeutsche LandesbankGirozentrale of up to $28,125 to partially finance the purchase price of one MR2 product tanker vessel. The facility is repayable in 32 quarterly installmentsof $391 each with a final balloon payment of $15,625 to be repaid on the last repayment date. The repayment started three months after the delivery of thevessel and bears interest at a rate of LIBOR plus: (a) up to but not including the drawdown date of, 175 bps per annum; (b) thereafter until, but not including,the tenth repayment date, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants.During the first quarter of 2015, the facility was fully drawn and as of December 31, 2017, an amount of $23,828 was outstanding under this loan agreement.DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: On December 29, 2011, Navios Acquisition entered into a loan agreement withDVB Bank SE and Credit Agricole Corporate and Investment Bank of up to $56,250 (divided into two tranches of $28,125 each) to partially finance thepurchase price of two MR2 product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $391 each with a final balloonpayment of $15,625 to be repaid on the last repayment date. The repayment started three months after the delivery of the respective vessel and bears interestat a rate of LIBOR plus: (a) up to but not including the drawdown date of, 175 bps per annum; (b) thereafter until, but not including, the tenth repaymentdate, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2017,an amount of $45,703 was outstanding.ABN AMRO Bank N.V.: In February 2017, the Company drew $26,650 under this credit facility with ABN AMRO Bank N.V., which was secured withits two chemical tankers, following the full repayment of the previous financing arrangements. The facility was repayable in four equal consecutive quarterlyinstallments of $650 each, with a final balloon payment of the balance to be repaid on the last repayment date. The maturity date of the loan was in February2018. The loan bore interest at LIBOR plus 400 bps per annum. In June, 2017, the Company prepaid the outstanding balance of $26,000 and an amount of$697 was written-off from the deferred finance costs. As of December 31, 2017, there was no outstanding amount under this facility and the loan matured inFebruary 2018.Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB: In November 2015, Navios Acquisition, entered into a termloan facility of up to $125,000 (divided into five tranches) with Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB forthe: (i) financing of the purchase price of the Nave Spherical; and (ii) the refinancing of the existing facility with Deutsche Bank AG FilialeDeutschlandgescäft and Skandinaviska Enskilda Banken AB, dated July 18, 2014. Four of the five tranches of the facility are repayable in 20 quarterlyinstallments of between approximately $435 and $1,896, each with a final balloon repayment to be made on the last repayment date. The fifth tranche isrepayable in 16 quarterly installments of between approximately $709 and $803, each. The maturity date of the loan is in the fourth quarter of 2020. Thecredit facility bears interest at LIBOR plus 295 bps per annum. F-26Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18,449. Navios Acquisitionprepaid $12,097 being the respective tranche of the Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB facility that wasdrawn to finance the Nave Lucida. Following the prepayment in January 2016, an amount of $214 was written-off from the deferred financing cost. As ofDecember 31, 2017, an amount of $82,327 was outstanding under this facility.On March 23, 2018, Navios Acquisition prepaid $26,770, being the respective tranche of the facility that was drawn to finance the Nave Equinox andthe Nave Pyxis.HSH Nordbank: In June 2017, Navios Acquisition entered into a loan facility for an amount of $24,000 to refinance the credit facility with ABNAMRO Bank N.V. of its two chemical tankers. The facility is repayable in 17 equal consecutive quarterly installments of $572 each, with a final balloonpayment of the balance to be repaid on the last repayment date. The facility matures in September 2021 and bears interest at LIBOR plus 300 bps per annum.As of December 31, 2017, the outstanding balance was $22,856.BNP Paribas S.A. Bank: On December 18, 2015, Navios Acquisition, through certain of its wholly owned subsidiaries, entered into a term loan facilityagreement of up to $44,000 with BNP Paribas, as agent and the lenders named therein, for the partial post-delivery financing of a LR1 product tanker and aMR2 product tanker. The facility is repayable in 12 equal consecutive semi-annual installments in the amount of $2,000 in aggregate, with a final balloonpayment of $20,000 to be repaid on the last repayment date. The maturity date of the loan is in December 2021. The loan bears interest at LIBOR plus 230bps per annum. As of December 31, 2017, an amount of $36,000 was outstanding under this facility.HSH Nordbank AG: On August 20, 2013, Navios Acquisition entered into a loan agreement with HSH Nordbank AG of up to $40,300 (divided in twotranches of $20,150 each), to partially finance the acquisition of two chemical tanker vessels. Each tranche of the facility was repayable in 28 quarterlyinstallments of $315 with a final balloon payment of $11,334 to be paid on the last repayment date. The facility bore interest at a rate of LIBOR plus 320 bps.The loan also required compliance with certain financial covenants. On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated thirdparty for net cash proceeds of $35,768. Navios Acquisition prepaid $16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn tofinance the acquisition of the Nave Universe. On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for netcash proceeds of $35,771. Navios Acquisition prepaid $16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn to finance theacquisition of the Nave Constellation. Following these prepayments in 2016, an amount of $240 was written-off from the deferred financing cost. As of eachDecember 31, 2017 and 2016, no amount was outstanding.The loan facilities include, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$40,000 or $1,000 per vessel; (ii) net worth ranging from $50,000 to $135,000; and (iii) total liabilities divided by total assets, adjusted for market values tobe lower than 75%. It is an event of default under the credit facilities if such covenants are not complied with, including the loan to value ratios for which theCompany may provide sufficient additional security to prevent such an event.As of December 31, 2017, the Company was in compliance with its covenants.Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed byeach vessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among otherthings: incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of NaviosAcquisition’s vessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; andsubordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payableunder the management agreement. The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintain validsafety management certificates and documents of compliance at all times.The maturity table below reflects the principal payments of all notes and credit facilities outstanding as of December 31, 2017 for the next five yearsand thereafter and is based on the repayment schedule of the respective loan facilities (as described above) and the outstanding amount due under the 2021Notes. F-27Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) December 31,2017 Long-Term Debt Obligations: Year December 31, 2018 37,712 December 31, 2019 100,751 December 31, 2020 119,410 December 31, 2021 720,637 December 31, 2022 56,740 December 31, 2023 and thereafter 42,437 Total $1,077,687 Sale and Leaseback AgreementOn March 31, 2018, Navios Acquisition entered into a sale and leaseback agreement in order to refinance $71,500 outstanding on the existing facilityon four product tankers. Navios Acquisition has a purchase obligation at the end of the lease term and under ASC 842-40, the transaction is expected to beaccounted for as a failed sale and leaseback transaction and result in a finance lease. As a result of the refinancing, as of December 31, 2017, an amount of$32,771 was reclassified from “Current portion of long-term debt, net of deferred finance cost” to “Long term debt, net of current portion, premium and net ofdeferred finance cost”. The facility will be repayable in 24 equal consecutive quarterly installments of $1,490 each, with a final balloon payment of $35,750to be repaid on the last repayment date. The facility matures in March 2024 and bears interest at LIBOR plus 305 bps per annum.The agreement includes, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$1,000 per vessel; (ii) net worth higher from $125,000; and (iii) total liabilities divided by total assets, adjusted for market values to be lower than 80%. It isan event of default under the credit facilities if such covenants are not complied with, including the loan to value ratios for which the Company may providesufficient additional security to prevent such an event.NOTE 13: FAIR VALUE OF FINANCIAL INSTRUMENTSFair Value of Financial InstrumentsThe following methods and assumptions were used to estimate the fair value of each class of financial instruments:Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair valuebecause of the short maturity of these investments.Restricted Cash: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because ofthe short maturity of these investments.Due from related parties, long-term: The carrying amount of due from related parties, long-term reported in the balance sheet approximates its fairvalue.Other long-term debt, net of deferred finance costs: As a result of the adoption of ASU 2015-03, the book value has been adjusted to reflect the netpresentation of deferred financing costs. The outstanding balance of the floating rate loans continues to approximate its fair value, excluding the effect of anydeferred finance costs.Ship Mortgage Notes and premiums: The fair value of the 2021 Notes, which has a fixed rate, was determined based on quoted market prices, asindicated in the table below. December 31, 2017 December 31, 2016 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $81,151 $81,151 $49,292 $49,292 Restricted cash $5,307 $5,307 $7,366 $7,366 Ship mortgage notes and premium $661,463 $572,214 $659,684 $571,597 Other long-term debt, net of deferred finance costs $403,906 $407,687 $436,254 $441,233 Due from related parties, long-term $54,593 $54,593 $80,068 $80,646 F-28Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The Company’s assets measured at fair value on a non-recurring basis were: Fair Value Measurements as of December 31, 2017 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investment in affiliates $120,007 $120,007 $— $— The Company recorded a non-cash OTTI loss of $59,104 on its investment in Navios Midstream during the year ended December 31, 2017. (Refer toNote 8, “Investment in affiliates”).As of December 31, 2017 the carrying amount of the investment in Navios Midstream was $113,662.Fair Value MeasurementsThe estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair valuehierarchy, is as follows:Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to access. Valuation of theseitems does not entail a significant amount of judgment.Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at themeasurement date.Level III: Inputs that are unobservable. The Company did not use any Level III inputs as of December 31, 2017. Fair Value Measurements at December 31, 2017 Using Total Level I Level II Level III Cash and cash equivalents $81,151 $81,151 $— $— Restricted cash $5,307 $5,307 $— $— Ship mortgage notes and premium $572,214 $572,214 $— $— Other long-term debt(1) $407,687 $— $407,687 $— Due from related parties, long-term(2) $54,593 $— $54,593 $— Fair Value Measurements at December 31, 2016 Using Total Level I Level II Level III Cash and cash equivalents $49,292 $49,292 $— $— Restricted cash $7,366 $7,366 $— $— Ship mortgage notes and premium $571,597 $571,597 $— $— Other long-term debt(1) $441,233 $— $441,233 $— Due from related parties, long-term(2) $80,646 $— $80,646 $— (1)The fair value of the Company’s other long-term debt is estimated based on currently available debt with similar contract terms, interest rate andremaining maturities as well as taking into account the Company’s creditworthiness.(2)The fair value of the Company’s long term amounts due from related parties is estimated based on currently available debt with similar contract terms,interest rate and remaining maturities as well as taking into account the counterparty’s creditworthiness. F-29Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 14: LEASESChartered-out:The future minimum contractual lease income (charter-out rates is presented net of commissions) is as follows: Amount 2018 $75,535 2019 10,837 2020 — 2021 — 2022 — Thereafter — Total minimum lease revenue, net of commissions $86,372 Revenues from time charters are not generally received when a vessel is off-hire, including time required for scheduled maintenance of the vessel.NOTE 15: TRANSACTIONS WITH RELATED PARTIESThe Navios Holdings Credit Facilities: On September 19, 2016, Navios Acquisition entered into a $70,000 secured loan facility with NaviosHoldings. The loan facility is secured by all of Navios Holdings’ interest in Navios Acquisition and 78.5% of Navios Holdings’ interest in Navios SouthAmerican Logistics Inc. “Navios Logistics”, representing a majority of the shares outstanding of Navios Logistics. The secured loan facility provided for anarrangement fee of $700, is available for up to five drawings and has a fixed interest rate of 8.75% with a maturity date of November 15, 2018. OnNovember 3, 2017, Navios Holdings prepaid in full the outstanding amount with a payment of $55,132. The prepayment amount consisted of the $50,000drawn under the facility and $5,132 of accrued interest. As of December 31, 2017 and December 31, 2016, the outstanding receivable balance of $0 and$50,661, respectively, consisted of the drawdown of $50,000 on September 20, 2016 net of the arrangement fee, upon deduction of the applicable expensesfor the origination of the loan facility and the accrued interest of $1,240, respectively, included in the consolidated balance sheets under “Due from relatedparties, long-term”. The arrangement fee was deferred and amortized using the effective interest rate method. Total interest income, including amortization ofdeferred fees, for the year ended December 31, 2017 and December 31, 2016 amounted to $4,471 and $1,319, respectively.In March 2016, Navios Acquisition entered into the $50,000 Revolver with Navios Holdings, which was available for multiple drawings up to a limitof $50,000. The Revolver had a margin of LIBOR plus 300bps and a maturity until December 2018. On April 14, 2016, Navios Acquisition and NaviosHoldings announced that the Revolver was terminated. No borrowings had been made under the Revolver.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition mayborrow up to $200,000 for general corporate purposes. The loan provided for an arrangement fee of $4,000 and bore a fixed interest of 600 bps. OnNovember 13, 2014, the Company drew an amount of $169,650 from the facility. The facility matured and was fully repaid by December 29, 2014.In 2010, Navios Acquisition entered into a $40,000 credit facility with Navios Holdings, which matured in December 2015. The facility was availablefor multiple drawings up to a limit of $40,000 and had a margin of LIBOR plus 300 basis points. As of its maturity date, December 31, 2015, all amountsdrawn had been fully repaid.Management fees: Pursuant to the Management Agreement dated May 28, 2010 and as amended in May 2012 and May 2014, the Manager providedcommercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6.0 per MR2 product tanker and chemical tankervessel; (b) $7.0 per LR1 product tanker vessel; and (c) $9.5 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6.35 per MR2 product tanker andchemical tanker vessel; (b) $7.15 per LR1 product tanker vessel; and (c) $9.5 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition at cost. F-30Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Total management fees for each of the years ended December 31, 2017, 2016 and 2015 amounted to $94,973, $97,866 and $95,336, respectively.Included in direct vessel expenses is an amount of $730 for the year ended December 31, 2016, that was incurred for specialized work performed inconnection with certain vessels of our fleet.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with NaviosHoldings, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping,audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of theseservices. In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020.For each of the years ended December 31, 2017, 2016 and 2015 the expense arising from administrative services rendered by Navios Holdingsamounted to $9,000, $9,427 and $7,608, respectively.Balance due from related parties (excluding Navios Europe I, Navios Europe II and Navios Holdings Credit Facility): Balance due from relatedparties as of December 31, 2017 and December 31, 2016 was $18,036 and $25,760, respectively, and included the short-term and long-term amounts duefrom Navios Holdings and Navios Midstream. The balances mainly consisted of administrative expenses and special survey and dry docking expenses forcertain vessels of our fleet, as well as management fees, in accordance with the Management Agreement.Balance due to related parties, short-term: Amounts due to related parties, short-term as of December 31, 2017 and December 31, 2016 was $17,107and $0, respectively, and mainly consisted of backstop commitments and other payables to Navios Midstream. In the first quarter of 2018, NaviosAcquisition paid to Navios Midstream the amount of $16,391 concerning the backstop commitment.Omnibus AgreementsAcquisition Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Acquisition Omnibus Agreement”) with NaviosHoldings and Navios Partners in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things,Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that areprimarily employed in operations in South America without the consent of an independent committee of Navios Acquisition. In addition, NaviosAcquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter-in drybulk carriers underspecific exceptions. Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners a rightof first offer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition.Likewise, Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they mightown. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to theexisting terms of any charter or other agreement with a counterparty; or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated thirdparty.Midstream Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Midstream Omnibus Agreement”), with NaviosMidstream, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream,Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleumproduct tankers, LPG tankers or chemical tankers under time charters of five or more years without the consent of the Navios Midstream General Partner. TheMidstream Omnibus Agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of theircontrolled affiliates to compete with Navios Midstream under specified circumstances.Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries will grant to Navios Acquisition a right of first offer on any proposedsale, transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and relatedcharters owned or acquired by Navios Midstream. Likewise, Navios Acquisition will agree (and will cause its subsidiaries to agree) to grant a similar right offirst offer to Navios Midstream for any of the VLCCs, F-31Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under charter for five or more years it might own. These rights of firstoffer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or otheragreement with a charter party, or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.Navios Containers Omnibus Agreement: In connection with the Navios Maritime Containers Inc. (“Navios Containers”) private placement and listingon the Norwegian over-the-counter market effective June 8, 2017, Navios Acquisition entered into an omnibus agreement with Navios Containers, NaviosMidstream, Navios Holdings and Navios Partners, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream havegranted to Navios Containers a right of first refusal over any container vessels to be sold or acquired in the future. The omnibus agreement containssignificant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream to compete with Navios Containers underspecified circumstances.Backstop Agreement: On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with theterms of the backstop agreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the NaveCeleste, the Shinyo Ocean and the Shinyo Kannika from their original charters, at a net rate of $35, $38.4 and $38, respectively. Navios Midstream hascurrently entered into new charter contracts for the above vessels with third parties upon their redelivery in the first quarter of 2017. Those contracts providefor index linked charter rates or pool earnings, as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstoprates. The Company has recognized a liability of $16,391 ($0 for the same period in 2016), under “Time charter and voyage expenses” in the consolidatedstatements of operations for the year ended December 31, 2017, which the Company believes represents a reasonable estimate of the loss for the backstopagreements. In 2018 the Company paid to Navios Midstream the amount of $11,489. The backstop commitment for Shinyo Kannika terminated following thesale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic, following thesale of the latter to Navios Midstream in March 2018.Navios Midstream General Partner Option Agreement with Navios Holdings: Navios Acquisition entered into an option agreement, datedNovember 18, 2014, with Navios Holdings under which Navios Acquisition grants Navios Holdings the option to acquire any or all of the outstandingmembership interests in Navios Midstream General Partner and all of the incentive distribution rights in Navios Midstream representing the right to receivean increasing percentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. Any such exerciseshall relate to not less than twenty-five percent of the option interest and the purchase price for the acquisition of all or part of the option interest shall be anamount equal to its fair market value.Option Vessels: In connection with the IPO of Navios Midstream, Navios Acquisition granted options to Navios Midstream, exercisable untilNovember 18, 2016, to purchase seven VLCCs (two of which, the Nave Celeste and the C. Dream were sold to Navios Midstream in June 2015 pursuant tosuch option) from Navios Acquisition at fair market value. On October 25, 2016, Navios Acquisition extended the option periods on three of the fiveremaining VLCCs, the Nave Buena Suerte, the Nave Neutrino and the Nave Electron, for an additional two-year period expiring on November 18, 2018. Thepurchase options pursuant to the extended period do not include any backstop commitments from Navios Acquisition.Sale of C. Dream and Nave Celeste: On June 18, 2015, Navios Acquisition sold the vessel-owning subsidiaries of the C. Dream and the Nave Celesteto Navios Midstream for a sale price of $100,000 in total. Out of the $100,000 purchase price, $73,000 was paid in cash and the remaining amount was paidthrough the issuance of 1,592,920 subordinated Series A Units of Navios Midstream. In conjunction with the transaction, Navios Midstream also issued32,509 general partner units to the General Partner, in order for the General Partner to maintain its 2.0% general partnership interest, for $551.The Company recognized its incremental investment in Navios Midstream, which amounted to $27,665 under “Investment in affiliates”. Theinvestment was recognized at fair value at $17.02 per unit. The incremental investment included the Company’s share of the basis difference between the fairvalue and the underlying book value of Navios Midstream’s assets at the transaction date, which amounted to $2,554. Of this difference an amount of $(72)was allocated to the intangibles assets and $2,626 was allocated to the tangible assets. This difference is amortized through “Equity/ (loss) in net earnings ofaffiliated companies” over the remaining life of Navios Midstream’s tangible and intangible assets. F-32Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The transaction resulted in a gain on sale of $14,742, of which $5,771 was recognized at the time of sale in the statements of operations under “Gain onsale of vessels” and the remaining $8,971 representing profit of Navios Acquisition’s 60.9% interest in Navios Midstream has been deferred under “Deferredgain on sale of assets” and is being amortized over the vessels’ remaining useful life or until the vessels are sold. Subsequently, the deferred gain is amortizedto income over the remaining useful life of the vessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently soldor otherwise disposed of by Navios Midstream or (ii) the Company’s ownership interest in Navios Midstream is reduced.In connection with the public offerings of common units by Navios Midstream, a pro rata portion of the deferred gain is released to income upondilution of the Company’s ownership interest in Navios Midstream. As of December 31, 2017 and 2016, the unamortized deferred gain for all vessels andrights sold totaled $7,708 and $8,823, respectively, of which an amount of $979 and $994, respectively, was included in “Deferred revenue”. For the yearsended December 31, 2017, 2016 and 2015 Navios Acquisition recognized $1,116, $159 and $11 of the deferred gain, respectively, in “Equity/ (loss) in netearnings of affiliated companies”.Participation in offerings of affiliates: On July 29, 2016, Navios Midstream launched a continuous offering sales program of its common units for anaggregate offering of up to $25,000. (Refer also to Note 8 “Investment in affiliates”).On September 30, 2016, December 30, 2016, February 16, 2017 and May 5, 2017 Navios Acquisition entered into securities purchase agreements withNavios Midstream pursuant to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655, 1,143, 6,446 and 412 generalpartnership interests, respectively, for a consideration of $75, $14, $79 and $5, respectively, in order to maintain its 2.0% partnership interest in NaviosMidstream in light of such continuous offering sales program.The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by theinvestee. As a result, a net loss of $54 and $246 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31,2017 and December 31, 2016, respectively.Balance due from Navios Europe I: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe I revolvingloans up to $24,100 to fund working capital requirements. See Note 8 for the Investment in Navios Europe I.Balance due from Navios Europe I as of December 31, 2017 amounted to $19,397 (December 31, 2016: $12,301) which included the NaviosRevolving Loans I of $11,770 (December 31, 2016: $7,125), the non-current amount of $3,174 (December 31, 2016: $2,231) related to the accrued interestincome earned under the Navios Term Loans I under the caption “Due from related parties, long-term” and the accrued interest income earned under theNavios Revolving Loans I of $4,453 (December 31, 2016: $2,945) under the caption “Due from related parties, short-term.”The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 12.7% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, there was no amount undrawn under the Navios Revolving Loans I.Balance due from Navios Europe II: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolvingloans up to $43,500 to fund working capital requirements. In March 2017, the availability under the Navios Revolving Loans II was increased by $14,000.See Note 8 for the Investment in Navios Europe II.Balance due from Navios Europe II as of December 31, 2017 amounted to $31,091 (December 31, 2016: $16,393) which included the NaviosRevolving Loans II of $20,662 (December 31, 2016: $11,602), the non-current amount of $3,750 (December 31, 2016: $2,050) related to the accrued interestincome earned under the Navios Term Loans II under the caption “Due from related parties, long-term” and the accrued interest income earned under theNavios Revolving Loans II of $6,679 (December 31, 2016: $2,741) under the caption “Due from related parties, short-term.”The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 18% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, the amount undrawn under the Navios Revolving Loans II was$15,003, of which Navios Acquisition may be required to fund an amount ranging from $0 to $15,003. F-33Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 16: COMMITMENTS AND CONTINGENCIESOn November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstopagreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the Nave Celeste, the Shinyo Oceanand the Shinyo Kannika from their original charters, at a net rate of $35, $38.4 and $38, respectively. Navios Midstream has currently entered into newcharter contracts for the above vessels with third parties upon their redelivery in first quarter of 2017. Those contracts provide for index linked charter rates orpool earnings as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstop rates. The backstopcommitment for Shinyo Kannika terminated following the sale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitmentof the Shinyo Kannika to the Nave Galactic, following the sale of the latter to Navios Midstream in March 2018.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonablyestimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of thesematters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity.NOTE 17: PREFERRED AND COMMON STOCKPreferred StockSeries A Convertible Preferred StockOn September 17, 2010, Navios Acquisition issued 3,000 shares of the Company’s authorized Series A Convertible Preferred Stock to an independentthird party as a consideration for certain consulting and advisory fees related to the VLCC acquisition. The preferred stock has no voting rights, is onlyconvertible into shares of common stock and does not participate in dividends until such time as the shares are converted into common stock. On January 6,2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of puttable common stock and paid cash of $1,000 to the holder uponredemption. The Series A shares of preferred stock were fully converted into 1,200,000 common stock that was issued on March 11, 2016.Series B Convertible Preferred StockOn October 29, 2010, Navios Acquisition issued 540 shares of the Company’s authorized Series B Convertible Preferred Stock to the seller of the twoLR1 product tankers. The preferred stock contained a 2% per annum dividend payable quarterly starting on January 1, 2011 and upon declaration by theCompany’s Board commenced payment on March 31, 2011. The preferred stock did not have any voting rights. On June 30, 2015, 162 shares of Series BConvertible Preferred Stock (being 30% of the 540 shares originally issued), with nominal value of $10 per share, were mandatorily converted into 64,800shares of common stock at a conversion ratio of 1:25. On October 27, 2015, the remaining 378 shares of Series B Convertible Preferred Stock (being 70% ofthe 540 shares originally issued), with nominal value of $10 per share, were converted into 108,000 shares of common stock at a conversion ratio of 1:35.Series C Convertible Preferred StockOn March 30, 2011, pursuant to an Exchange Agreement Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s common stock it heldfor 1,000 non-voting Series C Convertible Preferred Stock of Navios Acquisition. Each holder of shares of Series C Convertible Preferred Stock shall beentitled at their option at any time, after March 31, 2013 to convert all or any of the outstanding shares of Series C Convertible Preferred Stock into a numberof fully paid and non-assessable shares of Common Stock determined by multiplying each share of Series C Convertible Preferred Stock to be converted by7,676, subject to certain limitations. Upon the declaration of a common stock dividend, the holders of the Series C Convertible Preferred Stock are entitled toreceive dividends on the Series C Convertible Preferred Stock in an amount equal to the amount that would have been received in the number of shares ofCommon Stock into which the Shares of Series C Convertible Preferred Stock held by each holder thereof could be converted. For the purpose of calculatingearnings / (loss) per share this preferred stock is treated as in-substance common stock and is allocated income / (losses) and considered in the dilutedcalculation.The Company was authorized to issue up to 10,000,000 shares of $0.0001 par value preferred stock in total with such designations, voting and otherrights and preferences as may be determined from time to time by the Board of Directors. F-34Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) As of each of December 31, 2017 and December 31, 2016 the Company’s issued and outstanding preferred stock consisted of the 1,000 Series CConvertible Preferred Stock.Series D Convertible Preferred StockOn each of August 31, 2012, October 31, 2012, February 13, 2013 and April 24, 2013, Navios Acquisition issued 300 shares of its authorized Series DConvertible Preferred Stock (nominal and fair value $3,000) to a shipyard, in partial settlement of the purchase price of each of the newbuilding LR1 producttankers, Nave Cassiopeia, Nave Cetus, Nave Atropos and Nave Rigel. The preferred stock includes a 6% per annum dividend payable quarterly, starting oneyear after delivery of each vessel. The Series D Convertible Preferred Stock mandatorily converted into shares of common stock 30 months after issuance at aprice per share of common stock equal to $10.00. During 2015, Navios Acquisition redeemed, at certain dates through the holder’s put option, 400 shares ofthe Series D Convertible Preferred Stock and paid cash of $4,000 in total to the holder upon redemption. As a result of the redemptions, no shares of series DConvertible Preferred Stock are outstanding.In addition at certain dates in 2015, 800 shares of Series D Convertible Preferred Stock were mandatorily converted into 800,000 shares of commonstock. In conjunction with these conversions, the 800,000 shares of common stock were reclassified to puttable common stock within temporary equity, as aresult of an embedded put option of the holder for up to 30 months after the conversion date.As of each of December 31, 2017 and December 31, 2016, no shares of Series D Convertible Preferred Stock were outstandingCommon Stock and puttable common stockAs of December 31, 2017 and December 31, 2016, the following shares of puttable common stock were outstanding: Puttable Common Stock Number ofcommon shares Amount Balance at December 31, 2015 650,000 $6,500 Redemption of 400,000 shares of the puttable common stock (400,000) (4,000) Balance at December 31, 2016 250,000 $2,500 Redemption of 250,000 shares of the puttable common stock (250,000) (2,500) Balance at December 31, 2017 — — Pursuant to an Exchange Agreement entered into on March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s commonstock it held for 1,000 non-voting shares of Series C Convertible Preferred Stock of Navios Acquisition.On March 2, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stockand on April 24, 2015, 25,000 shares of such puttable common stock were redeemed for $250.On April 30, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock.On June 30, 2015, 162 shares of Series B Convertible Preferred Stock were converted into 64,800 shares of common stock.On July 15, 2015, Navios Acquisition redeemed, through the holder’s put option, 50,000 shares of the puttable common stock and paid $500 to theholder upon redemption.On August 13, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock.On October 2, 2015, Navios Acquisition redeemed, through the holder’s put option, 75,000 shares of the puttable common stock and paid $750 to theholder upon redemption. F-35Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 26, 2015, 200 shares of the Series D Convertible Preferred Stock were converted into 200,000 shares of puttable common stock.On October 27, 2015, 378 shares of Series B Convertible Preferred Stock were mandatorily converted into 108,000 shares of common stock.Under the share repurchase program, for up to $50,000, approved and authorized by the Board of Directors, Navios Acquisition has repurchased2,704,752 shares for a total cost of approximately $9,904, as of December 31, 2015. The share repurchase program expired in December 2016.On January 6, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of$1,000 to the holder upon redemption.On March 11, 2016, 1,200,000 shares of common stock were issued as a result of the conversion of 3,000 shares of Series A Convertible PreferredStock.On April 1, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of $1,000to the holder upon redemption.On July 1, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of $1,000to the holder upon redemption.On October 3, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of$1,000 to the holder upon redemption.On January 17, 2017, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of puttable common stock and paid cash of$1,000 to the holder upon redemption.On May 8, 2017, Navios Acquisition redeemed, through the holder’s put option, 75,000 shares of puttable common stock and paid cash of $750 to theholder upon redemption.On August 8, 2017, Navios Acquisition redeemed, through the holder’s put option, 50,000 shares of puttable common stock and paid cash of $500 tothe holder upon redemption.On October 2, 2017, Navios Acquisition redeemed, through the holder’s put option, 25,000 shares of puttable common stock and paid cash of $250 tothe holder upon redemption. After this redemption there are no shares of puttable common stock outstanding.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.As of December 31, 2017, the Company was authorized to issue 250,000,000 shares of $0.0001 par value common stock of which 152,107,905 wereissued and outstanding.Stock based compensationIn October 2013, Navios Acquisition authorized and issued to its directors in the aggregate of 2,100,000 restricted shares of common stock and optionsto purchase 1,500,000 shares of common stock having an exercise price of $3.91 per share and an expiration term of 10 years. These awards of restrictedcommon stock and stock options are based on service conditions only and vest ratably over a period of three years (33.33% each year). The holders ofrestricted stock are entitled to dividends paid on the same schedule as paid to the common stockholders of the company. The fair value of restricted stock wasdetermined by reference to the quoted stock price on the date of grant of $3.99 per share (or total fair value of $8,379). F-36Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The fair value of stock option grants was determined with reference to the option pricing model, and principally adjusted Black- Scholes models, usinghistorical volatility, historical dividend yield, zero forfeiture rate, risk free rate equal to 10-year U.S. treasury bond and the simplified method for determiningthe expected option term since the Company did not have sufficient historical exercise data upon which to have a reasonable basis to estimate the expectedoption term. The fair value of stock options was calculated at $0.79 per option (or $1,188). Compensation expense is recognized based on a graded expensemodel over the vesting period of three years from the date of the grant.The effect of compensation expense arising from the stock based arrangements described above amounted to $0, $864 and $2,362 for the years endedDecember 31, 2017, 2016 and 2015, respectively, and was reflected in general and administrative expenses on the statements of operations. The recognizedcompensation expense for the year was presented as an adjustment to reconcile net (loss)/ income to net cash provided by operating activities on thestatements of cash flows.With respect to the October 2013 grants, there were no restricted stock or stock options exercised, forfeited or expired during the year endedDecember 31, 2017.On October 24, 2016, 2015 and 2014, 700,005, 700,001 and 699,994 shares of restricted stock, respectively, were vested. Accordingly, there were nounvested restricted shares outstanding as of December 31, 2017 and December 31, 2016.On each of October 24, 2016, 2015 and 2014, 500,000 stock options were vested. Accordingly, there were no unvested stock options outstanding andnon-vested as of December 31, 2017 and December 31, 2016.The weighted average contractual life of stock options outstanding as of December 31, 2017 was 5.8 years.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the stock holders of the company. The fair value ofrestricted stock is determined by reference to the quoted stock price on the date of grant of $1.18 per share (or total fair value of $2,094).Compensation expense is recognized based on a graded expense model over the vesting period.The effect of compensation expense arising from the stock-based arrangements described above amounts to $57, as of December 31, 2017, and it isreflected in general and administrative expenses on the statement of operations. The recognized compensation expense for the year is presented as adjustmentto reconcile net (loss)/ income to net cash provided by operating activities on the statements of cash flows.There were no restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017.Restricted Shares outstanding and not vested amounted to 1,774,915 shares as of December 31, 2017.The estimated compensation cost relating to service conditions of non-vested restricted stock, not yet recognized was $2,038 as of December 31, 2017and is expected to be recognized over the weighted average contractual life of stock options of 4.0 years.NOTE 18: SEGMENT INFORMATIONNavios Acquisition reports financial information and evaluates its operations by charter revenues. Navios Acquisition does not use discrete financialinformation to evaluate operating results for each type of charter. As a result, management reviews operating results solely by revenue per day and operatingresults of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.The following table sets out operating revenue by geographic region for Navios Acquisition’s reportable segment. Revenue is allocated on the basis ofthe geographic region in which the customer is located. Tanker vessels operate worldwide. Revenues from specific geographic regions which contribute over10% of total revenue are disclosed separately. F-37Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Revenue by Geographic RegionVessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operationsto specific countries. Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Asia $140,177 $179,256 $208,690 Europe 34,653 40,237 40,147 United States 52,458 70,752 64,559 Total Revenue $227,288 $290,245 $313,396 NOTE 19: EARNINGS/ (LOSS) PER COMMON SHAREEarnings/ (loss) per share is calculated by dividing net income attributable to common stockholders by the weighted average number of shares ofcommon stock of Navios Acquisition outstanding during the period.Net (loss)/ income for the years ended December 31, 2017, 2016 and 2015 was adjusted for the purposes of earnings/(loss) per share calculation, for thedividends on Series B Preferred Shares, Series D preferred shares, restricted shares and for the undistributed loss/ (income) that is attributable to Series Cpreferred stock. Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Numerator: Net (loss)/ income $(78,899) $62,878 $89,737 Less: Dividend declared on preferred shares Series B — — (78) Dividend declared on preferred shares Series D — — (281) Dividend declared on restricted shares (89) (105) (245) Undistributed loss/ (income) attributable to Series Cparticipating preferred shares 3,835 (3,058) (4,337) Net (loss)/ income attributable to common stockholders,basic $(75,153) $59,715 $84,796 Plus: Dividend declared on preferred shares Series B — — 78 Dividend declared on preferred shares Series D — — 281 Dividend declared on restricted shares — 105 245 Net (loss)/ income attributable to common stockholders,diluted $(75,153) $59,820 $85,400 Denominator: Denominator for basic net (loss)/ income per share —weighted average shares 150,412,031 149,932,713 150,025,086 Series A preferred stock — 232,787 1,200,000 Series B preferred stock — — 156,893 Series D preferred stock — — 647,758 Restricted shares — 570,656 1,270,658 Denominator for diluted net (loss)/ income per share —adjusted weighted average shares 150,412,031 150,736,156 153,300,395 Net (loss)/ income per share, basic $(0.50) $0.40 $0.57 Net (loss)/ income per share, diluted $(0.50) $0.40 $0.56 Potential common shares of 9,267,640, for the year ended December 31, 2017 (which includes Series C Preferred Stock, stock options and restrictedshares), 9,176,000, for the years ended December 31, 2016 (which includes Series C Preferred Stock and stock options) and December 31, 2015 (whichincludes Series S Preferred Stock and stock options) have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) and aretherefore excluded from the calculation of diluted earnings per share. F-38Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 20: INCOME TAXESMarshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws ofthese countries, the countries of incorporation of the Company and its subsidiaries and /or vessels’ registration, the companies are subject to registration andtonnage taxes which have been included in the daily management fee.In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessels’ tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel. In case that tonnage tax and/or similar taxes/duties are paid to the vessel’s flag state,these are deducted from the amount of the duty to be paid in Greece. The amount included in Navios Acquisition’s statements of operations for each of theyears ended December 31, 2017 and 2016, related to the Greek Tonnage tax was $616 and $612, respectively.Pursuant to Section 883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operation of ships isgenerally exempt from U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, inorder to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from incometaxes to U.S. corporations. All the Navios Acquisition’s ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must meet anownership test. Subject to proposed regulations becoming finalized in their current form, the management of Navios Acquisition believes by virtue of aspecial rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like Navios Acquisition, thesecond criterion can also be satisfied based on the trading volume and ownership of the Company’s shares, but no assurance can be given that this willremain so in the future.NOTE 21: RECENT ACCOUNTING PRONOUNCEMENTSIn May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-09, “Compensation — StockCompensation (Topic 718)”. This update provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance inTopic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this update affect any entity that changes the terms orconditions of a share-based payment award and are effective for all entities for annual periods, and interim periods within those annual periods, beginningafter December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for whichfinancial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been made available forissuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this newaccounting standard is not expected to have material impact on the Company’s results of operations, financial position or cash flows.In February 2017, FASB issued ASU 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)”.This update clarifies the scope of Subtopic 610-20 “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets” and provides guidancefor partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, “Revenue from Contracts with Customers(Topic 606)”, provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments inASU 2017-05 are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, the amendments are effective for annualreporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The adoption of this new standard isnot expected to have material impact on the Company’s results of operations, financial position or cash flows.In January 2017, the FASB issued ASU 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and JointVentures (Topic 323)”. The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SECguidance that specifically relates to our consolidated financial statement was from the September 2016 meeting, where the SEC staff expressed theirexpectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior toadoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M.Registrants are F-39Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In caseswhere a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporatesthese SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The adoption of thisASU did not have a material effect on the Company’s consolidated financial statements.In December 2016, FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. Theamendments in this ASU affect narrow aspects of the guidance issued in ASU 2014-09, which is not yet effective, and are of a similar nature to the itemstypically addressed in the Technical Corrections and Improvements project. The effective date and transition requirements for the amendments are the sameas the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, “Revenue from Contractswith Customers (Topic 606): Deferral of the Effective Date”, defers the effective date of Update 2014-09 by one year, as noted below.In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This update addresses the classification andpresentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective for publicbusiness entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Retrospective transition method isrequired. Early adoption is permitted for all entities. The Company currently presents changes in restricted cash and cash equivalents depending on thenature of the cash flow within the consolidated statement of cash flows. The new guidance will not impact financial results, but will result in a change in thepresentation of restricted cash and cash equivalents within the statement of cash flows. The Company currently plans to adopt this guidance from January 1,2018.In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This updateaddresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for public businessentities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. Thisupdate was adopted as from January 1, 2018 and applied on a retrospective basis. The Company has assessed each of the eight specific presentation issuesand the adoption of this ASU does not have a material impact on the Company’s consolidated financial statements.In June 2016, FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience, currentconditions, and reasonable and supportable forecasts in order to record credit losses in a more timely matter. ASU 2016-13 also amends the accounting forcredit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard is effective for interim and annualreporting periods beginning after December 15, 2019, although early adoption is permitted for interim and annual periods beginning after December 15,2018. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 will apply to both capital (or finance) leases and operating leases.According to ASU 2016-02, lessees will be required to recognize assets (right of use) and liabilities (lease liabilities) on the balance sheet for both types ofleases, capital (or finance) leases and operating leases, with terms greater than 12 months. ASU 2016 – 02 is effective for fiscal years beginning afterDecember 15, 2018, including interim periods within those fiscal years. Early application is permitted. This guidance requires companies to identify leaseand non-lease components of a lease agreement. Lease components relate to the right to use the leased asset and non-lease components relate to payments forgoods or services that are transferred separately from the right to use the underlying asset. Total lease consideration is allocated to lease and non-leasecomponents on a relative standalone basis. The recognition of revenues related to lease components will be governed by ASC 842 while revenue related tonon-lease components will be subject to ASC 606.In January 2018, the FASB issued a proposed amendment to ASU 842, Leases, that would provide an entity the optional transition method to initiallyaccount for the impact of the adoption with a cumulative adjustment to accumulated deficit on the effective date of the ASU, January 1, 2019 rather thanJanuary 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. In addition, this proposed amendment, lessors canelect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. Ifadopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenuerecognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would beclassified as an operating lease. ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts areconsidered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases.On March 28, the FASB tentatively approved the new practical expedient for lessors adopting the new leases standard. F-40Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The Company plans to early adopt the requirements of ASU 842, Leases, effective from January 1, 2018 and will elect the use of the practicalexpedients. Also, the Company plans to elect the transition method for adoption as described above.The Company is continuing its assessment of this ASU. Based on a preliminary assessment, the Company is expecting that the adoption will not have amaterial effect on its financial statements since the Company is primarily a lessor and the changes are fairly minor. If the proposed practical expedientmentioned above will be adopted and elected, and therefore good and services embedded in the charter contract that qualify as non-lease components will becombined under a single lease component presentation. However, without the proposed practical expedient, the Company expects that it will continue torecognize the lease revenue component using an approach that is substantially equivalent to existing guidance. The components of the charter hire that arecategorized as lease components will generally be a fixed rate per day with revenue recognized straight line over the lease contract. Other goods and servicesthat are categorized as non-lease components will be recognized at either a point in time or over time based on the pattern of transfer of the underlying goodsor services to our charterers.The Company is continuing its assessment of other miscellaneous leases and may identify additional impacts this guidance will have on itsconsolidated financial statements and disclosures. The Company currently does not have any other miscellaneous leases that are greater than 12 months andthe Company is the lessee that would be impacted by the adoption of this standard.In January 2016, FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assetsand Financial Liabilities”. The amendments in this ASU require an entity (i) to measure equity investments (except those accounted for under the equitymethod of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (ii) to perform aqualitative assessment to identify impairment in equity investments without readily determinable fair values; (iii) to present separately in othercomprehensive income the fair value of a liability resulting from a change in the instrument-specific credit risk; and (iv) to present separately financial assetsand financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet. Theamendments also eliminate the requirement, for public business entities, to disclose the methods and significant assumptions used to estimate the fair valueof financial instruments measured at amortized cost on the balance sheet and clarify that an entity should evaluate the need for a valuation allowance on adeferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, ASU 2016-01is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new standard is notexpected to have a material impact on the Company’s results of operations, financial position or cash flows.In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, clarifying the method used to determine the timing andrequirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract,the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendmentsin this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cashflow arising from contracts. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 for all entities by one year. Thestandard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The Company willadopt the standard as of January 1, 2018 utilizing the modified retrospective approach and is expecting that the adoption will not have an effect on itsfinancial statements since the Company has chartered its vessels since inception in time charter agreements and in this respect revenue is accounted underASC 840 Leases. The Company also operates certain of its vessels under voyage contracts, contracts for which currently revenue is recognized ratably fromwhen a vessel becomes available for loading to the completion of the discharge of the current cargo, provided an agreed non-cancelable charter between theCompany and the charterer is in existence. Upon adoption, the Company will recognize revenue ratably from the vessel’s arrival at the loading port, asapplicable under the contract, to when the charterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” andrelate directly to the contract. The estimated impact of the adoption of this standard is expected to be a minimal change in operating revenues and expensesand net income/ (loss).NOTE 22: SUBSEQUENT EVENTSOn January 26, 2018, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2017 of $0.02 per share of commonstock which was paid on March 27, 2018 to stockholders of record as of March 22, 2018. The declaration and payment of any further dividends remainsubject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by marketopportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. F-41Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25,000 of Navios Acquisition’scommon stock, for two years. Stock repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privatelynegotiated transactions. The timing and amount of repurchases under the program will be determined by management based upon market conditions andother factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Theprogram does not require any minimum repurchase or any specific number or amount of shares of common stock and may be suspended or reinstated at anytime in Navios Acquisition’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject torestrictions under Navios Acquisition’s credit facilities and indenture. As of March 31, 2018, the Company has repurchased 5,166,544 shares of commonstock, for a total cost of approximately $4,242, out of which 5,021,764 shares of common stock have been cancelled.On March 15, 2018, Navios Acquisition agreed to sell to Navios Midstream the Nave Galactic, a 2009 built VLCC vessel of 297,168 dwt, for a totalsale price of $44,500 the delivery of which completed on March 29, 2018. As of March 31, 2018, the estimated loss due to the sale is expected to beapproximately $340. In March 2018, Navios Acquisition agreed to extend the charter rate backstop of the Shinyo Kannika to the Nave Galactic. F-42Exhibit 4.52 1. Shipbroker N/A BIMCO STANDARD BAREBOAT CHARTER CODE NAME: “BARECON 2001” PART I 2. Place and date 2001 31 March 2018 1974 Revised in . 1989 3. Owners/Place of business (Cl. 1) 4. Bareboat Charterers/Place of business (Cl. 1) Sea 66 Leasing Co. Limited / Room 1803-1804, 18/F Bank of Antiparos Shipping Corporation / Trust Company Complex, Copenhagen America Tower, 12 Harcourt Road, Central, Hong Kong Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands amalgamated (BIMCO), and Council 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Revised “ . NAVE ATRIA / 3FFV5 / Panama or any other Flag State ‘B’ Maritime “Barecon 6. Type of Vessel 7. GT/NT and MR Tanker 30,052 / 13,255 “ International by ‘A’ and issued Baltic 8. When/Where built 9. Total DWT (abt.) in metric tons on summer freeboard “Barecon 2012, Dae Sun Shipping & Engineering Co., Ltd., Korea 49,992 First The as 10. Classification Society (Cl. 3) 11. Date of last special survey by the Vessel’s classification society Nippon Kaiji Kyokai or any other Classification Society 09/11/17 idea 12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) BIMCO’s IMO No.: 9459060 by Length: 174.00 metres Printed Breadth: 32.20 metres Depth: 19.10 metres 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) 15. Cancelling date (Cl. 5) The place of delivery specified under Clause 5(a) of the MOA See Clause 34 See Clause 33 16. Port or Place of redelivery (Cl. 15) 17. No. of months’ validity of trading and class certificates 2001 At a safe, ice free port where the Vessel would be afloat at all upon redelivery (Cl. 15) times See Clause 40 November Issued 18. Running days’ notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) . N/A In accordance with Classification Society or Flag State requirements 20. Trading limits (Cl. 6) Copenhagen Worldwide within Institute Warranty Limits (BIMCO), Council 21. Charter period (Cl. 2) 22. Charter hire (Cl. 11) Maritime See Clause 32 See Clause 36 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A by International and 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to 25.Currency and method of payment (Cl. 11) published Baltic PART IV Dollars/bank transfer The See Clause 36.11—neither Clause 11(f) nor Part IV applies Copyright, This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PART I 26. Place of payment; also state beneficiary and bank account (Cl. 11) 27. Bank Corporate guarantee/bond (sum and place) (Cl. 24) (optional) Beneficiary: Antiparos Shipping Corporation See Clause 24 Account No.: 1200048491 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) applies state date of Financial Instrument and name of or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) Mortgagee(s)/Place of business) (Cl. 12) See Clause 38 – CLAUSE 14 DOES NOT APPLY See Clause 35 30. Additional insurance cover, if any, for Owners’ account limited to 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 38 See Clause 38 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 27) N/A N/A 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place 34. Grace period (state number of clear banking daysBusiness Days) (Cl. 28) of Arbitration must be stated (Cl. 30) See Clause 44 See Clause 30(a) 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III 38. Name and place of Builders (only to be filled in if PART III applies) applies) (optional) N/A No, Part III does not apply 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) N/A N/A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) applies) (optional) No, Part IV does not apply No, Part V does not apply 44.Flag and Country of the Bareboat Charter Registry (only to be filled 45. Country of the Underlying Registry (only to be filled in if PART V applies) in if PART V applies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE—It is mutuallyagreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) For and on behalf of the Owners For and on behalf of the Charterers Name: Name: Title: Title: This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PART I This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter 1. Definitions See also Clause 59 1 day on which the Vessel should be ready, give notice 72 In this Charter, the following terms shall have the 2 thereof to the Charterers asking whether they will 73 meanings hereby assigned to them: 3 exercise their option of cancelling, and the option must 74 “The Owners” shall mean the party identified in Box 3; 4 then be declared within one hundred and sixty-eight 75 “The Charterers” shall mean the party identified in Box 4; 5 (168) running hours of the receipt by the Charterers of 76 “The Vessel” shall mean the vessel named in Box 5 and 6 such notice or within thirty-six (36) running hours after 77 with particulars as stated in Boxes 6 to 12. 7 the cancelling date, whichever is the earlier. If the 78 “Financial Instrument” means the mortgage, deed of 8 Charterers do not then exercise their option of cancelling, 79 covenant or other such financial security instrument as 9 the seventh day after the readiness date stated in the 80 annexed to this Charter and stated in Box 28. 10 Owners’ notice shall be substituted for the cancelling 81 2. Charter Period 11 date indicated in Box 15 for the purpose of this Clause 5. 82 In consideration of the hire detailed in Box 22, 12 (c) Cancellation under this Clause 5 shall be without 83 the Owners have agreed to let and the Charterers have 13 prejudice to any claim the Charterers may otherwise 84 agreed to hire the Vessel for the period stated in Box 21 14 have on the Owners under this Charter. 85 (“The Charter Period”). See also Clause 32 and Clause 15 6. Trading Restrictions See also Clauses 46.1(m) and 86 36. 46.1(n) 3. Delivery 16 The Vessel shall be employed in lawful trades for the 87 (not applicable when Part III applies, as indicated in Box 37) 17 carriage of suitable lawful merchandise within the trading 88 (a) The Owners shall before and at the time of delivery 18 limits indicated in Box 20. 89 exercise due diligence to make the Vessel seaworthy 19 The Charterers undertake not to employ the Vessel or 90 And in every respect ready in hull, machinery and 20 suffer the Vessel to be employed otherwise than in 91 equipment for service under this Charter. 21 conformity with the terms of the contracts of insurance 92 The Vessel shall be delivered by the Owners and taken 22 (including any warranties expressed or implied therein) 93 over by the Charterers at the port or place indicated in 23 without first obtaining the consent of theinsurers to such 94 Box 13 in such ready safe berth as the Charterers may 24 employment and complying with such requirements as 95 direct. 25 to extra premium or otherwise as the insurers may 96 (b) The Vessel shall beis properly documented on 26 prescribe. 97 delivery in accordance with the laws of the fFlag State 27 The Charterers also undertake not to employ the Vessel 98 indicated in Box 5 and the requirements of the 28 or suffer her employment in any trade or business which 99 cClassification sSociety stated in Box 10. The Vessel 29 is forbidden by the law of any country to which the Vessel 100 upon may sail or is otherwise illicit or in carrying illicit or 101 delivery shall have her survey cycles up to date and 30 prohibited goods or in any manner whatsoever which 102 trading and class certificates valid for at least the number 31 may render her liable to condemnation, destruction, 103 of months agreed in Box 12. 32 seizure or confiscation. 104 (c) The delivery of the Vessel by the Owners and the 33 Notwithstanding any other provisions contained in this 105 taking over of the Vessel by the Charterers shall 34 Charter it is agreed that nuclear fuels or radioactive 106 constitute a full performance by the Owners of all the 35 products or waste are specifically excluded from the 107 Owners’ obligations under this Clause 3, and thereafter 36 cargo permitted to be loaded or carried under this 108 the Charterers shall not be entitled to make or assert 37 Charter. This exclusion does not apply to radio-isotopes 109 any claim against the Owners on account of any 38 used or intended to be used for any industrial, 110 conditions, representations or warranties expressed or 39 commercial, agricultural, medical or scientific purposes 111 implied with respect to the Vessel but the Owners shall 40 provided the Owners’ prior approval has been obtained 112 be liable for the cost of but not the time for repairs or 41 to loading thereof. 113 renewals occasioned by latent defects in the Vessel, 42 7. Surveys on Delivery and Redelivery 114 her machinery or appurtenances, existing at the time of 43 (not applicable when Part III applies, as indicated in Box 37) 115 delivery under this Charter, provided such defects have 44 The Owners and Charterers shall each appoint 116 manifested themselves within twelve (12) months after 45 surveyors for the purpose of determining and agreeing 117 delivery unless otherwise provided in Box32. 46 in writing the condition of the Vessel at the time of 118 4. Time for Delivery See Clauses 32 and 34 47 delivery and redelivery pursuant to Clause 40.3 (with 119 (not applicable when Part III applies, as indicated in Box 37) 48 the relevant costs paid by the Charterers).hereunder. The Vessel shall not be delivered before the date 49 The Owners shall indicated in Box 14 without the Charterers’ consent and 50 bear all expenses of the On-hire Survey including loss 120 the Owners shall exercise due diligence to deliver the 51 of time, if any, and the Charterers shall bear all expenses 121 Vessel not later than the date indicated in Box 15. 52 of the Off-hire Survey including loss of time, if any, at 122 Unless otherwise agreed in Box 18, the Owners shall 53 the daily equivalent to the rate of hire or pro rata thereof. 123 give the Charterers not less than thirty (30) running days’ 54 8. Inspection 124 preliminary and not less than fourteen (14) running days’ 55 The Owners shall have the right at any time either (i) 125 definite notice of the date on which the Vessel is 56 once every calendar year provided no Potential expected to be ready for delivery. 57 Termination Event or Termination Event has occurred The Owners shall keep the Charterers closely advised 58 (after giving reasonable notice to the Charterers and of possible changes in the Vessel’s position. 59 provided that the Owners do not unduly interfere with 5. Cancelling See Clause 33 60 or cause delay to the commercial operation of the (not applicable when Part III applies, as indicated in Box 37) 61 Vessel) or (ii) at any time following the occurrence of (a) Should the Vessel not be delivered latest by the 62 a Potential Termination Event or Termination Event cancelling date indicated in Box 15, the Charterers shall 63 and for as long as it is continuing (after giving have the option of cancelling this Charter by giving the 64 reasonable notice to the Charterers), to inspect or survey 126 Owners notice of cancellation within thirty-six (36) 65 the Vessel or instruct a duly authorised surveyor to carry 127 running hours after the cancelling date stated in Box 66 out such survey on their behalf:- 128 15, failing which this Charter shall remain in full force 67 (a) to ascertain the condition of the Vessel and satisfy 129 and effect. 68 themselves that the Vessel is being properly repaired 130 (b) If it appears that the Vessel will be delayed beyond 69 and maintained. The costs and fees for such inspection 131 the cancelling date, the Ownersmay, as soon as they 70 or survey shall be paid by the Charterers, subject to the 132 are in a position to state with reasonable certainty the 71 above conditions as may be applicable from lines 125 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter to 128.Owners unless the Vessel of agreement, be referred to the dispute resolution 199 is found to require repairs or maintenance in order to 133 method agreed in Clause 30., the Charterers shall 200 achieve the condition so provided; 134 ensure that the same are complied with and the (b) in dry-dock if the Charterers have not dry-docked 135 time and costs of compliance shall be for the Her in accordance with Clause 10(g). The costs and fees 136 Charterers’ account. for such inspection or survey shall be paid by the 137 (iii) Financial Security—The Charterers shall maintain 201 Charterers, subject to the above conditions as may be 138 financial security or responsibility in respect of third 202 applicable from lines 125 to 128; and party liabilities as required by any government, 203 (c) for any other commercial reason they consider 139 including federal, state or municipal or other division 204 necessary (provided it does not unduly interfere with 140 or authority thereof, to enable the Vessel, without 205 the commercial operation of the Vessel). The costs and 141 penalty or charge, lawfully to enter, remain at, or 206 fees for such inspection and survey shall be paid by the 142 leave any port, place, territorial or contiguous 207 OwnersCharterers, subject to the above conditions as 143 waters of any country, state or municipality in 208 may be applicable from lines 125 to 128. performance of this Charter without any delay. This 209 All time used in respect of inspection, survey or repairs 144 obligation shall apply whether or not such 210 shall be for the Charterers’ account and form part of the 145 requirements have been lawfully imposed by such 211 Charter Period. 146 government or division or authority thereof. 212 The Charterers shall also permit the Owners to inspect 147 The Charterers shall make and maintain all arrange- 213 the Vessel’s log books whenever requested and shall 148 ments by bond or otherwise as may be necessary to 214 whenever required by the Owners furnish them with full 149 satisfy such requirements at the Charterers’ sole 215 information regarding any casualties or other accidents 150 expense and the Charterers shall indemnify the Owners 216 or damage to the Vessel. 151 against all consequences whatsoever (including loss of 217 The Charterers shall provide such necessary time) for any failure or inability to do so. 218 assistanceto the Owners, their representatives or (b) Operation of the Vessel—The Charterers shall at 219 agents in respect of any inspection hereunder. their own expense and by their own procurement man, 220 victual, navigate, operate, supply, fuel and, whenever 221 9. Inventories, Oil and Stores See Clause 34.7 152 required, repair the Vessel during the Charter Period 222 A complete inventory of the Vessel’s entire equipment, 153 and they shall pay all charges and expenses of every 223 outfit including spare parts, appliances and of all 154 kind and nature whatsoever incidental to their use and 224 consumable stores on board the Vessel shall be made 155 operation of the Vessel under this Charter, including 225 by the Charterers in conjunction with the Owners on 156 annual flag Flag State fees and any foreign general 226 delivery and again on redelivery of the Vessel. The 157 municipality and/or state taxes. The Master, officers 227 Charterers and the Owners, respectively, shall at the 158 and crew of the Vessel shall be the servants of the Charterers 228 time of delivery and redelivery take over and pay for all 159 for all purposes whatsoever, even if for any reason 229 bunkers, lubricating oil, unbroached provisions, paints, 160 appointed by the Owners. 230 ropes and other consumable stores (excluding spare 161 Charterers shall comply with the regulations regarding 231 parts) in the said Vessel at the then current market prices 162 officers and crew in force in the country of the Vessel’s 232 at the ports of delivery and redelivery, respectively. The 163 flag or any other applicable law. 233 Charterers shall ensure that all spare parts listed in the 164 (c) The Charterers shall keep the Owners and the 234 inventory and used during the Charter Period are 165 mortgagee(s) advised of the intended employment (other 235 replaced at their expense prior to redelivery of the 166 than in respect of sub time charters which are less Vessel. 167 than 12 months in duration (after including any 10. Maintenance and Operation 168 optional extension periods), (a)(i)Maintenance and Repairs—During the Charter 169 planned dry-docking (other than the periodical dry- 236 Period the Vessel shall be in the full possession 170 docking referred to under paragraph (g) below) and and at the absolute disposal for all purposes of the 171 major repairs of the Vessel, Charterers and under their complete control in 172 as reasonably required. 237 every respect. The Charterers shall maintain the173 (d) Flag and Name of Vessel – During the Charter 238 Vessel, her machinery, boilers, appurtenances and 174 Period, the Charterers shall have the liberty to paint the 239 spare parts in a good state of repair, in efficient 175 Vessel in their own colours, install and display their 240 operating condition and in accordance with good 176 funnel insignia and fly their own house flag (with all fees, 241 commercial maintenance practice and, except as 177 costs and expenses arising in relation thereto for the provided for in Clause 14(l), if applicable, at their 178 Charterers account). The own expense they shall at all times keep the 179 Charterers shall also have the liberty, with the Owners’ 242 Vessel’s Class classification fully up to date with 180 consent, which shall not be unreasonably withheld, to 243 the Classification change the flag of the Vessel to that of another Flag 244 Society indicated in Box 10 and maintain all other 181 State (with all fees, costs and expenses arising in necessary certificates in force at all times. 182 relation thereto for the Charterers’ account) and/or (ii) New Class and Other Safety Requirements—In the 183 with the Owners’ consent, the name of the Vessel (with event of any improvement, structural changes or 184 all fees, costs and expenses arising in relation new equipment becoming necessary for the 185 thereto for the Charterers’ account) during continued operation of the Vessel by reason of new 186 the Charter Period. Any Ppainting and re-painting, 245 class requirements or by compulsory legislation 187 instalment costing (excluding the Charterers’ loss of time) 188 and re-instalment, registration (including maintenance 246 more than the percentage stated in Box 23, or if 189 and renewal thereof) and re-registration, if Box 23 is left blank, 5 per cent. of the Vessel’s 190 required by the Owners, shall be at the Charterers’ 247 insurance value as stated in Box 29, then the 191 expense and time. If the Flag State requires the 248 extent, if any, to which the rate of hire shall be varied 192 Owners to establish a physical presence or office in and the ratio in which the cost of compliance shall 193 the jurisdiction of such Flag State, all fees, costs and be shared between the parties concerned in order 194 expenses payable by the Owners to establish and to achieve a reasonable distribution thereof as 195 maintain such physical presence or office shall be for between the Owners and the Charterers having 196 the account of the Charterers. regard, inter alia, to the length of the period 197 (e) Changes to the Vessel – Subject to Clause 10(a)(ii) and 249 remaining underthis Charter shall, in the absence 198 Clause 10(b), the Charterers shall make no structural changes in the 250 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter Vessel or changes which materially adversely affect 251 as lost or missing shall be ten (10) days after the Vessel 312 the Vessel’s classification or value in the machinery, was last reported or when the Vessel is posted as 313 boilers, appurten- missing by Lloyd’s, whichever occurs first. Any hire paid 314 ances or spare parts thereof without in each instance 252 in advance to be adjusted accordingly. 315 first securing the Owners’ approval thereof. If the Owners 253 (f) Any delay in payment of hire shall entitle the 316 so agree, the Charterers shall, if the Owners so require, 254 Owners to interest at the rate per annum as agreed 317 restore the Vessel to its former condition before the 255 in Box 24. If Box 24 has not been filled in, the three months 318 termination of this Charter. 256 Interbank offered rate in London (LIBOR or its successor) 319 (f) Use of the Vessel’s Outfit, Equipment and 257 for the currency stated in Box 25, as quoted by the British 320 Appliances—The Charterers shall have the use of all 258 Bankers’ Association (BBA) on the date when the hire 321 outfit, equipment, and appliances on board the Vessel 259 fell due, increased by 2 per cent., shall apply. 322 at the time of delivery, provided the same or their 260 (g) Payment of interest due under sub-clause 11(f) 323 substantial equivalent shall be returned to the Owners 261 shall be made within seven (7) running days of the date 324 on redelivery (without prejudice to Clauses 40.6 and 262 of the Owners’ invoice specifying the amount payable 325 40.7 and if redelivery is required pursuant to this or, in the absence of an invoice, at the time of the next 326 Charter) in the same good order and condition as hire payment date. 327 when received, ordinary wear and tear excepted. The 263 12. Mortgage See Clause 35 328 Charterers shall from time to time during the Charter 264 (only to apply if Box 28 has been appropriately filled in) 329 Period replace such items of equipment as shall be so 265 *) (a) The Owners warrant that they have not effected 330 damaged or worn as to be unfit for use. The Charterers 266 any mortgage(s) of the Vessel and that they shall not 331 are to procure that all repairs to or replacement of any 267 effect any mortgage(s) without the prior consent of the 332 damaged, worn or lost parts or equipment be effected 268 Charterers, which shall not be unreasonably withheld. 333 in such manner(both as regards workmanship and 269 *) (b) The Vessel chartered under this Charter is financed 334 quality of materials) as not to diminish the value of the 270 by a mortgage according to the Financial Instrument. 335 Vessel. Title of any equipment so replaced shall vest 271 The Charterers undertake to comply, and provide such 336 in and remain with the Owners. The Charterers have information and documents to enable the Owners to 337 the right to fit additional comply, with all such instructions or directions in regard 338 equipment at their expense and risk (provided that no 272 to the employment, insurances, operation, repairs and 339 permanent structural damage is caused to the Vessel maintenance of the Vessel as laid down in the Financial 340 by reason of such installation) andbut the Charterers Instrument or as may be directed from time to time during 341 shall, at their expense, remove such equipment and 273 the currency of the Charter by the mortgagee(s) in 342 make good any damage caused by the fitting or conformity with the Financial Instrument. The Charterers 343 removal of such additional equipment before the confirm that, for this purpose, they have acquainted 344 Vessel is redelivered to the Owners pursuant to themselves with all relevant terms, conditions and 345 Clause 40.3 and without prejudice to Clauses 40.6 provisions of the Financial Instrument and agree to 346 and 40.7,at the end of the period if acknowledge this in writing in any form that may be 347 requested by the Owners. Any equipment including radio 274 required by the mortgagee(s). The Owners warrant that 348 equipment on hire on the Vessel at time of delivery shall 275 they have not effected any mortgage(s) other than stated 349 be kept and maintained by the Charterers and the 276 in Box 28 and that they shall not agree to any 350 Charterers shall assume the obligations and liabilities 277 amendment of the mortgage(s) referred to in Box 28 or 351 of the Owners under any lease contracts in connection 278 effect any other mortgage(s) without the prior consent 352 therewith and shall reimburse the Owners for all 279 of the Charterers, which shall not be unreasonably 353 expenses incurred in connection therewith, also for any 280 withheld. 354 new equipment required in order to comply with radio 281 are alternatives; *) (Optional, Clauses 12(a)and 12(b) 355 regulations. 282 indicate alternative agreed in Box 28). 356 (g) Periodical Dry-Docking—The Charterers shall dry- 283 dock the Vessel and clean and paint her underwater 284 13. Insurance and Repairs See also Clause 38 357 parts whenever the same may be necessary, but not 285 (a) Subject and without prejudice to Clause 38, 358 less than once during the period stated in Box 19 or, if 286 Dduring the Charter Period the Vessel shall be kept Box 19 has been left blank, every sixty (60) calendar 287 insured by the Charterers at their expense against hull 359 months after delivery or such other period as may be 288 and machinery, marine and war (including blocking 360 required by the Classification Society or fFlag State. 289 and trapping) and Protection and Indemnity risks and freight, demurrage and defence risks 11. Hire See Clause 36 290 (and any risks against which it is compulsory to insure 361 (a) The Charterers shall pay hire due to the Owners 291 for the operation of the Vessel, including but not limited 362 punctually in accordance with the terms of this Charter 292 to maintaining in respect of which time shall be of the essence. 293 financial security in accordance with sub-clause 363 (b) The Charterers shall pay to the Owners for the hire 294 10(a)(iii)) in such form as the Owners shall in writing 364 of the Vessel a lump sum in the amount indicated in 295 approve, which approval shall not be un-reasonably 365 Box 22 which shall be payable not later than every thirty 296 withheld. During the Charter Period, the Charterers 366 (30) running days in advance, the first lump sum being 297 shall procure (at Charterers’ expense) that there are payable on the date and hour of the Vessel’s delivery to 298 in place innocent Owners’ interest insurance, the Charterers. Hire shall be paid continuously 299 Owner’s additional perils (pollution) insurance and if throughout the Charter Period. 300 applicable Mortgagees’ interest insurance and (c) Payment of hire shall be made in cash without 301 Mortgagees’ additional perils (pollution) insurance. discount in the currency and in the manner indicated in 302 Such insurances as specified in this Clause 13 shall be Box 25 and at the place mentioned in Box 26. 303 arranged by the (d) Final payment of hire, if for a period of less than 304 Charterers to protect the interests of both the Owners 367 thirty(30) running days, shall be calculated proportionally 305 and the Charterers and the mortgageeMortgagee(s) (if 368 according to the number of days and hours remaining 306 any),. and before redelivery and advance payment to be effected 307 The Charterers shall be at liberty to protect under such 369 accordingly. 308 insurances the interests of any managers they may 370 (e) Should the Vessel be lost or missing, hire shall 309 appoint. Insurance policies shall cover the Owners and 371 cease from the date and time when she was lost or last 310 the Charterers and the Mortgagees (if any) according to 372 heard of. The date upon which the Vessel is to be treated 311 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter their respective interests. payments made to discharge claims against or liabilities 437 Subject to the provisions of the Financial Instruments (if 373 of the Vessel or the Owners covered by such insurance. 438 any), if and the agreed loss payable clauses, Insurance policies shall cover the Owners and the 439 any, and the approval of the Owners and the insurers, 374 Charterers according to their respective interests. 440 the Charterers shall effect all insured repairs and shall 375 (b) During the Charter Period the Vessel shall be kept 441 undertake settlement and reimbursement from the 376 insured by the Charterers at their expense against 442 insurers of all costs in connection with such repairs as 377 Protection and Indemnity risks (and any risks against 443 well as insured charges, expenses and liabilities to the 378 which it is compulsory to insure for the operation of the 444 extent of coverage under the insurances herein provided 379 Vessel, including maintaining financial security in 445 for. 380 accordance with sub-clause 10(a)(iii)) in such form as 446 The Charterers also to remain responsible for and to 381 the Owners shall in writing approve which approval shall 447 effect repairs and settlement of costs and expenses 382 not be unreasonably withheld. 448 incurred thereby in respect of all other repairs not 383 (c) In the event that any act or negligence of the 449 covered by the insurances and/or not exceeding any 384 Charterers shall vitiate any of the insurance herein 450 possible franchise(s) or deductibles provided for in the 385 provided, the Charterers shall pay to the Owners all 451 insurances. 386 losses and indemnify the Owners against all claims and 452 All time used for repairs under the provisions of sub- 387 demands which would otherwise have been covered by 453 clause 13(a) and for repairs of latent defects according 388 such insurance. 454 to Clause 3(c) above, including any deviation, shall be 389 (d) The Charterers shall, subject to the approval of the 455 for the Charterers’ account. 390 Owners or Owners’ Underwriters, effect all insured 456 (b) If the conditions of the above insurances permit 391 repairs, and the Charterers shall undertake settlement 457 additional insurance to be placed by the parties, such 392 of all miscellaneous expenses in connection with such 458 cover shall be limited to the amount for each party set 393 repairs as well as all insured charges, expenses and 459 out in Box 30 and Box 31,respectively. The Owners or 394 liabilities, to the extent of coverage under the insurances 460 the Charterers as the case may be shall immediately 395 provided for under the provisions of sub-clause 14(a). 461 furnish the other partyOwners with particulars of any 396 The Charterers to be secured reimbursement through 462 additional the Owners’ Underwriters for such expenditures upon 463 insurance effected, including copies of any cover notes 397 presentation of accounts. 464 or policies and the written consent of the insurers of 398 (e) The Charterers to remain responsible for and to 465 any such required insurance in any case where the 399 effect repairs and settlement of costs and expenses 466 consent of such insurers is necessary. 400 incurred thereby in respect of all other repairs not 467 (c) The Charterers shall upon the request of the 401 covered by the insurances and/or not exceeding any 468 Owners, provide information and promptly execute such 402 possible franchise(s) or deductibles provided for in the 469 documents as may be required to enable the Owners to 403 insurances. 470 comply with the insurance provisions of the each 404 (f) All time used for repairs under the provisions of 471 Financial sub-clauses 14(d) and 14(e) and for repairs of latent 472 Instrument (if any). 405 defects according to Clause 3 above, including any 473 (d) Subject to the provisions of the Financial Instru- 406 deviation, shall be for the Charterers’ account and shall 474 ments, if any, and Clause 38 and Clause 40, should the 407 form part of the Charter Period. 475 Vessel become an actual, The Owners shall not be responsible for any expenses 476 constructive, compromised or agreed a tTotal lLoss under 408 as are incident to the use and operation of the Vessel 477 the insurances required under sub-clause 13(a), all 409 for such time as may be required to make such repairs. 478 insurance payments for such loss shall be paid to the 410 (g) If the conditions of the above insurances permit 479 Owners (or if applicable, their financiers) in 411 additional insurance to be placed by the parties such 480 accordance with the agreed loss payable clauses who cover shall be limited to the amount for each party set 481 shall distribute the moneys between the out in Box 30 and Box 31, respectively. The Owners or 482 Owners and the Charterers according to their respective 412 the Charterers as the case may be shall immediately 483 interests. TheCharterers undertake to notify the Owners 413 furnish the other party with particulars of any additional 484 and the mortgageeMortgagee(s), if any, of any 414 insurance effected, including copies of any cover notes 485 occurrences in or policies and the written consent of the insurers of 486 consequence of which the Vessel is likely to become a 415 any such required insurance in any case where the 487 Ttotal Lloss as defined in this Clause. 416 consent of such insurers is necessary. 488 (e) The Owners shall upon the request of the 417 (h) Should the Vessel become an actual, constructive, 489 Charterers and subject to the Owners’ approval of 418 compromised or agreed total loss under the insurances 490 such request, promptly execute such documents as may required under sub-clause 14(a), all insurance payments 491 be required to enable the Charterers to abandon the 419 for such loss shall be paid to the Owners, who shall 492 Vessel to insurers and claim a constructive total loss. 420 distribute the moneys between themselves and the 493 (f) For the purpose of insurance coverage against hull 421 Charterers according to their respective interests. 494 and machinery and war risks under the provisions of 422 (i) If the Vessel becomes an actual, constructive, 495 sub-clause 13(a), the value of the Vessel is the sum 423 compromised or agreed total loss under the insurances 496 indicated in Box 29Clause 38. 424 arranged by the Owners in accordance with sub-clause 497 14. Insurance, Repairs and Classification – intentionally 425 14(a), this Charter shall terminate as of the date of such 498 omitted loss. 499 (Optional, only to apply if expressly agreed and stated 426 (j) The Charterers shall upon the request of the 500 in Box 29, in which event Clause 13 shall be considered 427 Owners, promptly execute such documents as may be 501 deleted). 428 required to enable the Owners to abandon the Vessel 502 (a) During the Charter Period the Vessel shall be kept 429 to the insurers and claim a constructive total loss. 503 insured by the Owners at their expense against hull and 430 (k) For the purpose of insurance coverage against hull 504 machinery and war risks under the form of policy or 431 and machinery and war risks under the provisions of 505 policies attached hereto. The Owners and/or insurers 432 sub-clause 14(a), the value of the Vessel is the sum 506 shall not have any right of recovery or subrogation433 indicated in Box 29. 507 against the Charterers on account of loss of or any 434 (l) Notwithstanding anything contained in sub-clause 508 damage to the Vessel or her machinery or appurt- 435 10(a), it is agreed that under the provisions of Clause 509 enances covered by such insurance, or on account of 436 14, if applicable, the Owners shall keep the Vessel’s 510 Class fully up to date with the Classification Society 511 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter indicated in Box 10 and maintain all other necessary 512 is released, including the provision of bail. 581 certificates in force at all times. 513 In such circumstances the Owners shall indemnify the 582 15. Redelivery See Clause 40 514 Charterers against any loss, damage or expense 583 At the expiration of the Charter Period the Vessel shall 515 incurred by the Charterers (including hire paid under 584 be redelivered by the Charterers to the Owners at a 516 this Charter) as a direct consequence of such arrest or 585 safe and ice-free port or place as indicated in Box 16, in 517 detention. 586 such ready safe berth as the Owners may direct. The 518 18. Lien 587 Charterers shall give the Owners not less than thirty 519 The Owners to have a lien upon all cargoes, sub-hires 588 (30) running days’ preliminary notice of expected date, 520 and sub-freights belonging or due to the Charterers or 589 range of ports of redelivery or port or place of redelivery 521 any sub-charterers and any Bill of Lading freight for all 590 and not less than fourteen (14) running days’ definite 522 claims under this Charter, and the Charterers to have a 591 notice of expected date and port or place of redelivery. 523 lien on the Vessel for all moneys paid in advance and 592 Any changes thereafter in the Vessel’s position shall be 524 not earned. 593 notified immediately to the Owners. 525 19. Salvage 594 The Charterers warrant that they will not permit the 526 All salvage and towage performed by the Vessel shall 595 Vessel to commence a voyage (including any preceding 527 be for the Charterers’ benefit and the cost of repairing 596 ballast voyage) which cannot reasonably be expected 528 damage occasioned thereby shall be borne by the 597 to be completed in time to allow redelivery of the Vessel 529 Charterers. 598 within the Charter Period. Notwithstanding the above, 530 should the Charterers fail to redeliver the Vessel within 531 20. Wreck Removal 599 The Charter Period, the Charterers shall pay the daily 532 In the event of the Vessel becoming a wreck or 600 equivalent to the rate of hire stated in Box 22 plus 10 533 obstruction to navigation the Charterers shall indemnify 601 per cent. or to the market rate, whichever is the higher, 534 the Owners against any sums whatsoever which the 602 for the number of days by which the Charter Period is 535 Ownersshall become liable to pay and shall pay in 603 exceeded. All other terms, conditions and provisions of 536 consequence of the Vessel becoming a wreck or 604 this Charter shall continue to apply. 537 obstruction to navigation. 605 Subject to the provisions of Clause 10, the Vessel shall 538 be redelivered to the Owners in the same or as good 539 21. General Average 606 structure, state, condition and class as that in which she 540 The Owners shall not contribute to General Average. 607 was delivered, fair wear and tear not affecting class 541 22. Assignment, Sub-Charter and Sale 608 excepted. 542 (a) The Charterers shall not assign this Charter nor 609 The Vessel upon redelivery shall have her survey cycles 543 sub-charter the Vessel on a bareboat basis except with 610 up to date and trading and class certificates valid for at 544 the prior consent in writing of the Owners, which shall 611 least the number of months agreed in Box 17. 545 not be unreasonably withheld, and subject to such terms 612 16. Non-Lien 546 and conditions as the Owners shall approve. 613 Other than Permitted Security Interests, Tthe 547 (b) The Owners shall not sell the Vessel during the 614 Charterers will not suffer, nor permit to be continued, currency of this Charter except with the prior written 615 any lien or encumbrance incurred by them or their 548 consent of the Charterers, which shall not be unreason- 616 agents, which might have priority over the title and 549 ably withheld, and subject to the buyer accepting an 617 interest of the Owners in the Vessel. The Charterers 550 assignment of this Charter. 618 further agree to fasten to the Vessel in a conspicuous 551 place and to keep so fastened during the Charter Period 552 23. Contracts of Carriage 619 a notice reading as follows: 553 *) (a) The Charterers are to procure that all documents 620 “This Vessel is the property of (name of Owners). It is 554 issued during the Charter Period evidencing the terms 621 under charter to (name of Charterers) and by the terms 555 and conditions agreed in respect of carriage of goods 622 of the Charter Party neither the Charterers nor the 556 shall contain a paramount clause incorporating any 623 Master have any right, power or authority to create, incur 557 legislation relating to carrier’s liability for cargo 624 or permit to be imposed on the Vessel any lien 558 compulsorily applicable in the trade; if no such legislation 625 whatsoever.” 559 exists,the documents shall incorporate the Hague-Visby 626 or a notice in such form as required by any Rules. The documents shall also contain the New Jason 627 Mortgagee(s). Clause and the Both-to-Blame Collision Clause. 628 17. Indemnity See Clauses 37.3, 38.5, 38.15, 38.16, 40.5, 560 *) (b) The Charterers are to procure that all passenger 629 41.2 and 50 tickets issued during the Charter Period for the carriage 630 (a) The Charterers shall indemnify the Owners against 561 of passengers and their luggage under this Charter shall 631 any loss, damage or expense incurred by the Owners 562 contain a paramount clause incorporating any legislation 632 arising out of or in relation to the operation of the Vessel 563 relating to carrier’s liability for passengers and their 633 by the Charterers, and against any lien of whatsoever 564 luggage compulsorily applicable in the trade; if no such 634 nature arising out of an event occurring during the 565 legislation exists, the passenger tickets shall incorporate 635 Charter Period. If the Vessel be arrested or otherwise 566 the Athens Convention Relating to the Carriage of 636 detained by reason of claims or liens arising out of her 567 Passengers and their Luggage by Sea, 1974, and any 637 operation hereunder by the Charterers, the Charterers 568 protocol thereto. 638 shall at their own expense take all reasonable steps to 569 *) Delete as applicable. 639 secure that within a reasonable time the Vessel is 570 24. Bank Corporate Guarantee 640 released, including the provision of bail. 571 (Optional, only to apply if Box 27 filled in) 641 Without prejudice to the generality of the foregoing, the 572 The Charterers undertake to furnish, on or about the 642 Charterers agree to indemnify the Owners against all 573 date of this Charter before delivery of consequences or liabilities arising from the Master, 574 the Vessel, a first class bank a corporate guarantee from 643 officers or agents signing Bills of Lading or other 575 the Guarantor or bond in the documents. 576 sum and at the place as indicated in Box 27 as 644 (b) If the Vessel be arrested or otherwise detained by 577 guarantee, and on or about the date of this Charter reason of a claim or claims against the Owners, the 578 the other Security Documents (as the case may be) as 645 Owners shall at their own expense take all reasonable 579 security, in each case for full performance of their steps to secure that within a reasonable time the Vessel 580 obligations under this Thisdocument is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter Charter. 646 imposed on all vessels, or is imposed selectively in any 707 25. Requisition/Acquisition 647 way whatsoever against vessels of certain flags or 708 (a) Subject to the provisions of the Financial 648 ownership, or against certain cargoes or crews or 709 Instruments (if any) and the General Assignment, Iin otherwise howsoever, or to proceed to an area where 710 the event of the Requisition for Hire of the Vessel she shall be subject, or is likely to be subject to 711 by any governmental or other competent authority 649 a belligerent’s right of search and/or confiscation. 712 (hereinafter referred to as “Requisition for Hire”) 650 (d) If the insurers of the war risks insurance, when 713 irrespective of the date during the Charter Period when 651 Clause 14 is applicable, should require payment of 714 “Requisition for Hire” may occur and irrespective of the 652 premiums and/or calls because, pursuant to the 715 length thereof and whether or not it be for an indefinite 653 Charterers’ orders, the Vessel is within, or is due to enter 716 or a limited period of time, and irrespective of whether it 654 and remain within, any area or areas which are specified 717 may or will remain in force for the remainder of the 655 by such insurers as being subject to additional premiums 718 Charter Period, this Charter shall not be deemed thereby 656 because of War Risks, then such premiums and/or calls 719 or thereupon to be frustrated or otherwise terminated 657 shall be reimbursed by the Charterers to the Owners at 720 and the Charterers shall continue to pay the stipulated 658 the same time as the next payment of hire is due. 721 hire in the manner provided by this Charter until the time 659 (e) The Charterers shall have the liberty: 722 when the Charter would have terminated pursuant to 660 (i) to comply with all orders, directions, recommend- 723 any of the provisions hereof always provided however 661 ations or advice as to departure, arrival, routes, 724 that if all hire has been paid by the Charterers 662 sailing in convoy, ports of call, stoppages, 725 hereunder then in the event of “Requisition for Hire” any destinations, discharge of cargo, delivery, or in any 726 Requisition other way whatsoever, which are given by the 727 Hire or compensation is received or receivable by the 663 Government of the Nation under whose flag the 728 Owners, the same shall be payable to the Charterers 664 Vessel sails, or any otherGovernment, body or 729 during the group whatsoever acting with the power to compel 730 remainder of the Charter Period or the period of the 665 compliance with their orders or directions; 731 “Requisition for Hire” whichever be the shorter. 666 (ii) to comply with the orders, directions or recom- 732 (b) In the event of the Owners being deprived of their 667 mendations of any war risks underwriters who have 733 ownership in the Vessel by any Compulsory Acquisition 668 the authority to give the same under the terms of 734 of the Vessel or requisition for title by any governmental 669 the war risks insurance; 735 or other competent authority (hereinafter referred to as 670 (iii) to comply with the terms of any resolution of the 736 “Compulsory Acquisition”), then, irrespective of the date 671 Security Council of the United Nations, any 737 during the Charter Period when “Compulsory Acqui- 672 directives of the European Community, the effective 738 sition” may occur, this Charter shall be deemed 673 orders of any other Supranational body which has 739 terminated as of the date of such “Compulsory 674 the right to issue and give the same, and with 740 Acquisition”. In such event Charter Hire to be considered 675 national laws aimed at enforcing the same to which 741 as earned and to be paid up to the date and time of 676 the Owners are subject, and to obey the orders 742 such “Compulsory Acquisition”. 677 and directions of those who are charged with their 743 enforcement. 744 26. War 678 (f) In the event of outbreak of war (whether there be a 745 (a) Subject to the provisions of the Financial 679 declaration of war or not) (i) between any two or more 746 Instruments (if any), Ffor the purpose of this Clause, the of the following countries: the United States of America; 747 words “War Russia; the United Kingdom; France; and the People’s 748 Risks” shall include any war (whether actual or 680 Republic of China, (ii) between any two or more of the 749 threatened), act of war, civil war, hostilities, revolution, 681 countries stated in Box 36, both the Owners and the 750 rebellion, civil commotion, warlike operations, the laying 682 Charterers shall have the right to cancel this Charter, 751 of mines (whether actual or reported), acts of piracy, 683 whereupon the Charterers shall redeliver the Vessel to 752 acts ofterrorists, acts of hostility or malicious damage, 684 the Owners in accordance with Clause 15, if the Vessel 753 blockades (whether imposed against all vessels or 685 has cargo on board after discharge thereof at 754 imposed selectively against vessels of certain flags or 686 destination, or if debarred under this Clause from 755 ownership, or against certain cargoes or crews or 687 reaching or entering it at a near, open and safe port as 756 otherwise howsoever), by any person, body, terrorist or 688 directed by the Owners, or if the Vessel has no cargo 757 political group, or the Government of any state 689 on board, at the port at which the Vessel then is or if at 758 whatsoever, which may be dangerous or are likely to be 690 sea at a near, open and safe port as directed by the 759 or to become dangerous to the Vessel, her cargo, crew 691 Owners. In all cases hire shall continue to be paid in 760 or other persons on board the Vessel. 692 accordance with Clause 11 and except as aforesaid all 761 (b) Without first obtaining the consent of the 693 other provisions of this Charter shall apply until 762 insurers to such employment and complying with the redeliverythe end of the Charter Period. 763 terms of Clause 38 and such other requirements as to extra insurance premiums or any other requirements 27. Commission – intentionally omitted 764 as may be prescribed by the insurers, tThe Vessel, The Owners to pay a commission at the rate indicated 765 unless the written consent of the in Box 33 to the Brokers named in Box 33 on any hire 766 Owners be first obtained, shall not continue to or go 694 paid under the Charter. If no rate is indicated in Box 33, 767 through any port, place, area or zone (whether of land 695 the commission to be paid by the Owners shall cover 768 or sea), or any waterway or canal, where it reasonably 696 the actual expenses of the Brokers and a reasonable 769 appears that the Vessel, her cargo, crew or other 697 fee for their work. 770 persons on board the Vessel, in the reasonable 698 If the full hire is not paid owing to breach of the Charter 771 judgement of the Owners, may be, or are likely to be, 699 by either of the parties the party liable therefor shall 772 exposed to War Risks. Should the Vessel be within any 700 indemnify the Brokers against their loss of commission. 773 such place as aforesaid, which only becomes danger- 701 Should the parties agree to cancel the Charter, the 774 ous, or is likely to be or tobecome dangerous, after her 702 Owners shall indemnify the Brokers against any loss of 775 entry into it, the Owners shall have the right to require 703 commission but in such case the commission shall not 776 the Vessel to leave such area. 704 exceed the brokerage on one year’s hire. 777 (c) The Vessel shall not load contraband cargo, or to 705 28. Termination See Clauses 40 and 44 778 pass through any blockade, whether such blockade be 706 (a) Charterers’ Default 779 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter The Owners shall be entitled to withdraw the Vessel from 780 28Clause 40.3, the service of the Charterers and terminate the Charter 781 the Owners shall in addition have the right to repossess 853 with immediate effect by written notice to the Charterers if: 782 the Vessel (i) the Charterers fail to pay hire in accordance with 783 from the Charterers at her current or next port of call, or 854 Clause 11. However, where there is a failure to 784 at a port or place convenient to them without hindrance 855 make punctual payment of hire due to oversight, 785 or interference by the Charterers, courts or local 856 negligence, errors or omissions on the part of the 786 authorities. Pending physical repossession of the Vessel 857 Charterers or their bankers, the Owners shall give 787 in accordance with this Clause 29 and/or Clause 40, the 858 the Charterers written notice of the number of clear 788 Charterers shall banking days stated in Box 34 (as recognised at 789 hold the Vessel as gratuitous bailee only to the Owners 859 the agreed place of payment) in which to rectify 790 and the Charterers shall procure that the master and the failure, and when so rectified within such 791 crew follow the orders and directions of the Owners. number of days following the Owners’ notice, the 792 The Owners shall arrange for an authorised represent- 860 payment shall stand as regular and punctual. 793 ative to board the Vessel as soon as reasonably 861 Failure by the Charterers to pay hire within the 794 practicable following the termination of the Charter. The 862 number of days stated in Box 34 of their receiving 795 Vessel shall be deemed to be repossessed by the 863 the Owners’ notice as provided herein, shall entitle 796 Owners from the Charterers upon the boarding of the 864 the Owners to withdraw the Vessel from the service 797 Vessel by the Owners’ representative. All arrangements 865 of the Charterers and terminate the Charter without 798 and expenses relating to the settling of wages, 866 further notice; 799 disembarkation and repatriation of the Charterers’ 867 (ii) the Charterers fail to comply with the requirements of: 800 Master, officers and crew shall be the sole responsibility 868 (1) Clause 6 (Trading Restrictions) 801 of the Charterers. 869 (2) Clause 13(a) (Insurance and Repairs) 802 30. Dispute Resolution 870 provided that the Owners shall have the option, by 803 *) (a) This Contract Charter and any non-contractual 871 written noticeto the Charterers, to give the 804 obligations arising out of or in connection with it shall be Charterers a specified number of days grace within 805 governed by and construed which to rectify the failure without prejudice to the 806 in accordance with English law and any dispute arising 872 Owners’ right to withdraw and terminate under this 807 out of or in connection with this Contract Charter shall be 873 Clause if the Charterers fail to comply with such 808 referred notice; 809 to arbitration in London in accordance with the Arbitration 874 (iii) the Charterers fail to rectify any failure to comply 810 Act 1996 or any statutory modification or re-enactment 875 with the requirements of sub-clause 10(a)(i) 811 thereof save to the extent necessary to give effect to 876 (Maintenance and Repairs) as soon as practically 812 the provisions of this Clause. 877 possible after the Owners have requested them in 813 The arbitration shall be conducted in accordance with 878 writing so to do and in any event so that the Vessel’s 814 the London Maritime Arbitrators Association (LMAA) 879 insurance cover is not prejudiced. 815 Terms current at the time when the arbitration proceed- 880 (b) Owners’ Default 816 ings are commenced. 881 If the Owners shall by any act or omission be in breach 817 The reference shall be to three arbitrators. A party 882 of their obligations under this Charter to the extent that 818 wishing to refer a dispute to arbitration shall appoint its 883 the Charterers are deprived of the use of the Vessel 819 arbitrator and send notice of such appointment in writing 884 and such breach continues for a period of fourteen (14) 820 to the other party requiring the other party to appoint its 885 running days after written notice thereof has been given 821 own arbitrator within 14 calendar days of that notice and 886 by the Charterers to the Owners, the Charterers shall 822 stating that it will appoint its arbitrator as sole arbitrator 887 be entitled to terminate this Charter with immediate effect 823 unless the other party appoints its own arbitrator and 888 by written notice to the Owners. 824 gives notice that it has done so within the 14 days 889 (c) Loss of Vessel 825 specified. If the other party does not appoint its own 890 This Charter shall be deemed to be terminated if the 826 arbitrator and give notice that it has done so within the 891 Vessel becomes a total loss or is declared as a 827 14 days specified, the party referring a dispute to 892 constructive orcompromised or arranged total loss. For 828 arbitration may, without the requirement of any further 893 the purpose of this sub-clause, the Vessel shall not be 829 prior notice to the other party, appoint its arbitrator as 894 deemed to be lost unless she has either become an 830 sole arbitrator and shall advise the other party 895 actual total loss or agreement has been reached with 831 accordingly. The award of a sole arbitrator shall be 896 her underwriters in respect of her constructive, 832 binding on both parties as if he had been appointed by 897 compromised or arranged total loss or if such agreement 833 agreement. 898 with her underwriters is not reached it is adjudged by a 834 Nothing herein shall prevent the parties agreeing in 899 competent tribunal that a constructive loss of the Vessel 835 writing to vary these provisions to provide for the 900 has occurred. 836 appointment of a sole arbitrator. 901 (d) Either party shall be entitled to terminate this 837 In cases where neither the claim nor any counterclaim 902 Charter with immediate effect by written notice to the 838 exceeds the sum of US$50,000 (or such other sum as 903 other party in the event of an order being made or 839 the parties may agree) the arbitration shall be conducted 904 resolution passed for the winding up, dissolution, 840 in accordance with the LMAA Small Claims Procedure 905 liquidation or bankruptcy of the other party (otherwise 841 current at the time when the arbitration proceedings are 906 than for the purpose of reconstruction or amalgamation) 842 commenced. The language or any arbitration 907 or if a receiver is appointed, or if it suspends payment, 843 proceedings shall be English. ceases to carry on business or makes any special 844 *) (b) This Contract shall be governed by and construed 908 arrangement or composition with its creditors. 845 in accordance with Title 9 of the United States Code 909 (e) The termination of this Charter shall be without 846 and the Maritime Law of the United States and any 910 prejudice to all rights accrued due between the parties 847 dispute arising out of or in connection with this Contract 911 prior to the date of termination and to any claim that 848 shall be referred to three persons at New York, one to 912 either party might have. 849 be appointed by each of the parties hereto, and the third 913 29. Repossession 850 by the two so chosen; their decision orthat of any two 914 In the event of the Owners have made a request for 851 of them shall be final, and for the purposes of enforcing 915 redelivery of the Vessel termination of this Charter in any award, judgement may be entered on an award by 916 accordance with the applicable provisions of Clause 852 any court of competent jurisdiction. The proceedings 917 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter shall be conducted in accordance with the rules of the 918 communication shall be as stated in Boxes 3 and 4 992 Society of Maritime Arbitrators, Inc. 919 respectively. 993 In cases where neither the claim nor any counterclaim 920 exceeds the sum of US$50,000 (or such other sum as 921 the parties may agree) the arbitration shall be conducted 922 in accordance with the Shortened Arbitration Procedure 923 of the Society of Maritime Arbitrators, Inc. current at 924 the time when the arbitration proceedings are commenced. 925 *) (c) This Contract shall be governed by and construed 926 in accordance with the laws of the place mutually agreed 927 by the parties and any dispute arising out of or in 928 connection with this Contract shall be referred to 929 arbitration at a mutually agreed place, subject to the 930 procedures applicable there. 931 (d) Notwithstanding (a), (b) or (c) above, the parties 932 may agree at any time to refer to mediation any 933 difference and/or dispute arising out of or in connection 934 with this Contract. 935 In the case of a dispute in respect of which arbitration 936 has been commenced under (a), (b) or (c) above, the 937 following shall apply:- 938 (i) Either party may at any time and from time to time 939 elect to refer the dispute or part of the dispute to 940 mediation by service on the other party of a written 941 notice (the “Mediation Notice”) calling on the other 942 party to agree to mediation. 943 (ii) The other party shall thereupon within 14 calendar 944 days of receipt of the Mediation Notice confirm that 945 they agree to mediation, in which case the parties 946 shall thereafter agree a mediator within a further 947 14 calendar days, failing which on the application 948 of either party a mediator will be appointed promptly 949 by the Arbitration Tribunal (“the Tribunal”) or such 950 person as the Tribunal may designate for that 951 purpose. The mediation shall be conducted in such 952 place and in accordance with such procedure and 953 on such terms as the parties may agree or, in the 954 event of disagreement, as may be set by the 955 mediator. 956 (iii) If the other party does not agree to mediate, that 957 fact may be brought to the attention of the Tribunal 958 and may be taken into account by the Tribunal when 959 allocating the costs of the arbitration as between 960 the parties. 961 (iv) The mediationshall not affect the right of either 962 party to seek such relief or take such steps as it 963 considers necessary to protect its interest. 964 (v) Either party may advise the Tribunal that they have 965 agreed to mediation. The arbitration procedure shall 966 continue during the conduct of the mediation but 967 the Tribunal may take the mediation timetable into 968 account when setting the timetable for steps in the 969 arbitration. 970 (vi) Unless otherwise agreed or specified in the 971 mediation terms, each party shall bear its own costs 972 incurred in the mediation and the parties shall share 973 equally the mediator’s costs and expenses. 974 (vii) The mediation process shall be without prejudice 975 and confidential and no information or documents 976 disclosed during it shall be revealed to the Tribunal 977 except to the extent that they are disclosable under 978 the law and procedure governing the arbitration. 979 (Note: The parties should be aware that the mediation 980 process may not necessarily interrupt time limits.) 981 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 982 30(a) of this Clause shall apply. Sub-clause 30(d) shall 983 apply in all cases. 984 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 985 indicate alternative agreed in Box 35. 986 31. Notices See Clause 43 987 (a) Any notice to be given by either party to the other 988 party shall be in writing and may be sent by fax, telex, 989 registered or recorded mail or by personal service. 990 (b) The address of the Parties for service of such 991 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. “BARECON 2001” Standard Bareboat Charter OPTIONAL PART III PART PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) 1. Specifications and Building Contract 1 and upon and after such acceptance, subject to Clause 69 (a) The Vessel shall be constructed in accordance with 2 1(d), the Charterers shall not be entitled to make any claim 70 the Building Contract (hereafter called “the Building 3 against the Owners in respect of any conditions, 71 Contract”) as annexed to this Charter, made between the 4 representations or warranties, whether express or implied, 72 Builders and the Owners and in accordance with the 5 as to the seaworthiness of the Vessel or in respect of delay 73 specifications and plans annexed thereto, such Building 6 in delivery. 74 Contract, specifications and plans having been counter- 7 (b) If for any reason other than a default by the Owners 75 signed as approved by the Charterers. 8 under the Building Contract, the Builders become entitled 76 (b) No change shall be made in the Building Contract or 9 under that Contract not to deliver the Vessel to the Owners, 77 in the specifications or plans of the Vessel as approved by 10 the Owners shall upon giving to the Charterers written 78 the Charterers as aforesaid, without the Charterers’ 11 notice of Builders becoming so entitled, be excused from 79 consent. 12 giving delivery of the Vessel to the Charterers and upon 80 (c) The Charterers shall have the right to send their 13 receipt of such notice by the Charterers this Charter shall 81 representative to the Builders’ Yard to inspect the Vessel 14 cease to have effect. 82 during the course of her construction to satisfy themselves 15 (c) If for any reason the Owners become entitled under 83 that construction is in accordance with such approved 16 the Building Contract to reject the Vessel the Owners shall, 84 specifications and plans as referred to under sub-clause 17 before exercising such right of rejection, consult the 85 (a) of this Clause. 18 Charterers and thereupon 86 (d) The Vessel shall be built in accordance with the 19 (i) if the Charterers do not wish to take delivery of the Vessel 87 Building Contract and shall be of the description set out 20 they shall inform the Owners within seven (7) running days 88 therein. Subject to the provisions of sub-clause 2(c)(ii) 21 by notice in writing and upon receipt by the Owners of such 89 hereunder, the Charterers shallbe bound to accept the 22 notice this Charter shall cease to have effect; or 90 Vessel from the Owners, completed and constructed in 23 (ii) if the Charterers wish to take delivery of the Vessel 91 accordance with the Building Contract, on the date of 24 they may by notice in writing within seven (7) running days 92 delivery by the Builders. The Charterers undertake that 25 require the Owners to negotiate with the Builders as to the 93 having accepted the Vessel they will not thereafter raise 26 terms on which delivery should be taken and/or refrain from 94 any claims against the Owners in respect of the Vessel’s 27 exercising their right to rejection and upon receipt of such 95 performance or specification or defects, if any. 28 notice the Owners shall commence such negotiations and/ 96 Nevertheless, in respect of any repairs, replacements or 29 or take delivery of the Vessel from the Builders and deliver 97 defects which appear within the first 12 months from 30 her to the Charterers; 98 delivery by the Builders, the Owners shall endeavour to 31 (iii) in no circumstances shall the Charterers be entitled to 99 compel the Builders to repair, replace or remedy any defects 32 reject the Vessel unless the Owners are able to reject the 100 or to recover from the Builders any expenditure incurred in 33 Vessel from the Builders; 101 carrying out such repairs, replacements or remedies. 34 (iv) if this Charter terminates under sub-clause (b) or (c) of 102 However, the Owners’ liability to the Charterers shall be 35 this Clause, the Owners shall thereafter not be liable to the 103 limited to the extent the Owners have a valid claim against 36 Charterers for any claim under or arising out of this Charter 104 the Builders under the guarantee clause of the Building 37 or its termination. 105 Contract (a copy whereof has been supplied to the 38 (d) Any liquidated damages for delay in delivery under the 106 Charterers). The Charterers shall be bound to accept such 39 Building Contract and any costs incurred in pursuing a claim 107 sums as the Owners are reasonably able to recover under 40 therefor shall accrue to the account of the party stated in 108 this Clause and shall make no further claim on the Owners 41 Box 41(c) or if not filled in shall be shared equally between 109 for the difference between the amount(s) so recovered and 42 the parties. 110 the actual expenditure on repairs, replacement or 43 3. Guarantee Works 111 remedying defects or for any loss of time incurred. 44 If not otherwise agreed, the Owners authorise the 112 Any liquidated damages for physical defects or deficiencies 45 Charterers to arrange for theguarantee works to be 113 shall accrue to the account of the party stated in Box 41(a) 46 performed in accordance with the building contract terms, 114 or if not filled in shall be shared equally between the parties. 47 and hire to continue during the period of guarantee works. 115 The costs of pursuing a claim or claims against the Builders 48 The Charterers have to advise the Owners about the 116 under this Clause (including any liability to the Builders) 49 performance to the extent the Owners may request. 117 shall be borne by the party stated in Box 41(b) or if not 50 filled in shall be shared equally between the parties. 51 4. Name of Vessel 118 The name of the Vessel shall be mutually agreed between 119 2. Time and Place of Delivery 52 the Owners and the Charterers and the Vessel shall be 120 (a) Subject to the Vessel having completed her 53 painted in the colours, display the funnel insignia and fly 121 acceptance trials including trials of cargo equipment in 54 the house flag as required by the Charterers. 122 accordance with the Building Contract and specifications 55 to the satisfaction of the Charterers, the Owners shall give 56 5. Survey on Redelivery 123 and the Charterers shall take delivery of the Vessel afloat 57 The Owners and the Charterers shall appoint surveyors 124 when ready for delivery and properly documented at the 58 for the purpose of determining and agreeing in writing the 125 Builders’ Yard or some other safe and readily accessible 59 condition of the Vessel at the time of re-delivery. 126 dock, wharf or place as may be agreed between the parties 60 Without prejudice to Clause 15 (Part II), the Charterers 127 hereto and the Builders. Under the Building Contract the 61 shall bear all survey expenses and all other costs, if any, 128 Builders have estimated that the Vessel will be ready for 62 including the cost of docking and undocking, if required, 129 delivery to the Owners as therein provided but the delivery 63 as well as all repair costs incurred. The Charterers shall 130 date for the purpose of this Charter shall be the date when 64 also bear all loss of time spent in connection with any 131 the Vessel is in fact ready for delivery by the Builders after 65 docking and undocking as well as repairs, which shall be 132 completion of trials whether that be before or after as 66 paid at the rate of hire per day or pro rata. 133 indicated in the Building Contract. The Charterers shall not 67 be entitled to refuse acceptance of delivery of the Vessel 68 This document is a computer generatedBARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART IV PART HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) On expiration of this Charter and provided the Charterers 1 In exchange for payment of the last month’s hire 28 have fulfilled their obligations according to Part I and II 2 instalment the Sellers shall furnish the Buyers with a 29 as well as Part III, if applicable, it is agreed, that on 3 Bill of Sale duly attested and legalized, together with a 30 payment of the final payment of hire as per Clause 11 4 certificate setting out the registered encumbrances, if 31 the Charterers have purchased the Vessel with 5 any. On delivery of the Vessel the Sellers shall provide 32 everything belonging to her and the Vessel is fully paid 6 for deletion of the Vessel from the Ship’s Register and 33 for. 7 deliver a certificate of deletion to the Buyers. 34 In the following paragraphs the Owners are referred to 8 The Sellers shall, at the time of delivery, hand to the 35 as the Sellers and the Charterers as the Buyers. 9 Buyers all classification certificates (for hull, engines, 36 anchors, chains, etc.), as well as all plans which may 37 The Vessel shall be delivered by the Sellers and taken 10 be in Sellers’ possession. 38 over by the Buyers on expiration of the Charter. 11 The Wireless Installation and Nautical Instruments, 39 The Sellers guarantee that the Vessel, at the time of 12 unless on hire, shall be included in the sale without any 40 delivery, is free from all encumbrances and maritime 13 extra payment. 41 liens or any debts whatsoever other than those arising 14 from anything done or not done by the Buyers or any 15 The Vessel with everything belonging to her shall be at 42 existing mortgage agreed not to be paid off by the time 16 Sellers’ risk and expense until she is delivered to the 43 of delivery. Should any claims, which have been incurred 17 Buyers, subject to the conditions of this Contract and 44 prior to the time of delivery be made against the Vessel, 18 the Vessel with everything belonging to her shall be 45 the Sellers hereby undertake to indemnify the Buyers 19 delivered and taken over as she is at the time of delivery, 46 against all consequences of such claims to the extent it 20 after which the Sellers shall have no responsibility for 47 can be proved that the Sellers are responsible for such 21 possible faults or deficiencies of any description. 48 claims. Any taxes, notarial, consular and other charges 22 The Buyers undertake to pay for the repatriation of the 49 and expensesconnected with the purchase and 23 Master, officers and other personnel if appointed by the 50 registration under Buyers’ flag, shall be for Buyers’ 24 Sellers to the port where the Vessel entered the Bareboat 51 account. Any taxes, consular and other charges and 25 Charter as per Clause 3 (Part II) or to pay the equivalent 52 expenses connected with closing of the Sellers’ register, 26 cost for their journey to any other place. 53 shall be for Sellers’ account. 27 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. “BARECON 2001” Standard Bareboat Charter OPTIONAL PART PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY (Optional, only to apply if expressly agreed and stated in Box 43) 1. Definitions 1 3. Termination of Charter by Default 17 For the purpose of this PART V, the following terms shall 2 If the Vessel chartered under this Charter is registered 18 have the meanings hereby assigned to them: 3 in a Bareboat Charter Registry as stated in Box 44, and 19 “The Bareboat Charter Registry” shall mean the registry 4 if the Owners shall default in the payment of any amounts 20 of the State whose flag the Vessel will fly and in which 5 due under the mortgage(s) specified in Box 28, the 21 the Charterers are registered as the bareboat charterers 6 Charterers shall, if so required by the mortgagee, direct 22 during the period of the Bareboat Charter. 7 the Owners to re-register the Vessel in the Underlying 23 “The Underlying Registry” shall mean the registry of the 8 Registry as shown in Box 45. 24 state in which the Owners of the Vessel are registered 9 In the event of the Vessel being deleted from the 25 as Owners and to which jurisdiction and control of the 10 Bareboat Charter Registry as stated in Box 44, due to a 26 Vessel will revert upon termination of the Bareboat 11 default by the Owners in the payment of any amounts 27 Charter Registration. 12 due under the mortgage(s), the Charterers shall have 28 2. Mortgage 13 the right to terminate this Charter forthwith and without 29 The Vessel chartered under this Charter is financed by 14 prejudice to any other claim they may have against the 30 a mortgage and the provisions of Clause 12(b) (Part II) 15 Owners under this Charter. 31 shall apply. 16 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. “BARECON 2001” STANDARD BAREBOAT CHARTER 26. Place of payment: also state beneficiary and bank account (ci. 11) Beneficiary: Antiparos Shipping Corporation Account No.: 1200048491 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 27. Bank Corporate guarantee/bond (sum and place) (ci. 24) (optional) See Clause 24 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/place of business) (ci. 12) See clause 35 29. Insurance (hull and machinery and war risks) (state value acc. To cl. 13(f) or, if applicable, acc, to ci. 14(k)) (also state if ci. 14 applies) See Clause 38 – CLAUSE 14 DOES NOT APPLY 30. Additional Insurance cover, if any, for Owners’ account limited to (ci. 13(b) or, if applicable, ci. 14(g)) See Clause 38 31. Additional insurance cover, if any, for Charterers’ account limited to (ci. 13(b) or, if applicable, ci. 14(g)) See Clause 38 32. Latent defects (only to be filled in if period other than stated in ci. 3) N/A 33.Brokerage commission and to whom payable (ci. 27) N/A 34. Grace period (state number of clear banking days Business Days) (ci.28) See Clause 44 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed place of Arbitration must be stated (ci. 30) See Clause 30(a) 36. War cancellation (indicate countries agreed) (ci. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) No, Part III does not apply 38. Name and place of Builders (only to be filled in if PART III applies) N/A 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A 40. Date of Building Contract (only to be filled in if PART III applies) N/A 41. Liquidated damages and costs shall accrue to (state party acc. To ci.1) a) N/A b) N/A c) N/A 42. Hire/purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No, Part V does not apply 44. Flag and Country of the Bareboat Charter Registry (only to be filed in if PART V Applies) N/A 45. Country of the Underlying Registry (only to be filled in in if PART V applies) N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE – It is mutually agreed that this Contract shall be performed subject to tothe conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) For and behalf of the Owners Name: Title: Signature (Charterers) For and on behalf of the Charterers Name: Title: This document is a computer generated BARECON 2001 form printed by authority of BIMCO.“BARECON 2001” STANDARD BAREBOAT CHARTER PART 1 26. Place of payment: also state beneficiary and bank account (ci.11) Beneficiary: Antiparos Shopping Corporation Account no: 1200048491 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 27. BANK Corporation guarantee/bond (sum and place) CI.24) (optional) See Clause 24 28. mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies stste date of Financial instrument and name of Mortagee(s)Place of business) (CI.12) See Clause 35 29.Insurance (hull and machinery and war riskd)(stste value acc. To CI.13(f) or, applicable, acc. To CI.14(k)) (also state if CI.14 applies) See Clause 38-CLAUSE 14 DOES NOT APPLY 30. Additional insurance cover, if any, for Owners’ account limited to (CI.13(b) or, if applicable. CI.14(g)) See Clause 38 31. Additional insurance cover, if any, for charterers’ account limited to (CI.13(b) or, if applicable. CI.14(g)) See Clause 38 32. Latent defects (only to be filled in if period other than stated in CI.3) N/A 33. Brokerage commission and to whom payable(CI.27) N/A 34. Grace period (state number of clear banking dayBusinees Days(CI.28) See Clause 44 35. Dispute Resolution (stste 30(a).30(b), or 30(c); agreed place of Arbitration must be stated (CI.30) See Clause 30(a) 36. War cancellation (indicate countries agreed) (CI.26(f) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies ) (optional) No, Part III does not apply 38. Name and place of Builders (only be filled in if PART III applies) N/A 39. Vessei’s Yard Building No. (only to be filled in if PART III applies) N/A 40. Date Of Building Contract (only to be filled in if PART III applies) N/A 41. Liquidated damages and costs shall accrue to (stste party acc. To CI.1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “ no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No, Part V does not apply 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A 45. Country of the Underlying Registry (only to be filled in if PART III applies) N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE – It ismutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form par of this Charter expressly agreed and state in Boxes 37, 43. If PART III. Execution VersionADDITIONAL CLAUSES TO BARECON 2001 DATED 31 MARCH 2018CLAUSE 32 – CHARTER PERIOD 32.1For the avoidance of doubt, notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: (a)in full force and effect; and (b)valid, binding and enforceable against the parties hereto, (c)with effect from the date of this Charter until the end of the Charter Period (subject to the terms of this Charter). 32.2The Charter Period shall, subject to the terms of this Charter, continue for a period of seventy two (72) months from the Commencement Date.CLAUSE 33 – CANCELLATION 33.1If: (a)a Termination Event occurs prior to the delivery of the Vessel by the Charterers as sellers to Owners as buyers under the MOA; (b)it becomes unlawful for the Owners (as buyers) to perform or comply with any or all of their obligations under the MOA or any of the obligations ofthe Owners under the MOA are not or cease to be legal, valid, binding and enforceable; and/or (c)the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason,then this Charter shall immediately terminate and be cancelled (provided that any provision hereof expressed to survive such termination orcancellation shall so do in accordance with its terms) without the need for either of the Owners or the Charterers to take any action whatsoever.CLAUSE 34 – DELIVERY OF VESSEL 34.1 (a)This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. (b)The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: (i)the delivery of the Vessel by the Charterers as sellers to the Owners as buyers in accordance with the terms of the MOA with such Deliveryoccurring on or before the Cancelling Date(and, for the purposes of this Charter, the Vessel shall be deemed delivered to the Chartererssimultaneously with delivery of the Vessel to the Owners pursuant to the MOA); (ii)no Potential Termination Event or Termination Event having occurred and being continuing as at the Commencement Date; 1SINGAPORE/89220790v10 (iii)the representations and warranties contained in Clause 45 being true and correct on the date of this Charter and each day thereafter until andincluding the last day of the Charter Period; (iv)the Owners having received from the Charterers: (A)on or prior to Delivery, the documents or evidence set out in Part A of Schedule II in form and substance satisfactory to them; and (B)after Delivery, the documents or evidence set out in Part B of Schedule II in form and substance satisfactory to them within the timeperiods set out thereunder;and if any of the documents listed in sub-paragraph (iv) above are not in the English language then they shall be accompanied by a certifiedEnglish translation. 34.2The conditions precedent or conditions subsequent specified in Clause (b)(iv) are inserted for the sole benefit of the Owners and may be waived ordeferred in whole or in part and with or without conditions by the Owners. 34.3On delivery to and acceptance by the Owners of the Vessel under the MOA from the Charterers as sellers and subject to the provisions of this Clause34, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterersshall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter. 34.4On Delivery, as evidence of the commencement of the Charter Period the Charterers shall sign and deliver to the Owners the Acceptance Certificate.Without prejudice to this Clause 34.4, the Charterers shall be deemed to have accepted the Vessel under this Charter and the commencement of theCharter Period having started, on Delivery even if for whatever reason, the Acceptance Certificate is not signed and/or the Charterers do not takeactual possession of the Vessel at that time. 34.5Save where any of the events set out under Clause 44.1(f) (iv), (v), (vi) and (viii) below applies in relation to the Owners (and in the absence of aTermination Event or Potential Termination Event having occurred at the same time), the Charterers shall not be entitled for any reason whatsoever torefuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners under the MOA from theCharterers as sellers, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including, withoutlimitation, any loss of profit or any loss or otherwise: (a)resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or (b)arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. 34.6The Owners will not and shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and greases(whether in storage tanks and unopened drums or otherwise) except such items (including bunkers, lubricating oils, unbroached provisions, paints,ropes and other consumable stores) as are on the Vessel on Delivery. 34.7The Charterers shall, following the Owners’ delivery of items on board the Vessel on Delivery pursuant to Clause 34.6, keep all such items on boardthe Vessel for the Charterers’ own use. 2SINGAPORE/89220790v10CLAUSE 35 – QUIET ENJOYMENT 35.1Provided that no Potential Termination Event or Termination Event has occurred pursuant to the terms of this Charter, the Owners hereby agree not todisturb or interfere (or instruct or authorise another party to disturb or interfere) with the Charterers’ lawful use, possession and quiet enjoyment of theVessel during the Charter Period. 35.2The Owners shall use best endeavors to procure that their financier(s) enter into a Quiet Enjoyment Agreement with the Charterers on such terms asmay be mutually agreed between the Owners, the Owners’ financier(s) and the Charterers. 35.3Subject to Clause 35.1 above, the Charterers acknowledge that, at any time during the Charter Period: (a)the Owners are entitled to enter into certain funding arrangements with their financier(s), (the “Mortgagee”), in order to finance in part or in full of thePurchase Price (such financing amount not to exceed the Outstanding Principal Balance at the relevant time), which funding arrangements may besecured, inter alia, by the relevant Financial Instruments; (b)the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above: (i)execute a ship mortgage over the Vessel or any other Financial Instrument in favour of a Mortgagee; (ii)assign their rights and interests to, in or in connection with this Charter and any other Leasing Document in favour of that Mortgagee; (iii)assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel infavour of that Mortgagee; and (iv)enter into any other document or arrangement which is necessary to give effect to such financing arrangements; and (c)the Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all suchinstructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any FinancialInstrument or as may be directed from to time during the currency of this Charter by the Mortgagee in conformity with any Financial Instrument. TheCharterers further agree and acknowledge all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree toacknowledge this in writing in any form that may be reasonably required by the Mortgagee.CLAUSE 36 – CHARTERHIRE 36.1In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers herebyirrevocably and unconditionally agree to pay to the Owners, the Charterhire, the Advance Charterhire and the Purchase Obligation Price or, as thecase may be, the Purchase Option Price. 36.2The Charterers shall pay the Advance Charterhire to the Owners on the Commencement Date which amount shall be deemed paid on such date by itbeing set off against an equivalent portion of the Purchase Price payable by the Owners as buyers to the Charterers as sellers under the MOA on theCommencement Date pursuant to the terms thereof and which, for the avoidance of any doubt, shall be unsecured and non-refundable under allcircumstances and no interest shall accrue on the Advance Charterhire. 3SINGAPORE/89220790v1036.3Subject to the terms of this Clause 36, the Charterers shall pay the Charterhire quarterly in arrears in twenty four (24) consecutive instalments to theOwners under this Charter with the first instalment of the Charterhire payable on the date falling three months after the Commencement Date and thefinal instalment of the Charterhire payable on the last day of the Charter Period. 36.4The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay all Charterhire, Advance Charterhire and other amountspayable under the Leasing Documents shall be absolute and unconditional under any and all circumstances and shall not be affected by anycircumstances of any nature whatsoever including but not limited to: (a)any set-off (except in the case of the Advance Charterhire which shall be set off in accordance with Clause 36.2), counterclaim, recoupment, defence,claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, withoutlimitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Ownersand the Charterers; (b)any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange,release or surrender of, or other dealing in, any security for any such indebtedness or obligation; (c)any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; (d)any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vesselfor any particular trade; (e)the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel; (f)any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with orinterruption or cessation in, the use or possession thereof by the Charterers; (g)any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers; (h)any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the termsand provisions of this Charter or the other Leasing Documents by any party to this Charter or any other person; (i)any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to beexecuted pursuant to this Charter; or (j)any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any othercause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under thisCharter. 36.5Time of payment of the Charterhire, the Advance Charterhire and other payments by the Charterers shall be of the essence of this Charter and theother Leasing Documents. 36.6All payments of the Charterhire, the Advance Charterhire and any other amounts payable under the Leasing Documents shall be made in Dollars andshall be received by the Owners in same day available funds and by not later than 6:00pm (Shanghai time) on the due date thereof. 4SINGAPORE/89220790v1036.7All Charterhire and any moneys payable hereunder shall be payable by the Charterers to the Owners to such account as the Owners may notify theCharterers in writing. 36.8Payment of the Charterhire and the Advance Charterhire shall be at the Charterers’ risk until receipt by the Owners. 36.9All stamp duty, value added tax, withholding or other taxes (not including taxes levied on the income of the Owners) and import and export dutiesand all other similar types of charges which may be levied or assessed on or in connection with: (a)the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners;and (b)the import, export, purchase, delivery and re-delivery of the Vessel,shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and AdvanceCharterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts. 36.10If the Charterers fail to make any payment due under this Charter on the due date, they shall pay interest on such late payment at the default rate of2 per cent. (2 %) per annum (for the avoidance of doubt, such default interest rate applies in addition to the applicable Interest Rate if no paymentdefault were to occur) from the date on which such payment became due until the date of payment thereof. 36.11All default interest and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall becalculated on the basis of the actual number of days elapsed and a 360 day year. 36.12Any payment which is due to be made on a day which is not a Business Day, shall be made on the preceding Business Day in the same calendarmonth.CLAUSE 37 – POSSESSION OF VESSEL 37.1The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall notpermit the creation of any Security Interest thereon other than the Permitted Security Interests. 37.2The Charterers shall promptly notify any party including any Approved Subcharterer (as the Owners may request), in writing that the Vessel is theproperty of the Owners and the Charterers shall provide the Owners with a copy of such written notification and reasonably satisfactory evidence thatsuch party has received such written notification. 37.3Other than in the circumstances specified in Clause 37.4, if the Vessel is arrested, seized, impounded, forfeited, detained or taken out of theirpossession or control (whether or not pursuant to any distress, execution or other legal process but other than due to piracy events which are insuredagainst pursuant to Clause 38), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provisionof security or otherwise do such lawful things as the circumstances may require) and shall (if it will or is likely to exceed 30 days) immediately notifythe Owners of such event and shall indemnify the Owners against all losses, documented costs or documented charges incurred by the Owners byreason thereof in re-taking possession or otherwise in re-acquiring the Vessel. Without prejudice to the generality of the foregoing, the Charterersagree to indemnify the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or otherdocuments. 37.4If the Vessel is arrested or otherwise detained solely because of the Owners’ direct actions or omissions and for reasons which are not in any part aconsequence of a Relevant Person’s (or its 5SINGAPORE/89220790v10 affiliate’s) contributory negligence and/or wilful misconduct, the Owners shall at their own expense take all reasonable steps to procure that within areasonable time the Vessel is released, including the provision of bail. 37.5The Charterers shall pay and discharge or cause any Approved Subcharterer to pay and discharge all obligations and liabilities whatsoever whichhave given or may give rise to liens on or claims enforceable against the Vessel and take all steps to prevent (and in connection with procuring anyApproved Subcharterer in doing the above, take all reasonable steps to procure any Approved Subcharterer to prevent) an arrest (threatened orotherwise) of the Vessel.Clause 38 – INSURANCE 38.1The Charterers shall procure that insurances are effected in form and substance satisfactory to the Owners: (a)in Dollars; (b)in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis in an amountof 120% of the higher from time to time of: (i) the aggregate of the then Outstanding Principal Balance and (ii) the lower of the Certified Book Valueand Market Value; (c)in the case of oil pollution liability risks for the Vessel, for an aggregate amount equal to the highest level of cover from time to time available underprotection and indemnity club entry and in the international marine insurance market and for an amount of not less than $1,000,000,000; and (d)in relation to protection and indemnity risks in respect of the full tonnage of the Vessel; (e)through approved brokers and with first class international insurers and/or underwriters reasonably acceptable to the Owners (including having aStandard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above) or, in the case of war risks andprotection and indemnity risks, in a war risks and protection and indemnity risks associations reasonably acceptable to the Owners (including being amember of the International Group of Protection and Indemnity Clubs); and (f)on no less favourable terms which the Charterers may be under an obligation (if any) to maintain under the terms of any Approved BareboatSubcharter. 38.2In addition to the terms set out in Clause 13(a), the Charterers shall procure that the obligatory insurances shall: (a)subject always to paragraph (ii), name the Charterers, the Approved Manager and the Owners (if so required by the Owners) as the only namedassureds unless the interest of every other named assured or co-assured is limited: (ii)in respect of any obligatory insurances for hull and machinery and war risks; (1)to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and (2)to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of anyclaims made against them); and 6SINGAPORE/89220790v10 (iii)in respect of any obligatory insurances for protection and indemnity risks, to any recoveries they are entitled to make by way ofreimbursement following discharge of any third party liability claims made specifically against them,and every other named assured or co-assured has undertaken in writing to the Owners or their financiers reasonably that any deductible shall beapportioned between the Charterers and every other named assured or co-assured in proportion to the gross claims made by or paid to each of themand that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and their financiers (if any) inaccordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the obligatoryinsurances; (b)whenever a financier of the Owners requires: (i)in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for theirrights and interests, warranted no operational interest and with full waiver of rights of subrogation against such financiers, but without suchfinanciers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; (ii)in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights andinterests to the extent permissible under the relevant protection and indemnity club rules; and (iii)name the Owners’ financiers (as applicable) and the Owners (as applicable) as the first ranking loss payee and the second ranking loss payeerespectively (and in the absence of any financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant losspayable clauses approved by the Owners’ financiers and the Owners (such approval not to be unreasonably withheld) with such directions forpayment in accordance with the terms of such relevant loss payable clause, as the Owners and their financiers (if any) may specify; (c)provide that all payments by or on behalf of the insurers under the obligatory insurances to the Owners and/or their financiers (as applicable) shall bemade without set-off, counterclaim or deductions or condition whatsoever; (d)provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Owners ortheir financiers (if any); (e)provide that the Owners and/or their financiers (if any) may make proof of loss if the Charterers fail to do so; and (f)provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of theOwners, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective withrespect to the Owners and/or their financiers (if any) for fourteen (14) days (or seven (7) days in the case of war risks), or such other period as may beagreed by the Owners and/or their financiers (if any), after receipt by the Owners and/or their financiers (if any) of prior written notice from the insurersof such cancellation, change or lapse. 38.3The Charterers shall: (a)at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners (copied to their financiers (ifany)) of the terms and conditions of all Insurances; 7SINGAPORE/89220790v10(b)at least fourteen (14) days before the expiry of any obligatory insurance notify the Owners (copied to their financiers (if any)) of the brokers (or otherinsurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew that obligatory insuranceand of the proposed terms of renewal and obtain the Owners’ approval (such approval not to be unreasonably withheld and who shall have regard tothe requirements as to insurance cover required under the provisions of this Clause 38); (c)at least seven (7) days before the expiry of any obligatory insurance, procure that such obligatory insurance is renewed or to be renewed on its expirydate in accordance with the provisions of this Charter; (d)procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptlyafter the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners (copied to their financiers (if any))in writing of the terms and conditions of the renewal; and (e)as soon as practicable after the expiry of any obligatory insurance, deliver to the Owners a letter of undertaking as required by this Charter in respectof such Insurances for the Vessel as renewed pursuant to this Clause 38.3 together with copies of the relevant policies or cover notes or entrycertificates duly endorsed with the interest of the Owners and/or their financiers (if any). 38.4The Charterers shall ensure that all insurance companies and/or underwriters, and/or (if any) insurance brokers provide the Owners with all copies ofpolicies, cover notes and certificates of entry (originals where so requested by the Owners following the occurrence of a Termination Event orPotential Termination Event) relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a formrequired by the Owners (which the Charterers shall procure the relevant insurance companies, underwriters and/or insurance brokers to provide uponrenewal or receipt of the insurance companies, underwriters and/of insurance brokers of an executed notice of assignment). Such letter or letters ofundertaking shall include undertakings by the insurance companies and/or underwriters 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 ofthis Charter and the Financial Instruments; (b)they will hold the benefit of such policies and such insurances, to the order of the Owners and/or their financiers (if any) and/or such other party inaccordance with the said loss payable clause; (c)they will advise the Owners and their financiers (if any) promptly of any material change to the terms of the obligatory insurances of which they areaware; (d)(i) they will indicate in the letters of undertaking that they will immediately notify the Owners and their financiers (if any) when any cancellation,charge or lapse of the relevant obligatory insurance occur and (ii) following a written application from the Owners and/or their financiers (if any) notlater than one (1) month before the expiry of the obligatory insurances they will notify the Owners and their financiers (if any) not less than fourteen(14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Charterersand, in the event of their receiving instructions to renew, they will promptly notify the Owners and their financiers (if any) of the terms of theinstructions; and (e)if any of the obligatory insurances form part of any fleet cover, the Charterers shall use best endeavours to procure that the insurance broker(s), orleading insurer, as the case may be, undertakes to the Owners and their financiers (if any) that such insurance broker or insurer will not set off againstany sum recoverable in respect of a claim relating to the Vessel under 8SINGAPORE/89220790v10 such obligatory insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium duefor other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, andthey will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policyto be issued in respect of the Vessel forthwith upon being so requested by the Owners and/or their financiers (if any) and where practicable. 38.5The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners with: (a)a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; (b)a letter or letters of undertaking in such form as may be required by the Owners or in such association’s standard form (following the relevantassociation’s receipt of an executed notice of assignment upon the effecting or renewal of insurances); and (c)a copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifyingauthority in relation to the Vessel. 38.6The Charterers shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurancesare effected or renewed. 38.7The Charterers shall procure that all premiums or other sums payable in respect of the obligatory insurances are punctually paid and produce allrelevant receipts when so required by the Owners. 38.8The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in fullforce and effect. 38.9The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatoryinsurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, inparticular: (a)the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to theobligatory insurances, and (without limiting the obligations contained in this Clause) ensure that the obligatory insurances are not made subject toany exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made inaccordance with the rules of a protection and indemnity association which is a member of the International Group of protection and indemnityassociations), such approval not to be unreasonably withheld; (b)the Charterers shall not make or permit any changes relating to the classification or classification society or manager or operator of the Vessel unlesssuch changes have first been approved by the underwriters of the obligatory insurances or the Owners (such approval not to be unreasonably withheldby the Owners’ but always subject to the Owners receiving credit approval on such changes); (c)as may be applicable, the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection andindemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive EconomicZone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly providethe Owners with copies of such declarations and a copy of the certificate of financial responsibility; and 9SINGAPORE/89220790v10(d)the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatoryinsurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which theinsurers specify. 38.10The Charterers shall not make or agree to any material alteration to the terms of any obligatory insurance (relating to the identity of the beneficiariesunder such insurances or scope of cover) nor waive any right relating to any obligatory insurance without the prior written consent of the Owners(such consent to only be required where such amendment or waiver adversely affects or potentially adversely affects the Owners’ interests under theLeasing Documents and which is not to be unreasonably withheld or delayed).In this Clause 38.10 “material” alterations shall include, without limitation, reduction to the insured amount, limitation on the scope of the cover andany other amendment which would cause a breach under the terms of this Charter, any other Leasing Document or any Approved BareboatSubcharter. 38.11The Charterers shall not settle, compromise or abandon any claim under any obligatory insurance for a Total Loss or for a Major Casualty, and shalldo all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at anytime become payable in respect of the obligatory insurances. 38.12The Charterers shall provide the Owners, promptly upon the Owners’ written request, copies of: (a)all communications between the Charterers and: (i)the approved brokers; and (ii)the approved protection and indemnity and/or war risks associations; and (iii)the approved international insurers and/or underwriters, which relate directly or indirectly to: (A)the Charterers’ obligations relating to the obligatory insurances including, without limitation, all requisite declarations andpayments of additional premiums or calls; and (B)any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (i) or (ii) relating wholly orpartly to the effecting or maintenance of the obligatory insurances; andany communication with all parties involved in case of a claim under any of the Vessel’s insurances. 38.13The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners reasonablyrequest 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 proposedto be effected; and/or (b)effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) or dealing with or considering any matters relating to anysuch insurances. 38.14If one or more of the obligatory insurances are not effected and maintained with first class international insurers or are effected with an insurance orcaptive subsidiary of the Owners or the Charterers, then the Charterers shall procure, at their own expense, that the relevant insurers maintain in fullforce and effect facultative reinsurances with reinsurers and 10SINGAPORE/89220790v10 through brokers, in each case, of recognised standing and acceptable in all respects to the Owners. Any reinsurance policy shall include, if and whenpermitted by law, a cut-through clause in a form acceptable to the Owners. The Charterers shall procure that underwriters of the primary insurancesassign each reinsurance to the relevant financiers in full, if required. 38.15The Charterers shall upon demand fully indemnify the Owners in respect of all premiums and other expenses which are reasonably incurred by (i) theOwners in connection with or with a view to effecting, maintaining or renewing an innocent owners’ interest insurance, mortgagee’s interest insuranceand a lessor’s/mortgagee’s additional perils (pollution) insurance that is taken out in respect of the Vessel and/or (ii) the financier(s) of the Owners (ifany) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance and a mortgagee’s additional perils(pollution) insurance that is taken out in respect of the Vessel, in each case, with the Charterers’ insurance brokers as approved by the Owners (in theirsole discretion) and provided that the Charterers shall provide the Owners, as soon as these are dispatched, with copies of all communicationsbetween the Charterers and such insurance brokers. In each case, the amount of the cover under the insurances referred to this Clause 38.15 shall beequal to at least 120% of the higher from time to time of (i) the Outstanding Principal Balance; (ii) the lower of the Certified Book Value and theMarket Value. 38.16The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall notbe reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereofis retaken by the Owners, reasonable wear and tear to the Vessel only excepted. 38.17The Charterers shall: (a)reimburse the Owners any expenses incurred by the Owners in obtaining the reports described in Clause 38.13 (provided that such reimbursementobligation does not arise for the second or subsequent report obtained for any given 12-month period); and (b)procure that there is delivered to the brokers, insurers, underwriters, associations described in Clause 38.1(e) such information in relation to theInsurances as they may require. 38.18The Charterers shall keep the Vessel insured at their expense against such other risks which the Owners consider reasonable for a prudent shipowneror operator to insure against at the relevant time (as notified by the Owners) and which are, at that time, generally insured against by owners oroperators of vessels similar to the Vessel. 38.19The Charterers shall, in the event that the Approved Manager makes a claim under any obligatory insurances taken out in connection with this Clause38 but is unable to or otherwise fails to pay in full any deductible in connection with such claim (in an amount as apportioned between the Charterersand every other assured in proportion to the gross claims made by or paid to each of them), pay such shortfall in deductible payable on behalf of theApproved Manager.CLAUSE 39 – WARRANTIES RELATING TO VESSEL 39.1It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel which has been purchased by theOwners from the Charterers as sellers pursuant to the MOA for the purpose of then chartering the Vessel to the Charterers hereunder and that nocondition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (orany part thereof). 11SINGAPORE/89220790v1039.2All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for anypurpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. 39.3The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or naturecaused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereofand the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or the Advance Charterhire or other payment dueunder this Charter or the other Leasing Documents.CLAUSE 40 – TERMINATION, REDELIVERY AND TOTAL LOSS 40.1If the Termination Purchase Price becomes payable in accordance with Clause 44.3, the same shall be payable in consideration of the purchase andtransfer of the legal and beneficial title of the Vessel pursuant to Clause 40.4 and it is hereby agreed by the parties hereto that payment of theTermination Purchase Price shall not be construed as a penalty but shall represent an agreed estimate of the loss and damage suffered by the Owners inbuying the Vessel and entering into this Charter upon the terms and conditions contained herein, in each case, at the request of the Charterers andshall therefore be paid as compensation to the Owners for early termination and acquisition of the Vessel by the Charterers. 40.2Upon receipt of the Termination Purchase Price by the Owners pursuant to Clause 40.1 in full, this Charter shall terminate. 40.3 (a)If the Charterers fail to make any payment of the Termination Purchase Price on the due date, (i)Clauses 36.10 and 36.11 shall apply; (ii)the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation topay the Termination Purchase Price) the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately(and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port as the Owners may require; further andfor the avoidance of doubt, the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may createwhatsoever interests thereon, including without limitation charterparties or any other form of employment contracts (“Post-enforcementInterests”); and (iii)the Owners shall be entitled (at Owners’ sole discretion) to sell the Vessel on terms they deem fit (an “Owners’ Sale”). (b)Prior to effecting an Owners’ Sale, the Owners shall notify the Charterers in writing and the Charterers may within seven (7) Business Days thereaftersubmit to the Owners evidence (to the satisfaction of the Owners, acting reasonably) of a purchaser offering by way of a firm offer (subject tocustomary closing conditions and Owners’ investigation on know-your-client issues) (a “Charterers’ Offer”) an amount at least equal to the higherof (i) the purchase price contemplated by the Owners’ Sale and (ii) the then current amount of the Termination Purchase Price, in either case followingwhich the Owners will use reasonable endeavours to enter into a memorandum of agreement (in a form acceptable to the Owners and the relevantcounterparty buyer) pursuant to such Charterers’ Offer. (c)Without prejudice to the other provisions of this Clause 40.3, the Charterers may at any time following the occurrence of any event set out in Clause44.2 or 44.3 (as the case may be) 12SINGAPORE/89220790v10 submit to the Owners evidence (to the satisfaction of the Owners, acting reasonably) of a Charterers’ Offer in an amount at least equal to the thencurrent amount of the Termination Purchase Price, in which case the Owners will use reasonable endeavours to enter into a memorandum of agreement(in a form acceptable to the Owners and the relevant counterparty buyer) pursuant to such Charterers’ Offer. (d)The proceeds of any sale of the Vessel pursuant to Clause 40.3(a)(iii) or (b) or (c) shall be applied: (i)first, towards the Owners’ documented costs incurred in relation to such sale; (ii)second, towards payment of the outstanding Termination Purchase Price and other sums then due and payable to the Owners under theLeasing Documents; and (iii)third, any remaining balance to be paid to the Charterers subject to all actual and/or contingent liabilities incurred under any of the LeasingDocuments being fully discharged; provided also in the case of an Owners’ Sale that if such proceeds are not in an amount sufficient todischarge in full the aggregate amounts due to the Owners under (i) and (ii), the Charterers shall continue to be liable for the shortfall. 40.4Concurrently with the Owners receiving irrevocable payment of the Termination Purchase Price in full pursuant to the terms of this Charter, theOwners shall (save in the event of Total Loss or where ownership has already been or agreed to be transferred pursuant to Clause 40.3) transfer thelegal and beneficial ownership of the Vessel on an “as is where is” basis (and, for the avoidance of doubt but without prejudice to Clause 49.1(b),subject to any Post-enforcement Interests), and otherwise in accordance with the terms and conditions set out at Clause 49.1(a) and (b)), to thepurchaser under the Charterers’ Offer and shall (at the cost of the Charterers or the purchaser under the Charterers’ Offer) execute a bill of sale and aprotocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel to the purchaserunder the Charterers’ Offer (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners). 40.5The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel as a result of the Charterers’ action orperformance prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of theOwners’ register shall be for the Charterers’ account. 40.6If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 40.3, the Charterers shall ensure that the Vessel shall, at the timeof redelivery to the Owners (at Charterers’ cost and expense): (a)be in compliance with its Insurances; (b)be in an equivalent classification as she was as at the Commencement Date without any outstanding recommendation or condition, and with valid,unextended certificates for not less than three (3) months and free of average damage affecting the Vessel’s classification and in the same or as goodstructure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’sclassification excepted; (c)have passed her 5-year and if applicable, 10-year special surveys, and subsequent second intermediate surveys and drydock at the Charterers’ timeand expense without any condition or outstanding issue and to the satisfaction of the Classification Society and with all the Vessel’s classification,trading, national and international certificates that the Vessel had when she was delivered under this Charter and the log book and whatsoevernecessary relating to the operation of the Vessel, valid and un-extended without conditions or recommendation falling due; 13SINGAPORE/89220790v10(d)have her survey cycles up to date and trading and classification certificate valid for at least six (6) months; (e)be redelivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery and to the extent not alreadyexpended in the operation of the Vessel, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by theOwners free of charge; (f)be free of any Security Interest (save for the Security Interests granted pursuant to the Financial Instruments) and the Charterer shall use their bestendeavours to procure that the Vessel is free of any cargo; (g)be redelivered to the Owners together with all material information generated during the Charter Period in respect of the use, possession, operation,navigation, utilization of lubricating oil and the physical condition of the Vessel, whether or not such information is contained in the Charterers’equipment, computer or property; (h)be free of any charter (unless the Owners wish to retain the continuance of any then existing charter; (i)be free of officers and crew (unless otherwise agreed by the Owners); and (j)shall have had her underwater parts treated with ample anti-fouling to last for the ensuing period up to the next scheduled dry docking of the Vessel. 40.7The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes and otherconsumable stores in the Vessel at no cost to the Owners. 40.8If the Vessel, for any reason, becomes a Total Loss after Delivery, the Charterers shall pay the Termination Purchase Price to the Owners on the earlierof: (a)the date falling one hundred and twenty (120) days after such Total Loss has occurred; and (b)the date of receipt by the Owners and/or their financiers (if any), in accordance with the terms of the relevant loss payable clause, of the proceeds ofinsurance relating to such Total Loss,provided that it is hereby agreed that any insurance proceeds in respect of the Vessel received by the Owners and/or their financiers (if any) shall beapplied in or towards discharging the Charterers’ obligation to pay the Termination Purchase Price and any interest accrued thereon (and suchapplication shall be deemed satisfaction of the Charterers’ obligation to pay the Termination Purchase Price to the extent so satisfied) and in theevent that the insurance proceeds received from the insurers exceed the Termination Purchase Price due (and any interest accrued thereon), the excessshall be firstly paid towards satisfying any amounts outstanding and owing by the Charterers or any of their Affiliates under any Other Charter andthereafter paid to the Charterers by way of rebate of hire.For the avoidance of doubt, in the event that the Vessel becomes a Total Loss: (A)payment of the Charterhire and all other sums payable under the Leasing Documents during such period shall continue to be made by theCharterers in accordance with the terms thereof unless and until the Owners receive in full the Termination Purchase Price; (B)should insurance proceeds be received by the Owners from the insurers, the Charterers’ obligations to pay the Termination Purchase Priceshall be accordingly 14SINGAPORE/89220790v10 reduced by an amount corresponding to such insurance proceeds but in the event that such insurance proceeds are less than the amount of theTermination Purchase Price together with any interest accrued thereon, the Charterers remain obliged to pay to the Owners the balance so thatthe full amount of the Termination Purchase Price due together with any interest accrued thereon is received by the Owners; and (C)the obligation of the Charterers to pay the Termination Purchase Price shall remain unaffected and exist regardless of whether any of theinsurers have agreed or refused to meet or have disputed in good faith, the claim for Total Loss. 40.9The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss.CLAUSE 41 – FEES AND EXPENSES 41.1In consideration of the Owners entering into this Charter, the Charterers shall pay to the Owners or their nominee a non-refundable arrangement fee atsuch time and in such amount to be set out in a fee letter. 41.2Without prejudice to any other rights of the Owners under this Agreement, the Charterers shall promptly pay to the Owners on written demand on afull indemnity basis: (a)all documented costs, charges and expenses incurred by the Owners in collecting any Charterhire or Advance Charterhire or other payments not paidon the due date under this Charter, in remedying any other failure of the Charterers to observe the terms and conditions of this Charter and inenforcing the Owners’ rights under any Leasing Document; and (b)all documented costs and expenses (including, but not limited to, legal costs) incurred by the Owners in the negotiation and execution of alldocumentation in relation to this Charter and the other Leasing Documents including, but not limited to, all documented costs incurred by theOwners and all documented legal costs, expenses and other disbursements incurred by the Owners’ legal counsels in connection with the same.CLAUSE 42 – NO WAIVER OF RIGHTS 42.1No neglect, delay, act, omission or indulgence on the part of either party in enforcing the terms and conditions of this Charter shall prejudice the strictrights of that party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or furtherexercise thereof. 42.2No right or remedy conferred upon either party by this Charter shall be exclusive of any other right or remedy provided for herein or by law and allsuch rights and remedies shall be cumulative.CLAUSE 43 – NOTICES 43.1Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Charter shall be in English and inwriting and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent ifsent by registered post, fax or by email to the following respective addresses: 15SINGAPORE/89220790v10(A) to the Owners: c/o CMB FINANCIAL LEASING CO., LTD. Attention: Wang Wei Email: wangwei17@cmbchina.com Tel: +8621 6106 1735 Fax: +8621 6105 9911*1735(B) to the Charterers: c/o NAVIOS TANKERS MANAGEMENT INC. Attention: Vassiliki Papaefthymiou Email: vpapaefthymiou@Navios.com Tel: +30 210 41 72 050 Fax: +30 210 41 72 070or, if a party hereto changes its address or fax number, to such other address or fax number as that party may notify to the other.CLAUSE 44 – TERMINATION EVENTS 44.1The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: (a)any of the Charterers or the Guarantor fails to make any payment on its due date under this Charter or any other Leasing Document to which they are aparty or the Guarantor fails to make any payment on its due date under the Leasing Documents to which it is a party and in each case, suchnon-payment fails to be rectified within seven (7) Business Days of the relevant due date; or (b)the Charterers breach or omit to observe or perform any of their undertakings in Clause 46.1 (n), (o), (p), (q), (r) or (v) or the Guarantor breaches oromits to observe or perform its financial covenants contained in clause 11.20 of the Guarantee; or the Charterers fail to obtain and/or maintain theInsurances required under Clause 38 in accordance with the provisions thereof or any insurer in respect of such Insurances cancels the Insurances ordisclaims liability with respect thereto; or (c)the Charterers and/or the Guarantor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in thisCharter or any Leasing Document (other than a breach referred to in paragraph (a) or (b) above) unless such breach or omission is, in the reasonableopinion of the Owners, remediable and the Charterers remedy and/or the Guarantor remedies such breach or omission to the satisfaction of the Ownerswithin fourteen (14) Business Days of notice thereof from the Owners (except that in the case of Clause 46.1(k), the relevant period shall be ten(10) Business Days of notice thereof from the Owners); or (d)any representation or warranty made by the Charterers or the Guarantor or the Approved Manager in or pursuant to any Leasing Document proves tobe untrue or misleading in a material way when made; or (e)any of the following occurs in relation to any Financial Indebtedness of a Relevant Person: (i)any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand after any applicable grace period hasexpired; or (ii)any Financial Indebtedness of a Relevant Person becomes due and payable, or capable of being declared due and payable, prior to its statedmaturity date as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; or 16SINGAPORE/89220790v10 (iii)a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner as aconsequence of any termination event or event of default (howsoever defined); or (iv)any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or otherderivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable ofbeing terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any terminationevent or event of default (howsoever defined),provided that no Termination Event will occur under this Clause 44.1(e) in respect of a Relevant Person or a subsidiary of the Guarantor if theaggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above is less than (A) inthe case of a Relevant Person (other than the Guarantor), $1,000,000 (or its equivalent in any other currency) in aggregate and (B) in the case of theGuarantor, less than $5,000,000 (or its equivalent in any other currency) in aggregate, and in each of (A) and (B) above, not including any FinancialIndebtedness arising directly from a claim which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement. (f)any of the following occurs in relation to a Relevant Person: (i)a Relevant Person becomes, in the reasonable opinion of the Owners, unable to pay their debts as they fall due; or (ii)any assets of a Relevant Person, or any assets of the Guarantor exceeding the value of $10,000,000 (or its equivalent in any other currency) inaggregate, or the Vessel are subject to any form of execution, attachment, arrest, sequestration or distress which is not discharged within thirty(30) days (or such longer period agreed by the Owners); or (iii)any administrative or other receiver is appointed over all or a substantial part of the assets of a Relevant Person unless as part of a solventreorganisation which has been approved by the Owners; or (iv)a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely tobecome insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a RelevantPerson pass a resolution to the effect that they should be wound up, placed in administration or cease to carry on business; or (v)a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of aRelevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within thirty(30) days of the presentation of the petition; or (vi)a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments,reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditorsor of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract orotherwise; or (vii)any meeting of the members or directors of a Relevant Person is summoned for the purpose of proposing to authorise or take any action of atype described in paragraphs (iii) to (vi); or 17SINGAPORE/89220790v10 (viii)in a country other than England and Wales, any event occurs or any procedure is commenced which, in the reasonable opinion of the Owners,is similar to any of the foregoing referred to in (ii) to (vii) above inclusive; or (ix)any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets ofa Relevant Person; or (g)a Relevant Person suspends or ceases carrying on its business; or (h)any consent, approval, authorisation, license or permit necessary to enable the Charterers, any Approved Subcharterer or any Approved Manager tooperate or charter the Vessel to enable them to comply with any provision of any Leasing Document, as the case may be, to ensure that theobligations of the Charterers, Approved Subcharterer or Approved Manager (as the case may be) are legal, valid, binding or enforceable is notgranted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent, approval, authorisation,license or permit is not fulfilled; or (i)any event or circumstance occurs which has or is likely to have a Material Adverse Effect; or (j)this Charter or any Leasing Document or any Security Interest created by a Leasing Document is cancelled, terminated, rescinded or suspended orotherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party tothat document for any reason whatsoever; or (k)a Relevant Person or Approved Manager rescinds or purports to rescind or repudiates or purports to repudiate a Leasing Document; or (l)it is or has become: (i)unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner inwhich an existing law is or will be interpreted or applied; or (ii)contrary to, or inconsistent with, any regulation,for any Relevant Person or Approved Manager to maintain or give effect to any of its obligations under this Charter or any of the other LeasingDocuments to which it is a party in the manner it is contemplated under such Leasing Document or any of the obligations of such Relevant Person orApproved Manager under any Leasing Document to which it is a party are not or cease to be legal, valid, binding and enforceable; or (m)the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy; or (n)the Vessel is not delivered latest by the Cancelling Date; or (o)there is a merger, amalgamation, demerger or corporation reconstructions of a Relevant Person (other than where, in the case of the Guarantor, theGuarantor remains the surviving legal entity following the occurrence of such event) or a change of control or legal or beneficial ownership of theCharterers from that set out in Clause 45.1(a) and (b) without disclosure to the Owners and the Owners’ prior written consent; (p)there is a change in control of the Guarantor from that set out in Clause 45.1(c) without disclosure to the Owners and the Owners’ prior writtenconsent; (q)the Guarantor is de-listed from the New York Stock Exchange or has its shares trading at the New York Stock Exchange suspended for any reason; 18SINGAPORE/89220790v10(r)any Termination Event (as defined in any Other Charter) occurs under such Other Charter; or (s)the occurrence of any of the following events; (i)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the Charterers toterminate such Approved Bareboat Subcharter; or (t)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the ApprovedSubcharterer of such Approved Bareboat Subcharter to terminate such Approved Bareboat Subcharter which has not been unconditionallywaived by such Approved Bareboat Subcharterer. 44.2Subject to Clause 44.3 below, upon the occurrence of a Termination Event which is continuing (other than pursuant to: (i) Clause (f), in which casethe Owner’s entitlement to issue the notice of termination to the Charterers under Clause 44.3 shall immediately arise), the Owners shall notify theCharterers of occurrence of the same (the “Termination Event Notice”) whereupon the Charterers may, within three (3) Business Days of the date ofthe Termination Event Notice, provide to the Owners a written notice advising the Owners of their intention to pay the Charterer TerminationPurchase Price to the Owners and terminate this Charter in accordance with the procedures set out in Clause 40. 44.3If the Charterers do not notify the Owners of their intention to terminate this Charter pursuant to Clause 44.2 within three (3) Business Days of thedate of the Termination Event Notice, or a Termination Event is continuing pursuant to Clause (f), then the Owners shall be entitled, provided theTermination Event is continuing, by notice to the Charterers to terminate this Charter at any time, and the Charterers shall be required to pay to theOwners the Termination Purchase Price in accordance with the procedures set out in Clause 40. 44.4For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for theoutstanding obligations on their part to be performed under this Charter. 44.5Without limiting the generality of the foregoing or any other rights of the Owners, upon the occurrence of a Termination Event which is continuing,the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any actions, suits or proceedingsrelating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policiesof insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any otheraction in respect of, any such policy or policies and (iii) change or appoint a new manager for the Vessel other than the Approved Manager and theappointment of the Approved Manager may be terminated immediately without any recourse to the Owners.CLAUSE 45 – REPRESENTATIONS AND WARRANTIES 45.1The Charterers represent and warrant to the Owners as of the date of this Charter, and on the first day of each Term as follows: (a)the Charterers are wholly legally owned by the Shareholder and the Shareholder is wholly legally owned by the Guarantor; (b)the Charterers are wholly beneficially owned by the Guarantor; (c)Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is thebeneficiary) and/or Navios Maritime Holdings Inc. is the ultimate beneficial owner of, or has ultimate control of the voting rights attaching to, 30 percent. of all the issued shares in the Guarantor; 19SINGAPORE/89220790v10(d)each of the Relevant Persons and Approved Manager is duly incorporated and validly existing under the laws of its jurisdiction of its incorporation; (e)each of the Relevant Persons and the Approved Manager has the corporate capacity, and has taken all corporate actions and obtained all consents,approvals, authorisations, licenses or permits necessary for it: (i)to execute each of the Leasing Documents to which it is a party; and (ii)to comply with and perform its obligations under each of the Leasing Documents to which it is a party; (f)all the consents, approvals, authorisations, licenses or permits referred to in Clause 45.1(e) remain in force and nothing has occurred which makes anyof them liable to revocation; (g)each of the Leasing Documents to which a Relevant Person or Approved Manager is a party constitutes such Relevant Person’s or ApprovedManager’s legal, valid and binding obligations enforceable against such party in accordance with its respective terms and any relevant insolvencylaws affecting creditors’ rights generally; (h)no third party has any Security Interest, other than the Permitted Security Interests, or any other interest, right or claim over, in or in relation to theVessel, this Charter or any moneys payable hereunder and/or any of the other Leasing Documents; (i)all payments which a Relevant Person is liable to make under any Leasing Document to which such Relevant Person is a party may be made by suchparty without deduction or withholding for or on account of any tax payable under the laws of the jurisdiction of incorporation; (j)no legal or administrative action involving a Relevant Person or Approved Manager has been commenced or taken which is likely to have a MaterialAdverse Effect; (k)each of the Relevant Persons and Approved Manager has paid all taxes applicable to, or imposed on or in relation to it, its business or if applicable,the Vessel, except for those being contested in good faith with adequate reserves; (l)the choice of governing law as stated in each Leasing Document to which a Relevant Person or Approved Manager is a party and the agreement bysuch party to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such Relevant Personor Approved Manager; (m)no Relevant Person or Approved Manager nor any of their assets are entitled to immunity on the grounds of sovereignty or otherwise from any legalaction or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); (n)the obligations of each Relevant Person or Approved Manager under each Leasing Document to which it is a party, are the direct, general andunconditional obligations of such Relevant Person and, rank at least pari passu with all other present and future unsecured and unsubordinatedcreditors of such Relevant Person save for any obligation which is mandatorily preferred by law and not by virtue of any contract; (o)no Relevant Person or Approved Manager is a US Tax Obligor, and no Relevant Person has established a place of business in the United Kingdom orthe United States of America; 20SINGAPORE/89220790v10(p)no Relevant Person, Approved Manager nor any of their respective directors, officers, employees or agents is a Restricted Person and to the best of theCharterers’ knowledge and belief (after due and careful enquiry), no Approved Subcharterer nor any of its directors, officers, employees or agents is aRestricted Person; (q)each Relevant Person and Approved Manager and their respective directors, officers, employees and agents, and to the best of the Charterers’knowledge and belief (after due and careful enquiry), the Approved Subcharterer and its directors, officers, employees and agents, is in compliancewith all Sanctions laws, and none of them have been or are currently being investigated on compliance with Sanctions, they have not received noticeor are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they have not taken any action to evade theapplication of Sanctions; (r)each Relevant Person and Approved Manager, and to the best of the Charterers’ knowledge and belief (after due and careful enquiry) the ApprovedSubcharterer, is not in breach of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each of the RelevantPersons and Approved Manager has instituted and maintained systems, controls, policies and procedures designed to: (i)prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and (ii)promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws. (s)none of the Relevant Persons and the Approved Manager or any of their assets, in each case, has any right to immunity from set off, legal proceedings,attachment prior to judgment or other attachment or execution of judgment on the grounds of sovereign immunity or otherwise; (t)none of the Relevant Persons and the Approved Manager is insolvent or in liquidation or administration or subject to any other formal or informalinsolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect ofthe Relevant Persons or the Approved Manager or all or material part of their assets; (u)that in respect of any Approved Subcharter: (i)the copy of such Approved Subcharter provided to the Owners (if required to be provided under the terms of this Charter) is a true andcomplete copy; (ii)in the case of an Approved Bareboat Subcharter being a bareboat charter, the relevant Approved Subcharterer is fully aware of the transactionscontemplated under this Charter; (v)no Termination Event or Potential Termination Event is continuing or might reasonably be expected to result from the entry into and performance ofthis Charter or any other Leasing Document; (w)as at the date of this Charter, the Charterers have not entered into any other investments, any sale or leaseback agreements, any off-balance sheettransaction or incur any other liability or obligation (including without limitation, any Financial Indebtedness of any obligations under a guarantee)except: (i)liabilities and obligations under the Leasing Documents to which it is or, as the case may be, will be a party and under the relevant IndentureGuarantee; or 21SINGAPORE/89220790v10 (ii)liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining andrepairing the Vessel; and (x)any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate in all material respects as at the date it wasprovided or as the date at which such information was stated; and (y)the entry by each Relevant Person into any Leasing Document does not in any way cause any breach, and is in all respects permitted, under the termsof the Indenture or any other document which is entered into under or in connection with the Indenture (including, without limitation, any IndentureGuarantee).CLAUSE 46 – CHARTERERS’ UNDERTAKINGS 46.1The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date of this Charterand up to the last day of the Charter Period: (a)there shall be sent to the Owners: (i)as soon as possible, but in no event later than 90 days after the end of each financial half-year, the consolidated semi-annual accounts of theGuarantor certified as to their correctness by an officer of the Guarantor; (ii)as soon as possible, but in no event later than 180 days after the end of each financial year of the Guarantor, the audited consolidated annualfinancial reports of the Guarantor; (b)they will provide to the Owners, promptly at the Owners’ request, copies of all notices and minutes relating to any of their extraordinary shareholders’meeting which are despatched to the Charterers’ or the Guarantor’s respective shareholders or any class of them, save that publicly disclosed noticesand minutes not concerning the Vessel or these Leasing Documents need not be provided to the Owners under this clause; (c)they will provide to the Owners, promptly at the Owners’ requests, copies of all notices and and notices of meetings which are despatched to theCharterers’ or Guarantors’ other creditors (if any); (d)they will provide or will procure that each Relevant Person and Approved Manager provides the Owners with details of any legal, arbitral oradministrative action involving such Relevant Person or Approved Manager or the Vessel as soon as such action is instituted or it becomes apparentto such Relevant Person or Approved Manager that it is likely to be instituted and is likely to have a material adverse effect on the ability of aRelevant Person or Approved Manager to perform their obligations under each Leasing Document to which it is a party (and in the case of suchRelevant Person being the Guarantor, where the claim under such legal, arbitral or administrative action exceeds the sum of US$5,000,000); (e)they will, and will procure that each other Relevant Person and Approved Manager obtains and promptly renews or procure the obtainment or renewalof and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authorityfor the transactions contemplated under each Leasing Document to which it is a party (including without limitation to sell, charter and operate theVessel); (f)they will not, and will procure that each other Relevant Person and Approved Manager will not, create, assume or permit to exist any Security Interestof any kind upon any Leasing Document to which such Relevant Person or Approved Manager is a party, and if applicable, the Vessel, in each caseother than the Permitted Security Interests; 22SINGAPORE/89220790v10(g)they will at their own cost, and will procure that each other Relevant Person and Approved Manager will: (i)do all that such Relevant Person or Approved Manager reasonably can to ensure that any Leasing Document to which such Relevant Personor Approved Manager is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and (ii)without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which such Relevant Personor Approved Manager is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in allRelevant Jurisdictions in respect of any Leasing Document to which such Relevant Person or Approved Manager is a party, give any notice ortake any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible inevidence or to ensure or protect the priority of any Security Interest which such Relevant Person or Approved Manager creates; (h)they will, and will procure that each other Relevant Person, notify the Owners immediately of the occurrence of: (i)any damage and/or alteration caused to the Vessel by any reason whatsoever which results, or may be expected to result, in repairs on theVessel which exceed $1,000,000; (ii)any material safety incidents taking place on board the Vessel; (iii)any Termination Event; (iv)any default by either the Approved Bareboat Subcharterer or Charterers of the terms of any Approved Bareboat Subcharter; (v)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling either the Charterersto terminate such Approved Bareboat Subcharter; or (vi)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the relevantApproved Subcharterer to terminate such Approved Bareboat Subcharter which has not been unconditionally waived by such ApprovedBareboat Subcharterer,and will keep the Owners fully up-to-date with all developments and the Charterers will, if so requested by the Owners, provide any such certificatesigned by its director, confirming that there exists no Potential Termination Event or Termination Event; (i)they will, and will procure that each other Relevant Person and Approved Manager will, as soon as practicable after receiving the request, provide theOwners with any additional financial or other information relating: (i)to themselves and/or the Vessel (including, but not limited to the condition and location of the Vessel); or (ii)to any other matter relevant to, or to any provision of any Leasing Document to which it is a party,which may be reasonably requested by the Owners (or their financiers (if any)) at any time; 23SINGAPORE/89220790v10(j)without prejudice to Clause 46.1(n), comply, or procure compliance, and will procure that each other Relevant Person, Approved Subcharterer andApproved Manager will comply or procure compliance, with all laws or regulations relating to the Vessel and its ownership, employment, operation,management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry; (k)the Vessel shall be classed with the Classification Society and shall be free of all overdue recommendations and requirements; (l)they will ensure and procure that: (i)the Market Value of the Vessel shall be ascertained from time to time in the following circumstances: (aa)upon the occurrence of a Potential Termination Event or a Termination Event which is continuing, at any time at the request of theOwners; and (bb)in the absence of occurrence of a Potential Termination Event or Termination Event: (i)no more than once every calendar year, with such report to be dated no more than 30 calendar days prior to everyanniversary of the Commencement Date occurring within the Charter Period or on such other date as the Owners mayrequest; and (ii)at any time at the request of the Owners if the Owners have determined (in their sole discretion) that the Market Value of theVessel falls below an amount equal to 110% of the Outstanding Principal Balance from time to time. (ii)the Charterers shall pay the amount of the fees and expenses incurred by the Owners in connection with any matter arising out of thisparagraph (l); (m)they will notify the Owners immediately of: (i)any Environmental Claim which is made against the Charterers, Approved Subcharterer or Manager in connection with the Vessel or anyEnvironmental Incident; (ii)any arrest or detention of the Vessel (that will or is likely to exceed 45 days), any exercise or purported exercise of any lien on that Vessel orits Earnings or any requisition of that Vessel for hire; and (iii)any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a MajorCasualty; (n)they shall comply, shall procure that each other Relevant Person and Approved Manager comply, and shall use all reasonable endeavours to procurethat the Approved Subcharterer comply, with all laws and regulations in respect of Sanctions, and in particular, they shall effect and maintain asanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time; (o)the Vessel shall not be employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel shall not beused by or to benefit any party which is a target of Sanctions and/or is a Restricted Person or trade to any area or country where trading the Vessel tosuch area or country would constitute or reasonably be expected to constitute a breach of any Sanctions or published boycotts imposed by any of theUnited Nations, the European Union, the United States of America, the United Kingdom 24SINGAPORE/89220790v10 or the People’s Republic of China, (ii) would result or reasonably be expected to result in any Relevant Person, Approved Subcharterer, ApprovedManager or the Owners becoming a Restricted Person or (iii) would trigger the operation of any sanctions limitation or exclusion clause in anyinsurance documentation; (p)they shall, shall procure that each other Relevant Person and Approved Manager shall, and shall use all reasonable endeavours to procure that theApproved Subcharterer shall, promptly notify the Owners of any non-compliance, by any Relevant Person, Approved Subcharterer or ApprovedManager or their respective officers, directors, employees, consultants, agents or intermediaries, with all laws and regulations relating to Sanctions,Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws (including but not limited to notifying the Owners inwriting immediately upon being aware that any Relevant Person, Approved Subcharterer, Approved Manager or its shareholders, directors, officers oremployees is a Restricted Person or has otherwise become a target of Sanctions) as well as provide all information (once available) in relation to itsbusiness and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws; (q)they shall, shall procure that each other Relevant Person and Approved Manager shall, and shall use all reasonable endeavours to procure that theApproved Subcharterer shall, (in each case above, including procuring or as the case may be, using all reasonable endeavours to procure therespective officers, directors, employees, consultants, agents and/or intermediaries of the relevant entity to do the same) shall: (i)comply with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws; (ii)maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money LaunderingLaws, Anti-Terrorism Financing Laws and Business Ethics Laws; and (iii)in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Financing Amount for any purpose thatwould breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws; (r)in respect of the Charterers, not lend, invest, contribute or otherwise make available the Financing Amount to or for any other person in a mannerwhich would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws; (s)they shall not appoint or permit to be appointed any manager of the Vessel unless it is the Approved Manager appointed on terms acceptable to theOwners and their financiers (if any) and such Approved Manager has (prior to accepting its appointment) entered into a Manager’s Undertaking; (t)they shall ensure that all Earnings and any other amounts received by them in connection with the Vessel are paid into the Earnings Account; (u)if at any time during the Charter Period, the Market Value of the Vessel falls below an amount equal to 110% of the Outstanding Principal Balance,the Charterers shall, upon request, promptly and in any event not later than the date falling 30 days after the Owners notify them of such circumstanceto prepay such part of the Charterhire Principal Balance and such prepayment should be applied towards payment and satisfaction of Charterhire A(or part thereof) payable in inverse chronological order payable or, as the case may be, in the event of the Charterers’ exercise of the Purchase Optionunder Clause 47, the Purchase Option Price (or part thereof) without prejudice to the terms of Clause 47.4. (v)if at any time during the Charter Period, the most recent audited consolidated annual financial reports of the Guarantor provided under Clause 46.1(a)(ii) shows a Net Income Loss 25SINGAPORE/89220790v10 for two consecutive financial years of the Guarantor (for the avoidance of doubt, the financial year of the Guarantor ending on 31 December 2018shall constitute the first such financial year of the Guarantor for the purposes of the determination under this Clause in the period from thecommencement of the Charter to such date that the audited consolidated annual financial reports of the Guarantor for the financial year ending on31 December 2018 are provided to the Owners under Clause 46.1(a)(ii)), the Charterers shall, upon request, promptly and in any event not later thanthe date falling 30 days of the filing of the most recent audited consolidated annual financial report of the Guarantor, prepay such part of theCharterhire Principal Balance equivalent to one instalment of Charterhire A and such prepayment should be applied towards payment andsatisfaction of Charterhire A (or part thereof) payable in inverse chronological order payable, or as the case may be, in the event of the Charterers’exercise of the Purchase Option under Clause 47, the Purchase Option Price (or part thereof) without prejudice to the terms of Clause 47.4).For the avoidance of doubt: (i)the Owners shall not be liable for any claim by the Charterers for interest alleged to be accrued on any amount prepaid under this Clause46.1(v); and (ii)if a prepayment is made in accordance with this Clause 46.1(v) in respect of any two consecutive financial years during the Charter Periodwhere a Net Income Loss has occurred, neither of such financial years shall be taken into account for any subsequent test to be applied inaccordance with this Clause 46.1(v); (w)upon request, they will provide or they will procure to be provided to the Owners the report(s) of the survey(s) conducted pursuant to Clause 7 of thisCharter in form and substance satisfactory to the Owners; (x)they shall not permit the sub-chartering of the Vessel (other than pursuant to the Subcharter) save for an Approved Subcharter provided that: (i)in the case of a request from the Charterers for the Owners’ written consent to the terms of an Approved Subcharter being a time charterexceeding or capable of exceeding twelve (12) months (taking into account any optional extension periods), the Owners shall respond to suchrequest within one Business Day or any other longer period agreed between the Owners and the Charterers; (ii)as a condition precedent to the execution of any Approved Subcharter being a bareboat charter or a time charter of a period exceeding orcapable of exceeding twelve (12) months (taking into account any optional extension periods), the Charterers assign all their rights andinterests under such Approved Subcharter and uses reasonable endeavours to procure such Approved Subcharter to give a writtenacknowledgment of such assignment and provide such documents as the Owners may reasonably require regarding the due execution of suchApproved Subcharter; (y)in respect of an Approved Subcharter (other than a Short Term Time Subcharter) which contains an option to extend the charter period, they shallnotify the Owners as soon as they become aware that the relevant Approved Subcharterer does not intend to, or has not by the date falling 20 daysprior to the date on which such Approved Subcharter will expire, exercise the relevant option to extend the time charter period of the Subcharter inaccordance with the terms thereunder; (z)in respect of an Approved Subcharter other than a Short Term Time Subcharter, save with the prior written consent of the Owners, they shall not, andshall procure that the relevant Approved Subcharterer shall not, agree or enter into any transaction, arrangement, document or do or omit to doanything which will have the effect of varying, amending, supplementing or waiving any material term of any such Approved Subcharter. 26SINGAPORE/89220790v10In this Clause 46.1(z), “material term” means, without limitation, terms regarding payment of hire (unless such amendment contemplates increase ofhire rate), duration of charter period, off-hire and termination events; (aa)they shall not make or pay any dividend or other distribution (in cash or in kind) in respect of its share capital following the occurrence of a PotentialTermination Event or Termination Event or which would result in a Potential Termination Event or Termination Event; (bb)the Vessel shall be registered under the Flag State at all times; and (cc)they shall not enter into any other investments, any sale or leaseback agreements, any off-balance sheet transaction or incur any other liability orobligation (including without limitation, any Financial Indebtedness of any obligations under a guarantee) except: (i)liabilities and obligations under the Leasing Documents to which it is or, as the case may be, will be a party and under the relevant IndentureGuarantee; or (ii)liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining andrepairing the Vessel.CLAUSE 47 PURCHASE OPTION 47.1The Charterers shall have the option to purchase the Vessel on any date (the “Purchase Option Date”) specified in such notice (the “PurchaseOption Notice”) at the Purchase Option Price on any of the following instances: (a)on the occurrence of any of the events set out under Clause 44.1(f) (iv), (v), (vi) and (viii) in respect of the Owners; (b)where the Owners cease to be under the control of the China Merchants Group; or (c)on and from the second anniversary of the Commencement Date (subject always to giving the Owners not less than forty five (45) Business Days’prior written notice), provided that in the case of paragraph (c) above, the Purchase Option Date shall fall on a Payment Date. 47.2A Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, is irrevocableand the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. 47.3Only one Purchase Option Notice may be served throughout the duration of the Charter Period (unless otherwise agreed by the Owners in theirabsolute discretion). 47.4Upon the Owners’ receipt in full of the Purchase Option Price, the Owners shall (except in the case of Total Loss) transfer the legal and beneficialownership of the Vessel on an “as is where is” basis (and otherwise in accordance with the terms and conditions set out at Clause 49.1(b)) to theCharterers or their nominees and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other documentstrictly necessary to transfer the title of the Vessel to the Charterers (and to the extent required for such purposes the Vessel shall be deemed first tohave been redelivered to the Owners).CLAUSE 48 – PURCHASE OBLIGATION 48.1Subject to other provisions of this Charter, in consideration of the Owners entering into this Charter, the Charterers shall: (a)on the last day of the Charter Period; or 27SINGAPORE/89220790v10(b)in the event it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by the LeasingDocuments,be obliged to purchase from the Owners all of the Owners’ beneficial and legal right, title and interest in the Vessel and all belonging to her and theOwners and the Charterers shall perform their obligations referred to in Clause 49 and the Charterer shall pay the Purchase Obligation Price on thePurchase Obligation Date unless this Charter is terminated before the natural expiration of this Charter or the Owners and the Charterers agreeotherwise.CLAUSE 49 – SALE OF THE VESSEL BY PURCHASE OPTION OR PURCHASE OBLIGATION 49.1Completion of the exercise of the Purchase Option (by the Charterers) or the Purchase Obligation (by the Owners) shall respectively take place on thePurchase Option Date or the Purchase Obligation Date (as the case may be), whereupon the Owners will sell to the Charterers (or their nominee), andthe Charterers (or their nominee) will purchase from the Owners, all the legal and beneficial interest and title in the Vessel, for the Purchase OptionPrice or the Purchase Obligation Price (as the case may be) on an “as is where is” basis and on the following terms and conditions: (a)the Charterers expressly agree and acknowledge that no condition, warranty or representation of any kind is or has been given by or on behalf of theOwners in respect of the Vessel or any part thereof, and accordingly the Charterers confirm that they have not, in entering into this Charter, relied onany condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwisein relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality,merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vesselor any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waivedby the Charterers to the extent permissible under applicable law, the Charterers hereby also waive any rights which they may have in tort in respect ofany of the matters referred to under this Clause and irrevocably agree that the Owners shall have no greater liability in tort in respect of any suchmatter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warrantyrelating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby.Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claimsrelating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; (b)the Vessel shall be free from any registered mortgages, liens, encumbrances or debts incurred by the Owners and any other claims whatsoever (save forthose mortgages, liens, encumbrances or debts arising out of or in connection with the Charter or the Leasing Documents); (c)the Purchase Option Price or the Purchase Obligation Price (as the case may be) shall be paid by (or on behalf of) the Charterers to the Owners onrespectively the Purchase Option Date or the Purchase Obligation Date, together with unpaid amounts of Charterhire and other moneys owing by oraccrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or Purchase Obligation Date (as the case may be) whichremain unpaid; and (d)upon the Purchase Obligation Price and all other moneys payable under this Charter being fully and irrevocably paid to the Owners on, and inaccordance with, the terms set forth in this Charter, (except in the case of Total Loss) the Owners agree (at the cost of the Charterers) to enter into (i) abill of sale and (ii) a protocol of delivery and acceptance (and to the extent required for such purposes the Vessel shall be deemed first to have beenredelivered to the Owners). 28SINGAPORE/89220790v10CLAUSE 50 INDEMNITIES 50.1The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, fees(including, but not limited to, any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter andany Leasing Document or in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance,manufacture, purchase, ownership and operation of the Vessel by the Owners and the costs related to the prevention or release of liens or detention ofor requisition, use, operation or redelivery, sale or disposal of the Vessel or any part of it, enforcement of the Owners’ rights under any LeasingDocument, and whether prior to, during or after termination of the leasing of this Charter and whether or not the Vessel is in the possession or thecontrol of the Charterers or otherwise. Without prejudice to its generality, this Clause covers any documented claims, expenses, liabilities and losseswhich arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, anyEnvironmental Law, any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws . 50.2Without prejudice to the above Clause 50.1, if any sum (a “Sum”) due from a Relevant Person under the Leasing Documents, or any order, judgmentor 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 anothercurrency (the “Second Currency”) for the purpose of: (a)making or filing a claim or proof against that Relevant Person; or (b)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,the Charterers shall, as an independent obligation, on demand, indemnify the Owners against any cost, loss or liability arising out of or as a result ofthe conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the SecondCurrency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum. 50.3The obligations of the Charterers under Clause 50 and in respect of any Security Interest created pursuant to the Security Documents will not beaffected or discharged by an act, omission, matter or thing which would reduce, release or prejudice any of its obligations under Clause 50 or inrespect of any Security Interest created pursuant to the Security Documents (without limitation and whether or not known to it or any Relevant Personor Approved Manager) including: (a)any time, waiver or consent granted to, or composition with, any Relevant Person or Approved Manager other person; (b)the release of any other Relevant Person or Approved Manager or any other person under the terms of any composition or arrangement with anycreditor of the Guarantor or any of its affiliates; (c)the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to takeup or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Relevant Person or Approved Manager or other personor any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value ofany security; (d)any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Relevant Person or ApprovedManager or any other person; 29SINGAPORE/89220790v10(e)any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of anyLeasing Document or any other document or security; (f)any unenforceability, illegality or invalidity of any obligation of any person under any Security Document or any other document or security; or (g)any insolvency or similar proceedings. 50.4Notwithstanding anything to the contrary under the Leasing Documents (but subject and without prejudice to Clause 33) and without prejudice toany right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by theCharterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or such LeasingDocument or termination or cancellation of this Charter or such Leasing Document pursuant to the terms hereof or thereof or termination of thisCharter or such Leasing Document by the Owners. 50.5In consideration of the Charterers requesting the Other Owners to charter the Other Vessels to the Other Charterers under the Other Charters, theCharterers hereby irrevocably and unconditionally undertake to pay immediately on demand from the Other Owners (or of them, as the case may be)such amounts in respect of all claims, expenses, liabilities, losses, fees of every kind and nature and all other moneys due, owing and/or payable to theOther Owners under or in connection with the Other Charters, and to indemnify and hold the Other Owners harmless against all such moneys, costs,fees and expenses. 50.6All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against the Other Charterers or theGuarantor or any of them shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter andunless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any othertransaction) by reason of performance by it of its obligations under the Leasing Documents or by reason of any amount becoming payable, or liabilityarising, under this Clause: (a)to be indemnified by the Other Charterers or the Guarantor or any of them; (b)to claim any contribution from any third party providing security for, or any other guarantor of, the Other Charterers’ or the Guarantor’s obligationsunder the Leasing Documents; (c)to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Other Charterers or the Guarantor or anyof them under the Leasing Documents or of any other guarantee or security taken pursuant to, or in connection with, the Leasing Documents by anyof the aforesaid parties; (d)to bring legal or other proceedings for an order requiring any of the Other Charterers or the Guarantor or any of them to make any payment, or performany obligation, in respect of any Leasing Document; (e)to exercise any right of set-off against any of the Other Charterers or the Guarantor or any of them; and/or (f)to claim or prove as a creditor of any of the Other Charterers or the Guarantor or any of them,and if the Charterers receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to theextent necessary to enable all amounts which may be or become payable to the Owners or the Other Owners by the Other Charterers or the Guarantoror any of them under or in connection with the Leasing 30SINGAPORE/89220790v10Documents to be repaid in full on trust for the Owners or the Other Owners and shall promptly pay or transfer the same to the Owners or the OtherOwners as may be directed by the Owners. 50.7The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against any claim, expense, liability or loss reasonably incurredby the Owners in liquidating or employing deposits from their financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. 50.8Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any rightto damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by theCharterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of thisCharter pursuant to the terms hereof or termination of this Charter by the Owners.CLAUSE 51 – NO SET-OFF OR TAX DEDUCTION 51.1All Charterhire, Advance Charterhire or payment of the Purchase Obligation Price or the Purchase Option Price and any other payment made from theCharterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually: (a)without any form of set-off (except in the case of the Advance Charterhire which shall be set off in accordance with Clause 36.2), cross-claim orcondition and in the case of Charterhire or Advance Charterhire, without previous demand unless otherwise agreed with the Owners; and (b)free and clear of any tax deduction or withholding unless required by law. 51.2Without prejudice to Clause 51.1, if the Owners are required by law to make a tax deduction from any payment: (a)the Owners shall notify the Charterers as soon as they become aware of the requirement; and (b)the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from anyliability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise havereceived. 51.3In this Clause “tax deduction” means any deduction or withholding for or on account of any present or future tax, other than a FATCA Deduction.CLAUSE 52 – INCREASED COSTS 52.1This Clause 52 applies if the Owners notify the Charterers that they consider that as a result of: (a)the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law isinterpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall netincome); or (b)complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which theOwners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of whichis altered, after the date of this Charter, the Owners (or a parent company of them) has incurred or will incur an “increased cost”. 31SINGAPORE/89220790v1052.2In this Clause 52, “increased cost” means, in relation to the Owners: (a)an additional or increased cost incurred as a result of, or in connection with, the Owners having entered into, or being a party to, this Charter, offunding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter; (b)a reduction in the amount of any payment to the Owners under this Charter or in the effective return which such a payment represents to the Ownerson their capital; (c)an additional or increased cost of funding the acquisition of the Vessel pursuant to the MOA; or (d)a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Owners under thisCharter, (e)and for the purposes of this Clause 52.2 the Owners may in good faith allocate or spread costs and/or losses among their assets and liabilities (or anyclass of their assets and liabilities) on such basis as they consider appropriate. 52.3Subject to the terms of Clause 52.1, the Charterers shall pay to the Owners, on the Owners’ demand, the amounts which the Owners from time to timenotify the Charterers to be necessary to compensate the Owners for the increased cost.CLAUSE 53 – CONFIDENTIALITY 53.1The Parties agree to keep the terms and conditions of this Charter and any other Leasing Documents (the “Confidential Information”) strictlyconfidential, provided that a Party may disclose Confidential Information in the following cases: (a)it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; (b)it is required to be disclosed under the applicable laws of any Relevant Jurisdiction, by a governmental order, decree, regulation or rule, by an orderof a court, tribunal or listing exchange of the Relevant Jurisdiction (including but not limited to an order by the US Securities and ExchangeCommission or the New York Stock Exchange), provided that the disclosing Party shall give written notice of such required disclosure to the otherParty prior to the disclosure; (c)in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of suchproceedings; (d)to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or moreLeasing Document (as permitted by the terms thereof), provided that such person receiving Confidential Information shall undertake that it would notdisclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or suchother circumstances as may be permitted by all Parties; (e)to any of the following persons on a need to know basis: (i)a shareholder or an Affiliate of either Party or a party referred to in either paragraph (d) or (e) (including the employees, officers and directorsthereof); (ii)professional advisers retained by a disclosing party; or 32SINGAPORE/89220790v10 (iii)persons advising on, providing or considering the provision of financing to the disclosing party or an Affiliate,provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any otherparty save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by allParties; or (f)with the prior written consent of all Parties.CLAUSE 54 – PARTIAL INVALIDITYIf, at any time, any provision of a Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neitherthe legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of suchprovision under the law of any other jurisdiction will in any way be affected or impaired.CLAUSE 55 – SETTLEMENT OR DISCHARGE CONDITIONAL 55.1Any settlement or discharge under any Leasing Document between the Owners and any Relevant Person or Approved Manager shall be conditionalupon no security or payment to the Owners by any Relevant Person or Approved Manager any other person being set aside, adjusted or ordered to berepaid, whether under any insolvency law or otherwise. 55.2If the Owners consider that an amount paid or discharged by, or on behalf of, a Relevant Person or Approved Manager by any other person inpurported payment or discharge of an obligation of that Relevant Person or Approved Manager to the Owners under the Leasing Documents iscapable of being avoided or otherwise set aside on the liquidation or administration of that Relevant Person or Approved Manager or otherwise, thenthat amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Leasing Documents.CLAUSE 56 – CHANGES TO THE PARTIES 56.1Assignment or transfer by the CharterersThe Charterers shall not assign their rights or transfer by novation any of their rights and obligations under the Leasing Documents except with theprior consent in writing of the Owners. 56.2Transfer by the Owners (a)The Owners may transfer by novation any of its rights and obligations under the Leasing Documents: (i)in the event of an occurrence of a Termination Event which is continuing; or (ii)subject to the consent of such other party under the Leasing Document (which must not be unreasonably withheld or delayed), to anotherlessor or financial institution or trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose ofmaking, purchasing or investing in loans, securities or other financial assets, (b)During the Charter Period, any change in the registered ownership of the Vessel (other than pursuant to paragraph (a)) above shall require theCharterers’ prior approval which shall not be unreasonably withheld or delayed, provided always that, notwithstanding such change, this Charterwould continue on identical terms (save for logical, consequential or mutually agreed amendments). The Guarantor and the Charterers shall remainjointly and severally 33SINGAPORE/89220790v10 liable to the aforesaid new owner of the Vessel for its performance of all obligations pursuant to this Charter after change of the registered ownershipof the Vessel from the Owners to such new owner. 56.3The Charterers agree and undertake to enter into any such usual documents as the Owners shall require to complete or perfect the transfer of the Vessel(with the benefit and burden of this Charter) pursuant to this Clause 56.2, with any documented costs or expenses whatsoever arising in relationthereto at no cost to the Charterers.CLAUSE 57 – MISCELLANEOUS 57.1The Charterers waive any rights of sovereign immunity which they or any of their assets may enjoy in any jurisdiction and subjects itself to civil andcommercial law with respect to their obligations under this Charter. 57.2No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not party to this Charter , save that theOther Owners may rely on the rights conferred on them under Clause 50.5 (Indemnities). 57.3This Charter and each Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on thecounterparts were on a single copy of this Charter or that Leasing Document, as the case may be.CLAUSE 58 – FATCA 58.1Defined terms. For the purposes of this Clause 58, the following terms shall have the following meanings:“Code” means the United States Internal Revenue Code of 1986, as amended.“FATCA” means sections 1471 through 1474 of the Code and any Treasury regulations thereunder.“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA 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 a Relevant Party is not a FATCA ExemptParty, could be required to make a FATCA Deduction.“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.“Relevant Party” means any party to a Leasing Document except an Approved Subcharterer. 58.2FATCA Information. (a)Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten Business Days of a reasonable requestby another Relevant Party: (i)confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and 34SINGAPORE/89220790v10 (ii)supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 orany successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA(including its applicable “pass thru percentage” or other information required under FATCA or other official guidance includingintergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA . (b)If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is aFATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall so notify all otherRelevant Parties reasonably promptly. (c)Nothing in this clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any lawor 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 nothing in this paragraph shall excuse any Relevant Party fromproviding a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided onsuch IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of thisparagraph. (d)If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions ofthis Charter or the provided information is insufficient under FATCA, then: (i)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 thisCharter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and (ii)if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and theLeasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish therelevant facts.58.3 FATCA Deduction and gross-up by Relevant Party (a)If the representation made by the Charterers under Clause 45.1(o) proves to be untrue or misleading such that the Charterers are required to make aFATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within thetime allowed and in the minimum amount required by FATCA. (b)If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amountwhich (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had beenrequired. (c)The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of aFATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any paymentrequired in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that theFATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. 35SINGAPORE/89220790v1058.4FATCA Deduction by OwnersThe Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCADeduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwisecompensate the recipient for that FATCA Deduction. 58.5FATCA MitigationNotwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 58.3 inrespect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interestin the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of theCharterers.CLAUSE 59 – DEFINITIONS 59.1In this Charter the following terms shall have the meanings ascribed to them below:“Acceptance Certificate” means a certificate substantially in the form set out in Schedule I to be signed by the Charterers at Delivery.“Account Bank” means HSH Nordbank AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany.“Account Security” means the document creating security over the Earnings Account executed by the Charterers in favour of the Owners, in theagreed form.“Advance Charterhire” means the amount by which the Purchase Price exceeds the Financing Amount.“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 HoldingCompany.“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes(including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of alljurisdictions including and without limitation, the United States of America, the European Union and the People’s Republic of China and which ineach case are (a) issued, administered or enforced by any governmental agency having jurisdiction over any Relevant Person, Approved Subcharterer,Approved Manager or the Owners; (b) of any jurisdiction in which any Relevant Person, Approved Subcharterer, Approved Manager or the Ownersconduct business; or (c) to which any Relevant Person, Approved Subcharterer, Approved Manager or Owner is subjected or subject to.“Anti-Terrorism Financing Laws” means all applicable anti-terrorism laws, rules, regulations or guidelines of any jurisdiction, including and notlimited to the United States of America or the People’s Republic of China which are: (a) issued, administered or enforced by any governmentalagency, having jurisdiction over any Relevant Person, Approved Subcharterer, Approved Manager or the Owners; (b) of any jurisdiction in which anyRelevant Person, Approved Subcharterer, Approved Manager or the Owners conduct business; or (c) to which any Relevant Person, ApprovedSubcharterer, Approved Manager or the Owners are subjected or subject to.“Approved Bareboat Subcharter” means an Approved Subcharter as described under paragraph (b)(i) of the definition of an Approved Subcharterand consented to by the Owners. 36SINGAPORE/89220790v10“Approved Manager” means Navios Tankers Management Inc. a corporation incorporated under the laws of the Marshall Islands having itsregistered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 or Affiliate of Navios MaritimeHoldings Inc. or any other ship management company approved in writing by the Owners.“Approved Subcharter” means the Subcharter or: (a)any Short Term Time Subcharter; (b)subject to prior written consent of the Owners: (i)a subcharter of the Vessel on a bareboat charter basis; or (ii)a subcharter of the Vessel on a time charter basis with a charter period exceeding or capable of exceeding twelve (12) months (takinginto account any optional extension period).“Approved Subcharterer” means the Subcharterer or in the case of any other Approved Subcharter falling within paragraph (b) of the definition ofApproved Subcharter above, any subcharterer of the Vessel approved by the Owners in writing (such approval not to be unreasonably withheld ordelayed).“Approved Valuer” means Clarksons, Maersk Brokers, Howe Robinson, Arrow, Lorentzen & Stemoco, Simpson Spence Young, Braemar Seascope orany other shipbroker nominated by the Charterers and approved by the Owners.“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under therelevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price do not fall on a Payment Date.“Business Day” means a day on which banks are open for business in the principal business centres of Hong Kong, Shanghai, Hamburg and Athensand in respect of a day on which a payment is required to be made or other dealing is due to take place under a Leasing Document in Dollars, also aday on which commercial banks are open in New York City.“Business Ethics Law” means any laws, regulations and/or other legally binding requirements or determinations in relation to corruption, fraud,collusion, bid-rigging or anti-trust, human rights violations (including forced labour and human trafficking) which are applicable to any RelevantPerson, Approved Subcharterer, Approved Manager or the Owners or to any jurisdiction where activities are performed and which shall include butnot be limited to (i) the United Kingdom Bribery Act 2010 and (ii) the United States Foreign Corrupt Practices Act 1977 and all rules and regulationsunder each of (i) and (ii).“Cancelling Date” has the meaning given to that term in the MOA.“Certified Book Value” means the book value of the Vessel from time to time, which as at the date of this Charter is $29,948,660.98 as evidencedand certified in a manner acceptable to the Owners.“Charterers’ Offer” has the meaning given to that term in Clause 40.3(b).“Charterhire” means each of, as the context may require, all of the quarterly instalments of hire payable hereunder comprising in each case: (a)a component of Charterhire A; and 37SINGAPORE/89220790v10 (b)a component of Charterhire B.“Charterhire A” means, in relation to a Payment Date, an amount equal to one twenty fourth (1/24) of the difference between the Financing Amountand the Purchase Obligation Price.“Charterhire B” means, in relation to a Payment Date, the interest component calculated in accordance with Schedule III at the applicable InterestRate for the Term commencing on that Payment Date on the Outstanding Principal Balance.“Charterhire Principal” means the aggregate amount of Charterhire A payable under this Charter.“Charterhire Principal Balance” means the Charterhire Principal outstanding under this Charter from time to time, as may be reduced by paymentsor prepayments by the Charterers to the Owners of Charterhire A under this Charter.“CISADA” means the United States Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 as it applies to non-US persons.“Charter Period” means the period commencing on the Commencement Date and described in Clause 32.2 unless it is either terminated earlier orextended in accordance with the provisions of this Charter.“China Merchants Group” means China Merchants Group Limited, a company incorporated under the laws of the People’s Republic of China actingthrough its office at China Merchants Tower, 39-40 Floor, Shun Tak Centre, 168-200 Connaught Road, Central, Hong Kong.“Classification Society” means ABS or DNV GL or any classification society being a member of the International Association of ClassificationSocieties which is approved by the Owners.“Commencement Date” means the date on which Delivery takes place.“Delivery” means the delivery of the legal and beneficial interest in the Vessel from the Owners to the Charterers pursuant to the terms of the MOA.“Dollars” or “$” have the meanings given to those terms in the MOA.“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) and which arise out of the use oroperation of the Vessel, including (but not limited to): (a)all freight, hire and passage moneys, compensation payable in the event of requisition of the Vessel for hire, all moneys which are at any timepayable under any Insurances in respect of loss of hire, remuneration for salvage and towage services, demurrage and detention moneys anddamages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and (b)if and whenever the Vessel is employed on terms whereby any moneys falling within paragraph (a) 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 Vessel;“Earnings Account” means, an account in the name of the Charterers with Account Bank or such bank as the Owners may approve.“Environmental Claim” means: 38SINGAPORE/89220790v10 (c)any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or which relates to anyEnvironmental Law; or (d)any claim by any other person which relates to an Environmental Incident,and “claim” means a claim for damages, compensation, fines, penalties or any other payment (exceeding $1,000,000 in each of the above cases); anorder or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action,including the arrest or attachment of any asset;“Environmental Incident” means: (a)any release of Environmentally Sensitive Material from the Vessel; or (b)any incident in which Environmentally Sensitive Material is released from a vessel other than the Vessel and which involves a collisionbetween the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which theVessel is actually liable to be arrested, attached, detained or injuncted and/or the Vessel and/or the Owners and/or the Charterers and/or anyother operator or manager of the Vessel is at fault or otherwise liable to any legal or administrative action; or (c)any other incident involving the Vessel in which Environmentally Sensitive Material is released otherwise than from the Vessel and inconnection with which the Vessel is actually arrested and/or where the Owners and/or the Charterers and/or any other operator or manager ofthe Vessel is at fault or otherwise liable to any legal or administrative action.“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage or releases of Environmentally SensitiveMaterial.“Environmentally Sensitive Material” means oil, oil products and any other substances (including any chemical, gas or other hazardous or noxioussubstance) which are (or are capable of being or becoming) polluting, toxic or hazardous.“Fee Letter” means the fee letter referred to under Clause 41.1.“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor: (a)for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; (b)under any loan stock, bond, note or other security issued by the debtor; (c)under any acceptance credit, guarantee or letter of credit facility made available to the debtor; (d)under a lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normalcommercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of moneyby the debtor; (e)under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtoror, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the netamount; or 39SINGAPORE/89220790v10 (f)under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fallwithin paragraphs (a) to (e) if the references to the debtor referred to the other person.“Financial Instruments” means the mortgage, deed of covenant, the general assignment or such other financial security instruments granted to theOwners’ financiers as security for the obligations of the Owners in relation to the financing of the acquisition of the Vessel.“Financing Amount” means an amount equal to the lower of (i) seventy five per cent. (75%) of the Purchase Price and (ii) $17,265,000.“Flag State” means Republic of Panama, the Republic of the Marshall Islands, Republic of Malta, Republic of Liberia, Hong Kong, the CaymanIslands or any other flag state approved by the Owners in writing.“Fleet Vessel” has the meaning give to it under clause 11.20(c) of the Guarantee.“General Assignment” means the general assignment executed or to be executed between the Charterers and the Owners in respect of the Vessel,pursuant to which the Charterers shall, inter alia, assign their rights under the Insurances, Earnings and Requisition Compensation and anysub-charters having a duration of at least twelve (12) months (or which are capable of exceeding twelve (12) months) in respect of the Vessel, infavour of the Owners and in the agreed form.“Guarantor” means Navios Maritime Acquisition Corporation, a corporation incorporated under the laws of the Marshall Islands having itsregistered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands.“Guarantee” means a guarantee executed by the Guarantor in favour of the Owners dated on or around the date of this Charter.“Holding Company” means, in relation to a person, any other person in relation to which it is a subsidiary.“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.“Indenture” means the indenture dated as of 13 November 2013, as amended and supplemented by including as supplemented a supplementalindenture dated 31 March 2014 and as the same may be further amended and supplemented from time to time in accordance with the terms thereof,entered into by the Guarantor and Navios Acquisition Finance (US) Inc. as co-issuers and Wells Fargo Bank, National Association, as trustee andcollateral trustee, in respect of certain 8.125% first priority ship mortgage notes due in 2021.“Indenture Guarantee” means a guarantee executed, or as the case may be, to be executed by the Charterers as security for the obligations andliability of the Guarantor under the Indenture.“Initial Market Value” means, in relation to the Vessel at any relevant time, the arithmetic mean of two (2) valuations, each prepared: (a)on a date no earlier than thirty (30) days prior to the Commencement Date; (b)with or without physical inspection of the Vessel; (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing and a willing buyer, free ofany existing charter or other contract of employment; and 40SINGAPORE/89220790v10 (d)after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,and such valuations shall be prepared by one Approved Valuer selected and appointed by the Owners and one Approved Valuer selected by theCharterers (but appointed by the Owners) provided that if the difference in the two valuations obtained is more than five per cent. (5%) of the lowervaluation obtained, a third Approved Valuer shall be selected and appointed by the Owners and the Initial Market Value shall be the arithmetic meanof the two lowest valuations out of the three valuations obtained.“Insurances” means: (a)all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which areeffected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and (b)all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights inrespect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter.“Interest Rate” means, in relation to Charterhire B, the rate of interest determined in accordance with Schedule III plus the Margin.“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the InternationalMaritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and theterms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given tothem in the ISM Code).“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life atSea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may besupplemented or amended from time to time.“Leasing Documents” means this Charter, the MOA, any Approved Subcharter, the Fee Letter, the Security Documents and the Trust Deed.“LIBOR” means, in relation to a Term, the London Interbank offered rate administered by ICE Benchmark Administration Limited (or any otherperson which takes over the administration of that rate) for Dollars commencing on the first day of that Term displayed on page LIBOR 01 of theThomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other informationservice which publishes that rate from time to time in place of Thomson Reuters, and if such page or service ceases to be available the Owners mayspecify another page or service displaying the relevant rate on the Quotation Day (if the rate as determined above is less than zero, LIBOR shall bedeemed to be zero).“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustmentfor any relevant franchise or deductible, exceeds $1,000,000 or the equivalent in any other currency.“Manager’s Undertaking” means, in relation to an Approved Manager, the letter of undertaking from the Approved Manager, inter alia,subordinating the rights of such Approved Manager against the Vessel and the Charterers to the rights of the Owners and their financiers (if any) in anagreed form. 41SINGAPORE/89220790v10“Margin” means 3.05% per annum.“Market Value” means, in relation to the Vessel at any relevant time, the valuation prepared: (a)on a date no earlier than thirty (30) days previously; (b)with or without physical inspection of the Vessel; and (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing and a willing buyer, free ofany existing charter or other contract of employmentand such valuations shall be prepared by one Approved Valuer selected by the Charterers (but appointed by the Owners).“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for thePrevention of Pollution from Ships 1973 (as amended in 1978 and 1997).“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on: (a)the business, operations, property, condition (financial or otherwise) or prospects of the Charterers or the Guarantor and its subsidiaries as awhole; or (b)the ability of any Relevant Person or Approved Manager to perform its obligations under any Leasing Document to which it is a party; or (c)the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to any of the Leasing Documents orthe rights or remedies of the Owners under any of the Leasing Documents.“MOA” means the memorandum of agreement entered into by the Charterers as sellers and the Owners as buyers dated on the date of this Charter inrelation to the sale and purchase of the Vessel.“Mortgagee” has the meaning given to that term in Clause 35.3.“Net Income Loss” means, at the relevant time, the net income loss (if any) as shown in the most recent audited consolidated annual financial reportsof the Guarantor adjusted to exclude impairment losses.“Original Financial Statements” means the Guarantor’s audited financial statements for the financial year ended 31 December 2016 and itsunaudited consolidated management accounts for the financial year ended 31 December 2017.“Original Jurisdiction” means, in relation to any Relevant Person, Approved Subcharterer or Approved Manager (as the case may be), thejurisdiction under whose laws they are respectively incorporated as at the date of this Charter.“Other Charter” means the bareboat charterparty entered into between the relevant Other Owner and the relevant Other Charterer in respect of any ofthe Other Vessels.“Other Charterer” means Ikaria Shipping Corporation, Kos Shipping Corporation or Mytilene Shipping Corporation (and “Other Charterers” meanall of them). 42SINGAPORE/89220790v10“Other Owner” means Sea 67 Leasing Co. Limited, Sea 68 Leasing Co. Limited or Sea 69 Leasing Co. Limited (and “Other Owners” means all ofthem).“Other Vessel” means the 49,991 DWT MR tanker named Nave Aquila, 49,999 DWT MR tanker named Nave Bellatrix, or the 49,999 DWT MRtanker named Nave Orion (and “Other Vessels” means all of them).“Outstanding Principal Balance” means the aggregate of: (a)the Charterhire Principal Balance; and (b)the Purchase Obligation Price.“Owners’ Sale” has the meaning given to that term in Clause 40.3(a)(iii).“Party” means either party to this Charter.“Payment Date” means each of the twenty four (24) dates upon which Charterhire is to be paid by the Charterers to the Owners pursuant to Clause 36.“Permitted Security Interests” means: (a)Security Interests created by a Leasing Document or a Financial Instrument; (b)other Security Interests Permitted by the Owners in writing; (c)liens for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usualreputable maritime practice; (d)liens for salvage; (e)liens for master’s disbursements incurred in the ordinary course of trading; (f)any other liens arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel providedsuch liens do not secure amounts more than 30 days overdue; (g)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 assecurity for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and (h)Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for paymentbut which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserveshave been made.“Post-enforcement Interests” has the meaning given to that term in 40.3(a)(ii).“Potential Termination Event” means, an event or circumstance which, with the giving of any notice, the lapse of time, a determination of theOwners and/or the satisfaction of any other condition, would constitute a Termination Event.“Purchase Obligation” means the purchase obligation referred to in Clause 48.1. 43SINGAPORE/89220790v10“Purchase Obligation Date” means the date on which the Owners shall transfer the legal and beneficial interest in the Vessel to the Charterers, andthe Charterers shall purchase the Vessel, being the date falling on the last day of the Charter Period.“Purchase Obligation Price” means fifty per cent. (50%) of the Financing Amount.“Purchase Price” has the meaning given to that term in the MOA.“Purchase Option” means the early termination option which the Charterers are entitled to pursuant to Clause 47.“Purchase Option Date” has the meaning given to that term in Clause 47.1.“Purchase Option Notice” has the meaning given to that term in Clause 47.1.“Purchase Option Price” means the aggregate of: (a)the Outstanding Principal Balance as at the Purchase Option Date together with a fee calculated at the rate of (i) one per cent. (1%) thereon forany prepayment made before the fourth anniversary of the Commencement Date, (ii) zero point five per cent. (0.5%) thereon for any paymentmade on and after the fourth anniversary of the Commencement Date and before the fifth anniversary of the Commencement Date and(iii) zero per cent. (0%) for any prepayment made thereafter; (b)any Charterhire B accrued as at the Purchase Option Date; (c)any Breakfunding Costs; (d)any legal costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 47; and (e)all other amounts payable under this Charter and the other Leasing Documents together with any applicable interest thereon.“Quiet Enjoyment Agreement” means the quiet enjoyment agreement executed or to be executed between, amongst others, the Charterers, theOwners and the Owners’ financiers in the agreed form.“Quotation Day” means in relation to any period for which an Interest Rate is to be determined, two Business Days before the first day of that periodunless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Owners in accordance withmarket practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market onmore than one day, the Quotation Day will be the last of those days).“Relevant Interbank Market” means the London interbank market.“Relevant Person” means the Charterers, the Other Charterers, the Guarantor, the Shareholder and such other party providing security to the Ownersfor the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (but not including the Subcharterer, any ApprovedSubcharterer and the Manager).“Relevant Jurisdiction” means, in relation to any Relevant Person, Approved Subcharterer or Approved Manager (as the case may be): (b)its Original Jurisdiction; 44SINGAPORE/89220790v10 (c)any jurisdiction where any property owned by it and charged under a Leasing Document is situated; (d)any jurisdiction where it conducts its business; and (e)any jurisdiction whose laws govern the perfection of any of the Leasing Documents entered into by it creating a Security Interest.“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”.“Restricted Countries” means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but notlimited to pursuant to the U.S.‘s Office of Foreign Asset Control of the U.S. Department of Treasury (“OFAC”) including at the date of this Charter,but without limitation, Iran, North Korea and Syria and any additional countries based on respective country-wide or territory-wide Sanctions beingimposed by OFAC or any of the regulative bodies referred to in the definition of Restricted Persons.“Restricted Person” means a person, entity or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, and/or(ii) subject to any sanction administrated by the United Nations, the European Union, Switzerland, the United States and the U.S. Department ofTreasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, Her Majesty’s Treasury (“HMT”) and the Foreign and CommonwealthOffice of the United Kingdom, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any otherparties as referred to in (i) and (ii).“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment,exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) imposed by law or regulation ofUnited Kingdom, the United States of America (including, without limitation, CISADA and OFAC), the People’s Republic of China or the Council ofthe European Union.“Security Documents” means the Guarantee, the Account Security, the General Assignment, the Shares Pledge, the Manager’s Undertaking and anyother security documents granted as security for the obligations of the Charterers under or in connection with this Charter.“Security Interest” means: (a)a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; (b)the security rights of a plaintiff under an action in rem; or (c)any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to itahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off orcombination of accounts conferred by the standard terms of business of a bank or financial institution.“Shareholder” means Aegean Sea Maritime Holdings Inc., a corporation incorporated and existing under the laws of the Republic of the MarshallIslands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands.“Shares Pledge” means the shares pledge over the shares in the Charterers to be executed by the Shareholder in favour of the Owners on or around thedate of this Charter. 45SINGAPORE/89220790v10“Short Term Time Subcharter” means a subcharter of the Vessel on a time charter basis with a charter period not exceeding and not capable ofexceeding twelve (12) months (taking into account any optional extension period)“Subcharter” means the subcharter with the particulars set out under Schedule IV.“Subcharterer Assignment” means the subcharterer of the Vessel named under Schedule IV;“Term” means, in relation to the definitions of “Charterhire A” and “Charterhire B”, a period of three (3) month’s duration provided that: (a)the first Term shall commence on the Commencement Date; (b)each subsequent Term shall commence on the last day of the preceding Term; (c)any Term which would otherwise end on a non-Business Day shall instead end on the next following Business Day or, if that Business Day isin another calendar month, on the immediately preceding Business Day; (d)if any Term commences on the last Business Day of a calendar month or on a day for which there is no numerically corresponding day in thecalendar month three (3) months thereafter, as the case may be, that Term shall, subject to paragraphs (c), (e) and (f), end on the last BusinessDay of such later calendar month; (e)any Term which would otherwise overrun a Payment Date shall instead end on that Payment Date; and (f)any Term which would otherwise extend beyond the Charter Period shall instead end on the last day of the Charter Period.“Termination Event” means any event described in Clause 44.“Termination Purchase Price” means, in respect of any date (for the purposes of this definition only, the “Relevant Date”), the aggregate of: (a)the Outstanding Principal Balance as at the Relevant Date together with a fee calculated at the rate of (i) one per cent. (1%) thereon for anytermination of this Charter occurring before the fourth anniversary of the Commencement Date, (ii) zero point five per cent. (0.5%) thereon forany termination of this Charter occurring on and after the fourth anniversary of the Commencement Date and before the fifth anniversary ofthe Commencement Date and (iii) zero per cent. (0%) for any prepayment made thereafter; (b)and any accrued but unpaid Charterhire B as at the Relevant Date; (c)any Breakfunding Costs; (d)any costs incurred and expenses incurred by the Owners (and their financiers (if any)) in locating, repossessing or recovering the Vessel orcollecting any payments due under this Charter or in obtaining the due performance of the obligations of the Charterers under this Charter orthe other Leasing Documents and any default interest in relation thereto; (e)any legal costs incurred by the Owners in connection with the termination of this Charter under Clause 44; 46SINGAPORE/89220790v10 (f)all other outstanding amounts payable under this Charter together with any applicable interest thereon.“Total Loss” means: (a)actual, constructive, compromised, agreed or arranged total loss of the Vessel; (b)any expropriation, confiscation, requisition or acquisition of the Vessel, whether for full consideration, a consideration less than its propervalue, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person orpersons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1year without any right to an extension) unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers;or (c)any arrest, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (b) ofthis definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers.“Trust Deed” means a trust deed dated on or around the date of this Charter entered into between the Owners, the Other Owners, the Charterers, theOther Charterers, the Guarantor and the Approved Manager which, inter alia, sets out the obligations of the Owners in respect of holding on trust allmoneys or other assets received or recovered by or on behalf of the Owners by virtue of any Security Interest or other rights granted to the Ownersunder or by virtue of the Security Documents.“US Tax Obligor” means (a) a person which is resident for tax purposes in the United States of America or (b) a person some or all of whose paymentsunder the Leasing Documents are from sources within the United States for United States federal income tax purposes.“Vessel” means the MR tanker m.v. “NAVE ATRIA” with IMO No. 9459060 with particulars stated in Boxes 6 to 12 of this Charter and which is to beregistered under the name of the Owners with the Panama registry upon Delivery. 59.2In this Charter:“Approved Manager”, “Approved Subcharterer”, “Charterers”, “Other Charterers”, “Other Owners”, “Owners”, “Relevant Person”,“Shareholder”, “Subcharterer” or any other person shall be construed so as to include its successors in title, permitted assigns and permittedtransferees to, or of, its rights and/or obligations under the Leasing Documents.“agreed form” means, in relation to a document, such document in a form agreed in writing by the Owners;“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;“company” includes any partnership, joint venture and unincorporated association;“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained; 47SINGAPORE/89220790v10“continuing” means, in relation to any Termination Event, a Termination Event which has not been waived by the Owners and in relation to anyPotential Termination Event, a Potential Termination Event which has not been waived by the Owners;“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: (a)cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of suchcompany; or (b)appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or (c)give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers ofsuch company are obliged to comply;“document” includes a deed; also a letter, fax or telex;“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of theCouncil 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 59.3;“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 itsterms;“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the InternationalGroup of P&I Clubs including pollution risks, freight, demurrage and defence cover, extended passenger cover and the proportion (if any) of anysums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of theincorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)(1/10/83) orclause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental,intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;“subsidiary” has the meaning given in Clause 59.4; and“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 stateor any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine. 48SINGAPORE/89220790v1059.3Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of thecalendar 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 nolater 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 lastcalendar month of the period has no numerically corresponding day;and “month” and “monthly” shall be construed accordingly. 59.4Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if a majority of the issued shares in S (or a majority of the issuedshares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P. A company (S) is a subsidiary of another company (U) if S is a subsidiary of P and P is in turn a subsidiary of U.For the purposes of this Charter and other Leasing Documents, references to the subsidiaries of the Guarantor shall exclude any subsidiary of theGuarantor which is publicly listed on any stock exchange. 59.5In this Charter: (a)references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in therecitals include references to that form with any modifications to that form which the Owners approve; (b)references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether beforethe date of this Charter or otherwise; (c)references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date ofthis Charter or otherwise; and (d)words denoting the singular number shall include the plural and vice versa. 59.6Headings. In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and anyother Leasing Document shall be entirely disregarded. 49SINGAPORE/89220790v10Execution page Owners signed by sea 66 leasing co. limited witness’ signature name address Charterers signed antiparos shipping corporationExecution Page Owners signed by as an attorney-in-fact Forand on behalf of sea 66leasing co. limited Witness signature name address charterers signed antiparos shipping corporationMEMORANDUM OF AGREEMENT Norwegian Shipbrokers’ Association’s Memorandum of Agreement for sale and purchase of ships. Adopted by BIMCO in 1956. Code-name SALEFORM 2012 org bimco. Revised 1966, 1983 and 1986/87, 1993 and 2012 www. Dated: 31 March 2018 1 at Antiparos Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall 2 BIMCO Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, from MH96960, Marshall Islands(Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and Sea 66 Leasing Co. Limited, a company incorporated and existing under the laws of Hong Kong having 3 its registered office at Room 1803-1804, 18/F Bank of America Tower, 12 Harcourt Road, Central, Hong available Kong (Name of buyers), hereinafter called the “Buyers”, have agreed to buy: are Name of vessel: NAVE ATRIA 4 2012 IMO Number: 9459060 5 Classification Society: Nippon Kaiji Kyokai 6 SALEFORM Class Notation: NS* (CSR, Tanker, Oils-Flashpoint on and below 60 degree C and Chemicals Type II 7 for and III, Performance Standard for Protective Coatings for Dedicated Seawater Notes MNS* (Ballast Tanks in All Types of Ships and Double-side Skin Spaces of Bulk Carriers)(ESP)(IWS)(PSCM)(EA + VOC) Year of Build: 2012 Builder/Yard: Dae Sun Shipbuilding & Engineering 8 Explanatory Co., Ltd. Flag: Panama Place of Registration: Panama GT/NT: 30,052 /13,255 9 hereinafter called the “Vessel”, on the following terms and conditions: 10 Definitions – see also Clause 28 11 “Agreement” means this memorandum of agreement which shall for the avoidance of doubt, include the rider provisions from Clauses 19 to 28. idea “Banking Days” are days on which banks are open both in the country of the currency stipulated for 12 BIMCO’s the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 13 by (Documentation) and (add additional jurisdictions as appropriate). 14 Printed “Buyers’ Nominated Flag State” means Panama (state flag state). 15 “Cancelling Date” has the meaning given to that term in Clause 5. 16 “Conditions Precedent” has themeaning given to that term in Clause 8(a). “Class” means the class notation referred to above. 17 “Classification Society” means the Classification Society referred to above. Copenhagen ““Dollars” or “$” mean United States dollars, being the lawful currency of the United States of 18 BIMCO, America.Deposit” shall have the meaning given in Clause 2 (Deposit) and “Deposit Holder” means (state name and location of Deposit Holder) or, if left blank, the 19 Sellers’ Bank, which shall hold and release the Deposit in accordance with this Agreement. 20 Oslo Oslo. “In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a 21 registered letter, e-mail or telefax. 22 Association, “Parties” means the Sellers and the Buyers. 23 Association, “Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price). 24 Shipbrokers’ “Sellers’ Account” means (state details of bank account) at the Sellers’ Bank. 25 Shipbrokers’ “Sellers’ Bank” means (state name of bank, branch and details) or, if left blank, the bank 26 Norwegian notified by the Sellers to the Buyers for receipt of the balance of the Purchase Price. 27 Norwegian by 1. Purchase Price 28 Copyright: Published See Clause 19The Purchase Price is (state currency and amount both in words and figures). 29 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document.2. Deposit – intentionally omitted 30 As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of 31 ______% (______per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the 32 “Deposit”) in an interest bearing account for the Parties with the Deposit Holder within three (3) 33 Banking Days after the date that: 34 (i) this Agreement has been signed by the Parties and exchanged in original or by 35 e-mail or telefax; and 36 (ii) the Deposit Holder has confirmed in writing to the Parties that the account has been 37 opened. 38 The Deposit shall be released in accordance with joint written instructions of the Parties. 39 Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the 40 Deposit shall be borne equally by the Parties. The Parties shall provide to the Deposit Holder 41 all necessary documentation to open and maintain the account without delay. 42 3. Payment 43 See Clause 19On delivery of the Vessel, but not later than three (3) Banking Days after the date that 44 Notice of Readiness has been given in accordance with Clause 5 (Time and place of delivery and 45 notices): 46 (i) the Deposit shall be released to the Sellers; and 47 (ii) the balance of the Purchase Price and all other sums payable on delivery by the Buyers 48 to the Sellers under this Agreement shall be paid in full free of bank charges to the 49 Sellers’ Account. 50 4. Inspection – intentionally omitted 51 (a)* The Buyers have inspected and accepted the Vessel’s classification records. The Buyers 52 have also inspected the Vessel at/in ______ (state place) on ______ (state date) and have 53 accepted the Vessel following this inspection and the sale is outright and definite, subject only 54 to the terms and conditions of this Agreement. 55 (b)* The Buyers shall have the right to inspect the Vessel’s classification records and declare 56 whether same are accepted or not within ______ (state date/period). 57 The Sellers shall make the Vessel available for inspection at/in ______ (state place/range) within 58 ______(state date/period). 59 The Buyers shall undertake the inspection without undue delay to the Vessel. Should the 60 Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred. 61 The Buyers shall inspect the Vessel without opening up and without cost to the Sellers. 62 During the inspection, the Vessel’s deck and engine log books shall be made available for 63 examination by the Buyers. 64 The sale shall become outright and definite,subject only to the terms and conditions of this 65 Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from 66 the Buyers within seventy-two (72) hours after completion of such inspection or after the 67 date/last day of the period stated in Line 59, whichever is earlier. 68 Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of 69 the Vessel’s classification records and/or of the Vessel not be received by the Sellers as 70 aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the 71 Buyers, whereafter this Agreement shall be null and void. 72 *4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, 73 alternative 4(a) shall apply. 74 5. Time and place of delivery and notices 75 (a) The Vessel shall be delivered and taken over safely afloat in (i) international waters or (ii) such 76 other place at a safe and accessible berth or anchorage at/in ______ (state place/range) in the Sellers’ option and subject to such conditions as 77 may be agreed by the Buyers. . Notice of Readiness shall not be tendered before: ______(date) 78 Cancelling Date (see Clauses 5(c) , 6 (a)(i), 6 (a) (iii) and 14): 30 April 2018 (or such later date as may 79 be agreed by the Sellers and the Buyers in writing) (the “Cancelling Date”) (b) The Sellers shall keep the Buyers well informed of the Vessel’s itinerary and shall 80 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 2provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ notice of the date the 81 Sellers intend to tender Notice of Readiness and of the intended place of delivery. 82 When the Vessel is, on a day being a Business Day, at the place of delivery and physically ready for 83 delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. 84 (c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the 85 Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing 86 stating the date when they anticipate that the Vessel will be ready for delivery and proposing a 87 new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of 88 either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3) 89 Banking Business Days of receipt of the notice or of accepting the new date as the new Cancelling 90 Date. If the Buyers have not declared their option within three (3) Banking Business Days of receipt of the 91 Sellers’ notification or if the Buyers accept the new date, the date proposed in the Sellers’ 92 notification shall be deemed to be the new Cancelling Date and shall be substituted for the 93 Cancelling Date stipulated in line 79. 94 If this Agreement is maintained with the a new Cancelling Date all other terms and conditions 95 hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full 96 force and effect. 97 (d) Cancellation, failure to cancel or acceptance of the a new Cancelling Date shall be entirely 98 without prejudice to any claim for damages the Buyers may have under Clause 14 (Sellers’ 99 Default) for the Vessel not being ready by the original Cancelling Date. 100 (e) Should the Vessel become an actual, constructive or compromised t Total lLoss before delivery 101 the Deposit together with interest earned, if any, shall be released immediately to the Buyers 102 whereafter this Agreement shall be null and voidterminate (provided that any provision hereof 103 expressed to survive such termination shall do so in accordance with its terms). 6. Divers Inspection / Drydocking – intentionally omitted 104 (a)* 105 (i) The Buyers shall have the option at their cost and expense to arrange for an underwater 106 inspection by a diver approved by the Classification Society prior to the delivery of the 107 Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended 108 date of readiness for delivery as notifiedby the Sellers pursuant to Clause 5(b) of this 109 Agreement. The Sellers shall at their cost and expense make the Vessel available for 110 such inspection. This inspection shall be carried out without undue delay and in the 111 presence of a Classification Society surveyor arranged for by the Sellers and paid for by 112 the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s 113 inspection as observer(s) only without interfering with the work or decisions of the 114 Classification Society surveyor. The extent of the inspection and the conditions under 115 which it is performed shall be to the satisfaction of the Classification Society. If the 116 conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at 117 their cost and expense make the Vessel available at a suitable alternative place near to 118 the delivery port, in which event the Cancelling Date shall be extended by the additional 119 time required for such positioning and the subsequent re-positioning. The Sellers may 120 not tender Notice of Readiness prior to completion of the underwater inspection. 121 (ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are 122 found broken, damaged or defective so as to affect the Vessel’s class, then (1) unless 123 repairs can be carried out afloat to the satisfaction of the Classification Society, the 124 Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by 125 the Classification Society of the Vessel’s underwater parts below the deepest load line, 126 the extent of the inspection being in accordance with the Classification Society’s rules (2) 127 such defects shall be made good by the Sellers at their cost and expense to the 128 satisfaction of the Classification Society without condition/recommendation** and (3) the 129 Sellers shall pay for the underwater inspection and the Classification Society’s 130 attendance. 131 Notwithstanding anything to the contrary in this Agreement, if the Classification Society 132 do not require the aforementioned defects to be rectified before the next class 133 drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects 134 against a deduction from the Purchase Price of the estimated direct cost (of labour and 135 materials) of carrying out the repairs to the satisfaction of the Classification Society, 136 whereafter the Buyers shall have no further rights whatsoever in respect of the defects 137 and/or repairs. The estimated direct cost of the repairs shall be the average of quotes 138 for the repair work obtained from two reputableindependent shipyards at or in the 139 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 3vicinity of the port of delivery, one to be obtained by each of the Parties within two (2) 140 Banking Days from the date of the imposition of the condition/recommendation, unless 141 the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within 142 the stipulated time then the quote duly obtained by the other Party shall be the sole basis 143 for the estimate of the direct repair costs. The Sellers may not tender Notice of 144 Readiness prior to such estimate having been established. 145 (iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking 146 facilities are available at the port of delivery, the Sellers shall take the Vessel to a port 147 where suitable drydocking facilities are available, whether within or outside the delivery 148 range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the 149 Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose 150 of this Clause, become the new port of delivery. In such event the Cancelling Date shall 151 be extended by the additional time required for the drydocking and extra steaming, but 152 limited to a maximum of fourteen (14) days. 153 (b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the 154 Classification Society of the Vessel’s underwater parts below the deepest load line, the extent 155 of the inspection being in accordance with the Classification Society’s rules. If the rudder, 156 propeller, bottom or other underwater parts below the deepest load line are found broken, 157 damaged or defective so as to affect the Vessel’s class, such defects shall be made good at the 158 Sellers’ cost and expense to the satisfaction of the Classification Society without 159 condition/recommendation**. In such event the Sellers are also to pay for the costs and 160 expenses in connection with putting the Vessel in and taking her out of drydock, including the 161 drydock dues and the Classification Society’s fees. The Sellers shall also pay for these costs 162 and expenses if parts of the tailshaft system are condemned or found defective or broken so as 163 to affect the Vessel’s class. In all other cases, the Buyers shall pay the aforesaid costs and 164 expenses, dues and fees. 165 (c) If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above: 166 (i) The Classification Society may require survey of the tailshaft system, the extent of the 167 survey being to the satisfaction of the Classification surveyor. If such survey is 168 not required by the Classification Society, theBuyers shall have the option to require the 169 tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey 170 being in accordance with the Classification Society’s rules for tailshaft survey and 171 consistent with the current stage of the Vessel’s survey cycle. The Buyers shall declare 172 whether they require the tailshaft to be drawn and surveyed not later than by the 173 completion of the inspection by the Classification Society. The drawing and refitting of 174 the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be 175 condemned or found defective so as to affect the Vessel’s class, those parts shall be 176 renewed or made good at the Sellers’ cost and expense to the satisfaction of 177 Classification Society without condition/recommendation**. 178 (ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by 179 the Buyers unless the Classification Society requires such survey to be carried out or if 180 parts of the system are condemned or found defective or broken so as to affect the 181 Vessel’s class, in which case the Sellers shall pay these costs and expenses. 182 (iii) The Buyers’ representative(s) shall have the right to be present in the drydock, as 183 observer(s) only without interfering with the work or decisions of the Classification 184 Society surveyor. 185 (iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned 186 and painted at their risk, cost and expense without interfering with the Sellers’ or the 187 Classification Society surveyor’s work, if any, and without affecting the Vessel’s timely 188 delivery. If, however, the Buyers’ work in drydock is still in progress when the 189 Sellers have completed the work which the Sellers are required to do, the additional 190 docking time needed to complete the Buyers’ work shall be for the Buyers’ risk, cost and 191 expense. In the event that the Buyers’ work requires such additional time, the Sellers 192 may upon completion of the Sellers’ work tender Notice of Readiness for delivery whilst 193 the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be 194 obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in 195 drydock or not. 196 *6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions, 197 alternative 6 (a) shall apply. 198 **Notes or memoranda, if any, in the surveyor’s report which are accepted by the Classification 199 This document is acomputer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 4Society without condition/recommendation are not to be taken into account. 200 7. Spares, bunkers and other items 201 The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board 202 and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or 203 spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspectiondelivery 204 used or unused, whether on board or not shall become the Buyers’ property, but spares on 205 order are excluded. Forwarding charges, if any, shall be for the Buyers’ account. The Sellers 206 are not required to replace spare parts including spare tail-end shaft(s) and spare 207 propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to 208 delivery, but the replaced items shall be the property of the Buyers. Unused stores and 209 provisions shall be included in the sale and be taken over by the Buyers without extra payment. 210 Library and forms exclusively for use in the Sellers’ vessel(s) and captain’s, officers’ and crew’s 211 personal belongings including the slop chest are excluded from the sale without compensation, 212 as well as the following additional items: ______(include list) 213 Items on board which are on hire or owned by third parties, listed as follows, are excluded from 214 the sale without compensation: ______(include list) 215 Items on board at the time of inspection which are on hire or owned by third parties, not listed 216 above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense. 217 The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and 218 greases in storage tanks and unopened drums at no extra cost.and pay either 219 (a) *the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or 220 (b) *the current net market price (excluding barging expenses) at the port and date of delivery 221 of the Vessel or, if unavailable, at the nearest bunkering port, 222 for the quantities taken over. 223 Payment under this Clause shall be made at the same time and place and in the same 224 currency as the Purchase Price. 225 “inspection” in this Clause 7, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b) 226 (Inspection), if applicable. If the Vessel is taken over without inspection, the date of this 227 Agreement shall be the relevant date. 228 *(a) and (b) are alternatives, deletewhichever is not applicable. In the absence of deletions 229 alternative (a) shall apply. 230 8. Documentation 231 The place of closing: To be mutually agreed between the Seller and the Buyers. 232 (a) In exchange for pPayment of the Purchase Price by the Buyers to the Sellers shall be subject to 233 Clause 20 and conditional on the Buyers having on or prior to delivery of the Vessel on the Delivery Date received, or being satisfied as to, provide the Buyers with the following delivery documentsitems: 234 (i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State, 235 transferring title of the Vessel and stating that the Vessel is free from all mortgages, 236 encumbrances and maritime liens (whether maritime or otherwise) or any other debts 237 whatsoever, duly notarially attested and legalised or apostilled, as required by the Buyers’ Nominated Flag State; 238 (ii) Acceptance of Sale in a form recordable in the Buyers’ Nominated Flag State, duly notarially attested and legalised or apostilled, as required by the Buyers’ Nominated Flag State. (iiiii) Evidence that all necessary corporate, shareholder and other action has been taken by 239 the Sellers to authorise the execution, delivery and performance of this Agreement; 240 (iiiiv) Power of Attorney of the Sellers appointing one or more representatives to act on behalf 241 of the Sellers in the performance of this Agreement, duly notarially attested and legalised 242 or apostilled (as appropriate); 243 (ivv) Certificate or Transcript of Registry issued by the competent authorities of the flag state 244 on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the 245 Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by 246 such authority to the closing meeting with the original to be sent to the Buyers as soon as 247 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 5possible after delivery of the Vessel; 248 (vvi) Declaration of Class or (depending on the Classification Society) a Class Maintenance 249 Certificate issued within three (3) Business Banking Days prior to delivery confirming that the 250 Vessel is in Class free of overdue condition/recommendation; 251 (vi) Certificate of Deletion of the Vessel from the Vessel’s registry or other official evidence of 252 deletion appropriate to the Vessel’s registry at the time of delivery, or, in the event that 253 the registry does not as a matter of practice issue such documentation immediately, a 254 written undertaking by the Sellers to effect deletion from the Vessel’s registry forthwith 255 and provide a certificate or other official evidence of deletion to the Buyers promptly and 256 latest within four (4) weeks after the Purchase Price has been paid and the Vessel has 257 been delivered; 258 (vii) A copy of the Vessel’s Continuous Synopsis Record certifying the date on which the 259 Vessel ceased to be registered with the Vessel’s registry, or, in the event that the registry 260 does not as a matter of practice issue such certificate immediately, a written undertaking 261 from the Sellers to provide the copy of this certificate promptly upon it being issued 262 together with evidence of submission by the Sellers of a duly executed Form 2 stating 263 the date on which the Vessel shall cease to be registered with the Vessel’s registry; 264 (viiivii) Commercial Invoice for the Vessel; 265 (ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases; 266 (x) A copy of the Sellers’ letter to their satellite communication provider cancelling the 267 Vessel’s communications contract which is to be sent immediately after delivery of the 268 Vessel; 269 (xiviii) Any additional documents as may reasonably be required by the competent authorities of 270 the Buyers’ Nominated Flag State for the purpose of registering the Vessel, each in a form 271 acceptable to the Buyers’ Nominated Flag State, duly notarially attested and legalised or apostilled (if required) provided the Buyers notify the Sellers of any such documents as soon as possible after the date of 272 this Agreement; and 273 (xiiix) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not 274 black listed by any nation or international organisation. 275 (x) The items set out in Clause 20. The items set out in this Clause 8(a) (together the “Conditions Precedent”) are inserted for the sole benefit of the Buyers and may be waived in whole or in part with or without conditions by the Buyers. (b) At the time of delivery the Buyers shallprovide the Sellers with: 276 (i) Evidence that all necessary corporate, shareholder and other action has been taken by 277 the Buyers to authorise the execution, delivery and performance of this Agreement; and 278 (ii) Power of Attorney of the Buyers (if any) appointing one or more representatives to act on behalf 279 of the Buyers in the performance of this Agreement., duly notarially attested and legalised 280 or apostilled (as appropriate). 281 (c) If any of the documents listed in Sub-clauses (a) and (b) above are not in the English 282 language they shall be accompanied by an English translation by an authorised translator or 283 certified by a lawyer qualified to practice in the country of the translated language. 284 (d) The Parties shall to the extent possible exchange copies, drafts or samples of the 285 documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the 286 other party not later than two (2) Business Days (or such later date as the Buyers may agree) prior 287 to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this Agreement. (state number of days), or if left blank, nine (9) days prior to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to 288 Clause 5(b) of this Agreement. 289 (e) On delivery, Concurrent with the exchange of documents in Sub-clause (a) and Sub-clause (b) 290 above, the Sellers shall also hand to the Buyers copies of the classification certificate(s) as well as all plans, 291 drawings and manuals, (excluding ISM/ISPS manuals), which are on board the Vessel. Other 292 certificates which are on board the Vessel shall also be handed over to the Buyers unless 293 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 6the Sellers are required to retain same, in which case the Buyers have the right to take copies. 294 (f) Other technical documentation which may be in the Sellers’ possession shall promptly after 295 delivery be forwarded to the Buyers at their Sellers’ expense, if they so request. The Sellers may keep 296 the Vessel’s log books but the Buyers have the right to take copies of same. 297 (g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance 298 confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. 299 9. Encumbrances 300 The Sellers warrant that the Vessel, at the time of delivery, is free from all charters (other than the 301 Bareboat Charter and any time charter permitted by the terms of the Leasing Documents), encumbrances, mortgages and maritime liens (whether maritime or otherwise) or any other debts 302 whatsoever, and is not subject to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the 303 Buyers against all consequences of claims made against the Vessel which have been incurred 304 prior to the time of delivery. 305 10. Taxes, fees and expenses 306 Any taxes, fees and expenses in connection with the purchase of the Vessel and registration in the 307 Buyers’ Nominated Flag State shall be for the Buyers’ account, whereas similar charges and in connection 308 with the closing of the Sellers’ register shall be for the Sellers’ account. 309 11. Condition on delivery 310 The Vessel with everything belonging to her shall be at the Sellers’ risk and expense until she is 311 delivered to the Buyers, but subject pursuant to the terms and conditions of this Agreement she shall 312 be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 313 However, the Vessel shall be delivered free of cargo and free of stowaways with her Class 314 maintained without condition/recommendation*, free of average damage affecting the Vessel’s 315 class, and with her classification certificates and national certificates, as well as all other 316 certificates the Vessel had at the time of inspectiondelivery, valid and unextended without overdue 317 condition/recommendation* by the Classification Society or the relevant authorities at the time 318 of delivery. 319 “inspection” in this Clause 11, shall mean the Buyers’ inspection according to Clause 4(a) or 320 4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this 321 Agreement shall be the relevant date. 322 *Notes and memoranda, if any, in the surveyor’s report which are accepted by the Classification323 Society without condition/recommendation are not to be taken into account. 324 12. Name/markings – intentionally omitted 325 Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel 326 markings. 327 13. Buyers’ default 328 Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the 329 right to cancel this Agreement, and they shall be entitled to claim compensation for their losses 330 and for all expenses incurred together with interest. 331 Should the Purchase Price not be paid in accordance with Clause 3 (Payment)this Agreement, the 332 Sellers have the right to cancel this Agreement, in which case it shall terminate whereupon all the Buyers’ 333 liabilities hereunder shall be extinguished. the Deposit together with interest earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the 334 Sellers shall be entitled to claim further compensation for their losses and for all expenses 335 incurred together with interest. 336 14. Sellers’ default 337 Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be 338 ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the 339 option of cancelling this Agreement. If after Notice of Readiness has been given but before 340 the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not 341 made physically ready again by the Cancelling Date and new Notice of Readiness given, the 342 Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this 343 Agreement, the Deposit together with interest earned, if any, shall be released to them 344 immediately. 345 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 7Without prejudice to any of the rights the Buyers may have under the Leasing Documents, at law 346 or otherwise, Sshould the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers 347 for their direct and documented loss and for all documented expenses together with interest if 348 their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 349 15. Buyers’ representatives – intentionally omitted 350 After this Agreement has been signed by the Parties and the Deposit has been lodged, the 351 Buyers have the right to place two (2) representatives on board the Vessel at their sole risk and 352 expense. 353 These representatives are on board for the purpose of familiarisation and in the capacity of 354 observers only, and they shall not interfere in any respect with the operation of the Vessel. The 355 Buyers and the Buyers’ representatives shall sign the Sellers’ P&I Club’s standard letter of 356 indemnity prior to their embarkation. 357 16. Law and Arbitration See Clause 25 358 (a) *This Agreement shall be governed by and construed in accordance with English law and 359 any dispute arising out of or in connection with this Agreement shall be referred to arbitration in 360 London in accordance with the Arbitration Act 1996 or any statutory modification or re- 361 enactment thereof save to the extent necessary to give effect to the provisions of this Clause. 362 The arbitration shall be conducted in accordance with the London Maritime Arbitrators 363 Association (LMAA) Terms current at the time when the arbitration proceedings are 364 commenced. 365 The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall 366 appoint its arbitrator and send notice of such appointment in writing to the other party requiring 367 the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and 368 stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own 369 arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the 370 other party does not appoint its own arbitrator and give notice that it has done so within the 371 fourteen (14) days specified, the party referring a dispute to arbitration may, without the 372 requirement of any further prior notice to the other party, appoint itsarbitrator as sole arbitrator 373 and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on 374 both Parties as if the sole arbitrator had been appointed by agreement. 375 In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the 376 arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at 377 the time when the arbitration proceedings are commenced. 378 (b) *This Agreement shall be governed by and construed in accordance with Title 9 of the 379 United States Code and the substantive law (not including the choice of law rules) of the State 380 of New York and any dispute arising out of or in connection with this Agreement shall be 381 referred to three (3) persons at New York, one to be appointed by each of the parties hereto, 382 and the third by the two so chosen; their decision or that of any two of them shall be final, and 383 for the purposes of enforcing any award, judgment may be entered on an award by any court of 384 competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the 385 Society of Maritime Arbitrators, Inc. 386 In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the 387 arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the 388 Society of Maritime Arbitrators, Inc. 389 (c) This Agreement shall be governed by and construed in accordance with the laws of ______ 390 (state place) and any dispute arising out of or in connection with this Agreement shall be 391 referred to arbitration at ______ (state place), subject to the procedures applicable there. 392 *16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of 393 deletions, alternative 16(a) shall apply. 394 17. Notices See Clause 27 395 All notices to be provided under this Agreement shall be in writing. 396 Contact details for recipients of notices are as follows: 397 For the Buyers: 398 For the Sellers: 399 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply.BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 818. Entire Agreement 400 The written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous 402 agreements whether oral or written between the Parties in relation thereto. 403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and 404 shall have no right or remedy in respect of any statement, representation, assurance or 405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement. 406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to 407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude 408 any liability for fraud. 409 For and on behalf of the Sellers For and on behalf of the Buyers Name: ______ Name: ______ Title: ______ Title: ______ This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 918. Entire Agreement 400 The written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous 402 agreements whether oral or written between the Parties in relation thereto. 403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and 404 shall have no right or remedy in respect of any statement, representation, assurance or 405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement. 406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to 407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude 408 any liability for fraud. 409 For and on behalf of the Sellers For and on behalf of the Buyers Name: ______ Name: ______ Title: ______ Title: ______ This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 918. Entire Agreement 400 The written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous 402 agreements whether oral or written between the Parties in relation thereto. 403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and 404 shall have no right or remedy in respect of any statement, representation, assurance or 405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement. 406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to 407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude 408 any liability for fraud. 409 For and on behalf of the Sellers For and on behalf of the Buyers Name: ______ Name: ______ Title: ______ Title: ______ This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 9Execution VersionRIDER CLAUSES TOMEMORANDUM OF AGREEMENTDATED 31 MARCH 2018Clause 19 – Payment of Purchase Price (a)The Purchase Price of the Vessel shall be the lowest of: (i)$23,020,000; and (ii)the Certified Book Value; and (iii)the Market Value. (b)Subject always to Clause 21 and the Conditions Precedent having been satisfied, the Purchase Price of the Vessel shall be paid by the Buyers to theSellers on delivery of the Vessel on the Delivery Date in the following manner: (i)an amount of the Purchase Price equivalent to the amount of the Advance Charterhire (payable by the Sellers as bareboat charterers of theVessel to the Buyers as owners under the Bareboat Charter on the Delivery Date) shall be set off against the Sellers’ payment of such AdvanceCharterhire; and (ii)the balance of the Purchase Price shall be paid free of bank charges into the Sellers’ Account.Clause 20 – Further conditions precedentThe items referred to in Clause 8(a)(x) are: (a)the certificate of incorporation, articles of incorporation and by-laws or other constitutional documents of the Sellers along with an up-to-datecertificate of goodstanding; (b)such other documents as the Buyers may reasonably notify the Sellers as being necessary in relation to the Vessel and/or its status (including withoutlimitation, such confirmation of no liens and/or indemnity thereto which the Buyers may require the Sellers to provide or procure in respect of theVessel); (c)a certificate of an authorized signatory of the Sellers certifying that each copy document provided by Sellers to Buyers pursuant to this Agreement iscorrect, complete and in full force and effect as at a date no earlier than the Delivery Date; and (d)the Buyers being satisfied that the conditions precedent set out in the Bareboat Charter, have been, or will be capable of being, satisfied on theDelivery Date. 1SINGAPORE/89259268v1Clause 21 – Obligation to sell / purchase the VesselThe Parties’ obligation to sell / purchase the Vessel under this Agreement is conditional upon the simultaneous delivery to and acceptance by the Sellers asbareboat charterers of the Vessel under the Bareboat Charter and that no Potential Termination Event or Termination Event has occurred or will occur as aresult of the performance by the Parties of their obligations under this Agreement.Clause 22 – Physical PresenceIf the Buyers’ Nominated Flag State requires the Buyers to have a physical presence or office in the Buyers’ Nominated Flag State, all fees, costs and expensesarising out of or in connection with the establishment and maintenance of such physical presence or office by the Buyers shall be borne by the Sellers.Clause 23 – Costs and Expense (a)The Sellers shall pay such amounts to the Buyers in respect of all costs, claims, expenses, liabilities, losses and fees (including but not limited to anylegal fees, vessel registration and tonnage fees) suffered or incurred by or imposed on the Buyers arising from this Agreement or in connection withthe delivery, registration and purchase of the Vessel by the Buyers whether prior to, during or after termination of this Agreement and whether or notthe Vessel is in the possession of or the control of the Sellers or otherwise. (b)Notwithstanding anything to the contrary under the Leasing Documents and without prejudice to any right to damages or other claim which theBuyers may have at any time against the Sellers under this Agreement, the indemnities provided by the Sellers in favour of the Buyers shall continuein full force and effect notwithstanding any breach of the terms of this Agreement or such Leasing Document or termination or cancellation of thisAgreement or such Leasing Document pursuant to the terms hereof or thereof or termination of this Agreement or such Leasing Document by theBuyers.Clause 24 – SanctionsThe Sellers represent and warrant to the Buyers as of the date hereof and at the Delivery Date that: (a)they: (i)are not a Restricted Person; (ii)are not owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Person; (iii)do not own or control a Restricted Person; or (iv)do not have a Restricted Person serving as a director, officer or employee; and (b)no proceeds of the Purchase Price shall be made available, directly or indirectly, to or for the benefit of a Restricted Person nor shall they be otherwisedirectly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.Clause 25 – Governing Law and JurisdictionThis Agreement and any non-contractual obligations arising under or in connection with it, shall be governed by and construed in accordance with Englishlaw. 2SINGAPORE/89259268v1Any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement orany non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”)) shall be referred to and finally resolved by arbitration inLondon in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to theprovisions of this Clause 25. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current atthe time when the arbitration proceedings are commenced.The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment inwriting to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint itsarbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other partydoes not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a Dispute to arbitration may, withoutthe requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award ofa sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing tovary these provisions to provide for the appointment of a sole arbitrator.Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above.The language of the arbitration shall be English.Clause 26 - CounterpartsThis Agreement 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 ofthis Agreement.Clause 27 - NoticesAll notices to be provided under this Agreement shall be in writing.Contact details for recipients of notices are as follows:For the Sellers:85 Akti MiaouliPiraeus 185 38Greecec/o NAVIOS TANKERS MANAGEMENT INC.Attention: Vassiliki PapaefthymiouEmail: vpapaefthymiou@navios.comTel: +30 210 41 72 050Fax: +30 210 41 72 070For the Buyers:CMB Financial Leasing Co., Ltd21F, China Merchants Bank BuioldingNo. 1088, Lujiazui Ring RoadShanghaiChinaAttention: Wang WeiEmail: wangwei17@cmbchina.comTel: +8621 6106 1735Fax: +8621 6015 9911*1735 3SINGAPORE/89259268v1Clause 28 – DefinitionsUnless otherwise specified herein, capitalised terms in this Agreement shall have the same meaning as in the Bareboat Charter. Furthermore, in thisAgreement:“Approved Valuer” means Clarksons, Maersk Brokers, Howe Robinson, Arrow, Lorentzen & Stemoco, Simpson Spence Young, Braemar Seascope or anyother shipbroker nominated by the Charterers and approved by the Owners.“Bareboat Charter” means the bareboat charter in respect of the Vessel dated on or about the date hereof and made between the Buyers as owners and theSellers as bareboat charterers.“Certified Book Value” means the book value of the Vessel, which as at the date of this Agreement is $29,948,660.98.“Delivery Date” means the date (being a Business Day) on which the Vessel is delivered to the Buyers pursuant to the terms of this Agreement and thereafterimmediately delivered to the Sellers as bareboat charterers pursuant to the terms of the Bareboat Charter.“Market Value” means, in relation to the Vessel, the arithmetic mean of two (2) valuations, each prepared: (a)on a date no earlier than thirty (30) days prior to the Delivery Date; (b)with or without physical inspection of the Vessel; and (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of anyexisting charter or other contract of employment,and such valuations shall be prepared by one Approved Valuer selected and appointed by the Buyers and one Approved Valuer selected by theSellers (but appointed by the Buyers) provided that if the difference in the two valuations obtained is more than five per cent. (5%) of the lowervaluation obtained, a third Approved Valuer shall be selected and appointed by the Buyers and the Market Value shall be the arithmetic mean of thetwo lowest valuations out of the three valuations obtained.“Purchase Price” means the purchase price of the Vessel payable by the Buyers to the Sellers pursuant to Clause 19 above.“Restricted Countries” means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but not limited topursuant to the U.S.’s Office of Foreign Asset Control of the U.S. Department of Treasury (“OFAC”) including at the date of this Charter, but withoutlimitation, Iran, North Korea and Syria and any additional countries based on respective country-wide or territory-wide Sanctions being imposed by OFAC orany of the regulative bodies referred to in the definition of Restricted Persons.“Restricted Person” means a person, entity or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, and/or (ii) subject toany sanction administrated by the United Nations, the European Union, Switzerland, the United States and the OFAC, the United Kingdom, Her Majesty’sTreasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the People’s Republic of China and/or (iii) owned or controlled by oraffiliated with persons, entities or any other parties as referred to in (i) and (ii). 4SINGAPORE/89259268v1“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment,exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) imposed by law or regulation of UnitedKingdom, the United States of America (including, without limitation, CISADA and OFAC), the People’s Republic of China or the Council of the EuropeanUnion.“Sellers’ Account” means the account in the name of the Seller with HSH Nordbank AG in USD with the account number 1200048491 and IBANDE14210500001200048491. 5SINGAPORE/89259268v1EXECUTION PAGE BUYERS SIGNED ) by ) as an attorney-in-fact ) for and on behalf of ) SEA 66 LEASING CO. LIMITED ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) SELLERS SIGNED ) by ) for and on behalf of ) ANTIPAROS SHIPPING CORPORATION ) as ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) 6 SINGAPORE/89259268v1EXECUTION PAGE BUYERS SIGNED ) by ) as an attorney-in-fact ) for and on behalf of ) SEA 66 LEASING CO. LIMITED ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) SELLERS SIGNED ) by ) for and on behalf of ) ANTIPAROS SHIPPING CORPORATION ) as ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) 6 SINGAPORE/89259268v1EXECUTION PAGE BUYERS SIGNED ) by ) as an attorney-in-fact ) for and on behalf of ) SEA 66 LEASING CO. LIMITED ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) SELLERS SIGNED ) by ) for and on behalf of ) ANTIPAROS SHIPPING CORPORATION ) as ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) 6 SINGAPORE/89259268v1 1. Shipbroker N/A BIMCO STANDARD BAREBOAT CHARTER CODE NAME: “BARECON 2001” PART I 2. Place and date 2018 2001 31 March 1974 Revised in . 1989 3. Owners/Place of business (Cl. 1) 4. Bareboat Charterers/Place of business (Cl. 1) Sea 67 Leasing Co. Limited / Room 1803-1804, 18/F Bank of Ikaria Shipping Corporation / Trust Company Complex, Ajeltake Copenhagen America Tower, 12 Harcourt Road, Central, Hong Kong Road, Ajeltake Island, Majuro, MH96960, Marshall Islands amalgamated (BIMCO), and Council 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Revised “ . NAVE AQUILA / 3FLZ5 / Panama or any other Flag State ‘B’ Maritime “Barecon 6. Type of Vessel 7. GT/NT and MR Tanker 30,052 / 13,255 “ International by ‘A’ and issued Baltic 8. When/Where built 9. Total DWT (abt.) in metric tons on summer freeboard “Barecon 2012, Dae Sun Shipping & Engineering Co., Ltd., Korea 49,991 First The as 10. Classification Society (Cl. 3) 11. Date of last special survey by the Vessel’s classification society Nippon Kaiji Kyokai or any other Classification Society 02/02/18 idea 12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) BIMCO’s IMO No.: 9459072 by Length: 174.00 metres Printed Breadth: 32.20 metres Depth: 19.10 metres 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) 15. Cancelling date (Cl. 5) The place of delivery specified under Clause 5(a) of the MOA See Clause 34 See Clause 33 16. Port or Place of redelivery (Cl. 15) 17. No. of months’ validity of trading and class certificates 2001 At a safe, ice free port where the Vessel would be afloat at all upon redelivery (Cl. 15) times See Clause 40 November Issued 18. Running days’ notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) . N/A In accordance with Classification Society or Flag State requirements 20. Trading limits (Cl. 6) Copenhagen Worldwide within Institute Warranty Limits (BIMCO), Council 21. Charter period (Cl. 2) 22. Charter hire (Cl. 11) Maritime See Clause 32 See Clause 36 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A by International and 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to 25. Currencyand method of payment (Cl. 11) published Baltic PART IV Dollars/bank transfer The See Clause 36.11—neither Clause 11(f) nor Part IV applies Copyright, This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PART I 26. Place of payment; also state beneficiary and bank account (Cl. 11) 27. Bank Corporate guarantee/bond (sum and place) (Cl. 24) (optional) Beneficiary: Ikaria Shipping Corporation See Clause 24 Account No.: 1200048517 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) applies state date of Financial Instrument and name of or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) Mortgagee(s)/Place of business) (Cl. 12) See Clause 38 – CLAUSE 14 DOES NOT APPLY See Clause 35 30. Additional insurance cover, if any, for Owners’ account limited to 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 38 See Clause 38 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 27) N/A N/A 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place 34. Grace period (state number of clear banking daysBusiness Days) (Cl. 28) of Arbitration must be stated (Cl. 30) See Clause 44 See Clause 30(a) 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III 38. Name and place of Builders (only to be filled in if PART III applies) applies) (optional) N/A No, Part III does not apply 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) N/A N/A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) applies) (optional) No, Part IV does not apply No, Part V does not apply 44.Flag and Country of the Bareboat Charter Registry (only to be filled 45. Country of the Underlying Registry (only to be filled in if PART V applies) in if PART V applies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE—It is mutually agreed thatthis Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) For and on behalf of the Owners For and on behalf of the Charterers Name: Name: Title: Title: This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PART I This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter 1. Definitions See also Clause 59 1 day on which the Vessel should be ready, give notice 72 In this Charter, the following terms shall have the 2 thereof to the Charterers asking whether they will 73 meanings hereby assigned to them: 3 exercise their option of cancelling, and the option must 74 “The Owners” shall mean the party identified in Box 3; 4 then be declared within one hundred and sixty-eight 75 “The Charterers” shall mean the party identified in Box 4; 5 (168) running hours of the receipt by the Charterers of 76 “The Vessel” shall mean the vessel named in Box 5 and 6 such notice or within thirty-six (36) running hours after 77 with particulars as stated in Boxes 6 to 12. 7 the cancelling date, whichever is the earlier. If the 78 “Financial Instrument” means the mortgage, deed of 8 Charterers do not then exercise their option of cancelling, 79 covenant or other such financial security instrument as 9 the seventh day after the readiness date stated in the 80 annexed to this Charter and stated in Box 28. 10 Owners’ notice shall be substituted for the cancelling 81 2. Charter Period 11 date indicated in Box 15 for the purpose of this Clause 5. 82 In consideration of the hire detailed in Box 22, 12 (c) Cancellation under this Clause 5 shall be without 83 the Owners have agreed to let and the Charterers have 13 prejudice to any claim the Charterers may otherwise 84 agreed to hire the Vessel for the period stated in Box 21 14 have on the Owners under this Charter. 85 (“The Charter Period”). See also Clause 32 and Clause 15 6. Trading Restrictions See also Clauses 46.1(m) and 86 36. 46.1(n) 3. Delivery 16 The Vessel shall be employed in lawful trades for the 87 (not applicable when Part III applies, as indicated in Box 37) 17 carriage of suitable lawful merchandise within the trading 88 (a) The Owners shall before and at the time of delivery 18 limits indicated in Box 20. 89 exercise due diligence to make the Vessel seaworthy 19 The Charterers undertake not to employ the Vessel or 90 And in every respect ready in hull, machinery and 20 suffer the Vessel to be employed otherwise than in 91 equipment for service under this Charter. 21 conformity with the terms of the contracts of insurance 92 The Vessel shall be delivered by the Owners and taken 22 (including any warranties expressed or implied therein) 93 over by the Charterers at the port or place indicated in 23 without first obtaining the consent of theinsurers to such 94 Box 13 in such ready safe berth as the Charterers may 24 employment and complying with such requirements as 95 direct. 25 to extra premium or otherwise as the insurers may 96 (b) The Vessel shall beis properly documented on 26 prescribe. 97 delivery in accordance with the laws of the fFlag State 27 The Charterers also undertake not to employ the Vessel 98 indicated in Box 5 and the requirements of the 28 or suffer her employment in any trade or business which 99 cClassification sSociety stated in Box 10. The Vessel 29 is forbidden by the law of any country to which the Vessel 100 upon may sail or is otherwise illicit or in carrying illicit or 101 delivery shall have her survey cycles up to date and 30 prohibited goods or in any manner whatsoever which 102 trading and class certificates valid for at least the number 31 may render her liable to condemnation, destruction, 103 of months agreed in Box 12. 32 seizure or confiscation. 104 (c) The delivery of the Vessel by the Owners and the 33 Notwithstanding any other provisions contained in this 105 taking over of the Vessel by the Charterers shall 34 Charter it is agreed that nuclear fuels or radioactive 106 constitute a full performance by the Owners of all the 35 products or waste are specifically excluded from the 107 Owners’ obligations under this Clause 3, and thereafter 36 cargo permitted to be loaded or carried under this 108 the Charterers shall not be entitled to make or assert 37 Charter. This exclusion does not apply to radio-isotopes 109 any claim against the Owners on account of any 38 used or intended to be used for any industrial, 110 conditions, representations or warranties expressed or 39 commercial, agricultural, medical or scientific purposes 111 implied with respect to the Vessel but the Owners shall 40 provided the Owners’ prior approval has been obtained 112 be liable for the cost of but not the time for repairs or 41 to loading thereof. 113 renewals occasioned by latent defects in the Vessel, 42 7. Surveys on Delivery and Redelivery 114 her machinery or appurtenances, existing at the time of 43 (not applicable when Part III applies, as indicated in Box 37) 115 delivery under this Charter, provided such defects have 44 The Owners and Charterers shall each appoint 116 manifested themselves within twelve (12) months after 45 surveyors for the purpose of determining and agreeing 117 delivery unless otherwise provided in Box32. 46 in writing the condition of the Vessel at the time of 118 4. Time for Delivery See Clauses 32 and 34 47 delivery and redelivery pursuant to Clause 40.3 (with 119 (not applicable when Part III applies, as indicated in Box 37) 48 the relevant costs paid by the Charterers).hereunder. The Vessel shall not be delivered before the date 49 The Owners shall indicated in Box 14 without the Charterers’ consent and 50 bear all expenses of the On-hire Survey including loss 120 the Owners shall exercise due diligence to deliver the 51 of time, if any, and the Charterers shall bear all expenses 121 Vessel not later than the date indicated in Box 15. 52 of the Off-hire Survey including loss of time, if any, at 122 Unless otherwise agreed in Box 18, the Owners shall 53 the daily equivalent to the rate of hire or pro rata thereof. 123 give the Charterers not less than thirty (30) running days’ 54 8. Inspection 124 preliminary and not less than fourteen (14) running days’ 55 The Owners shall have the right at any time either (i) 125 definite notice of the date on which the Vessel is 56 once every calendar year provided no Potential expected to be ready for delivery. 57 Termination Event or Termination Event has occurred The Owners shall keep the Charterers closely advised 58 (after giving reasonable notice to the Charterers and of possible changes in the Vessel’s position. 59 provided that the Owners do not unduly interfere with 5. Cancelling See Clause 33 60 or cause delay to the commercial operation of the (not applicable when Part III applies, as indicated in Box 37) 61 Vessel) or (ii) at any time following the occurrence of (a) Should the Vessel not be delivered latest by the 62 a Potential Termination Event or Termination Event cancelling date indicated in Box 15, the Charterers shall 63 and for as long as it is continuing (after giving have the option of cancelling this Charter by giving the 64 reasonable notice to the Charterers), to inspect or survey 126 Owners notice of cancellation within thirty-six (36) 65 the Vessel or instruct a duly authorised surveyor to carry 127 running hours after the cancelling date stated in Box 66 out such survey on their behalf:- 128 15, failing which this Charter shall remain in full force 67 (a) to ascertain the condition of the Vessel and satisfy 129 and effect. 68 themselves that the Vessel is being properly repaired 130 (b) If it appears that the Vessel will be delayed beyond 69 and maintained. The costs and fees for such inspection 131 the cancelling date, the Ownersmay, as soon as they 70 or survey shall be paid by the Charterers, subject to the 132 are in a position to state with reasonable certainty the 71 above conditions as may be applicable from lines 125 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter to 128.Owners unless the Vessel of agreement, be referred to the dispute resolution 199 is found to require repairs or maintenance in order to 133 method agreed in Clause 30., the Charterers shall 200 achieve the condition so provided; 134 ensure that the same are complied with and the (b) in dry-dock if the Charterers have not dry-docked 135 time and costs of compliance shall be for the Her in accordance with Clause 10(g). The costs and fees 136 Charterers’ account. for such inspection or survey shall be paid by the 137 (iii) Financial Security—The Charterers shall maintain 201 Charterers, subject to the above conditions as may be 138 financial security or responsibility in respect of third 202 applicable from lines 125 to 128; and party liabilities as required by any government, 203 (c) for any other commercial reason they consider 139 including federal, state or municipal or other division 204 necessary (provided it does not unduly interfere with 140 or authority thereof, to enable the Vessel, without 205 the commercial operation of the Vessel). The costs and 141 penalty or charge, lawfully to enter, remain at, or 206 fees for such inspection and survey shall be paid by the 142 leave any port, place, territorial or contiguous 207 OwnersCharterers, subject to the above conditions as 143 waters of any country, state or municipality in 208 may be applicable from lines 125 to 128. performance of this Charter without any delay. This 209 All time used in respect of inspection, survey or repairs 144 obligation shall apply whether or not such 210 shall be for the Charterers’ account and form part of the 145 requirements have been lawfully imposed by such 211 Charter Period. 146 government or division or authority thereof. 212 The Charterers shall also permit the Owners to inspect 147 The Charterers shall make and maintain all arrange- 213 the Vessel’s log books whenever requested and shall 148 ments by bond or otherwise as may be necessary to 214 whenever required by the Owners furnish them with full 149 satisfy such requirements at the Charterers’ sole 215 information regarding any casualties or other accidents 150 expense and the Charterers shall indemnify the Owners 216 or damage to the Vessel. 151 against all consequences whatsoever (including loss of 217 The Charterers shall provide such necessary time) for any failure or inability to do so. 218 assistanceto the Owners, their representatives or (b) Operation of the Vessel—The Charterers shall at 219 agents in respect of any inspection hereunder. their own expense and by their own procurement man, 220 victual, navigate, operate, supply, fuel and, whenever 221 9. Inventories, Oil and Stores See Clause 34.7 152 required, repair the Vessel during the Charter Period 222 A complete inventory of the Vessel’s entire equipment, 153 and they shall pay all charges and expenses of every 223 outfit including spare parts, appliances and of all 154 kind and nature whatsoever incidental to their use and 224 consumable stores on board the Vessel shall be made 155 operation of the Vessel under this Charter, including 225 by the Charterers in conjunction with the Owners on 156 annual flag Flag State fees and any foreign general 226 delivery and again on redelivery of the Vessel. The 157 municipality and/or state taxes. The Master, officers 227 Charterers and the Owners, respectively, shall at the 158 and crew of the Vessel shall be the servants of the Charterers 228 time of delivery and redelivery take over and pay for all 159 for all purposes whatsoever, even if for any reason 229 bunkers, lubricating oil, unbroached provisions, paints, 160 appointed by the Owners. 230 ropes and other consumable stores (excluding spare 161 Charterers shall comply with the regulations regarding 231 parts) in the said Vessel at the then current market prices 162 officers and crew in force in the country of the Vessel’s 232 at the ports of delivery and redelivery, respectively. The 163 flag or any other applicable law. 233 Charterers shall ensure that all spare parts listed in the 164 (c) The Charterers shall keep the Owners and the 234 inventory and used during the Charter Period are 165 mortgagee(s) advised of the intended employment (other 235 replaced at their expense prior to redelivery of the 166 than in respect of sub time charters which are less Vessel. 167 than 12 months in duration (after including any 10. Maintenance and Operation 168 optional extension periods), (a)(i)Maintenance and Repairs—During the Charter 169 planned dry-docking (other than the periodical dry- 236 Period the Vessel shall be in the full possession 170 docking referred to under paragraph (g) below) and and at the absolute disposal for all purposes of the 171 major repairs of the Vessel, Charterers and under their complete control in 172 as reasonably required. 237 every respect. The Charterers shall maintain the173 (d) Flag and Name of Vessel – During the Charter 238 Vessel, her machinery, boilers, appurtenances and 174 Period, the Charterers shall have the liberty to paint the 239 spare parts in a good state of repair, in efficient 175 Vessel in their own colours, install and display their 240 operating condition and in accordance with good 176 funnel insignia and fly their own house flag (with all fees, 241 commercial maintenance practice and, except as 177 costs and expenses arising in relation thereto for the provided for in Clause 14(l), if applicable, at their 178 Charterers account). The own expense they shall at all times keep the 179 Charterers shall also have the liberty, with the Owners’ 242 Vessel’s Class classification fully up to date with 180 consent, which shall not be unreasonably withheld, to 243 the Classification change the flag of the Vessel to that of another Flag 244 Society indicated in Box 10 and maintain all other 181 State (with all fees, costs and expenses arising in necessary certificates in force at all times. 182 relation thereto for the Charterers’ account) and/or (ii) New Class and Other Safety Requirements—In the 183 with the Owners’ consent, the name of the Vessel (with event of any improvement, structural changes or 184 all fees, costs and expenses arising in relation new equipment becoming necessary for the 185 thereto for the Charterers’ account) during continued operation of the Vessel by reason of new 186 the Charter Period. Any Ppainting and re-painting, 245 class requirements or by compulsory legislation 187 instalment costing (excluding the Charterers’ loss of time) 188 and re-instalment, registration (including maintenance 246 more than the percentage stated in Box 23, or if 189 and renewal thereof) and re-registration, if Box 23 is left blank, 5 per cent. of the Vessel’s 190 required by the Owners, shall be at the Charterers’ 247 insurance value as stated in Box 29, then the 191 expense and time. If the Flag State requires the 248 extent, if any, to which the rate of hire shall be varied 192 Owners to establish a physical presence or office in and the ratio in which the cost of compliance shall 193 the jurisdiction of such Flag State, all fees, costs and be shared between the parties concerned in order 194 expenses payable by the Owners to establish and to achieve a reasonable distribution thereof as 195 maintain such physical presence or office shall be for between the Owners and the Charterers having 196 the account of the Charterers. regard, inter alia, to the length of the period 197 (e) Changes to the Vessel – Subject to Clause 10(a)(ii) and 249 remaining underthis Charter shall, in the absence 198 Clause 10(b), the Charterers shall make no structural changes in the 250 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter Vessel or changes which materially adversely affect 251 as lost or missing shall be ten (10) days after the Vessel 312 the Vessel’s classification or value in the machinery, was last reported or when the Vessel is posted as 313 boilers, appurten- missing by Lloyd’s, whichever occurs first. Any hire paid 314 ances or spare parts thereof without in each instance 252 in advance to be adjusted accordingly. 315 first securing the Owners’ approval thereof. If the Owners 253 (f) Any delay in payment of hire shall entitle the 316 so agree, the Charterers shall, if the Owners so require, 254 Owners to interest at the rate per annum as agreed 317 restore the Vessel to its former condition before the 255 in Box 24. If Box 24 has not been filled in, the three months 318 termination of this Charter. 256 Interbank offered rate in London (LIBOR or its successor) 319 (f) Use of the Vessel’s Outfit, Equipment and 257 for the currency stated in Box 25, as quoted by the British 320 Appliances—The Charterers shall have the use of all 258 Bankers’ Association (BBA) on the date when the hire 321 outfit, equipment, and appliances on board the Vessel 259 fell due, increased by 2 per cent., shall apply. 322 at the time of delivery, provided the same or their 260 (g) Payment of interest due under sub-clause 11(f) 323 substantial equivalent shall be returned to the Owners 261 shall be made within seven (7) running days of the date 324 on redelivery (without prejudice to Clauses 40.6 and 262 of the Owners’ invoice specifying the amount payable 325 40.7 and if redelivery is required pursuant to this or, in the absence of an invoice, at the time of the next 326 Charter) in the same good order and condition as hire payment date. 327 when received, ordinary wear and tear excepted. The 263 12. Mortgage See Clause 35 328 Charterers shall from time to time during the Charter 264 (only to apply if Box 28 has been appropriately filled in) 329 Period replace such items of equipment as shall be so 265 *) (a) The Owners warrant that they have not effected 330 damaged or worn as to be unfit for use. The Charterers 266 any mortgage(s) of the Vessel and that they shall not 331 are to procure that all repairs to or replacement of any 267 effect any mortgage(s) without the prior consent of the 332 damaged, worn or lost parts or equipment be effected 268 Charterers, which shall not be unreasonably withheld. 333 in such manner(both as regards workmanship and 269 *) (b) The Vessel chartered under this Charter is financed 334 quality of materials) as not to diminish the value of the 270 by a mortgage according to the Financial Instrument. 335 Vessel. Title of any equipment so replaced shall vest 271 The Charterers undertake to comply, and provide such 336 in and remain with the Owners. The Charterers have information and documents to enable the Owners to 337 the right to fit additional comply, with all such instructions or directions in regard 338 equipment at their expense and risk (provided that no 272 to the employment, insurances, operation, repairs and 339 permanent structural damage is caused to the Vessel maintenance of the Vessel as laid down in the Financial 340 by reason of such installation) andbut the Charterers Instrument or as may be directed from time to time during 341 shall, at their expense, remove such equipment and 273 the currency of the Charter by the mortgagee(s) in 342 make good any damage caused by the fitting or conformity with the Financial Instrument. The Charterers 343 removal of such additional equipment before the confirm that, for this purpose, they have acquainted 344 Vessel is redelivered to the Owners pursuant to themselves with all relevant terms, conditions and 345 Clause 40.3 and without prejudice to Clauses 40.6 provisions of the Financial Instrument and agree to 346 and 40.7,at the end of the period if acknowledge this in writing in any form that may be 347 requested by the Owners. Any equipment including radio 274 required by the mortgagee(s). The Owners warrant that 348 equipment on hire on the Vessel at time of delivery shall 275 they have not effected any mortgage(s) other than stated 349 be kept and maintained by the Charterers and the 276 in Box 28 and that they shall not agree to any 350 Charterers shall assume the obligations and liabilities 277 amendment of the mortgage(s) referred to in Box 28 or 351 of the Owners under any lease contracts in connection 278 effect any other mortgage(s) without the prior consent 352 therewith and shall reimburse the Owners for all 279 of the Charterers, which shall not be unreasonably 353 expenses incurred in connection therewith, also for any 280 withheld. 354 new equipment required in order to comply with radio 281 are alternatives; *) (Optional, Clauses 12(a)and 12(b) 355 regulations. 282 indicate alternative agreed in Box 28). 356 (g) Periodical Dry-Docking—The Charterers shall dry- 283 dock the Vessel and clean and paint her underwater 284 13. Insurance and Repairs See also Clause 38 357 parts whenever the same may be necessary, but not 285 (a) Subject and without prejudice to Clause 38, 358 less than once during the period stated in Box 19 or, if 286 Dduring the Charter Period the Vessel shall be kept Box 19 has been left blank, every sixty (60) calendar 287 insured by the Charterers at their expense against hull 359 months after delivery or such other period as may be 288 and machinery, marine and war (including blocking 360 required by the Classification Society or fFlag State. 289 and trapping) and Protection and Indemnity risks and freight, demurrage and defence risks 11. Hire See Clause 36 290 (and any risks against which it is compulsory to insure 361 (a) The Charterers shall pay hire due to the Owners 291 for the operation of the Vessel, including but not limited 362 punctually in accordance with the terms of this Charter 292 to maintaining in respect of which time shall be of the essence. 293 financial security in accordance with sub-clause 363 (b) The Charterers shall pay to the Owners for the hire 294 10(a)(iii)) in such form as the Owners shall in writing 364 of the Vessel a lump sum in the amount indicated in 295 approve, which approval shall not be un-reasonably 365 Box 22 which shall be payable not later than every thirty 296 withheld. During the Charter Period, the Charterers 366 (30) running days in advance, the first lump sum being 297 shall procure (at Charterers’ expense) that there are payable on the date and hour of the Vessel’s delivery to 298 in place innocent Owners’ interest insurance, the Charterers. Hire shall be paid continuously 299 Owner’s additional perils (pollution) insurance and if throughout the Charter Period. 300 applicable Mortgagees’ interest insurance and (c) Payment of hire shall be made in cash without 301 Mortgagees’ additional perils (pollution) insurance. discount in the currency and in the manner indicated in 302 Such insurances as specified in this Clause 13 shall be Box 25 and at the place mentioned in Box 26. 303 arranged by the (d) Final payment of hire, if for a period of less than 304 Charterers to protect the interests of both the Owners 367 thirty(30) running days, shall be calculated proportionally 305 and the Charterers and the mortgageeMortgagee(s) (if 368 according to the number of days and hours remaining 306 any),. and before redelivery and advance payment to be effected 307 The Charterers shall be at liberty to protect under such 369 accordingly. 308 insurances the interests of any managers they may 370 (e) Should the Vessel be lost or missing, hire shall 309 appoint. Insurance policies shall cover the Owners and 371 cease from the date and time when she was lost or last 310 the Charterers and the Mortgagees (if any) according to 372 heard of. The date upon which the Vessel is to be treated 311 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter their respective interests. payments made to discharge claims against or liabilities 437 Subject to the provisions of the Financial Instruments (if 373 of the Vessel or the Owners covered by such insurance. 438 any), if and the agreed loss payable clauses, Insurance policies shall cover the Owners and the 439 any, and the approval of the Owners and the insurers, 374 Charterers according to their respective interests. 440 the Charterers shall effect all insured repairs and shall 375 (b) During the Charter Period the Vessel shall be kept 441 undertake settlement and reimbursement from the 376 insured by the Charterers at their expense against 442 insurers of all costs in connection with such repairs as 377 Protection and Indemnity risks (and any risks against 443 well as insured charges, expenses and liabilities to the 378 which it is compulsory to insure for the operation of the 444 extent of coverage under the insurances herein provided 379 Vessel, including maintaining financial security in 445 for. 380 accordance with sub-clause 10(a)(iii)) in such form as 446 The Charterers also to remain responsible for and to 381 the Owners shall in writing approve which approval shall 447 effect repairs and settlement of costs and expenses 382 not be unreasonably withheld. 448 incurred thereby in respect of all other repairs not 383 (c) In the event that any act or negligence of the 449 covered by the insurances and/or not exceeding any 384 Charterers shall vitiate any of the insurance herein 450 possible franchise(s) or deductibles provided for in the 385 provided, the Charterers shall pay to the Owners all 451 insurances. 386 losses and indemnify the Owners against all claims and 452 All time used for repairs under the provisions of sub- 387 demands which would otherwise have been covered by 453 clause 13(a) and for repairs of latent defects according 388 such insurance. 454 to Clause 3(c) above, including any deviation, shall be 389 (d) The Charterers shall, subject to the approval of the 455 for the Charterers’ account. 390 Owners or Owners’ Underwriters, effect all insured 456 (b) If the conditions of the above insurances permit 391 repairs, and the Charterers shall undertake settlement 457 additional insurance to be placed by the parties, such 392 of all miscellaneous expenses in connection with such 458 cover shall be limited to the amount for each party set 393 repairs as well as all insured charges, expenses and 459 out in Box 30 and Box 31,respectively. The Owners or 394 liabilities, to the extent of coverage under the insurances 460 the Charterers as the case may be shall immediately 395 provided for under the provisions of sub-clause 14(a). 461 furnish the other partyOwners with particulars of any 396 The Charterers to be secured reimbursement through 462 additional the Owners’ Underwriters for such expenditures upon 463 insurance effected, including copies of any cover notes 397 presentation of accounts. 464 or policies and the written consent of the insurers of 398 (e) The Charterers to remain responsible for and to 465 any such required insurance in any case where the 399 effect repairs and settlement of costs and expenses 466 consent of such insurers is necessary. 400 incurred thereby in respect of all other repairs not 467 (c) The Charterers shall upon the request of the 401 covered by the insurances and/or not exceeding any 468 Owners, provide information and promptly execute such 402 possible franchise(s) or deductibles provided for in the 469 documents as may be required to enable the Owners to 403 insurances. 470 comply with the insurance provisions of the each 404 (f) All time used for repairs under the provisions of 471 Financial sub-clauses 14(d) and 14(e) and for repairs of latent 472 Instrument (if any). 405 defects according to Clause 3 above, including any 473 (d) Subject to the provisions of the Financial Instru- 406 deviation, shall be for the Charterers’ account and shall 474 ments, if any, and Clause 38 and Clause 40, should the 407 form part of the Charter Period. 475 Vessel become an actual, The Owners shall not be responsible for any expenses 476 constructive, compromised or agreed a tTotal lLoss under 408 as are incident to the use and operation of the Vessel 477 the insurances required under sub-clause 13(a), all 409 for such time as may be required to make such repairs. 478 insurance payments for such loss shall be paid to the 410 (g) If the conditions of the above insurances permit 479 Owners (or if applicable, their financiers) in 411 additional insurance to be placed by the parties such 480 accordance with the agreed loss payable clauses who cover shall be limited to the amount for each party set 481 shall distribute the moneys between the out in Box 30 and Box 31, respectively. The Owners or 482 Owners and the Charterers according to their respective 412 the Charterers as the case may be shall immediately 483 interests. TheCharterers undertake to notify the Owners 413 furnish the other party with particulars of any additional 484 and the mortgageeMortgagee(s), if any, of any 414 insurance effected, including copies of any cover notes 485 occurrences in or policies and the written consent of the insurers of 486 consequence of which the Vessel is likely to become a 415 any such required insurance in any case where the 487 Ttotal Lloss as defined in this Clause. 416 consent of such insurers is necessary. 488 (e) The Owners shall upon the request of the 417 (h) Should the Vessel become an actual, constructive, 489 Charterers and subject to the Owners’ approval of 418 compromised or agreed total loss under the insurances 490 such request, promptly execute such documents as may required under sub-clause 14(a), all insurance payments 491 be required to enable the Charterers to abandon the 419 for such loss shall be paid to the Owners, who shall 492 Vessel to insurers and claim a constructive total loss. 420 distribute the moneys between themselves and the 493 (f) For the purpose of insurance coverage against hull 421 Charterers according to their respective interests. 494 and machinery and war risks under the provisions of 422 (i) If the Vessel becomes an actual, constructive, 495 sub-clause 13(a), the value of the Vessel is the sum 423 compromised or agreed total loss under the insurances 496 indicated in Box 29Clause 38. 424 arranged by the Owners in accordance with sub-clause 497 14. Insurance, Repairs and Classification – intentionally 425 14(a), this Charter shall terminate as of the date of such 498 omitted loss. 499 (Optional, only to apply if expressly agreed and stated 426 (j) The Charterers shall upon the request of the 500 in Box 29, in which event Clause 13 shall be considered 427 Owners, promptly execute such documents as may be 501 deleted). 428 required to enable the Owners to abandon the Vessel 502 (a) During the Charter Period the Vessel shall be kept 429 to the insurers and claim a constructive total loss. 503 insured by the Owners at their expense against hull and 430 (k) For the purpose of insurance coverage against hull 504 machinery and war risks under the form of policy or 431 and machinery and war risks under the provisions of 505 policies attached hereto. The Owners and/or insurers 432 sub-clause 14(a), the value of the Vessel is the sum 506 shall not have any right of recovery or subrogation433 indicated in Box 29. 507 against the Charterers on account of loss of or any 434 (l) Notwithstanding anything contained in sub-clause 508 damage to the Vessel or her machinery or appurt- 435 10(a), it is agreed that under the provisions of Clause 509 enances covered by such insurance, or on account of 436 14, if applicable, the Owners shall keep the Vessel’s 510 Class fully up to date with the Classification Society 511 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter indicated in Box 10 and maintain all other necessary 512 is released, including the provision of bail. 581 certificates in force at all times. 513 In such circumstances the Owners shall indemnify the 582 15. Redelivery See Clause 40 514 Charterers against any loss, damage or expense 583 At the expiration of the Charter Period the Vessel shall 515 incurred by the Charterers (including hire paid under 584 be redelivered by the Charterers to the Owners at a 516 this Charter) as a direct consequence of such arrest or 585 safe and ice-free port or place as indicated in Box 16, in 517 detention. 586 such ready safe berth as the Owners may direct. The 518 18. Lien 587 Charterers shall give the Owners not less than thirty 519 The Owners to have a lien upon all cargoes, sub-hires 588 (30) running days’ preliminary notice of expected date, 520 and sub-freights belonging or due to the Charterers or 589 range of ports of redelivery or port or place of redelivery 521 any sub-charterers and any Bill of Lading freight for all 590 and not less than fourteen (14) running days’ definite 522 claims under this Charter, and the Charterers to have a 591 notice of expected date and port or place of redelivery. 523 lien on the Vessel for all moneys paid in advance and 592 Any changes thereafter in the Vessel’s position shall be 524 not earned. 593 notified immediately to the Owners. 525 19. Salvage 594 The Charterers warrant that they will not permit the 526 All salvage and towage performed by the Vessel shall 595 Vessel to commence a voyage (including any preceding 527 be for the Charterers’ benefit and the cost of repairing 596 ballast voyage) which cannot reasonably be expected 528 damage occasioned thereby shall be borne by the 597 to be completed in time to allow redelivery of the Vessel 529 Charterers. 598 within the Charter Period. Notwithstanding the above, 530 should the Charterers fail to redeliver the Vessel within 531 20. Wreck Removal 599 The Charter Period, the Charterers shall pay the daily 532 In the event of the Vessel becoming a wreck or 600 equivalent to the rate of hire stated in Box 22 plus 10 533 obstruction to navigation the Charterers shall indemnify 601 per cent. or to the market rate, whichever is the higher, 534 the Owners against any sums whatsoever which the 602 for the number of days by which the Charter Period is 535 Ownersshall become liable to pay and shall pay in 603 exceeded. All other terms, conditions and provisions of 536 consequence of the Vessel becoming a wreck or 604 this Charter shall continue to apply. 537 obstruction to navigation. 605 Subject to the provisions of Clause 10, the Vessel shall 538 be redelivered to the Owners in the same or as good 539 21. General Average 606 structure, state, condition and class as that in which she 540 The Owners shall not contribute to General Average. 607 was delivered, fair wear and tear not affecting class 541 22. Assignment, Sub-Charter and Sale 608 excepted. 542 (a) The Charterers shall not assign this Charter nor 609 The Vessel upon redelivery shall have her survey cycles 543 sub-charter the Vessel on a bareboat basis except with 610 up to date and trading and class certificates valid for at 544 the prior consent in writing of the Owners, which shall 611 least the number of months agreed in Box 17. 545 not be unreasonably withheld, and subject to such terms 612 16. Non-Lien 546 and conditions as the Owners shall approve. 613 Other than Permitted Security Interests, Tthe 547 (b) The Owners shall not sell the Vessel during the 614 Charterers will not suffer, nor permit to be continued, currency of this Charter except with the prior written 615 any lien or encumbrance incurred by them or their 548 consent of the Charterers, which shall not be unreason- 616 agents, which might have priority over the title and 549 ably withheld, and subject to the buyer accepting an 617 interest of the Owners in the Vessel. The Charterers 550 assignment of this Charter. 618 further agree to fasten to the Vessel in a conspicuous 551 place and to keep so fastened during the Charter Period 552 23. Contracts of Carriage 619 a notice reading as follows: 553 *) (a) The Charterers are to procure that all documents 620 “This Vessel is the property of (name of Owners). It is 554 issued during the Charter Period evidencing the terms 621 under charter to (name of Charterers) and by the terms 555 and conditions agreed in respect of carriage of goods 622 of the Charter Party neither the Charterers nor the 556 shall contain a paramount clause incorporating any 623 Master have any right, power or authority to create, incur 557 legislation relating to carrier’s liability for cargo 624 or permit to be imposed on the Vessel any lien 558 compulsorily applicable in the trade; if no such legislation 625 whatsoever.” 559 exists,the documents shall incorporate the Hague-Visby 626 or a notice in such form as required by any Rules. The documents shall also contain the New Jason 627 Mortgagee(s). Clause and the Both-to-Blame Collision Clause. 628 17. Indemnity See Clauses 37.3, 38.5, 38.15, 38.16, 40.5, 560 *) (b) The Charterers are to procure that all passenger 629 41.2 and 50 tickets issued during the Charter Period for the carriage 630 (a) The Charterers shall indemnify the Owners against 561 of passengers and their luggage under this Charter shall 631 any loss, damage or expense incurred by the Owners 562 contain a paramount clause incorporating any legislation 632 arising out of or in relation to the operation of the Vessel 563 relating to carrier’s liability for passengers and their 633 by the Charterers, and against any lien of whatsoever 564 luggage compulsorily applicable in the trade; if no such 634 nature arising out of an event occurring during the 565 legislation exists, the passenger tickets shall incorporate 635 Charter Period. If the Vessel be arrested or otherwise 566 the Athens Convention Relating to the Carriage of 636 detained by reason of claims or liens arising out of her 567 Passengers and their Luggage by Sea, 1974, and any 637 operation hereunder by the Charterers, the Charterers 568 protocol thereto. 638 shall at their own expense take all reasonable steps to 569 *) Delete as applicable. 639 secure that within a reasonable time the Vessel is 570 24. Bank Corporate Guarantee 640 released, including the provision of bail. 571 (Optional, only to apply if Box 27 filled in) 641 Without prejudice to the generality of the foregoing, the 572 The Charterers undertake to furnish, on or about the 642 Charterers agree to indemnify the Owners against all 573 date of this Charter before delivery of consequences or liabilities arising from the Master, 574 the Vessel, a first class bank a corporate guarantee from 643 officers or agents signing Bills of Lading or other 575 the Guarantor or bond in the documents. 576 sum and at the place as indicated in Box 27 as 644 (b) If the Vessel be arrested or otherwise detained by 577 guarantee, and on or about the date of this Charter reason of a claim or claims against the Owners, the 578 the other Security Documents (as the case may be) as 645 Owners shall at their own expense take all reasonable 579 security, in each case for full performance of their steps to secure that within a reasonable time the Vessel 580 obligations under this Thisdocument is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter Charter. 646 imposed on all vessels, or is imposed selectively in any 707 25. Requisition/Acquisition 647 way whatsoever against vessels of certain flags or 708 (a) Subject to the provisions of the Financial 648 ownership, or against certain cargoes or crews or 709 Instruments (if any) and the General Assignment, Iin otherwise howsoever, or to proceed to an area where 710 the event of the Requisition for Hire of the Vessel she shall be subject, or is likely to be subject to 711 by any governmental or other competent authority 649 a belligerent’s right of search and/or confiscation. 712 (hereinafter referred to as “Requisition for Hire”) 650 (d) If the insurers of the war risks insurance, when 713 irrespective of the date during the Charter Period when 651 Clause 14 is applicable, should require payment of 714 “Requisition for Hire” may occur and irrespective of the 652 premiums and/or calls because, pursuant to the 715 length thereof and whether or not it be for an indefinite 653 Charterers’ orders, the Vessel is within, or is due to enter 716 or a limited period of time, and irrespective of whether it 654 and remain within, any area or areas which are specified 717 may or will remain in force for the remainder of the 655 by such insurers as being subject to additional premiums 718 Charter Period, this Charter shall not be deemed thereby 656 because of War Risks, then such premiums and/or calls 719 or thereupon to be frustrated or otherwise terminated 657 shall be reimbursed by the Charterers to the Owners at 720 and the Charterers shall continue to pay the stipulated 658 the same time as the next payment of hire is due. 721 hire in the manner provided by this Charter until the time 659 (e) The Charterers shall have the liberty: 722 when the Charter would have terminated pursuant to 660 (i) to comply with all orders, directions, recommend- 723 any of the provisions hereof always provided however 661 ations or advice as to departure, arrival, routes, 724 that if all hire has been paid by the Charterers 662 sailing in convoy, ports of call, stoppages, 725 hereunder then in the event of “Requisition for Hire” any destinations, discharge of cargo, delivery, or in any 726 Requisition other way whatsoever, which are given by the 727 Hire or compensation is received or receivable by the 663 Government of the Nation under whose flag the 728 Owners, the same shall be payable to the Charterers 664 Vessel sails, or any otherGovernment, body or 729 during the group whatsoever acting with the power to compel 730 remainder of the Charter Period or the period of the 665 compliance with their orders or directions; 731 “Requisition for Hire” whichever be the shorter. 666 (ii) to comply with the orders, directions or recom- 732 (b) In the event of the Owners being deprived of their 667 mendations of any war risks underwriters who have 733 ownership in the Vessel by any Compulsory Acquisition 668 the authority to give the same under the terms of 734 of the Vessel or requisition for title by any governmental 669 the war risks insurance; 735 or other competent authority (hereinafter referred to as 670 (iii) to comply with the terms of any resolution of the 736 “Compulsory Acquisition”), then, irrespective of the date 671 Security Council of the United Nations, any 737 during the Charter Period when “Compulsory Acqui- 672 directives of the European Community, the effective 738 sition” may occur, this Charter shall be deemed 673 orders of any other Supranational body which has 739 terminated as of the date of such “Compulsory 674 the right to issue and give the same, and with 740 Acquisition”. In such event Charter Hire to be considered 675 national laws aimed at enforcing the same to which 741 as earned and to be paid up to the date and time of 676 the Owners are subject, and to obey the orders 742 such “Compulsory Acquisition”. 677 and directions of those who are charged with their 743 enforcement. 744 26. War 678 (f) In the event of outbreak of war (whether there be a 745 (a) Subject to the provisions of the Financial 679 declaration of war or not) (i) between any two or more 746 Instruments (if any), Ffor the purpose of this Clause, the of the following countries: the United States of America; 747 words “War Russia; the United Kingdom; France; and the People’s 748 Risks” shall include any war (whether actual or 680 Republic of China, (ii) between any two or more of the 749 threatened), act of war, civil war, hostilities, revolution, 681 countries stated in Box 36, both the Owners and the 750 rebellion, civil commotion, warlike operations, the laying 682 Charterers shall have the right to cancel this Charter, 751 of mines (whether actual or reported), acts of piracy, 683 whereupon the Charterers shall redeliver the Vessel to 752 acts ofterrorists, acts of hostility or malicious damage, 684 the Owners in accordance with Clause 15, if the Vessel 753 blockades (whether imposed against all vessels or 685 has cargo on board after discharge thereof at 754 imposed selectively against vessels of certain flags or 686 destination, or if debarred under this Clause from 755 ownership, or against certain cargoes or crews or 687 reaching or entering it at a near, open and safe port as 756 otherwise howsoever), by any person, body, terrorist or 688 directed by the Owners, or if the Vessel has no cargo 757 political group, or the Government of any state 689 on board, at the port at which the Vessel then is or if at 758 whatsoever, which may be dangerous or are likely to be 690 sea at a near, open and safe port as directed by the 759 or to become dangerous to the Vessel, her cargo, crew 691 Owners. In all cases hire shall continue to be paid in 760 or other persons on board the Vessel. 692 accordance with Clause 11 and except as aforesaid all 761 (b) Without first obtaining the consent of the 693 other provisions of this Charter shall apply until 762 insurers to such employment and complying with the redeliverythe end of the Charter Period. 763 terms of Clause 38 and such other requirements as to extra insurance premiums or any other requirements 27. Commission – intentionally omitted 764 as may be prescribed by the insurers, tThe Vessel, The Owners to pay a commission at the rate indicated 765 unless the written consent of the in Box 33 to the Brokers named in Box 33 on any hire 766 Owners be first obtained, shall not continue to or go 694 paid under the Charter. If no rate is indicated in Box 33, 767 through any port, place, area or zone (whether of land 695 the commission to be paid by the Owners shall cover 768 or sea), or any waterway or canal, where it reasonably 696 the actual expenses of the Brokers and a reasonable 769 appears that the Vessel, her cargo, crew or other 697 fee for their work. 770 persons on board the Vessel, in the reasonable 698 If the full hire is not paid owing to breach of the Charter 771 judgement of the Owners, may be, or are likely to be, 699 by either of the parties the party liable therefor shall 772 exposed to War Risks. Should the Vessel be within any 700 indemnify the Brokers against their loss of commission. 773 such place as aforesaid, which only becomes danger- 701 Should the parties agree to cancel the Charter, the 774 ous, or is likely to be or tobecome dangerous, after her 702 Owners shall indemnify the Brokers against any loss of 775 entry into it, the Owners shall have the right to require 703 commission but in such case the commission shall not 776 the Vessel to leave such area. 704 exceed the brokerage on one year’s hire. 777 (c) The Vessel shall not load contraband cargo, or to 705 28. Termination See Clauses 40 and 44 778 pass through any blockade, whether such blockade be 706 (a) Charterers’ Default 779 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter The Owners shall be entitled to withdraw the Vessel from 780 28Clause 40.3, the service of the Charterers and terminate the Charter 781 the Owners shall in addition have the right to repossess 853 with immediate effect by written notice to the Charterers if: 782 the Vessel (i) the Charterers fail to pay hire in accordance with 783 from the Charterers at her current or next port of call, or 854 Clause 11. However, where there is a failure to 784 at a port or place convenient to them without hindrance 855 make punctual payment of hire due to oversight, 785 or interference by the Charterers, courts or local 856 negligence, errors or omissions on the part of the 786 authorities. Pending physical repossession of the Vessel 857 Charterers or their bankers, the Owners shall give 787 in accordance with this Clause 29 and/or Clause 40, the 858 the Charterers written notice of the number of clear 788 Charterers shall banking days stated in Box 34 (as recognised at 789 hold the Vessel as gratuitous bailee only to the Owners 859 the agreed place of payment) in which to rectify 790 and the Charterers shall procure that the master and the failure, and when so rectified within such 791 crew follow the orders and directions of the Owners. number of days following the Owners’ notice, the 792 The Owners shall arrange for an authorised represent- 860 payment shall stand as regular and punctual. 793 ative to board the Vessel as soon as reasonably 861 Failure by the Charterers to pay hire within the 794 practicable following the termination of the Charter. The 862 number of days stated in Box 34 of their receiving 795 Vessel shall be deemed to be repossessed by the 863 the Owners’ notice as provided herein, shall entitle 796 Owners from the Charterers upon the boarding of the 864 the Owners to withdraw the Vessel from the service 797 Vessel by the Owners’ representative. All arrangements 865 of the Charterers and terminate the Charter without 798 and expenses relating to the settling of wages, 866 further notice; 799 disembarkation and repatriation of the Charterers’ 867 (ii) the Charterers fail to comply with the requirements of: 800 Master, officers and crew shall be the sole responsibility 868 (1) Clause 6 (Trading Restrictions) 801 of the Charterers. 869 (2) Clause 13(a) (Insurance and Repairs) 802 30. Dispute Resolution 870 provided that the Owners shall have the option, by 803 *) (a) This Contract Charter and any non-contractual 871 written noticeto the Charterers, to give the 804 obligations arising out of or in connection with it shall be Charterers a specified number of days grace within 805 governed by and construed which to rectify the failure without prejudice to the 806 in accordance with English law and any dispute arising 872 Owners’ right to withdraw and terminate under this 807 out of or in connection with this Contract Charter shall be 873 Clause if the Charterers fail to comply with such 808 referred notice; 809 to arbitration in London in accordance with the Arbitration 874 (iii) the Charterers fail to rectify any failure to comply 810 Act 1996 or any statutory modification or re-enactment 875 with the requirements of sub-clause 10(a)(i) 811 thereof save to the extent necessary to give effect to 876 (Maintenance and Repairs) as soon as practically 812 the provisions of this Clause. 877 possible after the Owners have requested them in 813 The arbitration shall be conducted in accordance with 878 writing so to do and in any event so that the Vessel’s 814 the London Maritime Arbitrators Association (LMAA) 879 insurance cover is not prejudiced. 815 Terms current at the time when the arbitration proceed- 880 (b) Owners’ Default 816 ings are commenced. 881 If the Owners shall by any act or omission be in breach 817 The reference shall be to three arbitrators. A party 882 of their obligations under this Charter to the extent that 818 wishing to refer a dispute to arbitration shall appoint its 883 the Charterers are deprived of the use of the Vessel 819 arbitrator and send notice of such appointment in writing 884 and such breach continues for a period of fourteen (14) 820 to the other party requiring the other party to appoint its 885 running days after written notice thereof has been given 821 own arbitrator within 14 calendar days of that notice and 886 by the Charterers to the Owners, the Charterers shall 822 stating that it will appoint its arbitrator as sole arbitrator 887 be entitled to terminate this Charter with immediate effect 823 unless the other party appoints its own arbitrator and 888 by written notice to the Owners. 824 gives notice that it has done so within the 14 days 889 (c) Loss of Vessel 825 specified. If the other party does not appoint its own 890 This Charter shall be deemed to be terminated if the 826 arbitrator and give notice that it has done so within the 891 Vessel becomes a total loss or is declared as a 827 14 days specified, the party referring a dispute to 892 constructive orcompromised or arranged total loss. For 828 arbitration may, without the requirement of any further 893 the purpose of this sub-clause, the Vessel shall not be 829 prior notice to the other party, appoint its arbitrator as 894 deemed to be lost unless she has either become an 830 sole arbitrator and shall advise the other party 895 actual total loss or agreement has been reached with 831 accordingly. The award of a sole arbitrator shall be 896 her underwriters in respect of her constructive, 832 binding on both parties as if he had been appointed by 897 compromised or arranged total loss or if such agreement 833 agreement. 898 with her underwriters is not reached it is adjudged by a 834 Nothing herein shall prevent the parties agreeing in 899 competent tribunal that a constructive loss of the Vessel 835 writing to vary these provisions to provide for the 900 has occurred. 836 appointment of a sole arbitrator. 901 (d) Either party shall be entitled to terminate this 837 In cases where neither the claim nor any counterclaim 902 Charter with immediate effect by written notice to the 838 exceeds the sum of US$50,000 (or such other sum as 903 other party in the event of an order being made or 839 the parties may agree) the arbitration shall be conducted 904 resolution passed for the winding up, dissolution, 840 in accordance with the LMAA Small Claims Procedure 905 liquidation or bankruptcy of the other party (otherwise 841 current at the time when the arbitration proceedings are 906 than for the purpose of reconstruction or amalgamation) 842 commenced. The language or any arbitration 907 or if a receiver is appointed, or if it suspends payment, 843 proceedings shall be English. ceases to carry on business or makes any special 844 *) (b) This Contract shall be governed by and construed 908 arrangement or composition with its creditors. 845 in accordance with Title 9 of the United States Code 909 (e) The termination of this Charter shall be without 846 and the Maritime Law of the United States and any 910 prejudice to all rights accrued due between the parties 847 dispute arising out of or in connection with this Contract 911 prior to the date of termination and to any claim that 848 shall be referred to three persons at New York, one to 912 either party might have. 849 be appointed by each of the parties hereto, and the third 913 29. Repossession 850 by the two so chosen; their decision orthat of any two 914 In the event of the Owners have made a request for 851 of them shall be final, and for the purposes of enforcing 915 redelivery of the Vessel termination of this Charter in any award, judgement may be entered on an award by 916 accordance with the applicable provisions of Clause 852 any court of competent jurisdiction. The proceedings 917 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter shall be conducted in accordance with the rules of the 918 communication shall be as stated in Boxes 3 and 4 992 Society of Maritime Arbitrators, Inc. 919 respectively. 993 In cases where neither the claim nor any counterclaim 920 exceeds the sum of US$50,000 (or such other sum as 921 the parties may agree) the arbitration shall be conducted 922 in accordance with the Shortened Arbitration Procedure 923 of the Society of Maritime Arbitrators, Inc. current at 924 the time when the arbitration proceedings are commenced. 925 *) (c) This Contract shall be governed by and construed 926 in accordance with the laws of the place mutually agreed 927 by the parties and any dispute arising out of or in 928 connection with this Contract shall be referred to 929 arbitration at a mutually agreed place, subject to the 930 procedures applicable there. 931 (d) Notwithstanding (a), (b) or (c) above, the parties 932 may agree at any time to refer to mediation any 933 difference and/or dispute arising out of or in connection 934 with this Contract. 935 In the case of a dispute in respect of which arbitration 936 has been commenced under (a), (b) or (c) above, the 937 following shall apply:- 938 (i) Either party may at any time and from time to time 939 elect to refer the dispute or part of the dispute to 940 mediation by service on the other party of a written 941 notice (the “Mediation Notice”) calling on the other 942 party to agree to mediation. 943 (ii) The other party shall thereupon within 14 calendar 944 days of receipt of the Mediation Notice confirm that 945 they agree to mediation, in which case the parties 946 shall thereafter agree a mediator within a further 947 14 calendar days, failing which on the application 948 of either party a mediator will be appointed promptly 949 by the Arbitration Tribunal (“the Tribunal”) or such 950 person as the Tribunal may designate for that 951 purpose. The mediation shall be conducted in such 952 place and in accordance with such procedure and 953 on such terms as the parties may agree or, in the 954 event of disagreement, as may be set by the 955 mediator. 956 (iii) If the other party does not agree to mediate, that 957 fact may be brought to the attention of the Tribunal 958 and may be taken into account by the Tribunal when 959 allocating the costs of the arbitration as between 960 the parties. 961 (iv) The mediationshall not affect the right of either 962 party to seek such relief or take such steps as it 963 considers necessary to protect its interest. 964 (v) Either party may advise the Tribunal that they have 965 agreed to mediation. The arbitration procedure shall 966 continue during the conduct of the mediation but 967 the Tribunal may take the mediation timetable into 968 account when setting the timetable for steps in the 969 arbitration. 970 (vi) Unless otherwise agreed or specified in the 971 mediation terms, each party shall bear its own costs 972 incurred in the mediation and the parties shall share 973 equally the mediator’s costs and expenses. 974 (vii) The mediation process shall be without prejudice 975 and confidential and no information or documents 976 disclosed during it shall be revealed to the Tribunal 977 except to the extent that they are disclosable under 978 the law and procedure governing the arbitration. 979 (Note: The parties should be aware that the mediation 980 process may not necessarily interrupt time limits.) 981 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 982 30(a) of this Clause shall apply. Sub-clause 30(d) shall 983 apply in all cases. 984 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 985 indicate alternative agreed in Box 35. 986 31. Notices See Clause 43 987 (a) Any notice to be given by either party to the other 988 party shall be in writing and may be sent by fax, telex, 989 registered or recorded mail or by personal service. 990 (b) The address of the Parties for service of such 991 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. “BARECON 2001” Standard Bareboat Charter OPTIONAL PART III PART PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) 1. Specifications and Building Contract 1 and upon and after such acceptance, subject to Clause 69 (a) The Vessel shall be constructed in accordance with 2 1(d), the Charterers shall not be entitled to make any claim 70 the Building Contract (hereafter called “the Building 3 against the Owners in respect of any conditions, 71 Contract”) as annexed to this Charter, made between the 4 representations or warranties, whether express or implied, 72 Builders and the Owners and in accordance with the 5 as to the seaworthiness of the Vessel or in respect of delay 73 specifications and plans annexed thereto, such Building 6 in delivery. 74 Contract, specifications and plans having been counter- 7 (b) If for any reason other than a default by the Owners 75 signed as approved by the Charterers. 8 under the Building Contract, the Builders become entitled 76 (b) No change shall be made in the Building Contract or 9 under that Contract not to deliver the Vessel to the Owners, 77 in the specifications or plans of the Vessel as approved by 10 the Owners shall upon giving to the Charterers written 78 the Charterers as aforesaid, without the Charterers’ 11 notice of Builders becoming so entitled, be excused from 79 consent. 12 giving delivery of the Vessel to the Charterers and upon 80 (c) The Charterers shall have the right to send their 13 receipt of such notice by the Charterers this Charter shall 81 representative to the Builders’ Yard to inspect the Vessel 14 cease to have effect. 82 during the course of her construction to satisfy themselves 15 (c) If for any reason the Owners become entitled under 83 that construction is in accordance with such approved 16 the Building Contract to reject the Vessel the Owners shall, 84 specifications and plans as referred to under sub-clause 17 before exercising such right of rejection, consult the 85 (a) of this Clause. 18 Charterers and thereupon 86 (d) The Vessel shall be built in accordance with the 19 (i) if the Charterers do not wish to take delivery of the Vessel 87 Building Contract and shall be of the description set out 20 they shall inform the Owners within seven (7) running days 88 therein. Subject to the provisions of sub-clause 2(c)(ii) 21 by notice in writing and upon receipt by the Owners of such 89 hereunder, the Charterers shallbe bound to accept the 22 notice this Charter shall cease to have effect; or 90 Vessel from the Owners, completed and constructed in 23 (ii) if the Charterers wish to take delivery of the Vessel 91 accordance with the Building Contract, on the date of 24 they may by notice in writing within seven (7) running days 92 delivery by the Builders. The Charterers undertake that 25 require the Owners to negotiate with the Builders as to the 93 having accepted the Vessel they will not thereafter raise 26 terms on which delivery should be taken and/or refrain from 94 any claims against the Owners in respect of the Vessel’s 27 exercising their right to rejection and upon receipt of such 95 performance or specification or defects, if any. 28 notice the Owners shall commence such negotiations and/ 96 Nevertheless, in respect of any repairs, replacements or 29 or take delivery of the Vessel from the Builders and deliver 97 defects which appear within the first 12 months from 30 her to the Charterers; 98 delivery by the Builders, the Owners shall endeavour to 31 (iii) in no circumstances shall the Charterers be entitled to 99 compel the Builders to repair, replace or remedy any defects 32 reject the Vessel unless the Owners are able to reject the 100 or to recover from the Builders any expenditure incurred in 33 Vessel from the Builders; 101 carrying out such repairs, replacements or remedies. 34 (iv) if this Charter terminates under sub-clause (b) or (c) of 102 However, the Owners’ liability to the Charterers shall be 35 this Clause, the Owners shall thereafter not be liable to the 103 limited to the extent the Owners have a valid claim against 36 Charterers for any claim under or arising out of this Charter 104 the Builders under the guarantee clause of the Building 37 or its termination. 105 Contract (a copy whereof has been supplied to the 38 (d) Any liquidated damages for delay in delivery under the 106 Charterers). The Charterers shall be bound to accept such 39 Building Contract and any costs incurred in pursuing a claim 107 sums as the Owners are reasonably able to recover under 40 therefor shall accrue to the account of the party stated in 108 this Clause and shall make no further claim on the Owners 41 Box 41(c) or if not filled in shall be shared equally between 109 for the difference between the amount(s) so recovered and 42 the parties. 110 the actual expenditure on repairs, replacement or 43 3. Guarantee Works 111 remedying defects or for any loss of time incurred. 44 If not otherwise agreed, the Owners authorise the 112 Any liquidated damages for physical defects or deficiencies 45 Charterers to arrange for theguarantee works to be 113 shall accrue to the account of the party stated in Box 41(a) 46 performed in accordance with the building contract terms, 114 or if not filled in shall be shared equally between the parties. 47 and hire to continue during the period of guarantee works. 115 The costs of pursuing a claim or claims against the Builders 48 The Charterers have to advise the Owners about the 116 under this Clause (including any liability to the Builders) 49 performance to the extent the Owners may request. 117 shall be borne by the party stated in Box 41(b) or if not 50 filled in shall be shared equally between the parties. 51 4. Name of Vessel 118 The name of the Vessel shall be mutually agreed between 119 2. Time and Place of Delivery 52 the Owners and the Charterers and the Vessel shall be 120 (a) Subject to the Vessel having completed her 53 painted in the colours, display the funnel insignia and fly 121 acceptance trials including trials of cargo equipment in 54 the house flag as required by the Charterers. 122 accordance with the Building Contract and specifications 55 to the satisfaction of the Charterers, the Owners shall give 56 5. Survey on Redelivery 123 and the Charterers shall take delivery of the Vessel afloat 57 The Owners and the Charterers shall appoint surveyors 124 when ready for delivery and properly documented at the 58 for the purpose of determining and agreeing in writing the 125 Builders’ Yard or some other safe and readily accessible 59 condition of the Vessel at the time of re-delivery. 126 dock, wharf or place as may be agreed between the parties 60 Without prejudice to Clause 15 (Part II), the Charterers 127 hereto and the Builders. Under the Building Contract the 61 shall bear all survey expenses and all other costs, if any, 128 Builders have estimated that the Vessel will be ready for 62 including the cost of docking and undocking, if required, 129 delivery to the Owners as therein provided but the delivery 63 as well as all repair costs incurred. The Charterers shall 130 date for the purpose of this Charter shall be the date when 64 also bear all loss of time spent in connection with any 131 the Vessel is in fact ready for delivery by the Builders after 65 docking and undocking as well as repairs, which shall be 132 completion of trials whether that be before or after as 66 paid at the rate of hire per day or pro rata. 133 indicated in the Building Contract. The Charterers shall not 67 be entitled to refuse acceptance of delivery of the Vessel 68 This document is a computer generatedBARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART IV PART HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) On expiration of this Charter and provided the Charterers 1 In exchange for payment of the last month’s hire 28 have fulfilled their obligations according to Part I and II 2 instalment the Sellers shall furnish the Buyers with a 29 as well as Part III, if applicable, it is agreed, that on 3 Bill of Sale duly attested and legalized, together with a 30 payment of the final payment of hire as per Clause 11 4 certificate setting out the registered encumbrances, if 31 the Charterers have purchased the Vessel with 5 any. On delivery of the Vessel the Sellers shall provide 32 everything belonging to her and the Vessel is fully paid 6 for deletion of the Vessel from the Ship’s Register and 33 for. 7 deliver a certificate of deletion to the Buyers. 34 In the following paragraphs the Owners are referred to 8 The Sellers shall, at the time of delivery, hand to the 35 as the Sellers and the Charterers as the Buyers. 9 Buyers all classification certificates (for hull, engines, 36 anchors, chains, etc.), as well as all plans which may 37 The Vessel shall be delivered by the Sellers and taken 10 be in Sellers’ possession. 38 over by the Buyers on expiration of the Charter. 11 The Wireless Installation and Nautical Instruments, 39 The Sellers guarantee that the Vessel, at the time of 12 unless on hire, shall be included in the sale without any 40 delivery, is free from all encumbrances and maritime 13 extra payment. 41 liens or any debts whatsoever other than those arising 14 from anything done or not done by the Buyers or any 15 The Vessel with everything belonging to her shall be at 42 existing mortgage agreed not to be paid off by the time 16 Sellers’ risk and expense until she is delivered to the 43 of delivery. Should any claims, which have been incurred 17 Buyers, subject to the conditions of this Contract and 44 prior to the time of delivery be made against the Vessel, 18 the Vessel with everything belonging to her shall be 45 the Sellers hereby undertake to indemnify the Buyers 19 delivered and taken over as she is at the time of delivery, 46 against all consequences of such claims to the extent it 20 after which the Sellers shall have no responsibility for 47 can be proved that the Sellers are responsible for such 21 possible faults or deficiencies of any description. 48 claims. Any taxes, notarial, consular and other charges 22 The Buyers undertake to pay for the repatriation of the 49 and expensesconnected with the purchase and 23 Master, officers and other personnel if appointed by the 50 registration under Buyers’ flag, shall be for Buyers’ 24 Sellers to the port where the Vessel entered the Bareboat 51 account. Any taxes, consular and other charges and 25 Charter as per Clause 3 (Part II) or to pay the equivalent 52 expenses connected with closing of the Sellers’ register, 26 cost for their journey to any other place. 53 shall be for Sellers’ account. 27 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY (Optional, only to apply if expressly agreed and stated in Box 43) 1. Definitions 1 3. Termination of Charter by Default 17 For the purpose of this PART V, the following terms shall 2 If the Vessel chartered under this Charter is registered 18 have the meanings hereby assigned to them: 3 in a Bareboat Charter Registry as stated in Box 44, and 19 “The Bareboat Charter Registry” shall mean the registry 4 if the Owners shall default in the payment of any amounts 20 of the State whose flag the Vessel will fly and in which 5 due under the mortgage(s) specified in Box 28, the 21 the Charterers are registered as the bareboat charterers 6 Charterers shall, if so required by the mortgagee, direct 22 during the period of the Bareboat Charter. 7 the Owners to re-register the Vessel in the Underlying 23 “The Underlying Registry” shall mean the registry of the 8 Registry as shown in Box 45. 24 state in which the Owners of the Vessel are registered 9 In the event of the Vessel being deleted from the 25 as Owners and to which jurisdiction and control of the 10 Bareboat Charter Registry as stated in Box 44, due to a 26 Vessel will revert upon termination of the Bareboat 11 default by the Owners in the payment of any amounts 27 Charter Registration. 12 due under the mortgage(s), the Charterers shall have 28 2. Mortgage 13 the right to terminate this Charter forthwith and without 29 The Vessel chartered under this Charter is financed by 14 prejudice to any other claim they may have against the 30 a mortgage and the provisions of Clause 12(b) (Part II) 15 Owners under this Charter. 31 shall apply. 16 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER 26. Place of payment: also state beneficiary and bank account (ci. 11) Beneficiary: Antiparos Shipping Corporation Account No.: 1200048491 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 27. Bank Corporate guarantee/bond (sum and place) (ci. 24) (optional) See Clause 24 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/place of business) (ci. 12) See clause 35 29. Insurance (hull and machinery and war risks) (state value acc. To cl. 13(f) or, if applicable, acc, to ci. 14(k)) (also state if ci. 14 applies) See Clause 38 – CLAUSE 14 DOES NOT APPLY 30. Additional Insurance cover, if any, for Owners’ account limited to (ci. 13(b) or, if applicable, ci. 14(g)) See Clause 38 31. Additional insurance cover, if any, for Charterers’ account limited to (ci. 13(b) or, if applicable, ci. 14(g)) See Clause 38 32. Latent defects (only to be filled in if period other than stated in ci. 3) N/A 33.Brokerage commission and to whom payable (ci. 27) N/A 34. Grace period (state number of clear banking days Business Days) (ci.28) See Clause 44 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed place of Arbitration must be stated (ci. 30) See Clause 30(a) 36. War cancellation (indicate countries agreed) (ci. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) No, Part III does not apply 38. Name and place of Builders (only to be filled in if PART III applies) N/A 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A 40. Date of Building Contract (only to be filled in if PART III applies) N/A 41. Liquidated damages and costs shall accrue to (state party acc. To ci.1) a) N/A b) N/A c) N/A 42. Hire/purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No, Part V does not apply 44. Flag and Country of the Bareboat Charter Registry (only to be filed in if PART V Applies) N/A 45. Country of the Underlying Registry (only to be filled in in if PART V applies) N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE – It is mutually agreed that this Contract shall be performed subject to tothe conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) For and behalf of the Owners Name: Title: Signature (Charterers) For and on behalf of the Charterers Name: Title: This document is a computer generated BARECON 2001 form printed by authority of BIMCO.“BARECON 2001” STANDARD BAREBOAT CHARTER PART 1 26. Place of payment: also state beneficiary and bank account (ci.11) Beneficiary: Antiparos Shopping Corporation Account no: 1200048491 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 27. BANK Corporation guarantee/bond (sum and place) CI.24) (optional) See Clause 24 28. mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies stste date of Financial instrument and name of Mortagee(s)Place of business) (CI.12) See Clause 35 29.Insurance (hull and machinery and war riskd)(stste value acc. To CI.13(f) or, applicable, acc. To CI.14(k)) (also state if CI.14 applies) See Clause 38-CLAUSE 14 DOES NOT APPLY 30. Additional insurance cover, if any, for Owners’ account limited to (CI.13(b) or, if applicable. CI.14(g)) See Clause 38 31. Additional insurance cover, if any, for charterers’ account limited to (CI.13(b) or, if applicable. CI.14(g)) See Clause 38 32. Latent defects (only to be filled in if period other than stated in CI.3) N/A 33. Brokerage commission and to whom payable(CI.27) N/A 34. Grace period (state number of clear banking dayBusinees Days(CI.28) See Clause 44 35. Dispute Resolution (stste 30(a).30(b), or 30(c); agreed place of Arbitration must be stated (CI.30) See Clause 30(a) 36. War cancellation (indicate countries agreed) (CI.26(f) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies ) (optional) No, Part III does not apply 38. Name and place of Builders (only be filled in if PART III applies) N/A 39. Vessei’s Yard Building No. (only to be filled in if PART III applies) N/A 40. Date Of Building Contract (only to be filled in if PART III applies) N/A 41. Liquidated damages and costs shall accrue to (stste party acc. To CI.1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “ no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No, Part V does not apply 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A 45. Country of the Underlying Registry (only to be filled in if PART III applies) N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE – It ismutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form par of this Charter expressly agreed and state in Boxes 37, 43. If PART III. Execution VersionADDITIONAL CLAUSES TO BARECON 2001 DATED 31 MARCH 2018CLAUSE 32 – CHARTER PERIOD 32.1For the avoidance of doubt, notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: (a)in full force and effect; and (b)valid, binding and enforceable against the parties hereto, (c)with effect from the date of this Charter until the end of the Charter Period (subject to the terms of this Charter). 32.2The Charter Period shall, subject to the terms of this Charter, continue for a period of seventy two (72) months from the Commencement Date.CLAUSE 33 – CANCELLATION 33.1If: (a)a Termination Event occurs prior to the delivery of the Vessel by the Charterers as sellers to Owners as buyers under the MOA; (b)it becomes unlawful for the Owners (as buyers) to perform or comply with any or all of their obligations under the MOA or any of the obligations ofthe Owners under the MOA are not or cease to be legal, valid, binding and enforceable; and/or (c)the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason,then this Charter shall immediately terminate and be cancelled (provided that any provision hereof expressed to survive such termination orcancellation shall so do in accordance with its terms) without the need for either of the Owners or the Charterers to take any action whatsoever.CLAUSE 34 – DELIVERY OF VESSEL 34.1 (a)This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. (b)The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: (i)the delivery of the Vessel by the Charterers as sellers to the Owners as buyers in accordance with the terms of the MOA with such Deliveryoccurring on or before the Cancelling Date(and, for the purposes of this Charter, the Vessel shall be deemed delivered to the Chartererssimultaneously with delivery of the Vessel to the Owners pursuant to the MOA); (ii)no Potential Termination Event or Termination Event having occurred and being continuing as at the Commencement Date; 1SINGAPORE/89220790v10 (iii)the representations and warranties contained in Clause 45 being true and correct on the date of this Charter and each day thereafter until andincluding the last day of the Charter Period; (iv)the Owners having received from the Charterers: (A)on or prior to Delivery, the documents or evidence set out in Part A of Schedule II in form and substance satisfactory to them; and (B)after Delivery, the documents or evidence set out in Part B of Schedule II in form and substance satisfactory to them within the timeperiods set out thereunder;and if any of the documents listed in sub-paragraph (iv) above are not in the English language then they shall be accompanied by a certifiedEnglish translation. 34.2The conditions precedent or conditions subsequent specified in Clause (b)(iv) are inserted for the sole benefit of the Owners and may be waived ordeferred in whole or in part and with or without conditions by the Owners. 34.3On delivery to and acceptance by the Owners of the Vessel under the MOA from the Charterers as sellers and subject to the provisions of this Clause34, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterersshall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter. 34.4On Delivery, as evidence of the commencement of the Charter Period the Charterers shall sign and deliver to the Owners the Acceptance Certificate.Without prejudice to this Clause 34.4, the Charterers shall be deemed to have accepted the Vessel under this Charter and the commencement of theCharter Period having started, on Delivery even if for whatever reason, the Acceptance Certificate is not signed and/or the Charterers do not takeactual possession of the Vessel at that time. 34.5Save where any of the events set out under Clause 44.1(f) (iv), (v), (vi) and (viii) below applies in relation to the Owners (and in the absence of aTermination Event or Potential Termination Event having occurred at the same time), the Charterers shall not be entitled for any reason whatsoever torefuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners under the MOA from theCharterers as sellers, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including, withoutlimitation, any loss of profit or any loss or otherwise: (a)resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or (b)arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. 34.6The Owners will not and shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and greases(whether in storage tanks and unopened drums or otherwise) except such items (including bunkers, lubricating oils, unbroached provisions, paints,ropes and other consumable stores) as are on the Vessel on Delivery. 34.7The Charterers shall, following the Owners’ delivery of items on board the Vessel on Delivery pursuant to Clause 34.6, keep all such items on boardthe Vessel for the Charterers’ own use. 2SINGAPORE/89220790v10CLAUSE 35 – QUIET ENJOYMENT 35.1Provided that no Potential Termination Event or Termination Event has occurred pursuant to the terms of this Charter, the Owners hereby agree not todisturb or interfere (or instruct or authorise another party to disturb or interfere) with the Charterers’ lawful use, possession and quiet enjoyment of theVessel during the Charter Period. 35.2The Owners shall use best endeavors to procure that their financier(s) enter into a Quiet Enjoyment Agreement with the Charterers on such terms asmay be mutually agreed between the Owners, the Owners’ financier(s) and the Charterers. 35.3Subject to Clause 35.1 above, the Charterers acknowledge that, at any time during the Charter Period: (a)the Owners are entitled to enter into certain funding arrangements with their financier(s), (the “Mortgagee”), in order to finance in part or in full of thePurchase Price (such financing amount not to exceed the Outstanding Principal Balance at the relevant time), which funding arrangements may besecured, inter alia, by the relevant Financial Instruments; (b)the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above: (i)execute a ship mortgage over the Vessel or any other Financial Instrument in favour of a Mortgagee; (ii)assign their rights and interests to, in or in connection with this Charter and any other Leasing Document in favour of that Mortgagee; (iii)assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel infavour of that Mortgagee; and (iv)enter into any other document or arrangement which is necessary to give effect to such financing arrangements; and (c)the Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all suchinstructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any FinancialInstrument or as may be directed from to time during the currency of this Charter by the Mortgagee in conformity with any Financial Instrument. TheCharterers further agree and acknowledge all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree toacknowledge this in writing in any form that may be reasonably required by the Mortgagee.CLAUSE 36 – CHARTERHIRE 36.1In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers herebyirrevocably and unconditionally agree to pay to the Owners, the Charterhire, the Advance Charterhire and the Purchase Obligation Price or, as thecase may be, the Purchase Option Price. 36.2The Charterers shall pay the Advance Charterhire to the Owners on the Commencement Date which amount shall be deemed paid on such date by itbeing set off against an equivalent portion of the Purchase Price payable by the Owners as buyers to the Charterers as sellers under the MOA on theCommencement Date pursuant to the terms thereof and which, for the avoidance of any doubt, shall be unsecured and non-refundable under allcircumstances and no interest shall accrue on the Advance Charterhire. 3SINGAPORE/89220790v1036.3Subject to the terms of this Clause 36, the Charterers shall pay the Charterhire quarterly in arrears in twenty four (24) consecutive instalments to theOwners under this Charter with the first instalment of the Charterhire payable on the date falling three months after the Commencement Date and thefinal instalment of the Charterhire payable on the last day of the Charter Period. 36.4The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay all Charterhire, Advance Charterhire and other amountspayable under the Leasing Documents shall be absolute and unconditional under any and all circumstances and shall not be affected by anycircumstances of any nature whatsoever including but not limited to: (a)any set-off (except in the case of the Advance Charterhire which shall be set off in accordance with Clause 36.2), counterclaim, recoupment, defence,claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, withoutlimitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Ownersand the Charterers; (b)any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange,release or surrender of, or other dealing in, any security for any such indebtedness or obligation; (c)any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; (d)any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vesselfor any particular trade; (e)the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel; (f)any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with orinterruption or cessation in, the use or possession thereof by the Charterers; (g)any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers; (h)any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the termsand provisions of this Charter or the other Leasing Documents by any party to this Charter or any other person; (i)any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to beexecuted pursuant to this Charter; or (j)any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any othercause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under thisCharter. 36.5Time of payment of the Charterhire, the Advance Charterhire and other payments by the Charterers shall be of the essence of this Charter and theother Leasing Documents. 36.6All payments of the Charterhire, the Advance Charterhire and any other amounts payable under the Leasing Documents shall be made in Dollars andshall be received by the Owners in same day available funds and by not later than 6:00pm (Shanghai time) on the due date thereof. 4SINGAPORE/89220790v1036.7All Charterhire and any moneys payable hereunder shall be payable by the Charterers to the Owners to such account as the Owners may notify theCharterers in writing. 36.8Payment of the Charterhire and the Advance Charterhire shall be at the Charterers’ risk until receipt by the Owners. 36.9All stamp duty, value added tax, withholding or other taxes (not including taxes levied on the income of the Owners) and import and export dutiesand all other similar types of charges which may be levied or assessed on or in connection with: (a)the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners;and (b)the import, export, purchase, delivery and re-delivery of the Vessel,shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and AdvanceCharterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts. 36.10If the Charterers fail to make any payment due under this Charter on the due date, they shall pay interest on such late payment at the default rate of2 per cent. (2 %) per annum (for the avoidance of doubt, such default interest rate applies in addition to the applicable Interest Rate if no paymentdefault were to occur) from the date on which such payment became due until the date of payment thereof. 36.11All default interest and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall becalculated on the basis of the actual number of days elapsed and a 360 day year. 36.12Any payment which is due to be made on a day which is not a Business Day, shall be made on the preceding Business Day in the same calendarmonth.CLAUSE 37 – POSSESSION OF VESSEL 37.1The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall notpermit the creation of any Security Interest thereon other than the Permitted Security Interests. 37.2The Charterers shall promptly notify any party including any Approved Subcharterer (as the Owners may request), in writing that the Vessel is theproperty of the Owners and the Charterers shall provide the Owners with a copy of such written notification and reasonably satisfactory evidence thatsuch party has received such written notification. 37.3Other than in the circumstances specified in Clause 37.4, if the Vessel is arrested, seized, impounded, forfeited, detained or taken out of theirpossession or control (whether or not pursuant to any distress, execution or other legal process but other than due to piracy events which are insuredagainst pursuant to Clause 38), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provisionof security or otherwise do such lawful things as the circumstances may require) and shall (if it will or is likely to exceed 30 days) immediately notifythe Owners of such event and shall indemnify the Owners against all losses, documented costs or documented charges incurred by the Owners byreason thereof in re-taking possession or otherwise in re-acquiring the Vessel. Without prejudice to the generality of the foregoing, the Charterersagree to indemnify the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or otherdocuments. 5SINGAPORE/89220790v1037.4If the Vessel is arrested or otherwise detained solely because of the Owners’ direct actions or omissions and for reasons which are not in any part aconsequence of a Relevant Person’s (or its affiliate’s) contributory negligence and/or wilful misconduct, the Owners shall at their own expense takeall reasonable steps to procure that within a reasonable time the Vessel is released, including the provision of bail. 37.5The Charterers shall pay and discharge or cause any Approved Subcharterer to pay and discharge all obligations and liabilities whatsoever whichhave given or may give rise to liens on or claims enforceable against the Vessel and take all steps to prevent (and in connection with procuring anyApproved Subcharterer in doing the above, take all reasonable steps to procure any Approved Subcharterer to prevent) an arrest (threatened orotherwise) of the Vessel.Clause 38 – INSURANCE 38.1The Charterers shall procure that insurances are effected in form and substance satisfactory to the Owners: (a)in Dollars; (b)in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis in an amountof 120% of the higher from time to time of: (i) the aggregate of the then Outstanding Principal Balance and (ii) the lower of the Certified Book Valueand Market Value; (c)in the case of oil pollution liability risks for the Vessel, for an aggregate amount equal to the highest level of cover from time to time available underprotection and indemnity club entry and in the international marine insurance market and for an amount of not less than $1,000,000,000; and (d)in relation to protection and indemnity risks in respect of the full tonnage of the Vessel; (e)through approved brokers and with first class international insurers and/or underwriters reasonably acceptable to the Owners (including having aStandard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above) or, in the case of war risks andprotection and indemnity risks, in a war risks and protection and indemnity risks associations reasonably acceptable to the Owners (including being amember of the International Group of Protection and Indemnity Clubs); and (f)on no less favourable terms which the Charterers may be under an obligation (if any) to maintain under the terms of any Approved BareboatSubcharter. 38.2In addition to the terms set out in Clause 13(a), the Charterers shall procure that the obligatory insurances shall: (a)subject always to paragraph (ii), name the Charterers, the Approved Manager and the Owners (if so required by the Owners) as the only namedassureds unless the interest of every other named assured or co-assured is limited: (ii)in respect of any obligatory insurances for hull and machinery and war risks; (1)to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and (2)to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of anyclaims made against them); and 6SINGAPORE/89220790v10 (iii)in respect of any obligatory insurances for protection and indemnity risks, to any recoveries they are entitled to make by way ofreimbursement following discharge of any third party liability claims made specifically against them,and every other named assured or co-assured has undertaken in writing to the Owners or their financiers reasonably that any deductible shall beapportioned between the Charterers and every other named assured or co-assured in proportion to the gross claims made by or paid to each of themand that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and their financiers (if any) inaccordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the obligatoryinsurances; (b)whenever a financier of the Owners requires: (i)in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for theirrights and interests, warranted no operational interest and with full waiver of rights of subrogation against such financiers, but without suchfinanciers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; (ii)in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights andinterests to the extent permissible under the relevant protection and indemnity club rules; and (iii)name the Owners’ financiers (as applicable) and the Owners (as applicable) as the first ranking loss payee and the second ranking loss payeerespectively (and in the absence of any financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant losspayable clauses approved by the Owners’ financiers and the Owners (such approval not to be unreasonably withheld) with such directions forpayment in accordance with the terms of such relevant loss payable clause, as the Owners and their financiers (if any) may specify; (c)provide that all payments by or on behalf of the insurers under the obligatory insurances to the Owners and/or their financiers (as applicable) shall bemade without set-off, counterclaim or deductions or condition whatsoever; (d)provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Owners ortheir financiers (if any); (e)provide that the Owners and/or their financiers (if any) may make proof of loss if the Charterers fail to do so; and (f)provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of theOwners, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective withrespect to the Owners and/or their financiers (if any) for fourteen (14) days (or seven (7) days in the case of war risks), or such other period as may beagreed by the Owners and/or their financiers (if any), after receipt by the Owners and/or their financiers (if any) of prior written notice from the insurersof such cancellation, change or lapse. 38.3The Charterers shall: (a)at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners (copied to their financiers (ifany)) of the terms and conditions of all Insurances; 7SINGAPORE/89220790v10(b)at least fourteen (14) days before the expiry of any obligatory insurance notify the Owners (copied to their financiers (if any)) of the brokers (or otherinsurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew that obligatory insuranceand of the proposed terms of renewal and obtain the Owners’ approval (such approval not to be unreasonably withheld and who shall have regard tothe requirements as to insurance cover required under the provisions of this Clause 38); (c)at least seven (7) days before the expiry of any obligatory insurance, procure that such obligatory insurance is renewed or to be renewed on its expirydate in accordance with the provisions of this Charter; (d)procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptlyafter the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners (copied to their financiers (if any))in writing of the terms and conditions of the renewal; and (e)as soon as practicable after the expiry of any obligatory insurance, deliver to the Owners a letter of undertaking as required by this Charter in respectof such Insurances for the Vessel as renewed pursuant to this Clause 38.3 together with copies of the relevant policies or cover notes or entrycertificates duly endorsed with the interest of the Owners and/or their financiers (if any). 38.4The Charterers shall ensure that all insurance companies and/or underwriters, and/or (if any) insurance brokers provide the Owners with all copies ofpolicies, cover notes and certificates of entry (originals where so requested by the Owners following the occurrence of a Termination Event orPotential Termination Event) relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a formrequired by the Owners (which the Charterers shall procure the relevant insurance companies, underwriters and/or insurance brokers to provide uponrenewal or receipt of the insurance companies, underwriters and/of insurance brokers of an executed notice of assignment). Such letter or letters ofundertaking shall include undertakings by the insurance companies and/or underwriters 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 ofthis Charter and the Financial Instruments; (b)they will hold the benefit of such policies and such insurances, to the order of the Owners and/or their financiers (if any) and/or such other party inaccordance with the said loss payable clause; (c)they will advise the Owners and their financiers (if any) promptly of any material change to the terms of the obligatory insurances of which they areaware; (d)(i) they will indicate in the letters of undertaking that they will immediately notify the Owners and their financiers (if any) when any cancellation,charge or lapse of the relevant obligatory insurance occur and (ii) following a written application from the Owners and/or their financiers (if any) notlater than one (1) month before the expiry of the obligatory insurances they will notify the Owners and their financiers (if any) not less than fourteen(14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Charterersand, in the event of their receiving instructions to renew, they will promptly notify the Owners and their financiers (if any) of the terms of theinstructions; and (e)if any of the obligatory insurances form part of any fleet cover, the Charterers shall use best endeavours to procure that the insurance broker(s), orleading insurer, as the case may be, undertakes to the Owners and their financiers (if any) that such insurance broker or insurer will not set off againstany sum recoverable in respect of a claim relating to the Vessel under 8SINGAPORE/89220790v10 such obligatory insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium duefor other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, andthey will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policyto be issued in respect of the Vessel forthwith upon being so requested by the Owners and/or their financiers (if any) and where practicable. 38.5The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners with: (a)a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; (b)a letter or letters of undertaking in such form as may be required by the Owners or in such association’s standard form (following the relevantassociation’s receipt of an executed notice of assignment upon the effecting or renewal of insurances); and (c)a copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifyingauthority in relation to the Vessel. 38.6The Charterers shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurancesare effected or renewed. 38.7The Charterers shall procure that all premiums or other sums payable in respect of the obligatory insurances are punctually paid and produce allrelevant receipts when so required by the Owners. 38.8The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in fullforce and effect. 38.9The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatoryinsurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, inparticular: (a)the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to theobligatory insurances, and (without limiting the obligations contained in this Clause) ensure that the obligatory insurances are not made subject toany exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made inaccordance with the rules of a protection and indemnity association which is a member of the International Group of protection and indemnityassociations), such approval not to be unreasonably withheld; (b)the Charterers shall not make or permit any changes relating to the classification or classification society or manager or operator of the Vessel unlesssuch changes have first been approved by the underwriters of the obligatory insurances or the Owners (such approval not to be unreasonably withheldby the Owners’ but always subject to the Owners receiving credit approval on such changes); (c)as may be applicable, the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection andindemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive EconomicZone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly providethe Owners with copies of such declarations and a copy of the certificate of financial responsibility; and 9SINGAPORE/89220790v10(d)the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatoryinsurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which theinsurers specify. 38.10The Charterers shall not make or agree to any material alteration to the terms of any obligatory insurance (relating to the identity of the beneficiariesunder such insurances or scope of cover) nor waive any right relating to any obligatory insurance without the prior written consent of the Owners(such consent to only be required where such amendment or waiver adversely affects or potentially adversely affects the Owners’ interests under theLeasing Documents and which is not to be unreasonably withheld or delayed).In this Clause 38.10 “material” alterations shall include, without limitation, reduction to the insured amount, limitation on the scope of the cover andany other amendment which would cause a breach under the terms of this Charter, any other Leasing Document or any Approved BareboatSubcharter. 38.11The Charterers shall not settle, compromise or abandon any claim under any obligatory insurance for a Total Loss or for a Major Casualty, and shalldo all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at anytime become payable in respect of the obligatory insurances. 38.12The Charterers shall provide the Owners, promptly upon the Owners’ written request, copies of: (a)all communications between the Charterers and: (i)the approved brokers; and (ii)the approved protection and indemnity and/or war risks associations; and (iii)the approved international insurers and/or underwriters, which relate directly or indirectly to: (A)the Charterers’ obligations relating to the obligatory insurances including, without limitation, all requisite declarations andpayments of additional premiums or calls; and (B)any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (i) or (ii) relating wholly orpartly to the effecting or maintenance of the obligatory insurances; andany communication with all parties involved in case of a claim under any of the Vessel’s insurances. 38.13The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners reasonablyrequest 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 proposedto be effected; and/or (b)effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) or dealing with or considering any matters relating to anysuch insurances. 38.14If one or more of the obligatory insurances are not effected and maintained with first class international insurers or are effected with an insurance orcaptive subsidiary of the Owners or the Charterers, then the Charterers shall procure, at their own expense, that the relevant insurers maintain in fullforce and effect facultative reinsurances with reinsurers and 10SINGAPORE/89220790v10 through brokers, in each case, of recognised standing and acceptable in all respects to the Owners. Any reinsurance policy shall include, if and whenpermitted by law, a cut-through clause in a form acceptable to the Owners. The Charterers shall procure that underwriters of the primary insurancesassign each reinsurance to the relevant financiers in full, if required. 38.15The Charterers shall upon demand fully indemnify the Owners in respect of all premiums and other expenses which are reasonably incurred by (i) theOwners in connection with or with a view to effecting, maintaining or renewing an innocent owners’ interest insurance, mortgagee’s interest insuranceand a lessor’s/mortgagee’s additional perils (pollution) insurance that is taken out in respect of the Vessel and/or (ii) the financier(s) of the Owners (ifany) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance and a mortgagee’s additional perils(pollution) insurance that is taken out in respect of the Vessel, in each case, with the Charterers’ insurance brokers as approved by the Owners (in theirsole discretion) and provided that the Charterers shall provide the Owners, as soon as these are dispatched, with copies of all communicationsbetween the Charterers and such insurance brokers. In each case, the amount of the cover under the insurances referred to this Clause 38.15 shall beequal to at least 120% of the higher from time to time of (i) the Outstanding Principal Balance; (ii) the lower of the Certified Book Value and theMarket Value. 38.16The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall notbe reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereofis retaken by the Owners, reasonable wear and tear to the Vessel only excepted. 38.17The Charterers shall: (a)reimburse the Owners any expenses incurred by the Owners in obtaining the reports described in Clause 38.13 (provided that such reimbursementobligation does not arise for the second or subsequent report obtained for any given 12-month period); and (b)procure that there is delivered to the brokers, insurers, underwriters, associations described in Clause 38.1(e) such information in relation to theInsurances as they may require. 38.18The Charterers shall keep the Vessel insured at their expense against such other risks which the Owners consider reasonable for a prudent shipowneror operator to insure against at the relevant time (as notified by the Owners) and which are, at that time, generally insured against by owners oroperators of vessels similar to the Vessel. 38.19The Charterers shall, in the event that the Approved Manager makes a claim under any obligatory insurances taken out in connection with this Clause38 but is unable to or otherwise fails to pay in full any deductible in connection with such claim (in an amount as apportioned between the Charterersand every other assured in proportion to the gross claims made by or paid to each of them), pay such shortfall in deductible payable on behalf of theApproved Manager.CLAUSE 39 – WARRANTIES RELATING TO VESSEL 39.1It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel which has been purchased by theOwners from the Charterers as sellers pursuant to the MOA for the purpose of then chartering the Vessel to the Charterers hereunder and that nocondition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (orany part thereof). 11SINGAPORE/89220790v1039.2All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for anypurpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. 39.3The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or naturecaused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereofand the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or the Advance Charterhire or other payment dueunder this Charter or the other Leasing Documents.CLAUSE 40 – TERMINATION, REDELIVERY AND TOTAL LOSS 40.1If the Termination Purchase Price becomes payable in accordance with Clause 44.3, the same shall be payable in consideration of the purchase andtransfer of the legal and beneficial title of the Vessel pursuant to Clause 40.4 and it is hereby agreed by the parties hereto that payment of theTermination Purchase Price shall not be construed as a penalty but shall represent an agreed estimate of the loss and damage suffered by the Owners inbuying the Vessel and entering into this Charter upon the terms and conditions contained herein, in each case, at the request of the Charterers andshall therefore be paid as compensation to the Owners for early termination and acquisition of the Vessel by the Charterers. 40.2Upon receipt of the Termination Purchase Price by the Owners pursuant to Clause 40.1 in full, this Charter shall terminate. 40.3 (a)If the Charterers fail to make any payment of the Termination Purchase Price on the due date, (i)Clauses 36.10 and 36.11 shall apply; (ii)the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation topay the Termination Purchase Price) the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately(and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port as the Owners may require; further andfor the avoidance of doubt, the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may createwhatsoever interests thereon, including without limitation charterparties or any other form of employment contracts (“Post-enforcementInterests”); and (iii)the Owners shall be entitled (at Owners’ sole discretion) to sell the Vessel on terms they deem fit (an “Owners’ Sale”). (b)Prior to effecting an Owners’ Sale, the Owners shall notify the Charterers in writing and the Charterers may within seven (7) Business Days thereaftersubmit to the Owners evidence (to the satisfaction of the Owners, acting reasonably) of a purchaser offering by way of a firm offer (subject tocustomary closing conditions and Owners’ investigation on know-your-client issues) (a “Charterers’ Offer”) an amount at least equal to the higherof (i) the purchase price contemplated by the Owners’ Sale and (ii) the then current amount of the Termination Purchase Price, in either case followingwhich the Owners will use reasonable endeavours to enter into a memorandum of agreement (in a form acceptable to the Owners and the relevantcounterparty buyer) pursuant to such Charterers’ Offer. 12SINGAPORE/89220790v10(c)Without prejudice to the other provisions of this Clause 40.3, the Charterers may at any time following the occurrence of any event set out in Clause44.2 or 44.3 (as the case may be) submit to the Owners evidence (to the satisfaction of the Owners, acting reasonably) of a Charterers’ Offer in anamount at least equal to the then current amount of the Termination Purchase Price, in which case the Owners will use reasonable endeavours to enterinto a memorandum of agreement (in a form acceptable to the Owners and the relevant counterparty buyer) pursuant to such Charterers’ Offer. (d)The proceeds of any sale of the Vessel pursuant to Clause 40.3(a)(iii) or (b) or (c) shall be applied: (i)first, towards the Owners’ documented costs incurred in relation to such sale; (ii)second, towards payment of the outstanding Termination Purchase Price and other sums then due and payable to the Owners under theLeasing Documents; and (iii)third, any remaining balance to be paid to the Charterers subject to all actual and/or contingent liabilities incurred under any of the LeasingDocuments being fully discharged; provided also in the case of an Owners’ Sale that if such proceeds are not in an amount sufficient todischarge in full the aggregate amounts due to the Owners under (i) and (ii), the Charterers shall continue to be liable for the shortfall. 40.4Concurrently with the Owners receiving irrevocable payment of the Termination Purchase Price in full pursuant to the terms of this Charter, theOwners shall (save in the event of Total Loss or where ownership has already been or agreed to be transferred pursuant to Clause 40.3) transfer thelegal and beneficial ownership of the Vessel on an “as is where is” basis (and, for the avoidance of doubt but without prejudice to Clause 49.1(b),subject to any Post-enforcement Interests), and otherwise in accordance with the terms and conditions set out at Clause 49.1(a) and (b)), to thepurchaser under the Charterers’ Offer and shall (at the cost of the Charterers or the purchaser under the Charterers’ Offer) execute a bill of sale and aprotocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel to the purchaserunder the Charterers’ Offer (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners). 40.5The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel as a result of the Charterers’ action orperformance prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of theOwners’ register shall be for the Charterers’ account. 40.6If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 40.3, the Charterers shall ensure that the Vessel shall, at the timeof redelivery to the Owners (at Charterers’ cost and expense): (a)be in compliance with its Insurances; (b)be in an equivalent classification as she was as at the Commencement Date without any outstanding recommendation or condition, and with valid,unextended certificates for not less than three (3) months and free of average damage affecting the Vessel’s classification and in the same or as goodstructure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’sclassification excepted; (c)have passed her 5-year and if applicable, 10-year special surveys, and subsequent second intermediate surveys and drydock at the Charterers’ timeand expense without any condition or outstanding issue and to the satisfaction of the Classification Society and with all the Vessel’s classification,trading, national and international certificates that the Vessel had when she was delivered under this Charter and the log book and whatsoevernecessary relating to the operation of the Vessel, valid and un-extended without conditions or recommendation falling due; 13SINGAPORE/89220790v10(d)have her survey cycles up to date and trading and classification certificate valid for at least six (6) months; (e)be redelivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery and to the extent not alreadyexpended in the operation of the Vessel, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by theOwners free of charge; (f)be free of any Security Interest (save for the Security Interests granted pursuant to the Financial Instruments) and the Charterer shall use their bestendeavours to procure that the Vessel is free of any cargo; (g)be redelivered to the Owners together with all material information generated during the Charter Period in respect of the use, possession, operation,navigation, utilization of lubricating oil and the physical condition of the Vessel, whether or not such information is contained in the Charterers’equipment, computer or property; (h)be free of any charter (unless the Owners wish to retain the continuance of any then existing charter; (i)be free of officers and crew (unless otherwise agreed by the Owners); and (j)shall have had her underwater parts treated with ample anti-fouling to last for the ensuing period up to the next scheduled dry docking of the Vessel. 40.7The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes and otherconsumable stores in the Vessel at no cost to the Owners. 40.8If the Vessel, for any reason, becomes a Total Loss after Delivery, the Charterers shall pay the Termination Purchase Price to the Owners on the earlierof: (a)the date falling one hundred and twenty (120) days after such Total Loss has occurred; and (b)the date of receipt by the Owners and/or their financiers (if any), in accordance with the terms of the relevant loss payable clause, of the proceeds ofinsurance relating to such Total Loss,provided that it is hereby agreed that any insurance proceeds in respect of the Vessel received by the Owners and/or their financiers (if any) shall beapplied in or towards discharging the Charterers’ obligation to pay the Termination Purchase Price and any interest accrued thereon (and suchapplication shall be deemed satisfaction of the Charterers’ obligation to pay the Termination Purchase Price to the extent so satisfied) and in theevent that the insurance proceeds received from the insurers exceed the Termination Purchase Price due (and any interest accrued thereon), the excessshall be firstly paid towards satisfying any amounts outstanding and owing by the Charterers or any of their Affiliates under any Other Charter andthereafter paid to the Charterers by way of rebate of hire.For the avoidance of doubt, in the event that the Vessel becomes a Total Loss: (A)payment of the Charterhire and all other sums payable under the Leasing Documents during such period shall continue to be made by theCharterers in accordance with the terms thereof unless and until the Owners receive in full the Termination Purchase Price; 14SINGAPORE/89220790v10 (B)should insurance proceeds be received by the Owners from the insurers, the Charterers’ obligations to pay the Termination Purchase Priceshall be accordingly reduced by an amount corresponding to such insurance proceeds but in the event that such insurance proceeds are lessthan the amount of the Termination Purchase Price together with any interest accrued thereon, the Charterers remain obliged to pay to theOwners the balance so that the full amount of the Termination Purchase Price due together with any interest accrued thereon is received by theOwners; and (C)the obligation of the Charterers to pay the Termination Purchase Price shall remain unaffected and exist regardless of whether any of theinsurers have agreed or refused to meet or have disputed in good faith, the claim for Total Loss. 40.9The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss.CLAUSE 41 – FEES AND EXPENSES 41.1In consideration of the Owners entering into this Charter, the Charterers shall pay to the Owners or their nominee a non-refundable arrangement fee atsuch time and in such amount to be set out in a fee letter. 41.2Without prejudice to any other rights of the Owners under this Agreement, the Charterers shall promptly pay to the Owners on written demand on afull indemnity basis: (a)all documented costs, charges and expenses incurred by the Owners in collecting any Charterhire or Advance Charterhire or other payments not paidon the due date under this Charter, in remedying any other failure of the Charterers to observe the terms and conditions of this Charter and inenforcing the Owners’ rights under any Leasing Document; and (b)all documented costs and expenses (including, but not limited to, legal costs) incurred by the Owners in the negotiation and execution of alldocumentation in relation to this Charter and the other Leasing Documents including, but not limited to, all documented costs incurred by theOwners and all documented legal costs, expenses and other disbursements incurred by the Owners’ legal counsels in connection with the same.CLAUSE 42 - NO WAIVER OF RIGHTS 42.1No neglect, delay, act, omission or indulgence on the part of either party in enforcing the terms and conditions of this Charter shall prejudice the strictrights of that party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or furtherexercise thereof. 42.2No right or remedy conferred upon either party by this Charter shall be exclusive of any other right or remedy provided for herein or by law and allsuch rights and remedies shall be cumulative.CLAUSE 43 - NOTICES 43.1Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Charter shall be in English and inwriting and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent ifsent by registered post, fax or by email to the following respective addresses: 15SINGAPORE/89220790v10 (A) to the Owners:c/o CMB FINANCIAL LEASING CO., LTD. Attention: Wang Wei Email: wangwei17@cmbchina.com Tel: +8621 6106 1735 Fax: +8621 6105 9911*1735 (B) to the Charterers:c/o NAVIOS TANKERS MANAGEMENT INC. Attention: Vassiliki Papaefthymiou Email: vpapaefthymiou@Navios.com Tel: +30 210 41 72 050 Fax: +30 210 41 72 070or, if a party hereto changes its address or fax number, to such other address or fax number as that party may notify to the other.CLAUSE 44 – TERMINATION EVENTS 44.1The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: (a)any of the Charterers or the Guarantor fails to make any payment on its due date under this Charter or any other Leasing Document to which they are aparty or the Guarantor fails to make any payment on its due date under the Leasing Documents to which it is a party and in each case, suchnon-payment fails to be rectified within seven (7) Business Days of the relevant due date; or (b)the Charterers breach or omit to observe or perform any of their undertakings in Clause 46.1 (n), (o), (p), (q), (r) or (v) or the Guarantor breaches oromits to observe or perform its financial covenants contained in clause 11.20 of the Guarantee; or the Charterers fail to obtain and/or maintain theInsurances required under Clause 38 in accordance with the provisions thereof or any insurer in respect of such Insurances cancels the Insurances ordisclaims liability with respect thereto; or (c)the Charterers and/or the Guarantor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in thisCharter or any Leasing Document (other than a breach referred to in paragraph (a) or (b) above) unless such breach or omission is, in the reasonableopinion of the Owners, remediable and the Charterers remedy and/or the Guarantor remedies such breach or omission to the satisfaction of the Ownerswithin fourteen (14) Business Days of notice thereof from the Owners (except that in the case of Clause 46.1(k), the relevant period shall be ten(10) Business Days of notice thereof from the Owners); or (d)any representation or warranty made by the Charterers or the Guarantor or the Approved Manager in or pursuant to any Leasing Document proves tobe untrue or misleading in a material way when made; or (e)any of the following occurs in relation to any Financial Indebtedness of a Relevant Person: (i)any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand after any applicable grace period hasexpired; or (ii)any Financial Indebtedness of a Relevant Person becomes due and payable, or capable of being declared due and payable, prior to its statedmaturity date as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; or 16SINGAPORE/89220790v10 (iii)a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner as aconsequence of any termination event or event of default (howsoever defined); or (iv)any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or otherderivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable ofbeing terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any terminationevent or event of default (howsoever defined),provided that no Termination Event will occur under this Clause 44.1(e) in respect of a Relevant Person or a subsidiary of the Guarantor if theaggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above is less than (A) inthe case of a Relevant Person (other than the Guarantor), $1,000,000 (or its equivalent in any other currency) in aggregate and (B) in the case of theGuarantor, less than $5,000,000 (or its equivalent in any other currency) in aggregate, and in each of (A) and (B) above, not including any FinancialIndebtedness arising directly from a claim which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement. (f)any of the following occurs in relation to a Relevant Person: (i)a Relevant Person becomes, in the reasonable opinion of the Owners, unable to pay their debts as they fall due; or (ii)any assets of a Relevant Person, or any assets of the Guarantor exceeding the value of $10,000,000 (or its equivalent in any other currency) inaggregate, or the Vessel are subject to any form of execution, attachment, arrest, sequestration or distress which is not discharged within thirty(30) days (or such longer period agreed by the Owners); or (iii)any administrative or other receiver is appointed over all or a substantial part of the assets of a Relevant Person unless as part of a solventreorganisation which has been approved by the Owners; or (iv)a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely tobecome insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a RelevantPerson pass a resolution to the effect that they should be wound up, placed in administration or cease to carry on business; or (v)a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of aRelevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within thirty(30) days of the presentation of the petition; or (vi)a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments,reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditorsor of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract orotherwise; or (vii)any meeting of the members or directors of a Relevant Person is summoned for the purpose of proposing to authorise or take any action of atype described in paragraphs (iii) to (vi); or 17SINGAPORE/89220790v10 (viii)in a country other than England and Wales, any event occurs or any procedure is commenced which, in the reasonable opinion of the Owners,is similar to any of the foregoing referred to in (ii) to (vii) above inclusive; or (ix)any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets ofa Relevant Person; or (g)a Relevant Person suspends or ceases carrying on its business; or (h)any consent, approval, authorisation, license or permit necessary to enable the Charterers, any Approved Subcharterer or any Approved Manager tooperate or charter the Vessel to enable them to comply with any provision of any Leasing Document, as the case may be, to ensure that theobligations of the Charterers, Approved Subcharterer or Approved Manager (as the case may be) are legal, valid, binding or enforceable is notgranted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent, approval, authorisation,license or permit is not fulfilled; or (i)any event or circumstance occurs which has or is likely to have a Material Adverse Effect; or (j)this Charter or any Leasing Document or any Security Interest created by a Leasing Document is cancelled, terminated, rescinded or suspended orotherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party tothat document for any reason whatsoever; or (k)a Relevant Person or Approved Manager rescinds or purports to rescind or repudiates or purports to repudiate a Leasing Document; or (l)it is or has become: (i)unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner inwhich an existing law is or will be interpreted or applied; or (ii)contrary to, or inconsistent with, any regulation,for any Relevant Person or Approved Manager to maintain or give effect to any of its obligations under this Charter or any of the other LeasingDocuments to which it is a party in the manner it is contemplated under such Leasing Document or any of the obligations of such Relevant Person orApproved Manager under any Leasing Document to which it is a party are not or cease to be legal, valid, binding and enforceable; or (m)the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy; or (n)the Vessel is not delivered latest by the Cancelling Date; or (o)there is a merger, amalgamation, demerger or corporation reconstructions of a Relevant Person (other than where, in the case of the Guarantor, theGuarantor remains the surviving legal entity following the occurrence of such event) or a change of control or legal or beneficial ownership of theCharterers from that set out in Clause 45.1(a) and (b) without disclosure to the Owners and the Owners’ prior written consent; (p)there is a change in control of the Guarantor from that set out in Clause 45.1(c) without disclosure to the Owners and the Owners’ prior writtenconsent; (q)the Guarantor is de-listed from the New York Stock Exchange or has its shares trading at the New York Stock Exchange suspended for any reason; 18SINGAPORE/89220790v10(r)any Termination Event (as defined in any Other Charter) occurs under such Other Charter; or (s)the occurrence of any of the following events; (i)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the Charterers toterminate such Approved Bareboat Subcharter; or (t)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the ApprovedSubcharterer of such Approved Bareboat Subcharter to terminate such Approved Bareboat Subcharter which has not been unconditionallywaived by such Approved Bareboat Subcharterer. 44.2Subject to Clause 44.3 below, upon the occurrence of a Termination Event which is continuing (other than pursuant to: (i) Clause (f), in which casethe Owner’s entitlement to issue the notice of termination to the Charterers under Clause 44.3 shall immediately arise), the Owners shall notify theCharterers of occurrence of the same (the “Termination Event Notice”) whereupon the Charterers may, within three (3) Business Days of the date ofthe Termination Event Notice, provide to the Owners a written notice advising the Owners of their intention to pay the Charterer TerminationPurchase Price to the Owners and terminate this Charter in accordance with the procedures set out in Clause 40. 44.3If the Charterers do not notify the Owners of their intention to terminate this Charter pursuant to Clause 44.2 within three (3) Business Days of thedate of the Termination Event Notice, or a Termination Event is continuing pursuant to Clause (f), then the Owners shall be entitled, provided theTermination Event is continuing, by notice to the Charterers to terminate this Charter at any time, and the Charterers shall be required to pay to theOwners the Termination Purchase Price in accordance with the procedures set out in Clause 40. 44.4For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for theoutstanding obligations on their part to be performed under this Charter. 44.5Without limiting the generality of the foregoing or any other rights of the Owners, upon the occurrence of a Termination Event which is continuing,the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any actions, suits or proceedingsrelating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policiesof insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any otheraction in respect of, any such policy or policies and (iii) change or appoint a new manager for the Vessel other than the Approved Manager and theappointment of the Approved Manager may be terminated immediately without any recourse to the Owners.CLAUSE 45 – REPRESENTATIONS AND WARRANTIES 45.1The Charterers represent and warrant to the Owners as of the date of this Charter, and on the first day of each Term as follows: (a)the Charterers are wholly legally owned by the Shareholder and the Shareholder is wholly legally owned by the Guarantor; (b)the Charterers are wholly beneficially owned by the Guarantor; (c)Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is thebeneficiary) and/or Navios Maritime Holdings Inc. is the ultimate beneficial owner of, or has ultimate control of the voting rights attaching to, 30 percent. of all the issued shares in the Guarantor; 19SINGAPORE/89220790v10(d)each of the Relevant Persons and Approved Manager is duly incorporated and validly existing under the laws of its jurisdiction of its incorporation; (e)each of the Relevant Persons and the Approved Manager has the corporate capacity, and has taken all corporate actions and obtained all consents,approvals, authorisations, licenses or permits necessary for it: (i)to execute each of the Leasing Documents to which it is a party; and (ii)to comply with and perform its obligations under each of the Leasing Documents to which it is a party; (f)all the consents, approvals, authorisations, licenses or permits referred to in Clause 45.1(e) remain in force and nothing has occurred which makes anyof them liable to revocation; (g)each of the Leasing Documents to which a Relevant Person or Approved Manager is a party constitutes such Relevant Person’s or ApprovedManager’s legal, valid and binding obligations enforceable against such party in accordance with its respective terms and any relevant insolvencylaws affecting creditors’ rights generally; (h)no third party has any Security Interest, other than the Permitted Security Interests, or any other interest, right or claim over, in or in relation to theVessel, this Charter or any moneys payable hereunder and/or any of the other Leasing Documents; (i)all payments which a Relevant Person is liable to make under any Leasing Document to which such Relevant Person is a party may be made by suchparty without deduction or withholding for or on account of any tax payable under the laws of the jurisdiction of incorporation; (j)no legal or administrative action involving a Relevant Person or Approved Manager has been commenced or taken which is likely to have a MaterialAdverse Effect; (k)each of the Relevant Persons and Approved Manager has paid all taxes applicable to, or imposed on or in relation to it, its business or if applicable,the Vessel, except for those being contested in good faith with adequate reserves; (l)the choice of governing law as stated in each Leasing Document to which a Relevant Person or Approved Manager is a party and the agreement bysuch party to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such Relevant Personor Approved Manager; (m)no Relevant Person or Approved Manager nor any of their assets are entitled to immunity on the grounds of sovereignty or otherwise from any legalaction or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); (n)the obligations of each Relevant Person or Approved Manager under each Leasing Document to which it is a party, are the direct, general andunconditional obligations of such Relevant Person and, rank at least pari passu with all other present and future unsecured and unsubordinatedcreditors of such Relevant Person save for any obligation which is mandatorily preferred by law and not by virtue of any contract; (o)no Relevant Person or Approved Manager is a US Tax Obligor, and no Relevant Person has established a place of business in the United Kingdom orthe United States of America; 20SINGAPORE/89220790v10(p)no Relevant Person, Approved Manager nor any of their respective directors, officers, employees or agents is a Restricted Person and to the best of theCharterers’ knowledge and belief (after due and careful enquiry), no Approved Subcharterer nor any of its directors, officers, employees or agents is aRestricted Person; (q)each Relevant Person and Approved Manager and their respective directors, officers, employees and agents, and to the best of the Charterers’knowledge and belief (after due and careful enquiry), the Approved Subcharterer and its directors, officers, employees and agents, is in compliancewith all Sanctions laws, and none of them have been or are currently being investigated on compliance with Sanctions, they have not received noticeor are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they have not taken any action to evade theapplication of Sanctions; (r)each Relevant Person and Approved Manager, and to the best of the Charterers’ knowledge and belief (after due and careful enquiry) the ApprovedSubcharterer, is not in breach of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each of the RelevantPersons and Approved Manager has instituted and maintained systems, controls, policies and procedures designed to: (i)prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and (ii)promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws. (s)none of the Relevant Persons and the Approved Manager or any of their assets, in each case, has any right to immunity from set off, legal proceedings,attachment prior to judgment or other attachment or execution of judgment on the grounds of sovereign immunity or otherwise; (t)none of the Relevant Persons and the Approved Manager is insolvent or in liquidation or administration or subject to any other formal or informalinsolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect ofthe Relevant Persons or the Approved Manager or all or material part of their assets; (u)that in respect of any Approved Subcharter: (i)the copy of such Approved Subcharter provided to the Owners (if required to be provided under the terms of this Charter) is a true andcomplete copy; (ii)in the case of an Approved Bareboat Subcharter being a bareboat charter, the relevant Approved Subcharterer is fully aware of the transactionscontemplated under this Charter; (v)no Termination Event or Potential Termination Event is continuing or might reasonably be expected to result from the entry into and performance ofthis Charter or any other Leasing Document; (w)as at the date of this Charter, the Charterers have not entered into any other investments, any sale or leaseback agreements, any off-balance sheettransaction or incur any other liability or obligation (including without limitation, any Financial Indebtedness of any obligations under a guarantee)except: (i)liabilities and obligations under the Leasing Documents to which it is or, as the case may be, will be a party and under the relevant IndentureGuarantee; or 21SINGAPORE/89220790v10 (ii)liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining andrepairing the Vessel; and (x)any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate in all material respects as at the date it wasprovided or as the date at which such information was stated; and (y)the entry by each Relevant Person into any Leasing Document does not in any way cause any breach, and is in all respects permitted, under the termsof the Indenture or any other document which is entered into under or in connection with the Indenture (including, without limitation, any IndentureGuarantee).CLAUSE 46 – CHARTERERS’ UNDERTAKINGS 46.1The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date of this Charterand up to the last day of the Charter Period: (a)there shall be sent to the Owners: (i)as soon as possible, but in no event later than 90 days after the end of each financial half-year, the consolidated semi-annual accounts of theGuarantor certified as to their correctness by an officer of the Guarantor; (ii)as soon as possible, but in no event later than 180 days after the end of each financial year of the Guarantor, the audited consolidated annualfinancial reports of the Guarantor; (b)they will provide to the Owners, promptly at the Owners’ request, copies of all notices and minutes relating to any of their extraordinary shareholders’meeting which are despatched to the Charterers’ or the Guarantor’s respective shareholders or any class of them, save that publicly disclosed noticesand minutes not concerning the Vessel or these Leasing Documents need not be provided to the Owners under this clause; (c)they will provide to the Owners, promptly at the Owners’ requests, copies of all notices and and notices of meetings which are despatched to theCharterers’ or Guarantors’ other creditors (if any); (d)they will provide or will procure that each Relevant Person and Approved Manager provides the Owners with details of any legal, arbitral oradministrative action involving such Relevant Person or Approved Manager or the Vessel as soon as such action is instituted or it becomes apparentto such Relevant Person or Approved Manager that it is likely to be instituted and is likely to have a material adverse effect on the ability of aRelevant Person or Approved Manager to perform their obligations under each Leasing Document to which it is a party (and in the case of suchRelevant Person being the Guarantor, where the claim under such legal, arbitral or administrative action exceeds the sum of US$5,000,000); (e)they will, and will procure that each other Relevant Person and Approved Manager obtains and promptly renews or procure the obtainment or renewalof and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authorityfor the transactions contemplated under each Leasing Document to which it is a party (including without limitation to sell, charter and operate theVessel); (f)they will not, and will procure that each other Relevant Person and Approved Manager will not, create, assume or permit to exist any Security Interestof any kind upon any Leasing Document to which such Relevant Person or Approved Manager is a party, and if applicable, the Vessel, in each caseother than the Permitted Security Interests; 22SINGAPORE/89220790v10(g)they will at their own cost, and will procure that each other Relevant Person and Approved Manager will: (i)do all that such Relevant Person or Approved Manager reasonably can to ensure that any Leasing Document to which such Relevant Personor Approved Manager is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and (ii)without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which such Relevant Personor Approved Manager is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in allRelevant Jurisdictions in respect of any Leasing Document to which such Relevant Person or Approved Manager is a party, give any notice ortake any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible inevidence or to ensure or protect the priority of any Security Interest which such Relevant Person or Approved Manager creates; (h)they will, and will procure that each other Relevant Person, notify the Owners immediately of the occurrence of: (i)any damage and/or alteration caused to the Vessel by any reason whatsoever which results, or may be expected to result, in repairs on theVessel which exceed $1,000,000; (ii)any material safety incidents taking place on board the Vessel; (iii)any Termination Event; (iv)any default by either the Approved Bareboat Subcharterer or Charterers of the terms of any Approved Bareboat Subcharter; (v)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling either the Charterersto terminate such Approved Bareboat Subcharter; or (vi)an event of default or termination event howsoever called under the terms of any Approved Bareboat Subcharter entitling the relevantApproved Subcharterer to terminate such Approved Bareboat Subcharter which has not been unconditionally waived by such ApprovedBareboat Subcharterer,and will keep the Owners fully up-to-date with all developments and the Charterers will, if so requested by the Owners, provide any such certificatesigned by its director, confirming that there exists no Potential Termination Event or Termination Event; (i)they will, and will procure that each other Relevant Person and Approved Manager will, as soon as practicable after receiving the request, provide theOwners with any additional financial or other information relating: (i)to themselves and/or the Vessel (including, but not limited to the condition and location of the Vessel); or (ii)to any other matter relevant to, or to any provision of any Leasing Document to which it is a party,which may be reasonably requested by the Owners (or their financiers (if any)) at any time; 23SINGAPORE/89220790v10(j)without prejudice to Clause 46.1(n), comply, or procure compliance, and will procure that each other Relevant Person, Approved Subcharterer andApproved Manager will comply or procure compliance, with all laws or regulations relating to the Vessel and its ownership, employment, operation,management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry; (k)the Vessel shall be classed with the Classification Society and shall be free of all overdue recommendations and requirements; (l)they will ensure and procure that: (i)the Market Value of the Vessel shall be ascertained from time to time in the following circumstances: (aa)upon the occurrence of a Potential Termination Event or a Termination Event which is continuing, at any time at the request of theOwners; and (bb)in the absence of occurrence of a Potential Termination Event or Termination Event: (i)no more than once every calendar year, with such report to be dated no more than 30 calendar days prior to everyanniversary of the Commencement Date occurring within the Charter Period or on such other date as the Owners mayrequest; and (ii)at any time at the request of the Owners if the Owners have determined (in their sole discretion) that the Market Value of theVessel falls below an amount equal to 110% of the Outstanding Principal Balance from time to time. (ii)the Charterers shall pay the amount of the fees and expenses incurred by the Owners in connection with any matter arising out of thisparagraph (l); (m)they will notify the Owners immediately of: (i)any Environmental Claim which is made against the Charterers, Approved Subcharterer or Manager in connection with the Vessel or anyEnvironmental Incident; (ii)any arrest or detention of the Vessel (that will or is likely to exceed 45 days), any exercise or purported exercise of any lien on that Vessel orits Earnings or any requisition of that Vessel for hire; and (iii)any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a MajorCasualty; (n)they shall comply, shall procure that each other Relevant Person and Approved Manager comply, and shall use all reasonable endeavours to procurethat the Approved Subcharterer comply, with all laws and regulations in respect of Sanctions, and in particular, they shall effect and maintain asanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time; (o)the Vessel shall not be employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel shall not beused by or to benefit any party which is a target of Sanctions and/or is a Restricted Person or trade to any area or country where trading the Vessel tosuch area or country would constitute or reasonably be expected to constitute a breach of any Sanctions or published boycotts imposed by any of theUnited Nations, the European Union, the United States of America, the United Kingdom 24SINGAPORE/89220790v10 or the People’s Republic of China, (ii) would result or reasonably be expected to result in any Relevant Person, Approved Subcharterer, ApprovedManager or the Owners becoming a Restricted Person or (iii) would trigger the operation of any sanctions limitation or exclusion clause in anyinsurance documentation; (p)they shall, shall procure that each other Relevant Person and Approved Manager shall, and shall use all reasonable endeavours to procure that theApproved Subcharterer shall, promptly notify the Owners of any non-compliance, by any Relevant Person, Approved Subcharterer or ApprovedManager or their respective officers, directors, employees, consultants, agents or intermediaries, with all laws and regulations relating to Sanctions,Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws (including but not limited to notifying the Owners inwriting immediately upon being aware that any Relevant Person, Approved Subcharterer, Approved Manager or its shareholders, directors, officers oremployees is a Restricted Person or has otherwise become a target of Sanctions) as well as provide all information (once available) in relation to itsbusiness and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws; (q)they shall, shall procure that each other Relevant Person and Approved Manager shall, and shall use all reasonable endeavours to procure that theApproved Subcharterer shall, (in each case above, including procuring or as the case may be, using all reasonable endeavours to procure therespective officers, directors, employees, consultants, agents and/or intermediaries of the relevant entity to do the same) shall: (i)comply with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws; (ii)maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money LaunderingLaws, Anti-Terrorism Financing Laws and Business Ethics Laws; and (iii)in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Financing Amount for any purpose thatwould breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws; (r)in respect of the Charterers, not lend, invest, contribute or otherwise make available the Financing Amount to or for any other person in a mannerwhich would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws; (s)they shall not appoint or permit to be appointed any manager of the Vessel unless it is the Approved Manager appointed on terms acceptable to theOwners and their financiers (if any) and such Approved Manager has (prior to accepting its appointment) entered into a Manager’s Undertaking; (t)they shall ensure that all Earnings and any other amounts received by them in connection with the Vessel are paid into the Earnings Account; (u)if at any time during the Charter Period, the Market Value of the Vessel falls below an amount equal to 110% of the Outstanding Principal Balance,the Charterers shall, upon request, promptly and in any event not later than the date falling 30 days after the Owners notify them of such circumstanceto prepay such part of the Charterhire Principal Balance and such prepayment should be applied towards payment and satisfaction of Charterhire A(or part thereof) payable in inverse chronological order payable or, as the case may be, in the event of the Charterers’ exercise of the Purchase Optionunder Clause 47, the Purchase Option Price (or part thereof) without prejudice to the terms of Clause 47.4. 25SINGAPORE/89220790v10(v)if at any time during the Charter Period, the most recent audited consolidated annual financial reports of the Guarantor provided under Clause 46.1(a)(ii) shows a Net Income Loss for two consecutive financial years of the Guarantor (for the avoidance of doubt, the financial year of the Guarantorending on 31 December 2018 shall constitute the first such financial year of the Guarantor for the purposes of the determination under this Clause inthe period from the commencement of the Charter to such date that the audited consolidated annual financial reports of the Guarantor for the financialyear ending on 31 December 2018 are provided to the Owners under Clause 46.1(a)(ii)), the Charterers shall, upon request, promptly and in any eventnot later than the date falling 30 days of the filing of the most recent audited consolidated annual financial report of the Guarantor, prepay such partof the Charterhire Principal Balance equivalent to one instalment of Charterhire A and such prepayment should be applied towards payment andsatisfaction of Charterhire A (or part thereof) payable in inverse chronological order payable, or as the case may be, in the event of the Charterers’exercise of the Purchase Option under Clause 47, the Purchase Option Price (or part thereof) without prejudice to the terms of Clause 47.4).For the avoidance of doubt: (i)the Owners shall not be liable for any claim by the Charterers for interest alleged to be accrued on any amount prepaid under this Clause46.1(v); and (ii)if a prepayment is made in accordance with this Clause 46.1(v) in respect of any two consecutive financial years during the Charter Periodwhere a Net Income Loss has occurred, neither of such financial years shall be taken into account for any subsequent test to be applied inaccordance with this Clause 46.1(v); (w)upon request, they will provide or they will procure to be provided to the Owners the report(s) of the survey(s) conducted pursuant to Clause 7 of thisCharter in form and substance satisfactory to the Owners; (x)they shall not permit the sub-chartering of the Vessel (other than pursuant to the Subcharter) save for an Approved Subcharter provided that: (i)in the case of a request from the Charterers for the Owners’ written consent to the terms of an Approved Subcharter being a time charterexceeding or capable of exceeding twelve (12) months (taking into account any optional extension periods), the Owners shall respond to suchrequest within one Business Day or any other longer period agreed between the Owners and the Charterers; (ii)as a condition precedent to the execution of any Approved Subcharter being a bareboat charter or a time charter of a period exceeding orcapable of exceeding twelve (12) months (taking into account any optional extension periods), the Charterers assign all their rights andinterests under such Approved Subcharter and uses reasonable endeavours to procure such Approved Subcharter to give a writtenacknowledgment of such assignment and provide such documents as the Owners may reasonably require regarding the due execution of suchApproved Subcharter; (y)in respect of an Approved Subcharter (other than a Short Term Time Subcharter) which contains an option to extend the charter period, they shallnotify the Owners as soon as they become aware that the relevant Approved Subcharterer does not intend to, or has not by the date falling 20 daysprior to the date on which such Approved Subcharter will expire, exercise the relevant option to extend the time charter period of the Subcharter inaccordance with the terms thereunder; (z)in respect of an Approved Subcharter other than a Short Term Time Subcharter, save with the prior written consent of the Owners, they shall not, andshall procure that the relevant Approved Subcharterer shall not, agree or enter into any transaction, arrangement, document or do or omit to doanything which will have the effect of varying, amending, supplementing or waiving any material term of any such Approved Subcharter. 26SINGAPORE/89220790v10In this Clause 46.1(z), “material term” means, without limitation, terms regarding payment of hire (unless such amendment contemplates increase ofhire rate), duration of charter period, off-hire and termination events; (aa)they shall not make or pay any dividend or other distribution (in cash or in kind) in respect of its share capital following the occurrence of a PotentialTermination Event or Termination Event or which would result in a Potential Termination Event or Termination Event; (bb)the Vessel shall be registered under the Flag State at all times; and (cc)they shall not enter into any other investments, any sale or leaseback agreements, any off-balance sheet transaction or incur any other liability orobligation (including without limitation, any Financial Indebtedness of any obligations under a guarantee) except: (i)liabilities and obligations under the Leasing Documents to which it is or, as the case may be, will be a party and under the relevant IndentureGuarantee; or (ii)liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining andrepairing the Vessel.CLAUSE 47 PURCHASE OPTION 47.1The Charterers shall have the option to purchase the Vessel on any date (the “Purchase Option Date”) specified in such notice (the “PurchaseOption Notice”) at the Purchase Option Price on any of the following instances: (a)on the occurrence of any of the events set out under Clause 44.1(f) (iv), (v), (vi) and (viii) in respect of the Owners; (b)where the Owners cease to be under the control of the China Merchants Group; or (c)on and from the second anniversary of the Commencement Date (subject always to giving the Owners not less than forty five (45) Business Days’prior written notice),provided that in the case of paragraph (c) above, the Purchase Option Date shall fall on a Payment Date. 47.2A Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, is irrevocableand the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. 47.3Only one Purchase Option Notice may be served throughout the duration of the Charter Period (unless otherwise agreed by the Owners in theirabsolute discretion). 47.4Upon the Owners’ receipt in full of the Purchase Option Price, the Owners shall (except in the case of Total Loss) transfer the legal and beneficialownership of the Vessel on an “as is where is” basis (and otherwise in accordance with the terms and conditions set out at Clause 49.1(b)) to theCharterers or their nominees and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other documentstrictly necessary to transfer the title of the Vessel to the Charterers (and to the extent required for such purposes the Vessel shall be deemed first tohave been redelivered to the Owners).CLAUSE 48 – PURCHASE OBLIGATION 48.1Subject to other provisions of this Charter, in consideration of the Owners entering into this Charter, the Charterers shall: (a)on the last day of the Charter Period; or 27SINGAPORE/89220790v10(b)in the event it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by the LeasingDocuments,be obliged to purchase from the Owners all of the Owners’ beneficial and legal right, title and interest in the Vessel and all belonging to her and theOwners and the Charterers shall perform their obligations referred to in Clause 49 and the Charterer shall pay the Purchase Obligation Price on thePurchase Obligation Date unless this Charter is terminated before the natural expiration of this Charter or the Owners and the Charterers agreeotherwise.CLAUSE 49 – SALE OF THE VESSEL BY PURCHASE OPTION OR PURCHASE OBLIGATION 49.1Completion of the exercise of the Purchase Option (by the Charterers) or the Purchase Obligation (by the Owners) shall respectively take place on thePurchase Option Date or the Purchase Obligation Date (as the case may be), whereupon the Owners will sell to the Charterers (or their nominee), andthe Charterers (or their nominee) will purchase from the Owners, all the legal and beneficial interest and title in the Vessel, for the Purchase OptionPrice or the Purchase Obligation Price (as the case may be) on an “as is where is” basis and on the following terms and conditions: (a)the Charterers expressly agree and acknowledge that no condition, warranty or representation of any kind is or has been given by or on behalf of theOwners in respect of the Vessel or any part thereof, and accordingly the Charterers confirm that they have not, in entering into this Charter, relied onany condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwisein relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality,merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vesselor any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waivedby the Charterers to the extent permissible under applicable law, the Charterers hereby also waive any rights which they may have in tort in respect ofany of the matters referred to under this Clause and irrevocably agree that the Owners shall have no greater liability in tort in respect of any suchmatter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warrantyrelating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby.Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claimsrelating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; (b)the Vessel shall be free from any registered mortgages, liens, encumbrances or debts incurred by the Owners and any other claims whatsoever (save forthose mortgages, liens, encumbrances or debts arising out of or in connection with the Charter or the Leasing Documents); (c)the Purchase Option Price or the Purchase Obligation Price (as the case may be) shall be paid by (or on behalf of) the Charterers to the Owners onrespectively the Purchase Option Date or the Purchase Obligation Date, together with unpaid amounts of Charterhire and other moneys owing by oraccrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or Purchase Obligation Date (as the case may be) whichremain unpaid; and (d)upon the Purchase Obligation Price and all other moneys payable under this Charter being fully and irrevocably paid to the Owners on, and inaccordance with, the terms set forth in this Charter, (except in the case of Total Loss) the Owners agree (at the cost of the Charterers) to enter into (i) abill of sale and (ii) a protocol of delivery and acceptance (and to the extent required for such purposes the Vessel shall be deemed first to have beenredelivered to the Owners). 28SINGAPORE/89220790v10CLAUSE 50 INDEMNITIES 50.1The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, fees(including, but not limited to, any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter andany Leasing Document or in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance,manufacture, purchase, ownership and operation of the Vessel by the Owners and the costs related to the prevention or release of liens or detention ofor requisition, use, operation or redelivery, sale or disposal of the Vessel or any part of it, enforcement of the Owners’ rights under any LeasingDocument, and whether prior to, during or after termination of the leasing of this Charter and whether or not the Vessel is in the possession or thecontrol of the Charterers or otherwise. Without prejudice to its generality, this Clause covers any documented claims, expenses, liabilities and losseswhich arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, anyEnvironmental Law, any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws. 50.2Without prejudice to the above Clause 50.1, if any sum (a “Sum”) due from a Relevant Person under the Leasing Documents, or any order, judgmentor 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 anothercurrency (the “Second Currency”) for the purpose of: (a)making or filing a claim or proof against that Relevant Person; or (b)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,the Charterers shall, as an independent obligation, on demand, indemnify the Owners against any cost, loss or liability arising out of or as a result ofthe conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the SecondCurrency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum. 50.3The obligations of the Charterers under Clause 50 and in respect of any Security Interest created pursuant to the Security Documents will not beaffected or discharged by an act, omission, matter or thing which would reduce, release or prejudice any of its obligations under Clause 50 or inrespect of any Security Interest created pursuant to the Security Documents (without limitation and whether or not known to it or any Relevant Personor Approved Manager) including: (a)any time, waiver or consent granted to, or composition with, any Relevant Person or Approved Manager other person; (b)the release of any other Relevant Person or Approved Manager or any other person under the terms of any composition or arrangement with anycreditor of the Guarantor or any of its affiliates; (c)the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to takeup or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Relevant Person or Approved Manager or other personor any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value ofany security; (d)any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Relevant Person or ApprovedManager or any other person; 29SINGAPORE/89220790v10(e)any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of anyLeasing Document or any other document or security; (f)any unenforceability, illegality or invalidity of any obligation of any person under any Security Document or any other document or security; or (g)any insolvency or similar proceedings. 50.4Notwithstanding anything to the contrary under the Leasing Documents (but subject and without prejudice to Clause 33) and without prejudice toany right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by theCharterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or such LeasingDocument or termination or cancellation of this Charter or such Leasing Document pursuant to the terms hereof or thereof or termination of thisCharter or such Leasing Document by the Owners. 50.5In consideration of the Charterers requesting the Other Owners to charter the Other Vessels to the Other Charterers under the Other Charters, theCharterers hereby irrevocably and unconditionally undertake to pay immediately on demand from the Other Owners (or of them, as the case may be)such amounts in respect of all claims, expenses, liabilities, losses, fees of every kind and nature and all other moneys due, owing and/or payable to theOther Owners under or in connection with the Other Charters, and to indemnify and hold the Other Owners harmless against all such moneys, costs,fees and expenses. 50.6All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against the Other Charterers or theGuarantor or any of them shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter andunless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any othertransaction) by reason of performance by it of its obligations under the Leasing Documents or by reason of any amount becoming payable, or liabilityarising, under this Clause: (a)to be indemnified by the Other Charterers or the Guarantor or any of them; (b)to claim any contribution from any third party providing security for, or any other guarantor of, the Other Charterers’ or the Guarantor’s obligationsunder the Leasing Documents; (c)to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Other Charterers or the Guarantor or anyof them under the Leasing Documents or of any other guarantee or security taken pursuant to, or in connection with, the Leasing Documents by anyof the aforesaid parties; (d)to bring legal or other proceedings for an order requiring any of the Other Charterers or the Guarantor or any of them to make any payment, or performany obligation, in respect of any Leasing Document; (e)to exercise any right of set-off against any of the Other Charterers or the Guarantor or any of them; and/or (f)to claim or prove as a creditor of any of the Other Charterers or the Guarantor or any of them,and if the Charterers receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to theextent necessary to enable all amounts which may be or become payable to the Owners or the Other Owners by the Other Charterers or the Guarantoror any of them under or in connection with the Leasing Documents to be repaid in full on trust for the Owners or the Other Owners and shall promptlypay or transfer the same to the Owners or the Other Owners as may be directed by the Owners. 30SINGAPORE/89220790v1050.7The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against any claim, expense, liability or loss reasonably incurredby the Owners in liquidating or employing deposits from their financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. 50.8Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any rightto damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by theCharterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of thisCharter pursuant to the terms hereof or termination of this Charter by the Owners.CLAUSE 51 – NO SET-OFF OR TAX DEDUCTION 51.1All Charterhire, Advance Charterhire or payment of the Purchase Obligation Price or the Purchase Option Price and any other payment made from theCharterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually: (a)without any form of set-off (except in the case of the Advance Charterhire which shall be set off in accordance with Clause 36.2), cross-claim orcondition and in the case of Charterhire or Advance Charterhire, without previous demand unless otherwise agreed with the Owners; and (b)free and clear of any tax deduction or withholding unless required by law. 51.2Without prejudice to Clause 51.1, if the Owners are required by law to make a tax deduction from any payment: (a)the Owners shall notify the Charterers as soon as they become aware of the requirement; and (b)the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from anyliability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise havereceived. 51.3In this Clause “tax deduction” means any deduction or withholding for or on account of any present or future tax, other than a FATCA Deduction.CLAUSE 52 – INCREASED COSTS 52.1This Clause 52 applies if the Owners notify the Charterers that they consider that as a result of: (a)the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law isinterpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall netincome); or (b)complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which theOwners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of whichis altered, after the date of this Charter, 31SINGAPORE/89220790v10the Owners (or a parent company of them) has incurred or will incur an “increased cost”. 52.2In this Clause 52, “increased cost” means, in relation to the Owners: (a)an additional or increased cost incurred as a result of, or in connection with, the Owners having entered into, or being a party to, this Charter, offunding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter; (b)a reduction in the amount of any payment to the Owners under this Charter or in the effective return which such a payment represents to the Ownerson their capital; (c)an additional or increased cost of funding the acquisition of the Vessel pursuant to the MOA; or (d)a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Owners under thisCharter, (e)and for the purposes of this Clause 52.2 the Owners may in good faith allocate or spread costs and/or losses among their assets and liabilities (or anyclass of their assets and liabilities) on such basis as they consider appropriate. 52.3Subject to the terms of Clause 52.1, the Charterers shall pay to the Owners, on the Owners’ demand, the amounts which the Owners from time to timenotify the Charterers to be necessary to compensate the Owners for the increased cost.CLAUSE 53 – CONFIDENTIALITY 53.1The Parties agree to keep the terms and conditions of this Charter and any other Leasing Documents (the “Confidential Information”) strictlyconfidential, provided that a Party may disclose Confidential Information in the following cases: (a)it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; (b)it is required to be disclosed under the applicable laws of any Relevant Jurisdiction, by a governmental order, decree, regulation or rule, by an orderof a court, tribunal or listing exchange of the Relevant Jurisdiction (including but not limited to an order by the US Securities and ExchangeCommission or the New York Stock Exchange), provided that the disclosing Party shall give written notice of such required disclosure to the otherParty prior to the disclosure; (c)in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of suchproceedings; (d)to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or moreLeasing Document (as permitted by the terms thereof), provided that such person receiving Confidential Information shall undertake that it would notdisclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or suchother circumstances as may be permitted by all Parties; (e)to any of the following persons on a need to know basis: (i)a shareholder or an Affiliate of either Party or a party referred to in either paragraph (d) or (e) (including the employees, officers and directorsthereof); (ii)professional advisers retained by a disclosing party; or 32SINGAPORE/89220790v10 (iii)persons advising on, providing or considering the provision of financing to the disclosing party or an Affiliate,provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any otherparty save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by allParties; or (f)with the prior written consent of all Parties.CLAUSE 54 – PARTIAL INVALIDITYIf, at any time, any provision of a Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neitherthe legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of suchprovision under the law of any other jurisdiction will in any way be affected or impaired.CLAUSE 55 – SETTLEMENT OR DISCHARGE CONDITIONAL 55.1Any settlement or discharge under any Leasing Document between the Owners and any Relevant Person or Approved Manager shall be conditionalupon no security or payment to the Owners by any Relevant Person or Approved Manager any other person being set aside, adjusted or ordered to berepaid, whether under any insolvency law or otherwise. 55.2If the Owners consider that an amount paid or discharged by, or on behalf of, a Relevant Person or Approved Manager by any other person inpurported payment or discharge of an obligation of that Relevant Person or Approved Manager to the Owners under the Leasing Documents iscapable of being avoided or otherwise set aside on the liquidation or administration of that Relevant Person or Approved Manager or otherwise, thenthat amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Leasing Documents.CLAUSE 56 – CHANGES TO THE PARTIES 56.1Assignment or transfer by the CharterersThe Charterers shall not assign their rights or transfer by novation any of their rights and obligations under the Leasing Documents except with theprior consent in writing of the Owners. 56.2Transfer by the Owners (a)The Owners may transfer by novation any of its rights and obligations under the Leasing Documents: (i)in the event of an occurrence of a Termination Event which is continuing; or (ii)subject to the consent of such other party under the Leasing Document (which must not be unreasonably withheld or delayed), to anotherlessor or financial institution or trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose ofmaking, purchasing or investing in loans, securities or other financial assets, (b)During the Charter Period, any change in the registered ownership of the Vessel (other than pursuant to paragraph (a)) above shall require theCharterers’ prior approval which shall not be unreasonably withheld or delayed, provided always that, notwithstanding such change, this Charterwould continue on identical terms (save for logical, consequential or mutually agreed amendments). The Guarantor and the Charterers shall remainjointly and severally liable to the aforesaid new owner of the Vessel for its performance of all obligations pursuant to this Charter after change of theregistered ownership of the Vessel from the Owners to such new owner. 33SINGAPORE/89220790v1056.3The Charterers agree and undertake to enter into any such usual documents as the Owners shall require to complete or perfect the transfer of the Vessel(with the benefit and burden of this Charter) pursuant to this Clause 56.2, with any documented costs or expenses whatsoever arising in relationthereto at no cost to the Charterers.CLAUSE 57 – MISCELLANEOUS 57.1The Charterers waive any rights of sovereign immunity which they or any of their assets may enjoy in any jurisdiction and subjects itself to civil andcommercial law with respect to their obligations under this Charter. 57.2No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not party to this Charter , save that theOther Owners may rely on the rights conferred on them under Clause 50.5 (Indemnities). 57.3This Charter and each Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on thecounterparts were on a single copy of this Charter or that Leasing Document, as the case may be.CLAUSE 58 – FATCA 58.1Defined terms. For the purposes of this Clause 58, the following terms shall have the following meanings:“Code” means the United States Internal Revenue Code of 1986, as amended.“FATCA” means sections 1471 through 1474 of the Code and any Treasury regulations thereunder.“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA 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 a Relevant Party is not a FATCA ExemptParty, could be required to make a FATCA Deduction.“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.“Relevant Party” means any party to a Leasing Document except an Approved Subcharterer.58.2 FATCA Information. (a)Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten Business Days of a reasonable requestby another Relevant Party: (i)confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and 34SINGAPORE/89220790v10 (ii)supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 orany successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA(including its applicable “pass thru percentage” or other information required under FATCA or other official guidance includingintergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA . (b)If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is aFATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall so notify all otherRelevant Parties reasonably promptly. (c)Nothing in this clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any lawor 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 nothing in this paragraph shall excuse any Relevant Party fromproviding a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided onsuch IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of thisparagraph. (d)If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions ofthis Charter or the provided information is insufficient under FATCA, then: (i)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 thisCharter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and (ii)if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and theLeasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish therelevant facts. 58.3FATCA Deduction and gross-up by Relevant Party (a)If the representation made by the Charterers under Clause 45.1(o) proves to be untrue or misleading such that the Charterers are required to make aFATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within thetime allowed and in the minimum amount required by FATCA. (b)If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amountwhich (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had beenrequired. (c)The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of aFATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any paymentrequired in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that theFATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. 35SINGAPORE/89220790v1058.4FATCA Deduction by OwnersThe Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCADeduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwisecompensate the recipient for that FATCA Deduction. 58.5FATCA MitigationNotwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 58.3 inrespect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interestin the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of theCharterers.CLAUSE 59 - DEFINITIONS 59.1In this Charter the following terms shall have the meanings ascribed to them below:“Acceptance Certificate” means a certificate substantially in the form set out in Schedule I to be signed by the Charterers at Delivery.“Account Bank” means HSH Nordbank AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany.“Account Security” means the document creating security over the Earnings Account executed by the Charterers in favour of the Owners, in theagreed form.“Advance Charterhire” means the amount by which the Purchase Price exceeds the Financing Amount.“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 HoldingCompany.“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes(including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of alljurisdictions including and without limitation, the United States of America, the European Union and the People’s Republic of China and which ineach case are (a) issued, administered or enforced by any governmental agency having jurisdiction over any Relevant Person, Approved Subcharterer,Approved Manager or the Owners; (b) of any jurisdiction in which any Relevant Person, Approved Subcharterer, Approved Manager or the Ownersconduct business; or (c) to which any Relevant Person, Approved Subcharterer, Approved Manager or Owner is subjected or subject to.“Anti-Terrorism Financing Laws” means all applicable anti-terrorism laws, rules, regulations or guidelines of any jurisdiction, including and notlimited to the United States of America or the People’s Republic of China which are: (a) issued, administered or enforced by any governmentalagency, having jurisdiction over any Relevant Person, Approved Subcharterer, Approved Manager or the Owners; (b) of any jurisdiction in which anyRelevant Person, Approved Subcharterer, Approved Manager or the Owners conduct business; or (c) to which any Relevant Person, ApprovedSubcharterer, Approved Manager or the Owners are subjected or subject to.“Approved Bareboat Subcharter” means an Approved Subcharter as described under paragraph (b)(i) of the definition of an Approved Subcharterand consented to by the Owners. 36SINGAPORE/89220790v10“Approved Manager” means Navios Tankers Management Inc. a corporation incorporated under the laws of the Marshall Islands having itsregistered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 or Affiliate of Navios MaritimeHoldings Inc. or any other ship management company approved in writing by the Owners.“Approved Subcharter” means the Subcharter or: (a)any Short Term Time Subcharter; (b)subject to prior written consent of the Owners: (i)a subcharter of the Vessel on a bareboat charter basis; or (ii)a subcharter of the Vessel on a time charter basis with a charter period exceeding or capable of exceeding twelve (12) months (takinginto account any optional extension period).“Approved Subcharterer” means the Subcharterer or in the case of any other Approved Subcharter falling within paragraph (b) of the definition ofApproved Subcharter above, any subcharterer of the Vessel approved by the Owners in writing (such approval not to be unreasonably withheld ordelayed).“Approved Valuer” means Clarksons, Maersk Brokers, Howe Robinson, Arrow, Lorentzen & Stemoco, Simpson Spence Young, Braemar Seascope orany other shipbroker nominated by the Charterers and approved by the Owners.“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under therelevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price do not fall on a Payment Date.“Business Day” means a day on which banks are open for business in the principal business centres of Hong Kong, Shanghai, Hamburg and Athensand in respect of a day on which a payment is required to be made or other dealing is due to take place under a Leasing Document in Dollars, also aday on which commercial banks are open in New York City.“Business Ethics Law” means any laws, regulations and/or other legally binding requirements or determinations in relation to corruption, fraud,collusion, bid-rigging or anti-trust, human rights violations (including forced labour and human trafficking) which are applicable to any RelevantPerson, Approved Subcharterer, Approved Manager or the Owners or to any jurisdiction where activities are performed and which shall include butnot be limited to (i) the United Kingdom Bribery Act 2010 and (ii) the United States Foreign Corrupt Practices Act 1977 and all rules and regulationsunder each of (i) and (ii).“Cancelling Date” has the meaning given to that term in the MOA.“Certified Book Value” means the book value of the Vessel from time to time, which as at the date of this Charter is $30,463,247.46 as evidencedand certified in a manner acceptable to the Owners.“Charterers’ Offer” has the meaning given to that term in Clause 40.3(b).“Charterhire” means each of, as the context may require, all of the quarterly instalments of hire payable hereunder comprising in each case: (a)a component of Charterhire A; and 37SINGAPORE/89220790v10 (b)a component of Charterhire B.“Charterhire A” means, in relation to a Payment Date, an amount equal to one twenty fourth (1/24) of the difference between the Financing Amountand the Purchase Obligation Price.“Charterhire B” means, in relation to a Payment Date, the interest component calculated in accordance with Schedule III at the applicable InterestRate for the Term commencing on that Payment Date on the Outstanding Principal Balance.“Charterhire Principal” means the aggregate amount of Charterhire A payable under this Charter.“Charterhire Principal Balance” means the Charterhire Principal outstanding under this Charter from time to time, as may be reduced by paymentsor prepayments by the Charterers to the Owners of Charterhire A under this Charter.“CISADA” means the United States Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 as it applies to non-US persons.“Charter Period” means the period commencing on the Commencement Date and described in Clause 32.2 unless it is either terminated earlier orextended in accordance with the provisions of this Charter.“China Merchants Group” means China Merchants Group Limited, a company incorporated under the laws of the People’s Republic of China actingthrough its office at China Merchants Tower, 39-40 Floor, Shun Tak Centre, 168-200 Connaught Road, Central, Hong Kong.“Classification Society” means ABS or DNV GL or any classification society being a member of the International Association of ClassificationSocieties which is approved by the Owners.“Commencement Date” means the date on which Delivery takes place.“Delivery” means the delivery of the legal and beneficial interest in the Vessel from the Owners to the Charterers pursuant to the terms of the MOA.“Dollars” or “$” have the meanings given to those terms in the MOA.“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) and which arise out of the use oroperation of the Vessel, including (but not limited to): (a)all freight, hire and passage moneys, compensation payable in the event of requisition of the Vessel for hire, all moneys which are at any timepayable under any Insurances in respect of loss of hire, remuneration for salvage and towage services, demurrage and detention moneys anddamages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and (b)if and whenever the Vessel is employed on terms whereby any moneys falling within paragraph (a) 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 Vessel;“Earnings Account” means, an account in the name of the Charterers with Account Bank or such bank as the Owners may approve. 38SINGAPORE/89220790v10“Environmental Claim” means: (c)any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or which relates to anyEnvironmental Law; or (d)any claim by any other person which relates to an Environmental Incident,and “claim” means a claim for damages, compensation, fines, penalties or any other payment (exceeding $1,000,000 in each of the above cases); anorder or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action,including the arrest or attachment of any asset;“Environmental Incident” means: (a)any release of Environmentally Sensitive Material from the Vessel; or (b)any incident in which Environmentally Sensitive Material is released from a vessel other than the Vessel and which involves a collisionbetween the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which theVessel is actually liable to be arrested, attached, detained or injuncted and/or the Vessel and/or the Owners and/or the Charterers and/or anyother operator or manager of the Vessel is at fault or otherwise liable to any legal or administrative action; or (c)any other incident involving the Vessel in which Environmentally Sensitive Material is released otherwise than from the Vessel and inconnection with which the Vessel is actually arrested and/or where the Owners and/or the Charterers and/or any other operator or manager ofthe Vessel is at fault or otherwise liable to any legal or administrative action.“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage or releases of Environmentally SensitiveMaterial.“Environmentally Sensitive Material” means oil, oil products and any other substances (including any chemical, gas or other hazardous or noxioussubstance) which are (or are capable of being or becoming) polluting, toxic or hazardous.“Fee Letter” means the fee letter referred to under Clause 41.1.“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor: (a)for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; (b)under any loan stock, bond, note or other security issued by the debtor; (c)under any acceptance credit, guarantee or letter of credit facility made available to the debtor; (d)under a lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normalcommercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of moneyby the debtor; (e)under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtoror, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the netamount; or 39SINGAPORE/89220790v10 (f)under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fallwithin paragraphs (a) to (e) if the references to the debtor referred to the other person.“Financial Instruments” means the mortgage, deed of covenant, the general assignment or such other financial security instruments granted to theOwners’ financiers as security for the obligations of the Owners in relation to the financing of the acquisition of the Vessel.“Financing Amount” means an amount equal to the lower of (i) seventy five per cent. (75%) of the Purchase Price and (ii) $17,265,000.“Flag State” means Republic of Panama, the Republic of the Marshall Islands, Republic of Malta, Republic of Liberia, Hong Kong, the CaymanIslands or any other flag state approved by the Owners in writing.“Fleet Vessel” has the meaning give to it under clause 11.20(c) of the Guarantee.“General Assignment” means the general assignment executed or to be executed between the Charterers and the Owners in respect of the Vessel,pursuant to which the Charterers shall, inter alia, assign their rights under the Insurances, Earnings and Requisition Compensation and anysub-charters having a duration of at least twelve (12) months (or which are capable of exceeding twelve (12) months) in respect of the Vessel, infavour of the Owners and in the agreed form.“Guarantor” means Navios Maritime Acquisition Corporation, a corporation incorporated under the laws of the Marshall Islands having itsregistered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands.“Guarantee” means a guarantee executed by the Guarantor in favour of the Owners dated on or around the date of this Charter.“Holding Company” means, in relation to a person, any other person in relation to which it is a subsidiary.“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.“Indenture” means the indenture dated as of 13 November 2013, as amended and supplemented by including as supplemented a supplementalindenture dated 31 March 2014 and as the same may be further amended and supplemented from time to time in accordance with the terms thereof,entered into by the Guarantor and Navios Acquisition Finance (US) Inc. as co-issuers and Wells Fargo Bank, National Association, as trustee andcollateral trustee, in respect of certain 8.125% first priority ship mortgage notes due in 2021.“Indenture Guarantee” means a guarantee executed, or as the case may be, to be executed by the Charterers as security for the obligations andliability of the Guarantor under the Indenture.“Initial Market Value” means, in relation to the Vessel at any relevant time, the arithmetic mean of two (2) valuations, each prepared: (a)on a date no earlier than thirty (30) days prior to the Commencement Date; (b)with or without physical inspection of the Vessel; (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing and a willing buyer, free ofany existing charter or other contract of employment; and 40SINGAPORE/89220790v10 (d)after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,and such valuations shall be prepared by one Approved Valuer selected and appointed by the Owners and one Approved Valuer selected by theCharterers (but appointed by the Owners) provided that if the difference in the two valuations obtained is more than five per cent. (5%) of the lowervaluation obtained, a third Approved Valuer shall be selected and appointed by the Owners and the Initial Market Value shall be the arithmetic meanof the two lowest valuations out of the three valuations obtained.“Insurances” means: (a)all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which areeffected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and (b)all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights inrespect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter.“Interest Rate” means, in relation to Charterhire B, the rate of interest determined in accordance with Schedule III plus the Margin.“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the InternationalMaritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and theterms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given tothem in the ISM Code).“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life atSea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may besupplemented or amended from time to time.“Leasing Documents” means this Charter, the MOA, any Approved Subcharter, the Fee Letter, the Security Documents and the Trust Deed.“LIBOR” means, in relation to a Term, the London Interbank offered rate administered by ICE Benchmark Administration Limited (or any otherperson which takes over the administration of that rate) for Dollars commencing on the first day of that Term displayed on page LIBOR 01 of theThomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other informationservice which publishes that rate from time to time in place of Thomson Reuters, and if such page or service ceases to be available the Owners mayspecify another page or service displaying the relevant rate on the Quotation Day (if the rate as determined above is less than zero, LIBOR shall bedeemed to be zero).“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustmentfor any relevant franchise or deductible, exceeds $1,000,000 or the equivalent in any other currency.“Manager’s Undertaking” means, in relation to an Approved Manager, the letter of undertaking from the Approved Manager, inter alia,subordinating the rights of such Approved Manager against the Vessel and the Charterers to the rights of the Owners and their financiers (if any) in anagreed form. 41SINGAPORE/89220790v10“Margin” means 3.05% per annum.“Market Value” means, in relation to the Vessel at any relevant time, the valuation prepared: (a)on a date no earlier than thirty (30) days previously; (b)with or without physical inspection of the Vessel; and (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing and a willing buyer, free ofany existing charter or other contract of employmentand such valuations shall be prepared by one Approved Valuer selected by the Charterers (but appointed by the Owners).“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for thePrevention of Pollution from Ships 1973 (as amended in 1978 and 1997).“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on: (a)the business, operations, property, condition (financial or otherwise) or prospects of the Charterers or the Guarantor and its subsidiaries as awhole; or (b)the ability of any Relevant Person or Approved Manager to perform its obligations under any Leasing Document to which it is a party; or (c)the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to any of the Leasing Documents orthe rights or remedies of the Owners under any of the Leasing Documents.“MOA” means the memorandum of agreement entered into by the Charterers as sellers and the Owners as buyers dated on the date of this Charter inrelation to the sale and purchase of the Vessel.“Mortgagee” has the meaning given to that term in Clause 35.3.“Net Income Loss” means, at the relevant time, the net income loss (if any) as shown in the most recent audited consolidated annual financial reportsof the Guarantor adjusted to exclude impairment losses.“Original Financial Statements” means the Guarantor’s audited financial statements for the financial year ended 31 December 2016 and itsunaudited consolidated management accounts for the financial year ended 31 December 2017.“Original Jurisdiction” means, in relation to any Relevant Person, Approved Subcharterer or Approved Manager (as the case may be), thejurisdiction under whose laws they are respectively incorporated as at the date of this Charter.“Other Charter” means the bareboat charterparty entered into between the relevant Other Owner and the relevant Other Charterer in respect of any ofthe Other Vessels.“Other Charterer” means Kos Shipping Corporation, Mytilene Shipping Corporation or Antiparos Shipping Corporation (and “Other Charterers”mean all of them). 42SINGAPORE/89220790v10“Other Owner” means Sea 66 Leasing Co. Limited, Sea 68 Leasing Co. Limited or Sea 69 Leasing Co. Limited (and “Other Owners” means all ofthem).“Other Vessel” means 49,992 DWT MR tanker named Nave Atria, 49,999 DWT MR tanker named Nave Bellatrix, or the 49,999 DWT MR tankernamed Nave Orion (and “Other Vessels” means all of them).“Outstanding Principal Balance” means the aggregate of: (a)the Charterhire Principal Balance; and (b)the Purchase Obligation Price.“Owners’ Sale” has the meaning given to that term in Clause 40.3(a)(iii).“Party” means either party to this Charter.“Payment Date” means each of the twenty four (24) dates upon which Charterhire is to be paid by the Charterers to the Owners pursuant to Clause 36.“Permitted Security Interests” means: (a)Security Interests created by a Leasing Document or a Financial Instrument; (b)other Security Interests Permitted by the Owners in writing; (c)liens for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usualreputable maritime practice; (d)liens for salvage; (e)liens for master’s disbursements incurred in the ordinary course of trading; (f)any other liens arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel providedsuch liens do not secure amounts more than 30 days overdue; (g)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 assecurity for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and (h)Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for paymentbut which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserveshave been made.“Post-enforcement Interests” has the meaning given to that term in 40.3(a)(ii).“Potential Termination Event” means, an event or circumstance which, with the giving of any notice, the lapse of time, a determination of theOwners and/or the satisfaction of any other condition, would constitute a Termination Event.“Purchase Obligation” means the purchase obligation referred to in Clause 48.1. 43SINGAPORE/89220790v10“Purchase Obligation Date” means the date on which the Owners shall transfer the legal and beneficial interest in the Vessel to the Charterers, andthe Charterers shall purchase the Vessel, being the date falling on the last day of the Charter Period.“Purchase Obligation Price” means fifty per cent. (50%) of the Financing Amount.“Purchase Price” has the meaning given to that term in the MOA.“Purchase Option” means the early termination option which the Charterers are entitled to pursuant to Clause 47.“Purchase Option Date” has the meaning given to that term in Clause 47.1.“Purchase Option Notice” has the meaning given to that term in Clause 47.1.“Purchase Option Price” means the aggregate of: (a)the Outstanding Principal Balance as at the Purchase Option Date together with a fee calculated at the rate of (i) one per cent. (1%) thereon forany prepayment made before the fourth anniversary of the Commencement Date, (ii) zero point five per cent. (0.5%) thereon for any paymentmade on and after the fourth anniversary of the Commencement Date and before the fifth anniversary of the Commencement Date and(iii) zero per cent. (0%) for any prepayment made thereafter; (b)any Charterhire B accrued as at the Purchase Option Date; (c)any Breakfunding Costs; (d)any legal costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 47; and (e)all other amounts payable under this Charter and the other Leasing Documents together with any applicable interest thereon.“Quiet Enjoyment Agreement” means the quiet enjoyment agreement executed or to be executed between, amongst others, the Charterers, theOwners and the Owners’ financiers in the agreed form.“Quotation Day” means in relation to any period for which an Interest Rate is to be determined, two Business Days before the first day of that periodunless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Owners in accordance withmarket practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market onmore than one day, the Quotation Day will be the last of those days).“Relevant Interbank Market” means the London interbank market.“Relevant Person” means the Charterers, the Other Charterers, the Guarantor, the Shareholder and such other party providing security to the Ownersfor the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (but not including the Subcharterer, any ApprovedSubcharterer and the Manager).“Relevant Jurisdiction” means, in relation to any Relevant Person, Approved Subcharterer or Approved Manager (as the case may be): (b)its Original Jurisdiction; 44SINGAPORE/89220790v10 (c)any jurisdiction where any property owned by it and charged under a Leasing Document is situated; (d)any jurisdiction where it conducts its business; and (e)any jurisdiction whose laws govern the perfection of any of the Leasing Documents entered into by it creating a Security Interest.“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”.“Restricted Countries” means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but notlimited to pursuant to the U.S.‘s Office of Foreign Asset Control of the U.S. Department of Treasury (“OFAC”) including at the date of this Charter,but without limitation, Iran, North Korea and Syria and any additional countries based on respective country-wide or territory-wide Sanctions beingimposed by OFAC or any of the regulative bodies referred to in the definition of Restricted Persons.“Restricted Person” means a person, entity or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, and/or(ii) subject to any sanction administrated by the United Nations, the European Union, Switzerland, the United States and the U.S. Department ofTreasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, Her Majesty’s Treasury (“HMT”) and the Foreign and CommonwealthOffice of the United Kingdom, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any otherparties as referred to in (i) and (ii).“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment,exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) imposed by law or regulation ofUnited Kingdom, the United States of America (including, without limitation, CISADA and OFAC), the People’s Republic of China or the Council ofthe European Union.“Security Documents” means the Guarantee, the Account Security, the General Assignment, the Shares Pledge, the Manager’s Undertaking and anyother security documents granted as security for the obligations of the Charterers under or in connection with this Charter.“Security Interest” means: (a)a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; (b)the security rights of a plaintiff under an action in rem; or (c)any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to itahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off orcombination of accounts conferred by the standard terms of business of a bank or financial institution.“Shareholder” means Aegean Sea Maritime Holdings Inc., a corporation incorporated and existing under the laws of the Republic of the MarshallIslands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands.“Shares Pledge” means the shares pledge over the shares in the Charterers to be executed by the Shareholder in favour of the Owners on or around thedate of this Charter. 45SINGAPORE/89220790v10“Short Term Time Subcharter” means a subcharter of the Vessel on a time charter basis with a charter period not exceeding and not capable ofexceeding twelve (12) months (taking into account any optional extension period)“Subcharter” means the subcharter with the particulars set out under Schedule IV.“Subcharterer Assignment” means the subcharterer of the Vessel named under Schedule IV;“Term” means, in relation to the definitions of “Charterhire A” and “Charterhire B”, a period of three (3) month’s duration provided that: (a)the first Term shall commence on the Commencement Date; (b)each subsequent Term shall commence on the last day of the preceding Term; (c)any Term which would otherwise end on a non-Business Day shall instead end on the next following Business Day or, if that Business Day isin another calendar month, on the immediately preceding Business Day; (d)if any Term commences on the last Business Day of a calendar month or on a day for which there is no numerically corresponding day in thecalendar month three (3) months thereafter, as the case may be, that Term shall, subject to paragraphs (c), (e) and (f), end on the last BusinessDay of such later calendar month; (e)any Term which would otherwise overrun a Payment Date shall instead end on that Payment Date; and (f)any Term which would otherwise extend beyond the Charter Period shall instead end on the last day of the Charter Period.“Termination Event” means any event described in Clause 44.“Termination Purchase Price” means, in respect of any date (for the purposes of this definition only, the “Relevant Date”), the aggregate of: (a)the Outstanding Principal Balance as at the Relevant Date together with a fee calculated at the rate of (i) one per cent. (1%) thereon for anytermination of this Charter occurring before the fourth anniversary of the Commencement Date, (ii) zero point five per cent. (0.5%) thereon forany termination of this Charter occurring on and after the fourth anniversary of the Commencement Date and before the fifth anniversary ofthe Commencement Date and (iii) zero per cent. (0%) for any prepayment made thereafter; (b)and any accrued but unpaid Charterhire B as at the Relevant Date; (c)any Breakfunding Costs; (d)any costs incurred and expenses incurred by the Owners (and their financiers (if any)) in locating, repossessing or recovering the Vessel orcollecting any payments due under this Charter or in obtaining the due performance of the obligations of the Charterers under this Charter orthe other Leasing Documents and any default interest in relation thereto; (e)any legal costs incurred by the Owners in connection with the termination of this Charter under Clause 44; 46SINGAPORE/89220790v10 (f)all other outstanding amounts payable under this Charter together with any applicable interest thereon.“Total Loss” means: (a)actual, constructive, compromised, agreed or arranged total loss of the Vessel; (b)any expropriation, confiscation, requisition or acquisition of the Vessel, whether for full consideration, a consideration less than its propervalue, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person orpersons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1year without any right to an extension) unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers;or (c)any arrest, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (b) ofthis definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers.“Trust Deed” means a trust deed dated on or around the date of this Charter entered into between the Owners, the Other Owners, the Charterers, theOther Charterers, the Guarantor and the Approved Manager which, inter alia, sets out the obligations of the Owners in respect of holding on trust allmoneys or other assets received or recovered by or on behalf of the Owners by virtue of any Security Interest or other rights granted to the Ownersunder or by virtue of the Security Documents.“US Tax Obligor” means (a) a person which is resident for tax purposes in the United States of America or (b) a person some or all of whose paymentsunder the Leasing Documents are from sources within the United States for United States federal income tax purposes.“Vessel” means the MR tanker m.v. “NAVE AQUILA” with IMO No. 9459072 with particulars stated in Boxes 6 to 12 of this Charter and which is tobe registered under the name of the Owners with the Panama registry upon Delivery. 59.2In this Charter:“Approved Manager”, “Approved Subcharterer”, “Charterers”, “Other Charterers”, “Other Owners”, “Owners”, “Relevant Person”,“Shareholder”, “Subcharterer” or any other person shall be construed so as to include its successors in title, permitted assigns and permittedtransferees to, or of, its rights and/or obligations under the Leasing Documents.“agreed form” means, in relation to a document, such document in a form agreed in writing by the Owners;“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;“company” includes any partnership, joint venture and unincorporated association;“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained; 47SINGAPORE/89220790v10“continuing” means, in relation to any Termination Event, a Termination Event which has not been waived by the Owners and in relation to anyPotential Termination Event, a Potential Termination Event which has not been waived by the Owners;“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: (a)cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of suchcompany; or (b)appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or (c)give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers ofsuch company are obliged to comply;“document” includes a deed; also a letter, fax or telex;“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of theCouncil 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 59.3;“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 itsterms;“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the InternationalGroup of P&I Clubs including pollution risks, freight, demurrage and defence cover, extended passenger cover and the proportion (if any) of anysums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of theincorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)(1/10/83) orclause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental,intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;“subsidiary” has the meaning given in Clause 59.4; and“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 stateor any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine. 48SINGAPORE/89220790v1059.3Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of thecalendar 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 nolater 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 lastcalendar month of the period has no numerically corresponding day;and “month” and “monthly” shall be construed accordingly. 59.4Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if a majority of the issued shares in S (or a majority of the issuedshares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P.A company (S) is a subsidiary of another company (U) if S is a subsidiary of P and P is in turn a subsidiary of U.For the purposes of this Charter and other Leasing Documents, references to the subsidiaries of the Guarantor shall exclude any subsidiary of theGuarantor which is publicly listed on any stock exchange. 59.5In this Charter: (a)references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in therecitals include references to that form with any modifications to that form which the Owners approve; (b)references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether beforethe date of this Charter or otherwise; (c)references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date ofthis Charter or otherwise; and (d)words denoting the singular number shall include the plural and vice versa. 59.6Headings. In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and anyother Leasing Document shall be entirely disregarded. 49SINGAPORE/89220790v10EXECUTION PAGE OWNERS SIGNED by as an attorney-in-fact for and on behalf of SEA 67 LEASING CO. LIMITED ) in the presence of: Witness’ signature: Witness’ name: Witness’address: CHARTERERS SIGNED by for and on behalf of IKARIA SHIPPING CORPORATION as in the presence of: Witness’ signature: ) Witness’ name:) Witness’ address:) SINGAPORE/89220790vl0SIGNED by SIGNED by for and on beha for and on beha by by EXECUTION PAGE OWNERS as an attorney-in-fact for and on behalf of SEA 67 LEASING CO. LIMITED in the presence of: Witness’ signature: Witness’ name: Witness’ address: CHARTERERS for and on beWo^DR0S LA JOS SIGNED Witness’ signature: Francisco G.Tazelaar Witness’ name: Abogado / Attorney-at-law Witness’address:Copyright: Norwegian Shipbrokers’ Association, Oslo. Printed by BIMCO’s idea Explanatory Notes for SALEFORM 2012 are available from BIMCO at www.bimco.org Published by Norwegian Shipbrokers’ Association, Oslo and BIMCO, Copenhagen MEMORANDUM OF AGREEMENT Norwegian Shipbrokers’ Association’s Memorandum of Agreement for sale and purchase of ships. Adopted by BIMCO in 1956. Code-name SALEFORM 2012 Revised 1966, 1983 and 1986/87, 1993 and 2012 Dated: _____________ 31 March 2018 1 Ikaria Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall 2 Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands(Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and Sea 67 Leasing Co. Limited, a company incorporated and existing under the laws of Hong Kong having 3 its registered office at Room 1803-1804, 18/F Bank of America Tower, 12 Harcourt Road, Central, Hong Kong (Name of buyers), hereinafter called the “Buyers”, have agreed to buy: Name of vessel: NAVE AQUILA 4 IMO Number: 9459072 5 Classification Society: Nippon Kaiji Kyokai 6 Class Notation: NS* (CSR, Tanker, Oils-Flashpoint on and below 60 degree C and Chemicals Type II 7 and III, Performance Standard for Protective Coatings for Dedicated Seawater Ballast Tanks in All Types of Ships and Double-side Skin Spaces of Bulk Carriers)(ESP)(IWS)(PSCM)(EA + VOC) MNS* Year of Build: 2012 Builder/Yard: Dae Sun Shipbuilding & Engineering 8 Co., Ltd. Flag: Panama Place of Registration: Panama GT/NT: 30,052 /13,255 9 hereinafter called the “Vessel”, on the following terms and conditions: 10 Definitions – see also Clause 28 11 “Agreement” means this memorandum of agreement which shall for the avoidance of doubt, include the rider provisions from Clauses 19 to 28. “Banking Days” are days on which banks are open both in the country of the currency stipulated for 12 the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 13 (Documentation)and ______ (add additional jurisdictions as appropriate). 14 “Buyers’ Nominated Flag State” means Panama (state flag state). 15 “Cancelling Date” has the meaning given to that term in Clause 5. 16 “Conditions Precedent” has the meaning given to that term in Clause 8(a). “Class” means the class notation referred to above. 17 “Classification Society” means the Classification Society referred to above. “”Dollars” or “$” mean United States dollars, being the lawful currency of the United States of 18 America.Deposit” shall have the meaning given in Clause 2 (Deposit) “Deposit Holder” means ______ (state name and location of Deposit Holder) or, if left blank, the 19 Sellers’ Bank, which shall hold and release the Deposit in accordance with this Agreement. 20 “In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a 21 registered letter, e-mail or telefax. 22 “Parties” means the Sellers and the Buyers. 23 “Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price). 24 “Sellers’ Account” means ______ (state details of bank account) at the Sellers’ Bank. 25 “Sellers’ Bank” means (state name of bank, branch and details) or, if left blank, the bank 26 notified by the Sellers to the Buyers for receipt of the balance of the Purchase Price. 27 1. Purchase Price 28 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document.See Clause 19The Purchase Price is ______ (state currency and amount both in words and figures). 29 2. Deposit – intentionally omitted 30 As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of 31 ______% (______per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the 32 “Deposit”) in an interest bearing account for the Parties with the Deposit Holder within three (3) 33 Banking Days after the date that: 34 (i) this Agreement has been signed by the Parties and exchanged in original or by 35 e-mail or telefax; and 36 (ii) the Deposit Holder has confirmed in writing to the Parties that the account has been 37 opened. 38 The Deposit shall be released in accordance with joint written instructions of the Parties. 39 Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the 40 Deposit shall be borne equally by the Parties. The Parties shall provide to the Deposit Holder 41 all necessary documentation to open and maintain the account without delay. 42 3. Payment 43 See Clause 19On delivery of the Vessel, but not later than three (3) Banking Days after the date that 44 Notice of Readiness has been given in accordance with Clause 5 (Time and place of delivery and 45 notices): 46 (i) the Deposit shall be released to the Sellers; and 47 (ii) the balance of the Purchase Price and all other sums payable on delivery by the Buyers 48 to the Sellers under this Agreement shall be paid in full free of bank charges to the 49 Sellers’ Account. 50 4. Inspection – intentionally omitted 51 (a)* The Buyers have inspected and accepted the Vessel’s classification records. The Buyers 52 have also inspected the Vessel at/in ______ (state place) on ______ (state date) and have 53 accepted the Vessel following this inspection and the sale is outright and definite, subject only 54 to the terms and conditions of this Agreement. 55 (b)* The Buyers shall have the right to inspect the Vessel’s classification records and declare 56 whether same are accepted or not within ______ (state date/period). 57 The Sellers shall make the Vessel available for inspection at/in ______ (state place/range) within 58 ______(state date/period). 59 The Buyers shall undertake the inspection without undue delay to the Vessel. Should the 60 Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred. 61 The Buyers shall inspect the Vessel without opening up and without cost to the Sellers. 62 During the inspection, the Vessel’s deck and engine logbooks shall be made available for 63 examination by the Buyers. 64 The sale shall become outright and definite, subject only to the terms and conditions of this 65 Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from 66 the Buyers within seventy-two (72) hours after completion of such inspection or after the 67 date/last day of the period stated in Line 59, whichever is earlier. 68 Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of 69 the Vessel’s classification records and/or of the Vessel not be received by the Sellers as 70 aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the 71 Buyers, whereafter this Agreement shall be null and void. 72 *4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, 73 alternative 4(a) shall apply. 74 5. Time and place of delivery and notices 75 (a) The Vessel shall be delivered and taken over safely afloat in (i) international waters or (ii) such 76 other placeat a safe and accessible berth or anchorage at/in ______ (state place/range) in the Sellers’ option and subject to such conditions as 77 may be agreed by the Buyers. Notice of Readiness shall not be tendered before: ______(date) 78 Cancelling Date (see Clauses 5(c) , 6 (a)(i), 6 (a) (iii) and 14): 30 April 2018 (or such later date as may 79 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 2be agreed by the Sellers and the Buyers in writing) (the “Cancelling Date”) (b) The Sellers shall keep the Buyers well informed of the Vessel’s itinerary and shall 80 provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ notice of the date the 81 Sellers intend to tender Notice of Readiness and of the intended place of delivery. 82 When the Vessel is, on a day being a Business Day, at the place of delivery and physically ready for 83 delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. 84 (c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the 85 Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing 86 stating the date when they anticipate that the Vessel will be ready for delivery and proposing a 87 new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of 88 either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3) 89 Banking Business Days of receipt of the notice or of accepting the new date as the new Cancelling 90 Date. If the Buyers have not declared their option within three (3) Banking Business Days of receipt of the 91 Sellers’ notification or if the Buyers accept the new date, the date proposed in the Sellers’ 92 notification shall be deemed to be the new Cancelling Date and shall be substituted for the 93 Cancelling Date stipulated in line 79. 94 If this Agreement is maintained with the a new Cancelling Date all other terms and conditions 95 hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full 96 force and effect. 97 (d) Cancellation, failure to cancel or acceptance of the a new Cancelling Date shall be entirely 98 without prejudice to any claim for damages the Buyers may have under Clause 14 (Sellers’ 99 Default) for the Vessel not being ready by the original Cancelling Date. 100 (e) Should the Vessel become an actual, constructive or compromised t Total lLoss before delivery 101 the Deposit together with interest earned, if any, shall be released immediately to the Buyers 102 whereafter this Agreement shall be null and voidterminate (provided that any provision hereof 103 expressed to survive such termination shall do so in accordance with its terms). 6. Divers Inspection / Drydocking – intentionally omitted 104 (a)* 105 (i) The Buyers shall have the option at their cost and expense to arrange for an underwater 106 inspection by a diver approved by the Classification Society prior tothe delivery of the 107 Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended 108 date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this 109 Agreement. The Sellers shall at their cost and expense make the Vessel available for 110 such inspection. This inspection shall be carried out without undue delay and in the 111 presence of a Classification Society surveyor arranged for by the Sellers and paid for by 112 the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s 113 inspection as observer(s) only without interfering with the work or decisions of the 114 Classification Society surveyor. The extent of the inspection and the conditions under 115 which it is performed shall be to the satisfaction of the Classification Society. If the 116 conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at 117 their cost and expense make the Vessel available at a suitable alternative place near to 118 the delivery port, in which event the Cancelling Date shall be extended by the additional 119 time required for such positioning and the subsequent re-positioning. The Sellers may 120 not tender Notice of Readiness prior to completion of the underwater inspection. 121 (ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are 122 found broken, damaged or defective so as to affect the Vessel’s class, then (1) unless 123 repairs can be carried out afloat to the satisfaction of the Classification Society, the 124 Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by 125 the Classification Society of the Vessel’s underwater parts below the deepest load line, 126 the extent of the inspection being in accordance with the Classification Society’s rules (2) 127 such defects shall be made good by the Sellers at their cost and expense to the 128 satisfaction of the Classification Society without condition/recommendation** and (3) the 129 Sellers shall pay for the underwater inspection and the Classification Society’s 130 attendance. 131 Notwithstanding anything to the contrary in this Agreement, if the Classification Society 132 do not require the aforementioned defects to be rectified before the next class 133 drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects 134 against a deduction from the Purchase Price of the estimated direct cost (of labour and 135 materials) of carrying out the repairs to the satisfaction of the Classification Society, 136 This document is a computer generated SALEFORM2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 3whereafter the Buyers shall have no further rights whatsoever in respect of the defects 137 and/or repairs. The estimated direct cost of the repairs shall be the average of quotes 138 for the repair work obtained from two reputable independent shipyards at or in the 139 vicinity of the port of delivery, one to be obtained by each of the Parties within two (2) 140 Banking Days from the date of the imposition of the condition/recommendation, unless 141 the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within 142 the stipulated time then the quote duly obtained by the other Party shall be the sole basis 143 for the estimate of the direct repair costs. The Sellers may not tender Notice of 144 Readiness prior to such estimate having been established. 145 (iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking 146 facilities are available at the port of delivery, the Sellers shall take the Vessel to a port 147 where suitable drydocking facilities are available, whether within or outside the delivery 148 range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the 149 Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose 150 of this Clause, become the new port of delivery. In such event the Cancelling Date shall 151 be extended by the additional time required for the drydocking and extra steaming, but 152 limited to a maximum of fourteen (14) days. 153 (b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the 154 Classification Society of the Vessel’s underwater parts below the deepest load line, the extent 155 of the inspection being in accordance with the Classification Society’s rules. If the rudder, 156 propeller, bottom or other underwater parts below the deepest load line are found broken, 157 damaged or defective so as to affect the Vessel’s class, such defects shall be made good at the 158 Sellers’ cost and expense to the satisfaction of the Classification Society without 159 condition/recommendation**. In such event the Sellers are also to pay for the costs and 160 expenses in connection with putting the Vessel in and taking her out of drydock, including the 161 drydock dues and the Classification Society’s fees. The Sellers shall also pay for these costs 162 and expenses if parts of the tailshaft system are condemned or found defective or broken so as 163 to affect the Vessel’s class. In all other cases, the Buyers shall pay the aforesaid costs and 164 expenses, dues and fees. 165 (c) If the Vessel is drydocked pursuantto Clause 6 (a)(ii) or 6 (b) above: 166 (i) The Classification Society may require survey of the tailshaft system, the extent of the 167 survey being to the satisfaction of the Classification surveyor. If such survey is 168 not required by the Classification Society, the Buyers shall have the option to require the 169 tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey 170 being in accordance with the Classification Society’s rules for tailshaft survey and 171 consistent with the current stage of the Vessel’s survey cycle. The Buyers shall declare 172 whether they require the tailshaft to be drawn and surveyed not later than by the 173 completion of the inspection by the Classification Society. The drawing and refitting of 174 the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be 175 condemned or found defective so as to affect the Vessel’s class, those parts shall be 176 renewed or made good at the Sellers’ cost and expense to the satisfaction of 177 Classification Society without condition/recommendation**. 178 (ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by 179 the Buyers unless the Classification Society requires such survey to be carried out or if 180 parts of the system are condemned or found defective or broken so as to affect the 181 Vessel’s class, in which case the Sellers shall pay these costs and expenses. 182 (iii) The Buyers’ representative(s) shall have the right to be present in the drydock, as 183 observer(s) only without interfering with the work or decisions of the Classification 184 Society surveyor. 185 (iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned 186 and painted at their risk, cost and expense without interfering with the Sellers’ or the 187 Classification Society surveyor’s work, if any, and without affecting the Vessel’s timely 188 delivery. If, however, the Buyers’ work in drydock is still in progress when the 189 Sellers have completed the work which the Sellers are required to do, the additional 190 docking time needed to complete the Buyers’ work shall be for the Buyers’ risk, cost and 191 expense. In the event that the Buyers’ work requires such additional time, the Sellers 192 may upon completion of the Sellers’ work tender Notice of Readiness for delivery whilst 193 the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be 194 obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in 195 drydock or not.196 *6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions, 197 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 4alternative 6 (a) shall apply. 198 **Notes or memoranda, if any, in the surveyor’s report which are accepted by the Classification 199 Society without condition/recommendation are not to be taken into account. 200 7. Spares, bunkers and other items 201 The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board 202 and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or 203 spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspectiondelivery 204 used or unused, whether on board or not shall become the Buyers’ property, but spares on 205 order are excluded. Forwarding charges, if any, shall be for the Buyers’ account. The Sellers 206 are not required to replace spare parts including spare tail-end shaft(s) and spare 207 propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to 208 delivery, but the replaced items shall be the property of the Buyers. Unused stores and 209 provisions shall be included in the sale and be taken over by the Buyers without extra payment. 210 Library and forms exclusively for use in the Sellers’ vessel(s) and captain’s, officers’ and crew’s 211 personal belongings including the slop chest are excluded from the sale without compensation, 212 as well as the following additional items: ______(include list) 213 Items on board which are on hire or owned by third parties, listed as follows, are excluded from 214 the sale without compensation: ______(include list) 215 Items on board at the time of inspection which are on hire or owned by third parties, not listed 216 above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense. 217 The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and 218 greases in storage tanks and unopened drums at no extra cost.and pay either 219 (a) *the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or 220 (b) *the current net market price (excluding barging expenses) at the port and date of delivery 221 of the Vessel or, if unavailable, at the nearest bunkering port, 222 for the quantities taken over. 223 Payment under this Clause shall be made at the same time and place and in the same 224 currency as the Purchase Price. 225 “inspection” in this Clause 7, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b) 226 (Inspection), ifapplicable. If the Vessel is taken over without inspection, the date of this 227 Agreement shall be the relevant date. 228 *(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions 229 alternative (a) shall apply. 230 8. Documentation 231 The place of closing: To be mutually agreed between the Sellers and the Buyers 232 (a) In exchange for pPayment of the Purchase Price by the Buyers to the Sellers shall be subject to 233 Clause 20 and conditional on the Buyers having on or prior to delivery of the Vessel on the Delivery Date received, or being satisfied as to, provide the Buyers with the following delivery documentsitems: 234 (i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State, 235 transferring title of the Vessel and stating that the Vessel is free from all mortgages, 236 encumbrances and maritime liens (whether maritime or otherwise) or any other debts 237 whatsoever, duly notarially attested and legalised or apostilled, as required by the Buyers’ Nominated Flag State; 238 (ii) Acceptance of Sale in a form recordable in the Buyers’ Nominated Flag State, duly notarially attested and legalised or apostilled, as required by the Buyers’ Nominated Flag State. (iiiii) Evidence that all necessary corporate, shareholder and other action has been taken by 239 the Sellers to authorise the execution, delivery and performance of this Agreement; 240 (iiiiv) Power of Attorney of the Sellers appointing one or more representatives to act on behalf 241 of the Sellers in the performance of this Agreement, duly notarially attested and legalised 242 or apostilled (as appropriate); 243 (ivv) Certificate or Transcript of Registry issued by the competent authorities of the flag state 244 on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the 245 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 5Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by 246 such authority to the closing meeting with the original to be sent to the Buyers as soon as 247 possible after delivery of the Vessel; 248 (vvi) Declaration of Class or (depending on the Classification Society) a Class Maintenance 249 Certificate issued within three (3) Business Banking Days prior to delivery confirming that the 250 Vessel is in Class free of overdue condition/recommendation; 251 (vi) Certificate of Deletion of the Vessel from the Vessel’s registry or other official evidence of 252 deletion appropriate to the Vessel’s registry at the time of delivery, or, in the event that 253 the registry does not as a matter of practice issue such documentation immediately, a 254 written undertaking by the Sellers to effect deletion from the Vessel’s registry forthwith 255 and provide a certificate or other official evidence of deletion to the Buyers promptly and 256 latest within four (4) weeks after the Purchase Price has been paid and the Vessel has 257 been delivered; 258 (vii) A copy of the Vessel’s Continuous Synopsis Record certifying the date on which the 259 Vessel ceased to be registered with the Vessel’s registry, or, in the event that the registry 260 does not as a matter of practice issue such certificate immediately, a written undertaking 261 from the Sellers to provide the copy of this certificate promptly upon it being issued 262 together with evidence of submission by the Sellers of a duly executed Form 2 stating 263 the date on which the Vessel shall cease to be registered with the Vessel’s registry; 264 (viiivii) Commercial Invoice for the Vessel; 265 (ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases; 266 (x) A copy of the Sellers’ letter to their satellite communication provider cancelling the 267 Vessel’s communications contract which is to be sent immediately after delivery of the 268 Vessel; 269 (xiviii) Any additional documents as may reasonably be required by the competent authorities of 270 the Buyers’ Nominated Flag State for the purpose of registering the Vessel, each in a form 271 acceptable to the Buyers’ Nominated Flag State, duly notarially attested and legalised or apostilled (if required) provided the Buyers notify the Sellers of any such documents as soon as possible after the date of 272 this Agreement; and 273 (xiiix) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not 274 black listed by any nation or international organisation. 275 (x) The items set out in Clause 20. The items set out in this Clause 8(a) (together the “ConditionsPrecedent”) are inserted for the sole benefit of the Buyers and may be waived in whole or in part with or without conditions by the Buyers. (b) At the time of delivery the Buyers shall provide the Sellers with: 276 (i) Evidence that all necessary corporate, shareholder and other action has been taken by 277 the Buyers to authorise the execution, delivery and performance of this Agreement; and 278 (ii) Power of Attorney of the Buyers (if any) appointing one or more representatives to act on behalf 279 of the Buyers in the performance of this Agreement., duly notarially attested and legalised 280 or apostilled (as appropriate). 281 (c) If any of the documents listed in Sub-clauses (a) and (b) above are not in the English 282 language they shall be accompanied by an English translation by an authorised translator or 283 certified by a lawyer qualified to practice in the country of the translated language. 284 (d) The Parties shall to the extent possible exchange copies, drafts or samples of the 285 documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the 286 other party not later than two (2) Business Days (or such later date as the Buyers may agree) prior 287 to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this Agreement. (state number of days), or if left blank, nine (9) days prior to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to 288 Clause 5(b) of this Agreement. 289 (e) On delivery, Concurrent with the exchange of documents in Sub-clause (a) and Sub-clause (b) 290 above, the Sellers shall also hand to the Buyers copies of the classification certificate(s) as well as all plans, 291 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 6drawings and manuals, (excluding ISM/ISPS manuals), which are on board the Vessel. Other 292 certificates which are on board the Vessel shall also be handed over to the Buyers unless 293 the Sellers are required to retain same, in which case the Buyers have the right to take copies. 294 (f) Other technical documentation which may be in the Sellers’ possession shall promptly after 295 delivery be forwarded to the Buyers at their Sellers’ expense, if they so request. The Sellers may keep 296 the Vessel’s log books but the Buyers have the right to take copies of same. 297 (g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance 298 confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. 299 9. Encumbrances 300 The Sellers warrant that the Vessel, at the time of delivery, is free from all charters (other than the 301 Bareboat Charter and any time charter permitted by the terms of the Leasing Documents), encumbrances, mortgages and maritime liens (whether maritime or otherwise) or any other debts 302 whatsoever, and is not subject to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the 303 Buyers against all consequences of claims made against the Vessel which have been incurred 304 prior to the time of delivery. 305 10. Taxes, fees and expenses 306 Any taxes, fees and expenses in connection with the purchase of the Vessel and registration in the 307 Buyers’ Nominated Flag State shall be for the Buyers’ account, whereas similar charges and in connection 308 with the closing of the Sellers’ register shall be for the Sellers’ account. 309 11. Condition on delivery 310 The Vessel with everything belonging to her shall be at the Sellers’ risk and expense until she is 311 delivered to the Buyers, but subject pursuant to the terms and conditions of this Agreement she shall 312 be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. 313 However, the Vessel shall be delivered free of cargo and free of stowaways with her Class 314 maintained without condition/recommendation*, free of average damage affecting the Vessel’s 315 class, and with her classification certificates and national certificates, as well as all other 316 certificates the Vessel had at the time of inspectiondelivery, valid and unextended without overdue 317 condition/recommendation* by the Classification Society or the relevant authorities at the time 318 of delivery. 319 “inspection” in this Clause 11, shall mean the Buyers’ inspection according to Clause 4(a) or 320 4(b) (Inspections), if applicable. If theVessel is taken over without inspection, the date of this 321 Agreement shall be the relevant date. 322 *Notes and memoranda, if any, in the surveyor’s report which are accepted by the Classification 323 Society without condition/recommendation are not to be taken into account. 324 12. Name/markings – intentionally omitted 325 Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel 326 markings. 327 13. Buyers’ default 328 Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the 329 right to cancel this Agreement, and they shall be entitled to claim compensation for their losses 330 and for all expenses incurred together with interest. 331 Should the Purchase Price not be paid in accordance with Clause 3 (Payment)this Agreement, the 332 Sellers have the right to cancel this Agreement, in which case it shall terminate whereupon all the Buyers’ 333 liabilities hereunder shall be extinguished. the Deposit together with interest earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the 334 Sellers shall be entitled to claim further compensation for their losses and for all expenses 335 incurred together with interest. 336 14. Sellers’ default 337 Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be 338 ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the 339 option of cancelling this Agreement. If after Notice of Readiness has been given but before 340 the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not 341 made physically ready again by the Cancelling Date and new Notice of Readiness given, the 342 Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this 343 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 7Agreement, the Deposit together with interest earned, if any, shall be released to them 344 immediately. 345 Without prejudice to any of the rights the Buyers may have under the Leasing Documents, at law 346 or otherwise, Sshould the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers 347 for their direct and documented loss and for all documented expenses together with interest if 348 their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 349 15. Buyers’ representatives – intentionally omitted 350 After this Agreement has been signed by the Parties and the Deposit has been lodged, the 351 Buyers have the right to place two (2) representatives on board the Vessel at their sole risk and 352 expense. 353 These representatives are on board for the purpose of familiarisation and in the capacity of 354 observers only, and they shall not interfere in any respect with the operation of the Vessel. The 355 Buyers and the Buyers’ representatives shall sign the Sellers’ P&I Club’s standard letter of 356 indemnity prior to their embarkation. 357 16. Law and Arbitration See Clause 25 358 (a) *This Agreement shall be governed by and construed in accordance with English law and 359 any dispute arising out of or in connection with this Agreement shall be referred to arbitration in 360 London in accordance with the Arbitration Act 1996 or any statutory modification or re- 361 enactment thereof save to the extent necessary to give effect to the provisions of this Clause. 362 The arbitration shall be conducted in accordance with the London Maritime Arbitrators 363 Association (LMAA) Terms current at the time when the arbitration proceedings are 364 commenced. 365 The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall 366 appoint its arbitrator and send notice of such appointment in writing to the other party requiring 367 the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and 368 stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own 369 arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the 370 other party does not appoint its own arbitrator and give notice that it has done so within the 371 fourteen (14) days specified, the party referring a dispute to arbitrationmay, without the 372 requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator 373 and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on 374 both Parties as if the sole arbitrator had been appointed by agreement. 375 In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the 376 arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at 377 the time when the arbitration proceedings are commenced. 378 (b) *This Agreement shall be governed by and construed in accordance with Title 9 of the 379 United States Code and the substantive law (not including the choice of law rules) of the State 380 of New York and any dispute arising out of or in connection with this Agreement shall be 381 referred to three (3) persons at New York, one to be appointed by each of the parties hereto, 382 and the third by the two so chosen; their decision or that of any two of them shall be final, and 383 for the purposes of enforcing any award, judgment may be entered on an award by any court of 384 competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the 385 Society of Maritime Arbitrators, Inc. 386 In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the 387 arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the 388 Society of Maritime Arbitrators, Inc. 389 (c) This Agreement shall be governed by and construed in accordance with the laws of ______ 390 (state place) and any dispute arising out of or in connection with this Agreement shall be 391 referred to arbitration at ______ (state place), subject to the procedures applicable there. 392 *16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of 393 deletions, alternative 16(a) shall apply. 394 17. Notices See Clause 27 395 All notices to be provided under this Agreement shall be in writing. 396 Contact details for recipients of notices are as follows: 397 This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the originalapproved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 8For the Buyers: 398 For the Sellers: 399 18. Entire Agreement 400 The written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous 402 agreements whether oral or written between the Parties in relation thereto. 403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and 404 shall have no right or remedy in respect of any statement, representation, assurance or 405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement. 406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to 407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude 408 any liability for fraud. 409 For and on behalf of the Sellers For and on behalf of the Buyers Name: ______ Name: ______ Title: ______ Title: ______ This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 9For the Buyers: 398 ‘ For the Sellers:399 18.Entire Agreement400 IThe written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous402 agreements whether oral or written between the Parties in relation thereto.403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and404 shall have no right or remedy in respect of any statement, representation, assurance or405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement.406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude408 any liability for fraud.409 For and on behalf of the Sellers For and on behalf of the Buyers Name: ALEXANDROS LAIOSName: Title:\Title: This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 918. Entire Agreement 400 | The written terms of this Agreement (together with the other Leasing Documents) comprise the 401 entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous 402 agreements whether oral or written between the Parties in relation thereto.403 Each of the Parties acknowledges that in entering into this Agreement it has not relied on and404 shall have no right or remedy in respect of any statement, representation, assurance or405 warranty (whether or not made negligently) other than as is expressly set out in this Agreement.406 Any terms implied into this Agreement by any applicable statute or law are hereby excluded to407 the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude408 any liability for fraud.409 For and on behalf of the SellersFor and on behalf of the Buyers Name: Name: Title: Title: ‘ This document is a computer generated SALEFORM 2012 form printed by authority of the Norwegian Shipbrokers’ Association. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not cleariy visible, the text of the original approved document shall apply. BIMCO and the Norwegian Shipbrokers’ Association assume no responsibility for any loss, damage or expense as a result of discrepancies between the original approved document and this computer generated document. 9Execution VersionRIDER CLAUSES TOMEMORANDUM OF AGREEMENTDATED 31 MARCH 2018Clause 19 – Payment of Purchase Price (a)The Purchase Price of the Vessel shall be the lowest of: (i)$23,020,000; and (ii)the Certified Book Value; and (iii)the Market Value. (b)Subject always to Clause 21 and the Conditions Precedent having been satisfied, the Purchase Price of the Vessel shall be paid by the Buyers to theSellers on delivery of the Vessel on the Delivery Date in the following manner: (i)an amount of the Purchase Price equivalent to the amount of the Advance Charterhire (payable by the Sellers as bareboat charterers of theVessel to the Buyers as owners under the Bareboat Charter on the Delivery Date) shall be set off against the Sellers’ payment of such AdvanceCharterhire; and (ii)the balance of the Purchase Price shall be paid free of bank charges into the Sellers’ Account.Clause 20 – Further conditions precedentThe items referred to in Clause 8(a)(x) are: (a)the certificate of incorporation, articles of incorporation and by-laws or other constitutional documents of the Sellers along with an up-to-datecertificate of goodstanding; (b)such other documents as the Buyers may reasonably notify the Sellers as being necessary in relation to the Vessel and/or its status (including withoutlimitation, such confirmation of no liens and/or indemnity thereto which the Buyers may require the Sellers to provide or procure in respect of theVessel); (c)a certificate of an authorized signatory of the Sellers certifying that each copy document provided by Sellers to Buyers pursuant to this Agreement iscorrect, complete and in full force and effect as at a date no earlier than the Delivery Date; and (d)the Buyers being satisfied that the conditions precedent set out in the Bareboat Charter, have been, or will be capable of being, satisfied on theDelivery Date. 1SINGAPORE/89259271v1Clause 21 – Obligation to sell / purchase the VesselThe Parties’ obligation to sell / purchase the Vessel under this Agreement is conditional upon the simultaneous delivery to and acceptance by the Sellers asbareboat charterers of the Vessel under the Bareboat Charter and that no Potential Termination Event or Termination Event has occurred or will occur as aresult of the performance by the Parties of their obligations under this Agreement.Clause 22 – Physical PresenceIf the Buyers’ Nominated Flag State requires the Buyers to have a physical presence or office in the Buyers’ Nominated Flag State, all fees, costs and expensesarising out of or in connection with the establishment and maintenance of such physical presence or office by the Buyers shall be borne by the Sellers.Clause 23 – Costs and Expense (a)The Sellers shall pay such amounts to the Buyers in respect of all costs, claims, expenses, liabilities, losses and fees (including but not limited to anylegal fees, vessel registration and tonnage fees) suffered or incurred by or imposed on the Buyers arising from this Agreement or in connection withthe delivery, registration and purchase of the Vessel by the Buyers whether prior to, during or after termination of this Agreement and whether or notthe Vessel is in the possession of or the control of the Sellers or otherwise. (b)Notwithstanding anything to the contrary under the Leasing Documents and without prejudice to any right to damages or other claim which theBuyers may have at any time against the Sellers under this Agreement, the indemnities provided by the Sellers in favour of the Buyers shall continuein full force and effect notwithstanding any breach of the terms of this Agreement or such Leasing Document or termination or cancellation of thisAgreement or such Leasing Document pursuant to the terms hereof or thereof or termination of this Agreement or such Leasing Document by theBuyers.Clause 24 – SanctionsThe Sellers represent and warrant to the Buyers as of the date hereof and at the Delivery Date that: (a)they: (i)are not a Restricted Person; (ii)are not owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Person; (iii)do not own or control a Restricted Person; or (iv)do not have a Restricted Person serving as a director, officer or employee; and (b)no proceeds of the Purchase Price shall be made available, directly or indirectly, to or for the benefit of a Restricted Person nor shall they be otherwisedirectly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.Clause 25 – Governing Law and JurisdictionThis Agreement and any non-contractual obligations arising under or in connection with it, shall be governed by and construed in accordance with Englishlaw. 2SINGAPORE/89259271v1Any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement orany non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”)) shall be referred to and finally resolved by arbitration inLondon in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to theprovisions of this Clause 25. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current atthe time when the arbitration proceedings are commenced.The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment inwriting to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint itsarbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other partydoes not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a Dispute to arbitration may, withoutthe requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award ofa sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing tovary these provisions to provide for the appointment of a sole arbitrator.Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above.The language of the arbitration shall be English.Clause 26 - CounterpartsThis Agreement 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 ofthis Agreement.Clause 27 - NoticesAll notices to be provided under this Agreement shall be in writing.Contact details for recipients of notices are as follows:For the Sellers:85 Akti MiaouliPiraeus 185 38Greecec/o NAVIOS TANKERS MANAGEMENT INC.Attention: Vassiliki PapaefthymiouEmail: vpapaefthymiou@navios.comTel: +30 210 41 72 050Fax: +30 210 41 72 070For the Buyers:CMB Financial Leasing Co., Ltd21F, China Merchants Bank BuioldingNo. 1088, Lujiazui Ring RoadShanghaiChinaAttention: Wang WeiEmail: wangwei17@cmbchina.comTel: +8621 6106 1735Fax: +8621 6015 9911*1735 3SINGAPORE/89259271v1Clause 28 – DefinitionsUnless otherwise specified herein, capitalised terms in this Agreement shall have the same meaning as in the Bareboat Charter. Furthermore, in thisAgreement:“Approved Valuer” means Clarksons, Maersk Brokers, Howe Robinson, Arrow, Lorentzen & Stemoco, Simpson Spence Young, Braemar Seascope or anyother shipbroker nominated by the Charterers and approved by the Owners.“Bareboat Charter” means the bareboat charter in respect of the Vessel dated on or about the date hereof and made between the Buyers as owners and theSellers as bareboat charterers.“Certified Book Value” means the book value of the Vessel, which as at the date of this Agreement is $30,463,247.46.“Delivery Date” means the date (being a Business Day) on which the Vessel is delivered to the Buyers pursuant to the terms of this Agreement and thereafterimmediately delivered to the Sellers as bareboat charterers pursuant to the terms of the Bareboat Charter.“Market Value” means, in relation to the Vessel, the arithmetic mean of two (2) valuations, each prepared: (a)on a date no earlier than thirty (30) days prior to the Delivery Date; (b)with or without physical inspection of the Vessel; and (c)on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of anyexisting charter or other contract of employment,and such valuations shall be prepared by one Approved Valuer selected and appointed by the Buyers and one Approved Valuer selected by theSellers (but appointed by the Buyers) provided that if the difference in the two valuations obtained is more than five per cent. (5%) of the lowervaluation obtained, a third Approved Valuer shall be selected and appointed by the Buyers and the Market Value shall be the arithmetic mean of thetwo lowest valuations out of the three valuations obtained.“Purchase Price” means the purchase price of the Vessel payable by the Buyers to the Sellers pursuant to Clause 19 above.“Restricted Countries” means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but not limited topursuant to the U.S.’s Office of Foreign Asset Control of the U.S. Department of Treasury (“OFAC”) including at the date of this Charter, but withoutlimitation, Iran, North Korea and Syria and any additional countries based on respective country-wide or territory-wide Sanctions being imposed by OFAC orany of the regulative bodies referred to in the definition of Restricted Persons.“Restricted Person” means a person, entity or any other parties (i) located, domiciled, resident or incorporated in Restricted Countries, and/or (ii) subject toany sanction administrated by the United Nations, the European Union, Switzerland, the United States and the OFAC, the United Kingdom, Her Majesty’sTreasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the People’s Republic of China and/or (iii) owned or controlled by oraffiliated with persons, entities or any other parties as referred to in (i) and (ii). 4SINGAPORE/89259271v1“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment,exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) imposed by law or regulation of UnitedKingdom, the United States of America (including, without limitation, CISADA and OFAC), the People’s Republic of China or the Council of the EuropeanUnion.“Sellers’ Account” means the account in the name of the Seller with HSH Nordbank AG in USD with the account number 1200048517 and IBANDE88210500001200048517. 5SINGAPORE/89259271v1EXECUTION PAGE BUYERS SIGNED ) by ) as an attorney-in-fact ) for and on behalf of ) SEA 67 LEASING CO. LIMITED ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) SELLERS SIGNED ) by ) for and on behalf of ) IKARIA SHIPPING CORPORATION ) as ) in the presence of: ) Witness’ signature: ) Witness’ name: ) Witness’ address: ) 6 SINGAPORE/89259271v1EXECUTION PAGE BUYERS SIGNED by as an attorney-in-fact for and on behalf of SEA 67 LEASING CO. LIMITED in the presence of: Witness’ signature: ) Witness’ name: ) Witness’ address: SELLERS SIGNED by for and on behalf of IKARIA SHIPPING CORPORATION as in the presence of: Witness’ signature: Witness’ name: Witness’ address: 6 SINGAPORE/89259271vlEXECUTION PAGE BUYERS SIGNED by as an attorney-in-fact for and on behalf of SEA 67 LEASING CO. LIMITED in the presence of: Witness’ signature: Witness’ name: Witness’ address: SELLERS SIGNED by ALEXANDROS LAIOS for and on behalf of IKARIA SHIPPING CORPORATION as in the presence of. Witness’ signature: Francisco G.Tazelaar ) Witness’ name: Abogado I Attorney-at-law ) Witness’ ~ddress: TO 127 FO 127 CPACF 6 SINGAPORE/89259271vl1. Shipbroker N/A BIMCO STANDARD BAREBOAT CHARTER CODE NAME: “BARECON 2001” PART I 2. Place and date 31 March 2018 3. Owners/Place of business (Cl. 1) 4. Bareboat Charterers/Place of business (Cl. 1) Sea 68 Leasing Co. Limited / Room 1803-1804, 18/F Bank of Kos Shipping Corporation / Trust Company Complex, Ajeltake America Tower, 12 Harcourt Road, Central, Hong Kong Road, Ajeltake Island, Majuro, MH96960, Marshall Islands 5. Vessel’s name, call sign and flag (Cl. 1 and 3) NAVE BELLATRIX / 3FEC7 / Panama or any other Flag State 6. Type of Vessel 7. GT/NT MR Tanker 30,052 / 13,255 8. When/Where built 9. Total DWT (abt.) in metric tons on summer freeboard 2013, Dae Sun Shipping & Engineering Co., Ltd., Korea 49,999 10. Classification Society (Cl. 3) 11. Date of last special survey by the Vessel’s classification society Nippon Kaiji Kyokai or any other Classification Society 26/12/17 12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) IMO No.: 9459084 Length: 174.00 metres Breadth: 32.20 metres Depth: 19.10 metres 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) 15. Cancelling date (Cl. 5) The place of delivery specified under Clause 5(a) of the MOA See Clause 34 See Clause 33 16. Port or Place of redelivery (Cl. 15) 17. No. of months’ validity of trading and class certificates At a safe, ice free port where the Vessel would be afloat at all upon redelivery (Cl. 15) times See Clause 40 18. Running days’ notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) N/A In accordance with Classification Society or Flag State requirements 20. Trading limits (Cl. 6) Worldwide within Institute Warranty Limits 21. Charter period (Cl. 2) 22. Charter hire (Cl. 11) See Clause 32 See Clause 36 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to 25. Currency and method of payment (Cl. 11) PART IV Dollars/bank transfer See Clause 36.11—neither Clause 11(f) nor Part IV applies This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In theevent of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PART I 26. Place of payment; also state beneficiary and bank account (Cl. 11) 27. Bank Corporate guarantee/bond (sum and place) (Cl. 24) (optional) Beneficiary: Kos Shipping Corporation See Clause 24 Account No.: 1200048523 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) applies state date of Financial Instrument and name of or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) Mortgagee(s)/Place of business) (Cl. 12) See Clause 38 – CLAUSE 14 DOES NOT APPLY See Clause 35 30. Additional insurance cover, if any, for Owners’ account limited to 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 38 See Clause 38 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 27) N/A N/A 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place 34. Grace period (state number of clear banking daysBusiness Days) (Cl. 28) of Arbitration must be stated (Cl. 30) See Clause 44 See Clause 30(a) 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III 38. Name and place of Builders (only to be filled in if PART III applies) applies) (optional) N/A No, Part III does not apply 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) N/A N/A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) applies) (optional) No, Part IV does not apply No, Part V does not apply 44.Flag and Country of the Bareboat Charter Registry (only to be filled 45. Country of the Underlying Registry (only to be filled in if PART V applies) in if PART V applies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 59 PREAMBLE—It is mutually agreedthat this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) For and on behalf of the Owners For and on behalf of the Charterers Name: Name: Title: Title: This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document. “BARECON 2001” STANDARD BAREBOAT CHARTER PART I This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter 1. Definitions See also Clause 59 1 In this Charter, the following terms shall have the 2 meanings hereby assigned to them: 3 “The Owners” shall mean the party identified in Box 3; 4 “The Charterers” shall mean the party identified in Box 4; 5 “The Vessel” shall mean the vessel named in Box 5 and 6 with particulars as stated in Boxes 6 to 12. 7 “Financial Instrument” means the mortgage, deed of 8 covenant or other such financial security instrument as 9 annexed to this Charter and stated in Box 28. 10 2. Charter Period 11 In consideration of the hire detailed in Box 22, 12 the Owners have agreed to let and the Charterers have 13 agreed to hire the Vessel for the period stated in Box 21 14 (“The Charter Period”). See also Clause 32 and Clause 15 36. 3. Delivery 16 (not applicable when Part III applies, as indicated in Box 37) 17 (a) The Owners shall before and at the time of delivery 18 exercise due diligence to make the Vessel seaworthy 19 And in every respect ready in hull, machinery and 20 equipment for service under this Charter. 21 The Vessel shall be delivered by the Owners and taken 22 over by the Charterers at the port or place indicated in 23 Box 13 in such ready safe berth as the Charterers may 24 direct. 25 (b) The Vessel shall beis properly documented on 26 delivery in accordance with the laws of the fFlag State 27 indicated in Box 5 and the requirements of the 28 cClassification sSociety stated in Box 10. The Vessel 29 upon delivery shall have her survey cycles up to date and 30 trading and class certificates valid for at least the number 31 of months agreed in Box 12. 32 (c) The delivery of the Vessel by the Owners and the 33 taking over of the Vessel by the Charterers shall 34 constitute a full performance by the Owners of all the 35 Owners’ obligations under this Clause 3, and thereafter 36 the Charterers shall not be entitled to make or assert 37 any claim against the Owners on account of any 38 conditions, representations or warranties expressed or 39 implied with respect to the Vessel but the Owners shall 40 be liable for the cost of but not the time for repairs or 41 renewals occasioned by latent defects in the Vessel, 42 her machinery or appurtenances, existing at the time of 43 delivery under this Charter, provided such defects have 44 manifested themselves within twelve (12) months after 45 delivery unless otherwise provided in Box 32. 46 4. Time for Delivery See Clauses 32 and 34 47 (not applicable when Part III applies, asindicated in Box 37) 48 The Vessel shall not be delivered before the date 49 indicated in Box 14 without the Charterers’ consent and 50 the Owners shall exercise due diligence to deliver the 51 Vessel not later than the date indicated in Box 15. 52 Unless otherwise agreed in Box 18, the Owners shall 53 give the Charterers not less than thirty (30) running days’ 54 preliminary and not less than fourteen (14) running days’ 55 definite notice of the date on which the Vessel is 56 expected to be ready for delivery. 57 The Owners shall keep the Charterers closely advised 58 of possible changes in the Vessel’s position. 59 5. Cancelling See Clause 33 60 (not applicable when Part III applies, as indicated in Box 37) 61 (a) Should the Vessel not be delivered latest by the 62 cancelling date indicated in Box 15, the Charterers shall 63 have the option of cancelling this Charter by giving the 64 Owners notice of cancellation within thirty-six (36) 65 running hours after the cancelling date stated in Box 66 15, failing which this Charter shall remain in full force 67 and effect. 68 (b) If it appears that the Vessel will be delayed beyond 69 the cancelling date, the Owners may, as soon as they 70 are in a position to state with reasonable certainty the 71 day on which the Vessel should be ready, give notice 72 thereof to the Charterers asking whether they will 73 exercise their option of cancelling, and the option must 74 then be declared within one hundred and sixty-eight 75 (168) running hours of the receipt by the Charterers of 76 such notice or within thirty-six (36) running hours after 77 the cancelling date, whichever is the earlier. If the 78 Charterers do not then exercise their option of cancelling, 79 the seventh day after the readiness date stated in the 80 Owners’ notice shall be substituted for the cancelling 81 date indicated in Box 15 for the purpose of this Clause 5. 82 (c) Cancellation under this Clause 5 shall be without 83 prejudice to any claim the Charterers may otherwise 84 have on the Owners under this Charter. 85 Trading Restrictions See also Clauses 46.1(m) and 86 1(n) The Vessel shall be employed in lawful trades for the 87 carriage of suitable lawful merchandise within the trading 88 limits indicated in Box 20. 89 The Charterers undertake not to employ the Vessel or 90 suffer the Vessel to be employed otherwise than in 91 conformity with the terms of the contracts of insurance 92 (including any warranties expressed or implied therein) 93 without first obtaining the consentof the insurers to such 94 employment and complying with such requirements as 95 to extra premium or otherwise as the insurers may 96 prescribe. 97 The Charterers also undertake not to employ the Vessel 98 or suffer her employment in any trade or business which 99 is forbidden by the law of any country to which the Vessel 100 may sail or is otherwise illicit or in carrying illicit or 101 prohibited goods or in any manner whatsoever which 102 may render her liable to condemnation, destruction, 103 seizure or confiscation. 104 Notwithstanding any other provisions contained in this 105 Charter it is agreed that nuclear fuels or radioactive 106 products or waste are specifically excluded from the 107 cargo permitted to be loaded or carried under this 108 Charter. This exclusion does not apply to radio-isotopes 109 used or intended to be used for any industrial, 110 commercial, agricultural, medical or scientific purposes 111 provided the Owners’ prior approval has been obtained 112 to loading thereof. 113 Surveys on Delivery and Redelivery 114 (not applicable when Part III applies, as indicated in Box 37) 115 The Owners and Charterers shall each appoint 116 surveyors for the purpose of determining and agreeing 117 in writing the condition of the Vessel at the time of 118 delivery and redelivery pursuant to Clause 40.3 (with 119 the relevant costs paid by the Charterers).hereunder. The Owners shall bear all expenses of the On-hire Survey including loss 120 of time, if any, and the Charterers shall bear all expenses 121 of the Off-hire Survey including loss of time, if any, at 122 the daily equivalent to the rate of hire or pro rata thereof. 123 Inspection 124 The Owners shall have the right at any time either (i) 125 once every calendar year provided no Potential Termination Event or Termination Event has occurred (after giving reasonable notice to the Charterers and provided that the Owners do not unduly interfere with or cause delay to the commercial operation of the Vessel) or (ii) at any time following the occurrence of a Potential Termination Event or Termination Event and for as long as it is continuing (after giving reasonable notice to the Charterers), to inspect or survey 126 the Vessel or instruct a duly authorised surveyor to carry 127 out such survey on their behalf:- 128 (a) to ascertain the condition of the Vessel and satisfy 129 themselves that the Vessel is being properly repaired 130 andmaintained. The costs and fees for such inspection 131 or survey shall be paid by the Charterers, subject to the 132 above conditions as may be applicable from lines 125 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter to 128.Owners unless the Vessel of agreement, be referred to the dispute resolution 199 is found to require repairs or maintenance in order to 133 method agreed in Clause 30., the Charterers shall 200 achieve the condition so provided; 134 ensure that the same are complied with and the (b) in dry-dock if the Charterers have not dry-docked 135 time and costs of compliance shall be for the Her in accordance with Clause 10(g). The costs and fees 136 Charterers’ account. for such inspection or survey shall be paid by the 137 (iii) Financial Security - The Charterers shall maintain 201 Charterers, subject to the above conditions as may be 138 financial security or responsibility in respect of third 202 applicable from lines 125 to 128; and party liabilities as required by any government, 203 (c) for any other commercial reason they consider 139 including federal, state or municipal or other division 204 necessary (provided it does not unduly interfere with 140 or authority thereof, to enable the Vessel, without 205 the commercial operation of the Vessel). The costs and 141 penalty or charge, lawfully to enter, remain at, or 206 fees for such inspection and survey shall be paid by the 142 leave any port, place, territorial or contiguous 207 OwnersCharterers, subject to the above conditions as 143 waters of any country, state or municipality in 208 may be applicable from lines 125 to 128. performance of this Charter without any delay. This 209 All time used in respect of inspection, survey or repairs 144 obligation shall apply whether or not such 210 shall be for the Charterers’ account and form part of the 145 requirements have been lawfully imposed by such 211 Charter Period. 146 government or division or authority thereof. 212 The Charterers shall also permit the Owners to inspect 147 The Charterers shall make and maintain all arrange- 213 the Vessel’s log books whenever requested and shall 148 ments by bond or otherwise as may be necessary to 214 whenever required by the Owners furnish them with full 149 satisfy such requirements at the Charterers’ sole 215 information regarding any casualties or other accidents 150 expense and the Charterers shall indemnify the Owners 216 or damage to the Vessel. 151 against all consequences whatsoever (including loss of 217 The Charterers shall provide such necessary time) for any failure or inability to do so. 218 assistance to the Owners, their representatives or (b) Operation of the Vessel - The Charterers shall at219 agents in respect of any inspection hereunder. their own expense and by their own procurement man, 220 victual, navigate, operate, supply, fuel and, whenever 221 9. Inventories, Oil and Stores See Clause 34.7 152 required, repair the Vessel during the Charter Period 222 A complete inventory of the Vessel’s entire equipment, 153 and they shall pay all charges and expenses of every 223 outfit including spare parts, appliances and of all 154 kind and nature whatsoever incidental to their use and 224 consumable stores on board the Vessel shall be made 155 operation of the Vessel under this Charter, including 225 by the Charterers in conjunction with the Owners on 156 annual flag Flag State fees and any foreign general 226 delivery and again on redelivery of the Vessel. The 157 municipality and/or state taxes. The Master, officers 227 Charterers and the Owners, respectively, shall at the 158 and crew of the Vessel shall be the servants of the Charterers 228 time of delivery and redelivery take over and pay for all 159 for all purposes whatsoever, even if for any reason 229 bunkers, lubricating oil, unbroached provisions, paints, 160 appointed by the Owners. 230 ropes and other consumable stores (excluding spare 161 Charterers shall comply with the regulations regarding 231 parts) in the said Vessel at the then current market prices 162 officers and crew in force in the country of the Vessel’s 232 at the ports of delivery and redelivery, respectively. The 163 flag or any other applicable law. 233 Charterers shall ensure that all spare parts listed in the 164 (c) The Charterers shall keep the Owners and the 234 inventory and used during the Charter Period are 165 mortgagee(s) advised of the intended employment (other 235 replaced at their expense prior to redelivery of the 166 than in respect of sub time charters which are less Vessel. 167 than 12 months in duration (after including any 10. Maintenance and Operation 168 optional extension periods), (a)(i)Maintenance and Repairs - During the Charter 169 planned dry-docking (other than the periodical dry- 236 Period the Vessel shall be in the full possession 170 docking referred to under paragraph (g) below) and and at the absolute disposal for all purposes of the 171 major repairs of the Vessel, Charterers and under their complete control in 172 as reasonably required. 237 every respect. The Charterers shall maintain the 173 (d) Flag and Name of Vessel – During the Charter 238 Vessel, her machinery, boilers, appurtenances and 174 Period, the Charterers shall have the liberty to paint the 239 spare parts in a good state of repair, in efficient 175 Vessel in their own colours, install and display their 240 operating condition and in accordance with good 176 funnel insignia and fly their own house flag (with all fees, 241 commercial maintenance practice and, except as 177 costs and expenses arising in relation thereto for the provided for in Clause 14(l), if applicable, at their 178 Charterers account). The own expense they shall at all times keep the 179 Charterers shall also have the liberty, with the Owners’ 242 Vessel’s Class classification fully up to date with 180 consent, which shall not be unreasonably withheld, to 243 the Classification change the flag of the Vessel to that of another Flag 244 Society indicated in Box 10 and maintain all other 181 State (with all fees, costs and expenses arising in necessary certificates in force at all times. 182 relation thereto for the Charterers’ account) and/or (ii) New Class and Other Safety Requirements - In the 183 with the Owners’ consent, the name of the Vessel (with event of any improvement, structural changes or 184 all fees, costs and expenses arising in relation new equipment becoming necessary for the 185 thereto for the Charterers’ account) during continued operation of the Vessel by reason of new 186 the Charter Period. Any Ppainting and re-painting, 245 class requirements or by compulsory legislation 187 instalment costing (excluding the Charterers’ loss of time) 188 and re-instalment, registration (including maintenance 246 more than the percentage stated in Box 23, or if 189 and renewal thereof) and re-registration, if Box 23 is left blank, 5 per cent. of the Vessel’s 190 required by the Owners, shall be at the Charterers’ 247 insurance value as stated in Box 29, then the 191 expense and time. If the Flag State requires the 248 extent, if any, to which the rate of hire shall be varied 192 Owners to establish a physical presence or office in and the ratio in which the cost of compliance shall 193 the jurisdiction of such Flag State, all fees, costs and be shared between the parties concerned in order 194 expenses payable by the Owners to establish and to achieve a reasonable distribution thereof as 195 maintain such physical presence or office shall be for between the Owners and the Charterers having 196 the account of the Charterers. regard, inter alia, to the length of the period 197 (e) Changes to the Vessel – Subject to Clause 10(a)(ii) and 249 remaining under this Charter shall, in the absence 198 Clause 10(b), the Charterers shall make no structural changes in the 250PART II “BARECON 2001” Standard Bareboat Charter Vessel or changes which materially adversely affect 251 the Vessel’s classification or value in the machinery, boilers, appurten- ances or spare parts thereof without in each instance 252 first securing the Owners’ approval thereof. If the Owners 253 so agree, the Charterers shall, if the Owners so require, 254 restore the Vessel to its former condition before the 255 termination of this Charter. 256 (f) Use of the Vessel’s Outfit, Equipment and 257 Appliances—The Charterers shall have the use of all 258 outfit, equipment, and appliances on board the Vessel 259 at the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners 261 on redelivery (without prejudice to Clauses 40.6 and 262 40.7 and if redelivery is required pursuant to this Charter) in the same good order and condition as when received, ordinary wear and tear excepted. The 263 Charterers shall from time to time during the Charter 264 Period replace such items of equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 in such manner (both as regards workmanship and 269 quality of materials) as not to diminish the value of the 270 Vessel. Title of any equipment so replaced shall vest 271 in and remain with the Owners. The Charterers have the right to fit additional equipment at their expense and risk (provided that no 272 permanent structural damage is caused to the Vessel by reason of such installation) andbut the Charterers shall, at their expense, remove such equipment and 273 make good any damage caused by the fitting or removal of such additional equipment before the Vessel is redelivered to the Owners pursuant to Clause 40.3 and without prejudice to Clauses 40.6 and 40.7,at the end of the period if requested by the Owners. Any equipment including radio 274 equipment on hire on the Vessel at time of delivery shall 275 be kept and maintained by the Charterers and the 276 Charterers shall assume the obligations and liabilities 277 of the Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for all 279 expenses incurred in connection therewith, also for any 280 new equipment required in order to comply with radio 281 regulations. 282 (g) Periodical Dry-Docking—The Charterers shall dry-283 dock the Vessel and clean and paint her underwater 284 parts whenever the same may be necessary, but not 285 less than once during the period stated in Box 19 or, if 286 Box 19 has been left blank, every sixty (60) calendar 287 months after delivery or such other period as may be 288 required by the Classification Society or fFlag State. 289 Hire See Clause 36 290 (a) The Charterers shall pay hire due to the Owners 291 punctually in accordance with the terms of this Charter 292 in respect of which time shall be of the essence. 293 (b) The Charterers shall pay to the Owners for the hire 294 of the Vessel a lump sum in the amount indicated in 295 Box 22 which shall be payable not later than every thirty 296 (30) running days in advance, the first lump sum being 297 payable on the date and hour of the Vessel’s delivery to 298 the Charterers. Hire shall be paid continuously 299 throughout the Charter Period. 300 (c) Payment of hire shall be made in cash without 301 discount in the currency and in the manner indicated in 302 Box 25 and at the place mentioned in Box 26. 303 (d) Final payment of hire, if for a period of less than 304 thirty (30) running days, shall be calculated proportionally 305 according to the number of days and hours remaining 306 before redelivery and advance payment to be effected 307 accordingly. 308 (e) Should the Vessel be lost or missing, hire shall 309 cease from the date and time when she was lost or last 310 heard of. The date upon which the Vessel is to be treated 311 as lost or missing shall be ten (10) days after the Vessel 312 was last reported or when the Vessel is posted as 313 missing by Lloyd’s, whichever occurs first. Any hire paid 314 in advance to be adjusted accordingly. 315 (f) Any delay in payment of hire shall entitle the 316 Owners to interest at the rate per annum as agreed 317 in Box 24. If Box 24 has not been filled in, the three months 318 Interbank offered rate in London (LIBOR or its successor) 319 for the currency stated in Box 25, as quoted by the British 320 Bankers’ Association (BBA) on the date when the hire 321 fell due, increased by 2 per cent., shall apply. 322 (g) Payment of interest due under sub-clause 11(f) 323 shall be made within seven (7) running days of the date 324 of the Owners’ invoice specifying the amount payable 325 or, in the absence of an invoice, at the timeof the next 326 hire payment date. 327 . Mortgage See Clause 35 328 (only to apply if Box 28 has been appropriately filled in) 329 (a) The Owners warrant that they have not effected 330 any mortgage(s) of the Vessel and that they shall not 331 effect any mortgage(s) without the prior consent of the 332 Charterers, which shall not be unreasonably withheld. 333 (b) The Vessel chartered under this Charter is financed 334 a mortgage according to the Financial Instrument. 335 The Charterers undertake to comply, and provide such 336 information and documents to enable the Owners to 337 comply, with all such instructions or directions in regard 338 to the employment, insurances, operation, repairs and 339 maintenance of the Vessel as laid down in the Financial 340 Instrument or as may be directed from time to time during 341 the currency of the Charter by the mortgagee(s) in 342 conformity with the Financial Instrument. The Charterers 343 confirm that, for this purpose, they have acquainted 344 themselves with all relevant terms, conditions and 345 provisions of the Financial Instrument and agree to 346 acknowledge this in writing in any form that may be 347 required by the mortgagee(s). The Owners warrant that 348 they have not effected any mortgage(s) other than stated 349 in Box 28 and that they shall not agree to any 350 amendment of the mortgage(s) referred to in Box 28 or 351 effect any other mortgage(s) without the prior consent 352 of the Charterers, which shall not be unreasonably 353 withheld. 354 (Optional, Clauses 12(a) and 12(b) are alternatives; 355 indicate alternative agreed in Box 28). 356 . Insurance and Repairs See also Clause 38 357 (a) Subject and without prejudice to Clause 38, 358 Dduring the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull 359 and machinery, marine and war (including blocking 360 and trapping) and Protection and Indemnity risks and freight, demurrage and defence risks (and any risks against which it is compulsory to insure 361 for the operation of the Vessel, including but not limited 362 to maintaining financial security in accordance with sub-clause 363 10(a)(iii)) in such form as the Owners shall in writing 364 approve, which approval shall not be un-reasonably 365 withheld. During the Charter Period, theCharterers 366 shall procure (at Charterers’ expense) that there are in place innocent Owners’ interest insurance, Owner’s additional perils (pollution) insurance and if applicable Mortgagees’ interest insurance and Mortgagees’ additional perils (pollution) insurance. Such insurances as specified in this Clause 13 shall be arranged by the Charterers to protect the interests of both the Owners 367 and the Charterers and the mortgageeMortgagee(s) (if 368 any),. and The Charterers shall be at liberty to protect under such 369 insurances the interests of any managers they may 370 appoint. Insurance policies shall cover the Owners and 371 the Charterers and the Mortgagees (if any) according to 372 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter their respective interests. Subject to the provisions of the Financial Instruments (if 373 any), if and the agreed loss payable clauses, any, and the approval of the Owners and the insurers, 374 the Charterers shall effect all insured repairs and shall 375 undertake settlement and reimbursement from the 376 insurers of all costs in connection with such repairs as 377 well as insured charges, expenses and liabilities to the 378 extent of coverage under the insurances herein provided 379 for. 380 The Charterers also to remain responsible for and to 381 effect repairs and settlement of costs and expenses 382 incurred thereby in respect of all other repairs not 383 covered by the insurances and/or not exceeding any 384 possible franchise(s) or deductibles provided for in the 385 insurances. 386 All time used for repairs under the provisions of sub- 387 clause 13(a) and for repairs of latent defects according 388 to Clause 3(c) above, including any deviation, shall be 389 for the Charterers’ account. 390 (b) If the conditions of the above insurances permit 391 additional insurance to be placed by the parties, such 392 cover shall be limited to the amount for each party set 393 out in Box 30 and Box 31, respectively. The Owners or 394 the Charterers as the case may be shall immediately 395 furnish the other partyOwners with particulars of any 396 additional insurance effected, including copies of any cover notes 397 or policies and the written consent of the insurers of 398 any such required insurance in any case where the 399 consent of such insurers is necessary. 400 (c) The Charterers shall upon the request of the 401 Owners, provide information and promptly execute such 402 documents as may be required to enable the Owners to 403 comply with the insurance provisions of the each 404 Financial Instrument (if any). 405 (d) Subject to the provisions of the Financial Instru- 406 ments, if any, and Clause 38 and Clause 40, should the 407 Vessel become an actual, constructive, compromised or agreed a tTotal lLoss under 408 the insurances required under sub-clause 13(a), all 409 insurance payments for such loss shall be paid to the 410 Owners (or if applicable, their financiers) in 411 accordance with the agreed loss payable clauses who shall distribute the moneys between the Owners and the Charterers according to their respective 412 interests. The Charterers undertake to notify the Owners 413 and themortgageeMortgagee(s), if any, of any 414 occurrences in consequence of which the Vessel is likely to become a 415 Ttotal Lloss as defined in this Clause. 416 (e) The Owners shall upon the request of the 417 Charterers and subject to the Owners’ approval of 418 such request, promptly execute such documents as may be required to enable the Charterers to abandon the 419 Vessel to insurers and claim a constructive total loss. 420 (f) For the purpose of insurance coverage against hull 421 and machinery and war risks under the provisions of 422 sub-clause 13(a), the value of the Vessel is the sum 423 indicated in Box 29Clause 38. 424 . Insurance, Repairs and Classification – intentionally 425 omitted (Optional, only to apply if expressly agreed and stated 426 in Box 29, in which event Clause 13 shall be considered 427 deleted). 428 (a) During the Charter Period the Vessel shall be kept 429 insured by the Owners at their expense against hull and 430 machinery and war risks under the form of policy or 431 policies attached hereto. The Owners and/or insurers 432 shall not have any right of recovery or subrogation 433 against the Charterers on account of loss of or any 434 damage to the Vessel or her machinery or appurt- 435 enances covered by such insurance, or on account of 436 payments made to discharge claims against or liabilities 437 of the Vessel or the Owners covered by such insurance. 438 Insurance policies shall cover the Owners and the 439 Charterers according to their respective interests. 440 (b) During the Charter Period the Vessel shall be kept 441 insured by the Charterers at their expense against 442 Protection and Indemnity risks (and any risks against 443 which it is compulsory to insure for the operation of the 444 Vessel, including maintaining financial security in 445 accordance with sub-clause 10(a)(iii)) in such form as 446 the Owners shall in writing approve which approval shall 447 not be unreasonably withheld. 448 (c) In the event that any act or negligence of the 449 Charterers shall vitiate any of the insurance herein 450 provided, the Charterers shall pay to the Owners all 451 losses and indemnify the Owners against all claims and 452 demands which would otherwise have been covered by 453 such insurance. 454 (d) The Charterers shall, subject to the approval of the 455 Owners or Owners’ Underwriters, effect all insured 456 repairs, and the Charterers shall undertake settlement457 of all miscellaneous expenses in connection with such 458 repairs as well as all insured charges, expenses and 459 liabilities, to the extent of coverage under the insurances 460 provided for under the provisions of sub-clause 14(a). 461 The Charterers to be secured reimbursement through 462 the Owners’ Underwriters for such expenditures upon 463 presentation of accounts. 464 (e) The Charterers to remain responsible for and to 465 effect repairs and settlement of costs and expenses 466 incurred thereby in respect of all other repairs not 467 covered by the insurances and/or not exceeding any 468 possible franchise(s) or deductibles provided for in the 469 insurances. 470 (f) All time used for repairs under the provisions of 471 sub-clauses 14(d) and 14(e) and for repairs of latent 472 defects according to Clause 3 above, including any 473 deviation, shall be for the Charterers’ account and shall 474 form part of the Charter Period. 475 The Owners shall not be responsible for any expenses 476 as are incident to the use and operation of the Vessel 477 for such time as may be required to make such repairs. 478 (g) If the conditions of the above insurances permit 479 additional insurance to be placed by the parties such 480 cover shall be limited to the amount for each party set 481 out in Box 30 and Box 31, respectively. The Owners or 482 the Charterers as the case may be shall immediately 483 furnish the other party with particulars of any additional 484 insurance effected, including copies of any cover notes 485 or policies and the written consent of the insurers of 486 any such required insurance in any case where the 487 consent of such insurers is necessary. 488 (h) Should the Vessel become an actual, constructive, 489 compromised or agreed total loss under the insurances 490 required under sub-clause 14(a), all insurance payments 491 for such loss shall be paid to the Owners, who shall 492 distribute the moneys between themselves and the 493 Charterers according to their respective interests. 494 (i) If the Vessel becomes an actual, constructive, 495 compromised or agreed total loss under the insurances 496 arranged by the Owners in accordance with sub-clause 497 14(a), this Charter shall terminate as of the date of such 498 loss. 499 (j) The Charterers shall upon the request of the 500 Owners, promptly execute such documents as may be 501 required to enable the Owners to abandon the Vessel 502 to the insurers and claim a constructive total loss.503 (k) For the purpose of insurance coverage against hull 504 and machinery and war risks under the provisions of 505 sub-clause 14(a), the value of the Vessel is the sum 506 indicated in Box 29. 507 (l) Notwithstanding anything contained in sub-clause 508 10(a), it is agreed that under the provisions of Clause 509 14, if applicable, the Owners shall keep the Vessel’s 510 Class fully up to date with the Classification Society 511 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter indicated in Box 10 and maintain all other necessary 512 certificates in force at all times. 513 15. Redelivery See Clause 40 514 At the expiration of the Charter Period the Vessel shall 515 be redelivered by the Charterers to the Owners at a 516 safe and ice-free port or place as indicated in Box 16, in 517 such ready safe berth as the Owners may direct. The 518 Charterers shall give the Owners not less than thirty 519 (30) running days’ preliminary notice of expected date, 520 range of ports of redelivery or port or place of redelivery 521 and not less than fourteen (14) running days’ definite 522 notice of expected date and port or place of redelivery. 523 Any changes thereafter in the Vessel’s position shall be 524 notified immediately to the Owners. 525 The Charterers warrant that they will not permit the 526 Vessel to commence a voyage (including any preceding 527 ballast voyage) which cannot reasonably be expected 528 to be completed in time to allow redelivery of the Vessel 529 within the Charter Period. Notwithstanding the above, 530 should the Charterers fail to redeliver the Vessel within 531 The Charter Period, the Charterers shall pay the daily 532 equivalent to the rate of hire stated in Box 22 plus 10 533 per cent. or to the market rate, whichever is the higher, 534 for the number of days by which the Charter Period is 535 exceeded. All other terms, conditions and provisions of 536 this Charter shall continue to apply. 537 Subject to the provisions of Clause 10, the Vessel shall 538 be redelivered to the Owners in the same or as good 539 structure, state, condition and class as that in which she 540 was delivered, fair wear and tear not affecting class 541 excepted. 542 The Vessel upon redelivery shall have her survey cycles 543 up to date and trading and class certificates valid for at 544 least the number of months agreed in Box 17. 545 16. Non-Lien 546 Other than Permitted Security Interests, Tthe 547 Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their 548 agents, which might have priority over the title and 549 interest of the Owners in the Vessel. The Charterers 550 further agree to fasten to the Vessel in a conspicuous 551 place and to keep so fastened during the Charter Period 552 a notice reading as follows: 553 “This Vessel is the property of (name of Owners). It is 554 under charter to (name of Charterers) and by the terms 555of the Charter Party neither the Charterers nor the 556 Master have any right, power or authority to create, incur 557 or permit to be imposed on the Vessel any lien 558 whatsoever.” 559 or a notice in such form as required by any Mortgagee(s). 17. Indemnity See Clauses 37.3, 38.5, 38.15, 38.16, 40.5, 560 41.2 and 50 (a) The Charterers shall indemnify the Owners against 561 any loss, damage or expense incurred by the Owners 562 arising out of or in relation to the operation of the Vessel 563 by the Charterers, and against any lien of whatsoever 564 nature arising out of an event occurring during the 565 Charter Period. If the Vessel be arrested or otherwise 566 detained by reason of claims or liens arising out of her 567 operation hereunder by the Charterers, the Charterers 568 shall at their own expense take all reasonable steps to 569 secure that within a reasonable time the Vessel is 570 released, including the provision of bail. 571 Without prejudice to the generality of the foregoing, the 572 Charterers agree to indemnify the Owners against all 573 consequences or liabilities arising from the Master, 574 officers or agents signing Bills of Lading or other 575 documents. 576 (b) If the Vessel be arrested or otherwise detained by 577 reason of a claim or claims against the Owners, the 578 Owners shall at their own expense take all reasonable 579 steps to secure that within a reasonable time the Vessel 580 is released, including the provision of bail. 581 In such circumstances the Owners shall indemnify the 582 Charterers against any loss, damage or expense 583 incurred by the Charterers (including hire paid under 584 this Charter) as a direct consequence of such arrest or 585 detention. 586 18. Lien 587 The Owners to have a lien upon all cargoes, sub-hires 588 and sub-freights belonging or due to the Charterers or 589 any sub-charterers and any Bill of Lading freight for all 590 claims under this Charter, and the Charterers to have a 591 lien on the Vessel for all moneys paid in advance and 592 not earned. 593 19. Salvage 594 All salvage and towage performed by the Vessel shall 595 be for the Charterers’ benefit and the cost of repairing 596 damage occasioned thereby shall be borne by the 597 Charterers. 598 20. Wreck Removal 599 In the event of the Vessel becoming a wreck or 600 obstruction to navigation the Charterers shall indemnify 601 the Owners against any sums whatsoever which the 602 Owners shall become liable topay and shall pay in 603 consequence of the Vessel becoming a wreck or 604 obstruction to navigation. 605 21. General Average 606 The Owners shall not contribute to General Average. 607 22. Assignment, Sub-Charter and Sale 608 (a) The Charterers shall not assign this Charter nor 609 sub-charter the Vessel on a bareboat basis except with 610 the prior consent in writing of the Owners, which shall 611 not be unreasonably withheld, and subject to such terms 612 and conditions as the Owners shall approve. 613 (b) The Owners shall not sell the Vessel during the 614 currency of this Charter except with the prior written 615 consent of the Charterers, which shall not be unreason- 616 ably withheld, and subject to the buyer accepting an 617 assignment of this Charter. 618 23. Contracts of Carriage 619 *) (a) The Charterers are to procure that all documents 620 issued during the Charter Period evidencing the terms 621 and conditions agreed in respect of carriage of goods 622 shall contain a paramount clause incorporating any 623 legislation relating to carrier’s liability for cargo 624 compulsorily applicable in the trade; if no such legislation 625 exists, the documents shall incorporate the Hague-Visby 626 Rules. The documents shall also contain the New Jason 627 Clause and the Both-to-Blame Collision Clause. 628 *) (b) The Charterers are to procure that all passenger 629 tickets issued during the Charter Period for the carriage 630 of passengers and their luggage under this Charter shall 631 contain a paramount clause incorporating any legislation 632 relating to carrier’s liability for passengers and their 633 luggage compulsorily applicable in the trade; if no such 634 legislation exists, the passenger tickets shall incorporate 635 the Athens Convention Relating to the Carriage of 636 Passengers and their Luggage by Sea, 1974, and any 637 protocol thereto. 638 *) Delete as applicable. 639 24. Bank Corporate Guarantee 640 (Optional, only to apply if Box 27 filled in) 641 The Charterers undertake to furnish, on or about the 642 date of this Charter before delivery of the Vessel, a first class bank a corporate guarantee from 643 the Guarantor or bond in the sum and at the place as indicated in Box 27 as 644 guarantee, and on or about the date of this Charter the other Security Documents (as the case may be) as 645 security, in each case for full performance of their obligations under this Thisdocument is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document. PART II “BARECON 2001” Standard Bareboat Charter Charter. 646 25. Requisition/Acquisition 647 (a) Subject to the provisions of the Financial 648 Instruments (if any) and the General Assignment, Iin the event of the Requisition for Hire of the Vessel by any governmental or other competent authority 649 (hereinafter referred to as “Requisition for Hire”) 650 irrespective of the date during the Charter Period when 651 “Requisition for Hire” may occur and irrespective of the 652 length thereof and whether or not it be for an indefinite 653 or a limited period of time, and irrespective of whether it 654 may or will remain in force for the remainder of the 655 Charter Period, this Charter shall not be deemed thereby 656 or thereupon to be frustrated or otherwise terminated 657 and the Charterers shall continue to pay the stipulated 658 hire in the manner provided by this Charter until the time 659 when the Charter would have terminated pursuant to 660 any of the provisions hereof always provided however 661 that if all hire has been paid by the Charterers 662 hereunder then in the event of “Requisition for Hire” any Requisition Hire or compensation is received or receivable by the 663 Owners, the same shall be payable to the Charterers 664 during the remainder of the Charter Period or the period of the 665 “Requisition for Hire” whichever be the shorter. 666 (b) In the event of the Owners being deprived of their 667 ownership in the Vessel by any Compulsory Acquisition 668 of the Vessel or requisition for title by any governmental 669 or other competent authority (hereinafter referred to as 670 “Compulsory Acquisition”), then, irrespective of the date 671 during the Charter Period when “Compulsory Acqui- 672 sition” may occur, this Charter shall be deemed 673 terminated as of the date of such “Compulsory 674 Acquisition”. In such event Charter Hire to be considered 675 as earned and to be paid up to the date and time of 676 such “Compulsory Acquisition”. 677 26. War 678 (a) Subject to the provisions of the Financial 679 Instruments (if any), Ffor the purpose of this Clause, the words “War Risks” shall include any war (whether actual or 680 threatened), act of war, civil war, hostilities, revolution, 681 rebellion, civil commotion, warlike operations, the laying 682 of mines (whether actual or reported), acts of piracy, 683 acts of terrorists, acts of hostility or malicious damage,684 blockades (whether imposed against all vessels or 685 imposed selectively against vessels of certain flags or 686 ownership, or against certain cargoes or crews or 687 otherwise howsoever), by any person, body, terrorist or 688 political group, or the Government of any state 689 whatsoever, which may be dangerous or are likely to be 690 or to become dangerous to the Vessel, her cargo, crew 691 or other persons on board the Vessel. 692 (b) Without first obtaining the consent of the 693 insurers to such employment and complying with the terms of Clause 38 and such other requirements as to extra insurance premiums or any other requirements as may be prescribed by the insurers, tThe Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go 694 through any port, place, area or zone (whether of land 695 or sea), or any waterway or canal, where it reasonably 696 appears that the Vessel, her cargo, crew or other 697 persons on board the Vessel, in the reasonable 698 judgement of the Owners, may be, or are likely to be, 699 exposed to War Risks. Should the Vessel be within any 700 such place as aforesaid, which only becomes danger- 701 ous, or is likely to be or to become dangerous, after her 702 entry into it, the Owners shall have the right to require 703 the Vessel to leave such area. 704 (c) The Vessel shall not load contraband cargo, or to 705 pass through any blockade, whether such blockade be 706 imposed on all vessels, or is imposed selectively in any 707 way whatsoever against vessels of certain flags or 708 ownership, or against certain cargoes or crews or 709 otherwise howsoever, or to proceed to an area where 710 she shall be subject, or is likely to be subject to 711 a belligerent’s right of search and/or confiscation. 712 (d) If the insurers of the war risks insurance, when 713 Clause 14 is applicable, should require payment of 714 premiums and/or calls because, pursuant to the 715 Charterers’ orders, the Vessel is within, or is due to enter 716 and remain within, any area or areas which are specified 717 by such insurers as being subject to additional premiums 718 because of War Risks, then such premiums and/or calls 719 shall be reimbursed by the Charterers to the Owners at 720 the same time as the next payment of hire is due. 721 (e) The Charterers shall have the liberty: 722 (i) to comply with all orders, directions, recommend- 723 ations or advice as to departure, arrival, routes, 724 sailing in convoy, ports of call, stoppages,725 destinations, discharge of cargo, delivery, or in any 726 other way whatsoever, which are given by the 727 Government of the Nation under whose flag the 728 Vessel sails, or any other Government, body or 729 group whatsoever acting with the power to compel 730 compliance with their orders or directions; 731 (ii) to comply with the orders, directions or recom- 732 mendations of any war risks underwriters who have 733 the authority to give the same under the terms of 734 the war risks insurance; 735 (iii) to comply with the terms of any resolution of the 736 Security Council of the United Nations, any 737 directives of the European Community, the effective 738 orders of any other Supranational body which has 739 the right to issue and give the same, and with 740 national laws aimed at enforcing the same to which 741 the Owners are subject, and to obey the orders 742 and directions of those who are charged with their 743 enforcement. 744 (f) In the event of outbreak of war (whether there be a 745 declaration of war or not) (i) between any two or more 746 of the following countries: the United States of America; 747 Russia; the United Kingdom; France; and the People’s 748 Republic of China, (ii) between any two or more of the 749 countries stated in Box 36, both the Owners and the 750 Charterers shall have the right to cancel this Charter, 751 whereupon the Charterers shall redeliver the Vessel to 752 the Owners in accordance with Clause 15, if the Vessel 753 has cargo on board after discharge thereof at 754 destination, or if debarred under this Clause from 755 reaching or entering it at a near, open and safe port as 756 directed by the Owners, or if the Vessel has no cargo 757 on board, at the port at which the Vessel then is or if at 758 sea at a near, open and safe port as directed by the 759 Owners. In all cases hire shall continue to be paid in 760 accordance with Clause 11 and except as aforesaid all 761 other provisions of this Charter shall apply until 762 redeliverythe end of the Charter Period. 763 27. Commission – intentionally omitted 764 The Owners to pay a commission at the rate indicated 765 in Box 33 to the Brokers named in Box 33 on any hire 766 paid under the Charter. If no rate is indicated in Box 33, 767 the commission to be paid by the Owners shall cover 768 the actual expenses of the Brokers and a reasonable769 fee for their work. 770 If the full hire is not paid owing to breach of the Charter 771 by either of the parties the party liable therefor shall 772 indemnify the Brokers against their loss of commission. 773 Should the parties agree to cancel the Charter, the 774 Owners shall indemnify the Brokers against any loss of 775 commission but in such case the commission shall not 776 exceed the brokerage on one year’s hire. 777 28. Termination See Clauses 40 and 44 778 (a) Charterers’ Default 779 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter The Owners shall be entitled to withdraw the Vessel from 780 the service of the Charterers and terminate the Charter 781 with immediate effect by written notice to the Charterers if: 782 (i) the Charterers fail to pay hire in accordance with 783 Clause 11. However, where there is a failure to 784 make punctual payment of hire due to oversight, 785 negligence, errors or omissions on the part of the 786 Charterers or their bankers, the Owners shall give 787 the Charterers written notice of the number of clear 788 banking days stated in Box 34 (as recognised at 789 the agreed place of payment) in which to rectify 790 the failure, and when so rectified within such 791 number of days following the Owners’ notice, the 792 payment shall stand as regular and punctual. 793 Failure by the Charterers to pay hire within the 794 number of days stated in Box 34 of their receiving 795 the Owners’ notice as provided herein, shall entitle 796 the Owners to withdraw the Vessel from the service 797 of the Charterers and terminate the Charter without 798 further notice; 799 (ii) the Charterers fail to comply with the requirements of: 800 (1) Clause 6 (Trading Restrictions) 801 (2) Clause 13(a) (Insurance and Repairs) 802 provided that the Owners shall have the option, by 803 written notice to the Charterers, to give the 804 Charterers a specified number of days grace within 805 which to rectify the failure without prejudice to the 806 Owners’ right to withdraw and terminate under this 807 Clause if the Charterers fail to comply with such 808 notice; 809 (iii) the Charterers fail to rectify any failure to comply 810 with the requirements of sub-clause 10(a)(i) 811 (Maintenance and Repairs) as soon as practically 812 possible after the Owners have requested them in 813 writing so to do and in any event so that the Vessel’s 814 insurance cover is not prejudiced. 815 (b) Owners’ Default 816 If the Owners shall by any act or omission be in breach 817 of their obligations under this Charter to the extent that 818 the Charterers are deprived of the use of the Vessel 819 and such breach continues for a period of fourteen (14) 820 running days after written notice thereof has been given 821 by the Charterers to the Owners, the Charterers shall 822 be entitled to terminate this Charter with immediate effect 823 by written notice to the Owners. 824 (c) Loss of Vessel 825 This Charter shall be deemed to be terminated if the 826 Vessel becomes a total loss or is declared as a 827constructive or compromised or arranged total loss. For 828 the purpose of this sub-clause, the Vessel shall not be 829 deemed to be lost unless she has either become an 830 actual total loss or agreement has been reached with 831 her underwriters in respect of her constructive, 832 compromised or arranged total loss or if such agreement 833 with her underwriters is not reached it is adjudged by a 834 competent tribunal that a constructive loss of the Vessel 835 has occurred. 836 (d) Either party shall be entitled to terminate this 837 Charter with immediate effect by written notice to the 838 other party in the event of an order being made or 839 resolution passed for the winding up, dissolution, 840 liquidation or bankruptcy of the other party (otherwise 841 than for the purpose of reconstruction or amalgamation) 842 or if a receiver is appointed, or if it suspends payment, 843 ceases to carry on business or makes any special 844 arrangement or composition with its creditors. 845 (e) The termination of this Charter shall be without 846 prejudice to all rights accrued due between the parties 847 prior to the date of termination and to any claim that 848 either party might have. 849 29. Repossession 850 In the event of the Owners have made a request for 851 redelivery of the Vessel termination of this Charter in accordance with the applicable provisions of Clause 852 28Clause 40.3, the Owners shall in addition have the right to repossess 853 the Vessel from the Charterers at her current or next port of call, or 854 at a port or place convenient to them without hindrance 855 or interference by the Charterers, courts or local 856 authorities. Pending physical repossession of the Vessel 857 in accordance with this Clause 29 and/or Clause 40, the 858 Charterers shall hold the Vessel as gratuitous bailee only to the Owners 859 and the Charterers shall procure that the master and crew follow the orders and directions of the Owners. The Owners shall arrange for an authorised represent- 860 ative to board the Vessel as soon as reasonably 861 practicable following the termination of the Charter. The 862 Vessel shall be deemed to be repossessed by the 863 Owners from the Charterers upon the boarding of the 864 Vessel by the Owners’ representative. All arrangements 865 and expenses relating to the settling of wages, 866 disembarkation and repatriation of the Charterers’ 867 Master, officers and crew shall be the sole responsibility 868 of the Charterers. 869 30. Dispute Resolution 870 *) (a) This Contract Charterand any non-contractual 871 obligations arising out of or in connection with it shall be governed by and construed in accordance with English law and any dispute arising 872 out of or in connection with this Contract Charter shall be 873 referred to arbitration in London in accordance with the Arbitration 874 Act 1996 or any statutory modification or re-enactment 875 thereof save to the extent necessary to give effect to 876 the provisions of this Clause. 877 The arbitration shall be conducted in accordance with 878 the London Maritime Arbitrators Association (LMAA) 879 Terms current at the time when the arbitration proceed- 880 ings are commenced. 881 The reference shall be to three arbitrators. A party 882 wishing to refer a dispute to arbitration shall appoint its 883 arbitrator and send notice of such appointment in writing 884 to the other party requiring the other party to appoint its 885 own arbitrator within 14 calendar days of that notice and 886 stating that it will appoint its arbitrator as sole arbitrator 887 unless the other party appoints its own arbitrator and 888 gives notice that it has done so within the 14 days 889 specified. If the other party does not appoint its own 890 arbitrator and give notice that it has done so within the 891 14 days specified, the party referring a dispute to 892 arbitration may, without the requirement of any further 893 prior notice to the other party, appoint its arbitrator as 894 sole arbitrator and shall advise the other party 895 accordingly. The award of a sole arbitrator shall be 896 binding on both parties as if he had been appointed by 897 agreement. 898 Nothing herein shall prevent the parties agreeing in 899 writing to vary these provisions to provide for the 900 appointment of a sole arbitrator. 901 In cases where neither the claim nor any counterclaim 902 exceeds the sum of US$50,000 (or such other sum as 903 the parties may agree) the arbitration shall be conducted 904 in accordance with the LMAA Small Claims Procedure 905 current at the time when the arbitration proceedings are 906 commenced. The language or any arbitration 907 proceedings shall be English. *) (b) This Contract shall be governed by and construed 908 in accordance with Title 9 of the United States Code 909 and the Maritime Law of the United States and any 910 dispute arising out of or in connection with this Contract911 shall be referred to three persons at New York, one to 912 be appointed by each of the parties hereto, and the third 913 by the two so chosen; their decision or that of any two 914 of them shall be final, and for the purposes of enforcing 915 any award, judgement may be entered on an award by 916 any court of competent jurisdiction. The proceedings 917 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.PART II “BARECON 2001” Standard Bareboat Charter shall be conducted in accordance with the rules of the 918 Society of Maritime Arbitrators, Inc. 919 In cases where neither the claim nor any counterclaim 920 exceeds the sum of US$50,000 (or such other sum as 921 the parties may agree) the arbitration shall be conducted 922 in accordance with the Shortened Arbitration Procedure 923 of the Society of Maritime Arbitrators, Inc. current at 924 the time when the arbitration proceedings are commenced. 925 *) (c) This Contract shall be governed by and construed 926 in accordance with the laws of the place mutually agreed 927 by the parties and any dispute arising out of or in 928 connection with this Contract shall be referred to 929 arbitration at a mutually agreed place, subject to the 930 procedures applicable there. 931 (d) Notwithstanding (a), (b) or (c) above, the parties 932 may agree at any time to refer to mediation any 933 difference and/or dispute arising out of or in connection 934 with this Contract. 935 In the case of a dispute in respect of which arbitration 936 has been commenced under (a), (b) or (c) above, the 937 following shall apply:- 938 (i) Either party may at any time and from time to time 939 elect to refer the dispute or part of the dispute to 940 mediation by service on the other party of a written 941 notice (the “Mediation Notice”) calling on the other 942 party to agree to mediation. 943 (ii) The other party shall thereupon within 14 calendar 944 days of receipt of the Mediation Notice confirm that 945 they agree to mediation, in which case the parties 946 shall thereafter agree a mediator within a further 947 14 calendar days, failing which on the application 948 of either party a mediator will be appointed promptly 949 by the Arbitration Tribunal (“the Tribunal”) or such 950 person as the Tribunal may designate for that 951 purpose. The mediation shall be conducted in such 952 place and in accordance with such procedure and 953 on such terms as the parties may agree or, in the 954 event of disagreement, as may be set by the 955 mediator. 956 (iii) If the other party does not agree to mediate, that 957 fact may be brought to the attention of the Tribunal 958 and may be taken into account by the Tribunal when 959 allocating the costs of the arbitration as between 960 the parties. 961 (iv) The mediation shall not affect the right of either 962 party to seek such relief or take such steps as it 963considers necessary to protect its interest. 964 (v) Either party may advise the Tribunal that they have 965 agreed to mediation. The arbitration procedure shall 966 continue during the conduct of the mediation but 967 the Tribunal may take the mediation timetable into 968 account when setting the timetable for steps in the 969 arbitration. 970 (vi) Unless otherwise agreed or specified in the 971 mediation terms, each party shall bear its own costs 972 incurred in the mediation and the parties shall share 973 equally the mediator’s costs and expenses. 974 (vii) The mediation process shall be without prejudice 975 and confidential and no information or documents 976 disclosed during it shall be revealed to the Tribunal 977 except to the extent that they are disclosable under 978 the law and procedure governing the arbitration. 979 (Note: The parties should be aware that the mediation 980 process may not necessarily interrupt time limits.) 981 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 982 30(a) of this Clause shall apply. Sub-clause 30(d) shall 983 apply in all cases. 984 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 985 indicate alternative agreed in Box 35. 986 31. Notices See Clause 43 987 (a) Any notice to be given by either party to the other 988 party shall be in writing and may be sent by fax, telex, 989 registered or recorded mail or by personal service. 990 (b) The address of the Parties for service of such 991 communication shall be as stated in Boxes 3 and 4 992 respectively. 993 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART III PART PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) 1. Specifications and Building Contract 1 (a) The Vessel shall be constructed in accordance with 2 the Building Contract (hereafter called “the Building 3 Contract”) as annexed to this Charter, made between the 4 Builders and the Owners and in accordance with the 5 specifications and plans annexed thereto, such Building 6 Contract, specifications and plans having been counter- 7 signed as approved by the Charterers. 8 (b) No change shall be made in the Building Contract or 9 in the specifications or plans of the Vessel as approved by 10 the Charterers as aforesaid, without the Charterers’ 11 consent. 12 (c) The Charterers shall have the right to send their 13 representative to the Builders’ Yard to inspect the Vessel 14 during the course of her construction to satisfy themselves 15 that construction is in accordance with such approved 16 specifications and plans as referred to under sub-clause 17 (a) of this Clause. 18 (d) The Vessel shall be built in accordance with the 19 Building Contract and shall be of the description set out 20 therein. Subject to the provisions of sub-clause 2(c)(ii) 21 hereunder, the Charterers shall be bound to accept the 22 Vessel from the Owners, completed and constructed in 23 accordance with the Building Contract, on the date of 24 delivery by the Builders. The Charterers undertake that 25 having accepted the Vessel they will not thereafter raise 26 any claims against the Owners in respect of the Vessel’s 27 performance or specification or defects, if any. 28 Nevertheless, in respect of any repairs, replacements or 29 defects which appear within the first 12 months from 30 delivery by the Builders, the Owners shall endeavour to 31 compel the Builders to repair, replace or remedy any defects 32 or to recover from the Builders any expenditure incurred in 33 carrying out such repairs, replacements or remedies. 34 However, the Owners’ liability to the Charterers shall be 35 limited to the extent the Owners have a valid claim against 36 the Builders under the guarantee clause of the Building 37 Contract (a copy whereof has been supplied to the 38 Charterers). The Charterers shall be bound to accept such 39 sums as the Owners are reasonably able to recover under 40 this Clause and shall make no further claim on the Owners 41 for the difference between the amount(s) sorecovered and 42 the actual expenditure on repairs, replacement or 43 remedying defects or for any loss of time incurred. 44 Any liquidated damages for physical defects or deficiencies 45 shall accrue to the account of the party stated in Box 41(a) 46 or if not filled in shall be shared equally between the parties. 47 The costs of pursuing a claim or claims against the Builders 48 under this Clause (including any liability to the Builders) 49 shall be borne by the party stated in Box 41(b) or if not 50 filled in shall be shared equally between the parties. 51 2. Time and Place of Delivery 52 (a) Subject to the Vessel having completed her 53 acceptance trials including trials of cargo equipment in 54 accordance with the Building Contract and specifications 55 to the satisfaction of the Charterers, the Owners shall give 56 and the Charterers shall take delivery of the Vessel afloat 57 when ready for delivery and properly documented at the 58 Builders’ Yard or some other safe and readily accessible 59 dock, wharf or place as may be agreed between the parties 60 hereto and the Builders. Under the Building Contract the 61 Builders have estimated that the Vessel will be ready for 62 delivery to the Owners as therein provided but the delivery 63 date for the purpose of this Charter shall be the date when 64 the Vessel is in fact ready for delivery by the Builders after 65 completion of trials whether that be before or after as 66 indicated in the Building Contract. The Charterers shall not 67 be entitled to refuse acceptance of delivery of the Vessel 68 and upon and after such acceptance, subject to Clause 69 1(d), the Charterers shall not be entitled to make any claim 70 against the Owners in respect of any conditions, 71 representations or warranties, whether express or implied, 72 as to the seaworthiness of the Vessel or in respect of delay 73 in delivery. 74 (b) If for any reason other than a default by the Owners 75 under the Building Contract, the Builders become entitled 76 under that Contract not to deliver the Vessel to the Owners, 77 the Owners shall upon giving to the Charterers written 78 notice of Builders becoming so entitled, be excused from 79 giving delivery of the Vessel to the Charterers and upon 80 receipt of such notice by the Charterers this Charter shall 81 cease to have effect. 82 (c) If for any reason the Owners become entitled under 83 the Building Contract to reject the Vessel the Owners shall, 84 before exercising such right of rejection, consult the 85 Charterers and thereupon 86 (i) if the Charterers do not wish to take delivery of the Vessel 87 they shall inform the Owners within seven(7) running days 88 by notice in writing and upon receipt by the Owners of such 89 notice this Charter shall cease to have effect; or 90 (ii) if the Charterers wish to take delivery of the Vessel 91 they may by notice in writing within seven (7) running days 92 require the Owners to negotiate with the Builders as to the 93 terms on which delivery should be taken and/or refrain from 94 exercising their right to rejection and upon receipt of such 95 notice the Owners shall commence such negotiations and/ 96 or take delivery of the Vessel from the Builders and deliver 97 her to the Charterers; 98 (iii) in no circumstances shall the Charterers be entitled to 99 reject the Vessel unless the Owners are able to reject the 100 Vessel from the Builders; 101 (iv) if this Charter terminates under sub-clause (b) or (c) of 102 this Clause, the Owners shall thereafter not be liable to the 103 Charterers for any claim under or arising out of this Charter 104 or its termination. 105 (d) Any liquidated damages for delay in delivery under the 106 Building Contract and any costs incurred in pursuing a claim 107 therefor shall accrue to the account of the party stated in 108 Box 41(c) or if not filled in shall be shared equally between 109 the parties. 110 . Guarantee Works 111 If not otherwise agreed, the Owners authorise the 112 Charterers to arrange for the guarantee works to be 113 performed in accordance with the building contract terms, 114 and hire to continue during the period of guarantee works. 115 The Charterers have to advise the Owners about the 116 performance to the extent the Owners may request. 117 . Name of Vessel 118 The name of the Vessel shall be mutually agreed between 119 the Owners and the Charterers and the Vessel shall be 120 painted in the colours, display the funnel insignia and fly 121 the house flag as required by the Charterers. 122 . Survey on Redelivery 123 The Owners and the Charterers shall appoint surveyors 124 for the purpose of determining and agreeing in writing the 125 condition of the Vessel at the time of re-delivery. 126 Without prejudice to Clause 15 (Part II), the Charterers 127 shall bear all survey expenses and all other costs, if any, 128 including the cost of docking and undocking, if required, 129 as well as all repair costs incurred. The Charterers shall 130 also bear all loss of time spent in connection with any 131 docking and undocking as well as repairs, which shall be 132 paid at the rate of hire per day or pro rata. 133 This document is a computergenerated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART IV PART HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) On expiration of this Charter and provided the Charterers 1 have fulfilled their obligations according to Part I and II 2 as well as Part III, if applicable, it is agreed, that on 3 payment of the final payment of hire as per Clause 11 4 the Charterers have purchased the Vessel with 5 everything belonging to her and the Vessel is fully paid 6 for. 7 In the following paragraphs the Owners are referred to 8 as the Sellers and the Charterers as the Buyers. 9 The Vessel shall be delivered by the Sellers and taken 10 over by the Buyers on expiration of the Charter. 11 The Sellers guarantee that the Vessel, at the time of 12 delivery, is free from all encumbrances and maritime 13 liens or any debts whatsoever other than those arising 14 from anything done or not done by the Buyers or any 15 existing mortgage agreed not to be paid off by the time 16 of delivery. Should any claims, which have been incurred 17 prior to the time of delivery be made against the Vessel, 18 the Sellers hereby undertake to indemnify the Buyers 19 against all consequences of such claims to the extent it 20 can be proved that the Sellers are responsible for such 21 claims. Any taxes, notarial, consular and other charges 22 and expenses connected with the purchase and 23 registration under Buyers’ flag, shall be for Buyers’ 24 account. Any taxes, consular and other charges and 25 expenses connected with closing of the Sellers’ register, 26 shall be for Sellers’ account. 27 In exchange for payment of the last month’s hire 28 instalment the Sellers shall furnish the Buyers with a 29 Bill of Sale duly attested and legalized, together with a 30 certificate setting out the registered encumbrances, if 31 any. On delivery of the Vessel the Sellers shall provide 32 for deletion of the Vessel from the Ship’s Register and 33 deliver a certificate of deletion to the Buyers. 34 The Sellers shall, at the time of delivery, hand to the 35 Buyers all classification certificates (for hull, engines, 36 anchors, chains, etc.), as well as all plans which may 37 be in Sellers’ possession. 38 The Wireless Installation and Nautical Instruments, 39 unless on hire, shall be included in the sale without any 40 extra payment. 41 The Vessel with everything belonging to her shall be at 42 Sellers’ risk and expense until she is delivered to the 43 Buyers, subject to the conditions of this Contract and 44 the Vessel with everything belonging to hershall be 45 delivered and taken over as she is at the time of delivery, 46 after which the Sellers shall have no responsibility for 47 possible faults or deficiencies of any description. 48 The Buyers undertake to pay for the repatriation of the 49 Master, officers and other personnel if appointed by the 50 Sellers to the port where the Vessel entered the Bareboat 51 Charter as per Clause 3 (Part II) or to pay the equivalent 52 cost for their journey to any other place. 53 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” Standard Bareboat Charter OPTIONAL PART PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY (Optional, only to apply if expressly agreed and stated in Box 43) 1. Definitions 1 For the purpose of this PART V, the following terms shall 2 have the meanings hereby assigned to them: 3 “The Bareboat Charter Registry” shall mean the registry 4 of the State whose flag the Vessel will fly and in which 5 the Charterers are registered as the bareboat charterers 6 during the period of the Bareboat Charter. 7 “The Underlying Registry” shall mean the registry of the 8 state in which the Owners of the Vessel are registered 9 as Owners and to which jurisdiction and control of the 10 Vessel will revert upon termination of the Bareboat 11 Charter Registration. 12 2. Mortgage 13 The Vessel chartered under this Charter is financed by 14 a mortgage and the provisions of Clause 12(b) (Part II) 15 shall apply. 16 3. Termination of Charter by Default 17 If the Vessel chartered under this Charter is registered 18 in a Bareboat Charter Registry as stated in Box 44, and 19 if the Owners shall default in the payment of any amounts 20 due under the mortgage(s) specified in Box 28, the 21 Charterers shall, if so required by the mortgagee, direct 22 the Owners to re-register the Vessel in the Underlying 23 Registry as shown in Box 45. 24 In the event of the Vessel being deleted from the 25 Bareboat Charter Registry as stated in Box 44, due to a 26 default by the Owners in the payment of any amounts 27 due under the mortgage(s), the Charterers shall have 28 the right to terminate this Charter forthwith and without 29 prejudice to any other claim they may have against the 30 Owners under this Charter. 31 This document is a computer generated BARECON 2001 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In event of any modification being made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense caused as a result of discrepancies between the original BIMCO approved document and this computer generated document.“BARECON 2001” STANDARD BAREBOAT CHARTER PARTI 26. Place of payment; also state beneficiary and bank account (Q,_ll) 27. Sook-Corporate guaranteelOORl;I (sum and place) CCI. 24) (optional) Beneficiary: Kos Shipping Corporation See Clause 24 Account No.: 1200048523 Beneficiary bank: HSH Nordbank AG SWIFT Code: HSHNDEHH 28. Mortgage(s). if any (state whether ll.(fil or .{!ll applies; if 1.f.1Ql 29. Insurance (hull and machinery and war risks) (stale value acc. to Q,__1Mfi applies state date of Financial Instrument and name of or, if applicable, acc. to Cl. 14l (also state if Cl. 14 applies) Mortgagee(s)/Place of business) CCI. 12) See Clause 38- CLAUSE 14 DOES NOT APPLY See Clause 35 30. Additional insurance cover, if any, for Owners’ account limited to 31 Additional insurance cover, if any, for Charterers’ account limited to

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