Euroholdings Ltd 20-F, filed May 15, 2025
Euroholdings Ltd. (EHLD)
20-F
2025-05-15
For: 2024-12-31
View Original
Added on
April 10, 2026
About this 20-F
Euroholdings Ltd filed this 20-F on May 15, 2025, covering the fiscal year ended December 31, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 20-F
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(Mark One)
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☐
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
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OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☐
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report
For the transition period from to
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Commission file number 001-42465
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EUROHOLDINGS LTD.
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(Exact name of Registrant as specified in its charter)
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Not applicable
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(Translation of Registrant’s name into English)
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Republic of the Marshall Islands
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(Jurisdiction of incorporation or organization)
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4 Messogiou & Evropis Street, 151 24 Maroussi Greece
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(Address of principal executive offices)
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Stephania Karmiri, Tel: +30-211-180-4005, info@euroholdings.gr, Euroholdings Ltd. c/o Stephania Karmiri,
4, Messogiou & Evropis Street, Maroussi, 15124, Greece
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(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
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Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common shares, $0.01 par value including the Preferred Stock Purchase Rights
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EHLD
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Nasdaq Capital Market
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Securities registered or to be registered pursuant to Section 12(g) of the Act:
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None
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(Title of Class)
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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
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None
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(Title of Class)
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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
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Not applicable
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
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☐ Yes ☒
No
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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
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☐ Yes ☒
No
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Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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☐ Yes ☒
No
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Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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☒ Yes ☐
No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or an
emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Emerging growth company ☒
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
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† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to
its Accounting Standards Codification after April 5, 2012.
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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
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Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐
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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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☒ U.S. GAAP
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☐ International Financial Reporting Standards as issued by the International Accounting
Standards Board.
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☐ Other
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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow
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☐ Item 17 ☐
Item 18
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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
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☐ Yes ☒
No
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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
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Indicate by check mark whether the registrant has filed all documents and reports to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
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☐ Yes ☐
No
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TABLE OF CONTENTS
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Page
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Forward-Looking Statements
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1
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Part I
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Item 1.
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Identity of Directors, Senior Management and Advisers
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3
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Item 2.
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Offer Statistics and Expected Timetable
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3
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Item 3.
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Key Information
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3
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Item 4.
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Information on the Company
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44
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Item 4A.
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Unresolved Staff Comments
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63
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Item 5.
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Operating and Financial Review and Prospects
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63
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Item 6.
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Directors, Senior Management and Employees
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77
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Item 7.
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Major Shareholders and Related Party Transactions
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83
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Item 8.
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Financial Information
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87
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Item 9.
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The Offer and Listing
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88
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Item 10.
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Additional Information
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88
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Item 11.
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Quantitative and Qualitative Disclosures About Market Risk
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99
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Item 12.
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Description of Securities Other than Equity Securities
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99
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Part II
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Item 13.
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Defaults, Dividend Arrearages and Delinquencies
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99
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Item 14.
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Material Modifications to the Rights of Security Holders and Use of Proceeds
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99
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Item 15.
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Controls and Procedures
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100
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Item 16.
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[Reserved]
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Item 16A.
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Audit Committee Financial Expert
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101
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Item 16B.
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Code of Ethics
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101
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Item 16C.
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Principal Accountant Fees and Services
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101
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Item 16D.
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Exemptions from the Listing Standards for Audit Committees
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102
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Item 16E.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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102
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Item 16F.
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Change in Registrant’s Certifying Accountant
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102
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Item 16G.
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Corporate Governance
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102
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Item 16H.
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Mine Safety Disclosure
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102
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Item 16I.
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Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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102
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Item 16J.
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Insider Trading Policies
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102
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Item 16K.
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Cybersecurity
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103
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Part III
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Item 17.
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Financial Statements
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105
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Item 18.
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Financial Statements
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105
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Item 19.
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Exhibits
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105
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FORWARD-LOOKING STATEMENTS
Euroholdings Ltd. and its wholly owned subsidiaries, or the Company, desires to take advantage of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This annual report contains forward-looking statements. These forward-looking statements include information about
possible or assumed future results of our operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify the
forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and
unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or
implied by such forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding:
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our future operating or financial results;
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future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating
expenses;
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container shipping industry trends, including charter rates and factors affecting vessel supply and demand;
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fluctuations in our stock price as a result of volatility in securities markets;
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the impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our
Environmental, Social and Governance (“ESG”) policies;
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our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and
other general corporate activities;
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fluctuations in currencies, interest rates and foreign exchange rates;
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availability of crew, number of off-hire days, drydocking requirements and insurance costs;
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our expectations about the availability of vessels to purchase or the useful lives of our vessels;
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our expectations relating to dividend payments and our ability to make such payments;
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our ability to leverage to our advantage the relationships and reputations of Eurobulk Ltd. (“Eurobulk”), our affiliated ship management company or
“Manager”, in the container shipping industry;
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changes in seaborne and other transportation patterns;
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changes in governmental rules and regulations or actions taken by regulatory authorities;
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potential liability from future litigation;
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global and regional political conditions;
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General political conditions or events, including “trade wars”, acts of terrorism and other hostilities, including piracy, the war between Russia and
Ukraine, the war between Israel and Hamas and the trade disruption in the Red Sea region;
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the severity and duration of natural disasters or public health emergencies on our performance and business prospects; and
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1
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other factors discussed in the section titled “Risk Factors.”
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WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS
ANNUAL REPORT, EXCEPT AS REQUIRED BY LAW, OR THE DOCUMENTS TO WHICH WE REFER YOU IN THIS ANNUAL REPORT, TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH RESPECT TO SUCH STATEMENTS OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY
STATEMENT IS BASED.
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PART I
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Item 1.
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Identity of Directors, Senior Management and Advisers
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Not Applicable.
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Item 2.
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Offer Statistics and Expected Timetable
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Not Applicable.
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Item 3.
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Key Information
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Please note: Throughout this report, all references to “we,” “our,” “us” and the “Company” refer to Euroholdings Ltd. and its subsidiaries.
We use the term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. We use the term
twenty-foot equivalent unit, or teu, in describing the size of our containerships in addition to dwt. Teu, expressed in number of containers, refers to the maximum number of twenty-foot long containers that can be placed on board. Unless otherwise
indicated, all references to “dollars” and “$” in this report are to, and amounts are presented in, U.S. dollars.
On January 8, 2025, Euroseas Ltd. (“Euroseas” or “Parent Company” or “Parent”) contributed to the Company three subsidiaries (the “Subsidiaries”) in
connection with the spin-off of Euroseas’ vintage vessels (older than twenty-five years), comprising the recently sold 1998-built M/V “Diamantis P” as well as the 1999-built M/V “Joanna” and the 1997-built M/V “Aegean Express” (referred to herein as
“Spin -Off”). Euroseas contributed these Subsidiaries to Euroholdings, in exchange for common shares in Euroholdings, which Euroseas distributed on March 17, 2025 (the “Distribution Date”) to Euroseas shareholders of record as of March 7, 2025 (the
“Record Date”), on a pro rata basis. Euroseas shareholders received one share of common stock of Euroholdings for every two and a half shares of common stock of Euroseas they owned as of the Record Date. On March 18,
2025, the common shares of Euroholdings Ltd. began trading on Nasdaq Capital Market under the symbol “EHLD” and Euroholdings became an independent publicly traded company focusing on managing elder vessels, as well as other maritime opportunities.
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[Reserved]
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B.
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Capitalization and Indebtedness
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Not Applicable.
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C.
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Reasons for the Offer and Use of Proceeds
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Not Applicable.
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D.
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Risk Factors
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Any investment in our common stock involves a high degree of risk. You should consider carefully the following factors, as well as the
other information set forth in this annual report, before making an investment in our common stock. Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate to the securities
market for, and ownership of, our common stock. Any of the described risks could significantly and negatively affect our business, financial condition, operating results and common stock price. The following risk factors describe the material risks
that are presently known to us.
Risk Factors Summary
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The uncertainties in global and regional demand for chartering containerships;
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The volatile container shipping market and difficulty in finding profitable charters for our vessels;
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3
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Fluctuations in our stock price as a result of volatility in securities markets;
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The impact of global epidemics or pandemics and resulting disruptions to the Company and the international shipping industry could negatively affect our
business, results of operations or financial condition;
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Our ability to comply with various financial and collateral covenants in our credit facilities;
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Uncertainties related to the market value of our vessels;
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Uncertainties related to the supply and demand of containership vessels;
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The impact of increasing scrutiny and changing expectations from investors, lenders, charterers and other market participants with respect to our ESG
policies;
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Disruption of world trade due to rising protectionism or the breakdown of multilateral trade agreements;
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Disruptions in global financial markets relating to terrorist attacks or geopolitical risk and the recent conflict between Russia and Ukraine, the war
between Israel and Hamas and trade disruption in the Red Sea region;
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Uncertainties related to conducting business in China;
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Our dependence on a limited number of customers operating in a consolidating industry;
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Our ability to enter into time charters with existing and new customers, and to re-charter our vessels upon the expiry of existing charters;
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Uncertainties related to our counterparties’ ability to meet their obligations, which could adversely affect our business;
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Our ability to obtain additional debt financing for future acquisitions of vessels or to refinance our existing debt;
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Uncertainties related to availability of new or secondhand vessels to acquire;
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Uncertainties related to the price of fuel, and our reliance on suppliers;
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Our ability to attract and retain qualified, skilled crew at reasonable cost;
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A potential increase in operating costs associated with the aging of our fleet;
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Our ability to leverage to our advantage our Manager’s relationships and reputation within the container shipping industry;
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Our ability to hedge against fluctuations in exchange rates and in the future interest rates
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The expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as requirements
imposed by classification societies and standards demanded by our charterers;
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The expected cost of, and our ability to comply with, changing environmental and operational safety laws;
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Potential cyber-attacks which may disrupt our business operations;
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Potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists and armed conflicts;
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Potential conflicts of interest between us, our principal officers and our Manager;
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Uncertainties related to compliance with sanctions and embargo laws;
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Uncertainties in the interpretation of corporate law in the Marshall Islands;
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Uncertainties over our ability to pay dividends;
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The expected costs associated with complying with public company regulations; and
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The effect of any future issuance of preferred stock on the voting power of our shareholders.
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Industry Risk Factors
Our future profitability will be dependent on the level of charter rates in the international container shipping
industry.
We are an independent shipping company that operates in the container shipping industry. Our profitability is dependent upon the charter
rates we are able to charge for our ships. The supply of, and demand for, shipping capacity strongly influences charter rates. The demand for shipping capacity is determined primarily by the demand for containerized goods trade and the distance that
those goods must be moved by sea. The demand for trade is affected by, among other things, world and regional economic and political conditions (including developments in international trade, economic slowdowns caused by public health events such as
global pandemics and epidemics, fluctuations in industrial and agricultural production and armed conflicts), environmental concerns, weather patterns, and changes in seaborne and other transportation costs and patterns. The size of the existing fleet
in a particular market, the number of new vessel deliveries, the scrapping of older vessels and the number of vessels out of active service (i.e., laid-up, drydocked, awaiting repairs or otherwise not available for hire) determine the supply of
shipping capacity, which is measured by the amount of suitable tonnage available to carry cargo.
In addition to the prevailing and anticipated charter rates, factors that affect the rate of newbuilding, scrapping and laying-up include
newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of
the existing fleet in the market and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are
outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions. Some of these factors may have a negative impact on our revenues and net income.
The cyclical nature of the shipping industry may lead to volatile changes in charter rates, which may reduce our
revenues and negatively affect our results of operations.
Containership rates have experienced volatility in the past six years. Containership rates started in a depressed state in 2019 but by
March had gradually strengthened to levels that were noticeably higher. The remainder of 2019 saw one of the slowest growth rates in the containerized trade, as global economic growth weakened and continued fears of a U.S.-China ‘trade war’
escalated. In January 2020, freight rates rose initially, only to decrease significantly as a result of the COVID-19 pandemic, which resulted in disruptions to industrial production and supply chains and caused uncertainty in the short-term outlook
for the sector. However, during the final quarter of 2020, containership rates increased across all segments, drawing a more positive picture for the future. That sentiment continued throughout 2021 and the first half of 2022, with containership
rates reaching all-time highs and surpassing the last ten-year historical medians. After peaking in the summer of 2022, containership rates across all segments began to gradually soften, before dropping in the fourth quarter of 2022 and throughout
2023. Container shipping markets experienced substantial gains in 2024 which have continued during the first four months of 2025, driven by rerouting away from the Red Sea, Gulf of Aden and Suez Canal due to Houthi attacks on ships. These disruptions
have resulted in inefficiencies and support for container rates, which may not continue once these are resolved. Commercial trade continues to experience significant disruptions, despite the recent diplomatic efforts to stabilize the region.
5
Rates in the containership market are influenced by the balance of demand for and supply of vessels and may decline again in the
future. Because the factors affecting the supply of and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are unpredictable, and as a result so are the
rates at which we can charter our vessels. In addition, we may not be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends to our shareholders.
Some of the factors that influence demand for vessel capacity include:
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supply of, and demand for, containerized cargo;
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changes in the production of semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade;
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global and regional economic and political conditions, including trade wars, armed conflicts and terrorist activities, such as the wars between Ukraine and
Russia and between Israel and Hamas or trade disruptions in the Red Sea region;
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epidemics and pandemics;
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embargoes or strikes;
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the location of regional and global manufacturing facilities;
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availability of credit to finance international trade;
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the location of consuming regions for semi-finished and finished consumer and industrial products;
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the distance containerized commodities are to be moved by sea;
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environmental and other regulatory developments;
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currency exchange rates;
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changes in global production and manufacturing distribution patterns of finished goods that utilize containerized commodities;
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sanctions, embargoes, and import and export restrictions, including those arising as a result of the wars between Ukraine and Russia and between Hamas and
Israel:
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changes in seaborne and other transportation patterns; and
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weather and other natural phenomena.
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Some of the factors that influence the supply of vessel capacity include:
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the number of newbuilding orders and deliveries including slippage in deliveries;
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the scrapping rate of older vessels;
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the price of steel and other materials;
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port and canal congestion;
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changes in environmental and other regulations that may limit the useful life of vessels;
technological advances in vessel design, capacity, propulsion technlology and fuel consumption efficiency;
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the price of fuel;
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vessel casualties;
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the number of vessels that are out of service; and
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changes in global commodity production.
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We anticipate that the future demand for our container vessels and the charter rates of the corresponding markets will be dependent upon economic recovery and growth in the United
States, Europe, Japan, China and India and the overall world economy as well as seasonal and regional changes in demand and changes to the capacity of the world fleet. The capacity of the world fleet may increase and economic growth may not continue.
Adverse economic, political, social or other developments could also have a material adverse effect on our business and results of operations.
The market value of our vessels can fluctuate significantly, which may adversely affect our financial condition, cause us to breach any future financial covenants, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels.
The value of our vessels may fluctuate, adversely affecting our earnings and liquidity and causing us to breach our secured credit
agreements.
The fair market values of our vessels are related to prevailing charter rates. While the fair market value of vessels and the freight
charter market have a very close relationship as the charter market moves from trough to peak, the time lag between the effect of charter rates on market values of ships can vary. A decrease in the market values of our vessels could limit the amount
of funds that we can borrow or trigger certain financial covenants under our future credit facilities, and we may incur a loss if we sell vessels following a decline in their market value. Furthermore, a decrease in the market value of our vessels
could require us to raise additional capital in order to remain compliant with any future loan covenants, and could result in the foreclosure of our vessels and adversely affect our earnings and financial condition.
The market value of our vessels may increase or decrease depending on the following factors:
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general economic and market conditions affecting the shipping industry;
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supply of container vessels, including newbuildings;
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demand for container vessels;
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types and sizes of vessels in our fleet;
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scrap values;
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other modes of transportation;
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cost of newbuildings;
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technological advances;
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new regulatory requirements from governments or self-regulated organizations;
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competition from other shipping companies; and
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prevailing level of charter rates.
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As vessels grow older, they generally decline in value. Due to the cyclical nature of the container shipping industry, if for any reason we
sell vessels at a time when prices have fallen, we could incur a loss and our business, results of operations, cash flow, financial condition and ability to pay dividends could be adversely affected.
In addition, we periodically re-evaluate the carrying amount and period over which vessels are depreciated to determine if events have
occurred that would require modification to such assets’ carrying values or their useful lives. A determination that a vessel’s estimated remaining useful life or recoverable value has declined below its carrying amount could result in an impairment
charge against our earnings and a reduction in our shareholders’ equity.
As of December 31, 2023, one of our vessels had a mortgage securing a loan which has since been repaid, and as of December 31, 2024, none
of our vessels was encumbered by a mortgage. Typically, our secured loan agreements, which are secured by mortgages on our vessels, contain various financial covenants. If we enter into loan agreements in the future, any change in the assessed market
value of any of our vessels might also cause a violation of the covenants of each secured credit agreement, which, in turn, might restrict our cash and affect our liquidity. Among those covenants may be requirements that relate to our net worth,
operating performance and liquidity. For example, there may be a maximum fleet leverage covenant that is based, in part, upon the market value of the vessels securing the loans, as well as requirements to maintain a minimum ratio of the market value
of our vessels mortgaged thereunder to our aggregate outstanding balance under each respective loan agreement. If the assessed market value of our vessels declines below certain thresholds, we may violate these covenants and may incur penalties for
breach of our credit agreements. For example, these penalties could require us to prepay the shortfall between the assessed market value of our vessels and the value of such vessels required to be maintained pursuant to the secured credit agreement,
or to provide additional security acceptable to the lenders in an amount at least equal to the amount of any shortfall. If we are unable to pledge additional collateral, our lenders could accelerate our debt and foreclose on our fleet.
An over-supply of containership capacity may lead to a reduction in charter rates and profitability and may require us
to raise additional capital in order to remain compliant with our loan covenants and affect our ability to pay dividends in the future.
The market supply of containerships was highly elevated at the beginning of last decade, with the number of containerships on order
reaching historic highs. The orderbook gradually declined and by the end of 2020 neared its lowest level of the last twenty years, though it has been on the rise since. As reported by industry sources, the containership fleet increased by 2.9% in
2020, 4.5% in 2021, 4.0% in 2022, 8.3% in 2023 and 10.1% in 2024. As of April 15, 2025, containership volumes have increased by 9.8% in 2025. Specifically, as reported by industry sources, the capacity of the fully cellular worldwide container vessel
fleet, as of April 15, 2025, was approximately 31.36 million teu with approximately another 8.95 million teu, or about 28.55% of the fleet capacity on order. Growth of the fleet is also affected by the scrapping rate. If the number of new ships
delivered exceeds the number of vessels being scrapped and lost, vessel capacity will increase. An over-supply of containership capacity may result in a reduction of charter rates. If the supply of vessel capacity increases but the demand for vessel
capacity does not increase correspondingly, charter rates and vessel values could materially decline.
8
If a rate decline occurs upon the expiration or termination of our current charters, we may only be able to re-charter those vessels at
reduced rates or we may not be able to charter these vessels at all. Many containership charters we renewed or concluded during 2016 and 2017 were at unprofitable rates and were entered into because they resulted in lower losses than would have
resulted had we put the vessels in lay-up. Charter rates have improved since, but remained volatile and fluctuated during 2018, which continued into 2019. During 2020, the disruption in trade flows and markets caused by the COVID-19 pandemic caused
further volatility in charter rates. By the end of the year, the market was amongst the best performing across all containership segments, with charter markets celebrating new highs. Charters renewed or entered into during 2021 and 2022 were at rates
that were profitable, while charters renewed during 2023 were at lower, but still profitable levels for most of our vessels. Due to events in the Red Sea, Panama Canal and the implementation of certain environmental regulations, rates increased in
late 2023 and in 2024, reaching levels seen during the COVID-19 period. Despite expectations that a ceasefire in Gaza could potentially reroute vessels through the Suez Canal, the shift has yet to be implemented due to fear of the Houthi still
striking; therefore, the container shipping market is likely to face equal challenges in 2025, as it remains unclear when such disruptions will be resolved. Depending on changes of demand for and supply of shipping capacity, container charter rates
could decrease again. Any inability to enter into more profitable charters may require us to raise additional capital in order to remain compliant with our loan covenants and may also affect our ability to pay dividends in the future.
Adverse economic conditions, especially in the Asia Pacific region, the European Union or the United States, including
as a result of tariffs imposed by the United States and other countries, and the Ukraine Russia conflict, could harm our business, results of operations and financial condition.
Because a significant number of the port calls made by our vessels involves the loading or discharging of containerships in ports in the
Asia Pacific region, economic turmoil in that region may exacerbate the effect of any economic slowdown on us. China has been one of the world’s fastest growing economies and a major manufacturing hub for the production and export of finished goods
which are predominantly shipped in containerships. However, even prior to the COVID-19 pandemic, China’s high rate of real GDP growth had already reached a plateau, posting a 0.5 percentage points decline, year on year, in 2019, followed by a
tremendous decline to 3.8 percentage points in 2020 as a result of the COVID-19 pandemic. With a global economic recovery under way in 2021, China’s GDP increased by 6.1 percent, to stand at 8.4 percentage points. The rapid spread of COVID infections
in China, along with its troubled property market, dampened growth significantly in 2022, which expanded by a mere 3.0 percent. Nevertheless, Chinese economy grew further in 2023 by 2.2 percentage points to stand at 5.2 percent, despite an
underwhelming boost following the lifting of pandemic sanctions and persistent property sector woes. Although below expectations, China grew a further 4.8 percent in 2024, aided by a fiscal package announced in late 2024 that offset the negative
effect on investment from heightened trade policy uncertainty and its property market drag. Projections now show a Chinese growth of 4.6 percentage points in 2025 and further growth of 4.5 percentage points in 2026. In addition, the rise in interest
rates to tame inflation and the war between Russia and Ukraine and the war between Israel and Hamas continue to impact economic activity.
The U.S. government has recently made statements and taken certain actions which may impact U.S. and international trade policies,
including tariffs affecting certain Chinese industries. There is significant uncertainty about the future relationship between the United States and China and other exporting countries, such as Canada and Mexico, and the European Union, among others,
including with respect to trade policies, treaties, government regulations, and tariffs. For example, U.S.-China trade tensions, including the introduction by the U.S. government of tariffs affecting certain goods imported by China, has provoked
retaliatory trade actions from China, and may provoke additional tariffs or trade restrictions. Additionally, new tariffs have recently been imposed by the U.S. on imports from Canada and Mexico, among other countries, on goods including steel and
aluminum and automobiles and auto parts.
The U.S. has also announced the imposition of a reciprocal tariff policy on most foreign imports subject to certain specified exclusions,
that applied an additional 10% duty against all trading partners beginning on April 5, 2025. Additional country-specific duties against certain trading partners were initially effective beginning on April 9, 2025, but are now subject to a suspension
for 90 days until July 9, 2025 (although additional tariffs against China presently remain in effect). It is unknown whether and to what extent such tariffs will be retained, expanded, or otherwise modified by the U.S., or the effect that any such
actions or any actions taken by other countries in response will have on us or our industry, but such measures could have an adverse effect on our business, financial condition, and results of operations.
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Outbreaks of epidemic and pandemic diseases and governmental responses thereto could adversely affect
our business.
The extent to which our business could be negatively affected by future pandemics, epidemics or other outbreaks of
infectious diseases is uncertain and may depend on numerous evolving factors that we cannot predict and that are outside of our control, such as the duration and severity of the infectious disease outbreak; government responses to such outbreak
including travel restrictions and quarantine; the effect such an outbreak would have on the global business environment and the demand for the goods we transport; its effect on the price of fuel for our vessels; shortages or reductions of supply of
essential goods, services or labor; and fluctuations in general economic or financial conditions tied to the outbreak, such as a sharp increase in interest rates or reduction in the availability of credit, and governmental responses thereto. We
cannot predict the effect that an outbreak of any future infectious disease outbreak, pandemic or epidemic may have on our business, results of operations and financial condition, but it could be material and adverse.
Eurozone’s potential inability to deal with the sovereign debt
issues of some of its members could have a material adverse effect on the profitability of our business, financial condition and results of operations.
Despite the efforts of the European Council since 2011 to implement a structured financial support mechanism for Eurozone countries
experiencing financial difficulties, questions remain about the capability of a number of member countries to refinance their sovereign debt and meet their debt obligations, especially, as the COVID-19 pandemic resulted in lower economic growth in
almost all countries. In March 2011, the European Council agreed on the need for Eurozone countries to establish a permanent stability mechanism, the European Stability Mechanism (or “the ESM”), which will be activated by mutual agreement to provide
external financial assistance to Eurozone countries. Despite these measures, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the euro. An
extended period of adverse development in the outlook for Eurozone countries could reduce the overall demand for our services. These potential developments, or market perceptions concerning these and related issues, could have a material adverse
effect on our financial position, results of operations and cash flow.
Effects and events related to the Greek sovereign debt and economic crisis may adversely affect our operating results.
Greece has experienced a macroeconomic downturn in previous years, from which it has been recovering, partially as a result of the
sovereign debt crisis and the related austerity measures implemented by the Greek government. Eurobulk’s operations in Greece may be subjected to new regulations or regulatory action that may require us to incur new or additional compliance or other
administrative costs and may require that we or Eurobulk pay to the Greek government new taxes or other fees. We and Eurobulk also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt our and Eurobulk’s
shore-side operations located in Greece. The Greek government’s taxation authorities have increased their scrutiny of individuals and companies to secure tax law compliance. If economic and financial market conditions remain uncertain, persist or
deteriorate further, the Greek government may impose further changes to tax and other laws to which we and Eurobulk may be subject or change the ways they are enforced, which may adversely affect our business, operating results, and financial
condition.
Liner companies, which comprise the largest contingent of charterers of containerships, have been placed under
significant financial pressure, thereby increasing our charter counterparty risk which may have a material adverse effect on our business, financial condition and results of operations.
The decline in global trade after the financial crisis of 2008 and the subsequent economic slowdown resulted in a significant decline in
demand for the seaborne transportation of products in containers, including for exports from China to Europe and the United States. Consequently, the cargo volumes and, especially, freight rates (i.e., the rates that liner companies charge to their
clients) achieved by liner companies, which charter containerships from ship owners like us, declined sharply in the second half of 2011. They stabilized toward the end of 2012, remained at similar levels in 2013, but declined in 2014 and 2016 also
due to a growing oversupply of containerships despite a short-lived recovery in the middle of 2015. In 2017, a rate recovery began, which was maintained throughout the year and the first half of 2018. The second half of 2018 and the beginning of 2019
saw a decline in containership charter rates mainly due to measured demand for goods because of the uncertainty surrounding the possibility of increased protectionist policies by governments worldwide. Rates made progress throughout 2019, although
improvements were mostly weighted towards the larger size container segments. The COVID-19 pandemic had a major impact on containership rates, causing prolonged uncertainty in the markets through most of 2020. However, by the end of the year, rates
reached ten-year highs. 2021 and the first half of 2022 were strong periods for the containership markets, with rates exceeding average and median levels for the last 20 years, due in large part to logistical disruptions and firm trade demand in
containership products. However, starting from the third quarter of 2022, containership rates began to gradually soften as a result of a slowdown in world economic activity, including waning demand for containership trade, alongside lower consumer
activity due to inflationary pressures and the easing of logistical disruptions. Containership rates remained elevated in 2024 following the continued Houthi attacks on ships in the Red Sea and in the Gulf of Aden. However, easing of such
disruptions could result in lower freight rates and tonne-mile demand and in turn lower charter rates. In addition, the large orderbook will likely result in an increase of the world containership fleet over the next few years. These challenges may
reduce demand for containership charters and may increase the likelihood of our customers being unable or unwilling to pay us contracted charter rates. The combination of the current surplus of containership capacity and the expected increase in the
size of the world containership fleet over the next several years may make it difficult to secure substitute employment for our containerships if our counterparties fail to perform their obligations under the currently arranged time charters, and any
new charter arrangements we are able to secure may be at lower rates.
10
The containership industry is highly competitive, and we may be unable to compete successfully for charters with
established companies or new entrants that may have greater resources and access to capital, which may have a material adverse effect on our business, prospects, financial condition, liquidity and results of operations.
The containership industry is highly competitive and capital intensive. Competition arises primarily from other vessel owners, some of whom
may have greater resources and access to capital than we have. Competition among vessel owners for the seaborne transportation of semi-finished and finished consumer and industrial products can be intense and depends on the charter rate, location,
size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, many of our competitors with greater resources and access to capital than we have could operate larger fleets
than we may operate and thus be able to offer lower charter rates or higher quality vessels than we are able to offer. If this were to occur, we may be unable to retain or attract new charterers on attractive terms or at all, which may have a
material adverse effect on our business, prospects, financial condition, liquidity and results of operations.
Changes in the economic and political environment in China and policies adopted by the Chinese government
to regulate China’s economy may have a material adverse effect on our business, financial condition and results of operations.
The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development,
(or “OECD”), in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned
economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the
economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and
other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were
undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such
experiments. The Chinese government may not continue to pursue a policy of economic reform. The level of imports to and exports from China could be adversely affected by the nature of the economic reforms pursued by the Chinese government, as well as
by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect our business, operating results,
financial condition and cash flows.
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We conduct business in China, where the legal system is not fully developed and has inherent uncertainties that could
limit the legal protections available to us.
Some of our vessels may be chartered to Chinese customers and from time to time on our charterers’ instructions, our vessels may call on
Chinese ports. Such charters and voyages may be subject to regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinese government new taxes or other fees.
Applicable laws and regulations in China may not be well publicized and may not be known to us or to our charterers in advance of us or our charterers becoming subject to them, and the implementation of such laws and regulations may be inconsistent.
Changes in Chinese laws and regulations, including with regards to tax matters, or changes in their implementation by local authorities could affect our vessels if chartered to Chinese customers as well as our vessels calling to Chinese ports and
could have a material adverse impact on our business, financial condition and results of operations.
We may have difficulty securing profitable employment for our vessels if their charters expire in a depressed market.
As of April 30, 2025, both of our vessels are employed on time charter contracts and are scheduled to expire during 2025 and 2026. As of
April 30, 2025, the containership charter rates for vessels like ours are above historical averages. When the current charters of our vessels are due for renewal, we may be unable to re-charter these vessels at similar or better rates or we might not
be able to charter them at all. Although we do not receive any revenues from our vessels while not employed, we are required to pay expenses necessary to maintain the vessels in proper operating condition, insure them and service any indebtedness
secured by such vessels. If we cannot re-charter our vessels on time charters or trade them in the spot market profitably, our results of operations and operating cash flow will be adversely affected. Despite the fact that all of our vessels are
employed, we may be forced to lay up vessels if rates drop to levels below daily running expenses or if we are unable to find employment for the vessels for prolonged periods of time.
We will not be able to take advantage of potentially favorable opportunities in the current market with respect to
vessels employed on time charters.
As of April 30, 2025, all of our vessels are employed under time charters with remaining terms ranging from 6 months to 18 months based on
the minimum duration of the charter contracts, with options to extend for an additional 2 months. The percentage of our fleet that is under time charter contracts represents approximately 89% of our vessel capacity for the remainder of 2025 and 42%
of our capacity in 2026. Although time charters provide relatively steady streams of revenue, vessels committed to time charters may not be available for chartering during periods of increasing charter rates. If we cannot re-charter these vessels on
time charters or trade them profitably on the spot market, our results of operations and operating cash flow may suffer. We may not be able to secure charter rates in the future that will enable us to operate our vessels profitably.
Global economic conditions may continue to negatively impact the container shipping industry.
Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United States, the European Union
and worldwide may adversely affect our business.
Accordingly, our financial condition and results of operations, as well as our future prospects, would likely be hindered by an economic
downturn in any of these countries or geographic regions. In recent years China and India have been among the world’s fastest growing economies in terms of gross domestic product, and any economic slowdown in the Asia Pacific region, particularly in
China or India, may adversely affect demand for seaborne transportation of our products and our results of operations. Moreover, any deterioration in the economy of the United States or the European Union, may further adversely affect economic growth
in Asia.
Economic growth is expected to slow, including due to supply-chain disruption, the recent surge in inflation and related actions by central
banks and geopolitical conditions, with a significant risk of recession in many parts of the world in the near term. In particular, an adverse change in economic conditions affecting China, Japan, India or Southeast Asia generally could have a
negative effect on the container shipping market. It is also possible that new tariffs (or other laws and regulations) will be adopted, and trade agreements will be renegotiated with China also causing adverse effects on the industry. For example,
U.S.-China trade tensions, including the introduction by the U.S. government of tariffs affecting certain goods imported by China, has provoked retaliatory trade actions from China, and may provoke additional tariffs or trade restrictions.
12
Increasing scrutiny and changing expectations from investors, lenders and other market participants with
respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain
institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased
focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do
not adapt to or comply with investor, lender or other market participant expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is
a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.
We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to
prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain
invested in us and make further investments in us. If we do not meet these standards, our business and/or our ability to access capital could be harmed.
Additionally, certain investors and lenders may exclude shipping companies, such as us, from their investing portfolios altogether due to
environmental, social and governance factors. These limitations in both the debt and equity capital markets may affect our ability to develop as our plans for growth may include accessing the equity and debt capital markets. If those markets are
unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and results of
operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor, report and comply with wide ranging ESG requirements. The occurrence of any of the
foregoing could have a material adverse effect on our business and financial condition.
On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted final rules to require registrants to disclose certain
climate-related information in SEC filings of all public companies. The final rules require companies to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant’s
board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or
financial condition.
Almost immediately upon release of the rules, multiple lawsuits challenging the rules were filed in federal court, and the cases were
transferred to the Eighth Circuit Court of Appeals. On April 4, 2024, the SEC voluntarily issued a stay of the climate-related disclosure rules pending the completion of judicial review of the consolidated Eighth Circuit petitions, which is still
ongoing. In addition, on June 28, 2024, in its decision of the combined cases of Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo, the
Supreme Court of the United States narrowed its view of agency authority by overturning Chevron deference, which required judges to defer to an agency’s interpretation of relevant laws when its regulations are subject to a legal challenge. This
decision will raise the burden for administrative agencies to prove they have the authority to create a rule and will likely create a hurdle for SEC’s pending climate-related disclosure rules. Moreover, on March 27, 2025, the SEC withdrew its defense
of the climate-related disclosure rules. The impact of the ongoing litigation with respect to these rules, as well as the change in administration, is uncertain.
If we fail to adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or if
we fail to comply with the SEC’s requirements, or if we are perceived to have failed to respond appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage
and incur costs related to litigation or as a failure to comply with regulatory requirements, and our business, financial condition, and/or stock price could be materially and adversely affected.
13
We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost,
manner or feasibility of doing business.
Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and
local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not
limited to, the International Convention for the Prevention of Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as MARPOL, including the designation of emission
control areas, ECAs, thereunder, the International Convention on Load Lines of 1966, or the LL Convention, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976, 1984 and 1992, and
amended in 2000, and generally referred to as the CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or Bunker Convention, the International Convention for the Safety of Life at Sea of 1974, or SOLAS, the
International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, the U.S. Oil
Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Clean Water Act, or the CWA, the U.S. Clean Air Act, or the CAA, the U.S. Outer Continental Shelf Lands Act, the U.S.
Maritime Transportation Security Act of 2002, or the MTSA, and European Union regulations. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the
resale value or useful lives of our vessels.
Furthermore, events like the explosion of the Deepwater Horizon and the subsequent release of
oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes. Thus, we may also incur additional costs in order to comply with other existing and future
regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance
coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws
and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.
Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could
subject us to liability without regard to whether we were negligent or at fault. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the
impact thereof on the resale price or useful life of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely
affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. Under OPA, for example, owners, operators and bareboat charterers are
jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation
costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other
pollution incidents. There can be no assurance that any such insurance we have arranged to cover certain environmental risks will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business,
results of operations, cash flows and financial condition and our ability to pay dividends. We currently maintain, for each of our vessels, pollution liability coverage insurance of $1.0 billion per incident. If the damages from a catastrophic spill
exceeded our insurance coverage, it would severely and adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends.
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Environmental requirements can also require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead
to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports. Under local, national and foreign laws, as well as international
treaties and conventions, we could incur material liabilities, including clean up obligations and natural resource damages in the event that there is a release of bunkers or hazardous substances from our vessels or otherwise in connection with our
operations. We could also become subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements
can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of our vessels.
We are subject to international safety regulations and the failure to comply with these regulations may subject us to
increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
The operation of our vessels is affected by the requirements set forth in the ISM Code set forth in Chapter IX of SOLAS. The ISM Code
requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and
procedures for safe vessel operations and for dealing with emergencies. We rely upon the safety management system that we and our technical manager have developed for compliance with the ISM Code. The failure of a shipowner or bareboat charterer to
comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. Currently,
each of our vessels and Eurobulk, are ISM Code-certified, but we may not be able to maintain such certification indefinitely.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences
compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the
ISM Code. We have obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the United Nations’ International Maritime Organization (the “IMO”). The document
of compliance (the “DOC”) and the safety management certificate (the “SMC”) are renewed as required.
In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with
current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our
vessels to keep them in compliance.
The operation of our vessels is also affected by other government regulation in the form of international conventions, national, state and
local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. As mentioned above, we are required by various governmental and quasi-governmental agencies to obtain
certain permits, licenses, certificates and financial assurances with respect to our operations. See Item 4: “Information on the Company – Business Overview – Environmental and Other Regulations in the Shipping Industry” for more information.
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be
discharged from a vessel’s ballast water. The standards have been in force since 2019, and for most vessels, compliance with the D-2 standard involved installing on-board systems to treat ballast water and eliminate unwanted organisms. Ships
constructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017. We have implemented the required ballast water treatment systems on all of our vessels and are in compliance with all the applicable
regulations.
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Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (“VGP”) program and U.S. National
Invasive Species Act (“NISA”) are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, requires that the U.S. Environmental
Protection Agency (“EPA”) develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for Vessel Incidental
Discharge National Standards of Performance under VIDA. On October 18, 2023, the EPA published a supplemental notice of the proposed rule sharing new ballast water data received from the U.S. Coast Guard (“USCG”) and providing clarification on the
proposed rule. On September 24, 2024, the EPA finalized its rule on Vessel Incidental Discharge Standards of Performance, which means that the USCG must now develop corresponding regulations regarding ballast water within two years of that date. The
new regulations could require the installation of new equipment, which may cause us to incur substantial costs. Until the USCG issues its corresponding implementing regulations, interim requirements established through the EPA 2013 Vessel General
Permit (VGP) and the USCG ballast water regulations, and any applicable state and local government requirements, continue to apply.
Marine Environment Protection Committee (MEPC 80) continued discussions of amendments to Annex VI which impose new regulations to reduce
greenhouse gas emissions from ships. These amendments introduce requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping. To
achieve a 40% reduction in carbon emissions by 2030 compared to 2008, shipping companies are required to include: (i) a technical requirement to operational carbon intensity reduction requirements, based on a new operational carbon intensity
indicator (“CII”). The Energy Efficiency Existing Ship Index (EEXI) is required to be calculated for ships of 400 gross tonnage and above. The IMO and MEPC will calculate “required” EEXI levels based on the vessel’s technical design, such as vessel
type, date of creation, size and baseline. Additionally, an “attained” EEXI will be calculated to determine the actual energy efficiency of the vessel. A vessel’s attained EEXI must be less than the vessel’s required EEXI. Non-compliant vessels will
have to upgrade their engine to continue to travel. With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to document and verify their actual annual operational CII achieved against a determined required annual
operational CII. The vessel’s attained CII must be lower than its required CII. Vessels that continually receive subpar CII ratings will be required to submit corrective action plans to ensure compliance. MEPC 79 adopted amendments to MARPOL Annex
VI, Appendix IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption Database. The amendments entered into force on May
1, 2024.
Additionally, MEPC 75 proposed draft amendments requiring that, on or before January 1, 2023, all ships above 400 gross tonnage must have
an approved Ship Energy Efficiency Management Plan, or SEEMP, on board. For ships above 5,000 gross tonnage, the SEEMP would need to include certain mandatory content. MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and
carriage for use as fuel of heavy fuel oil by ships in Arctic waters on and after July 1, 2024. The draft amendments introduced at MEPC 75 were adopted at the MEPC 76 session held in June 2021, entered into force on November 1, 2022 and became
effective on January 1, 2023.
Regulations relating to low sulfur emissions that came into effect on January 1, 2020 may adversely affect our revenues
and profitability.
Under maritime regulations that came into effect on January 1, 2020, ships are required to reduce sulfur emissions from 3.5% to 0.5% m/m
through the use of scrubbers or buying fuel with low sulfur content which is more expensive than standard marine fuel. We do not currently intend to install scrubbers on our fleet. Our fuel costs and fuel inventories have increased as a result of
these sulfur emission regulations, but the effect is limited by the fact that our vessels are under time charter agreements and these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the
amount of time charter hire and, therefore, fuel costs also indirectly affect time charter rates. Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a
result of increased demand, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.
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Increased inspection procedures and tighter import and export controls and new security regulations could increase
costs and disrupt our business.
International container shipping is subject to various security and customs inspection and related procedures in countries of origin and
destination. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.
It is possible that changes to existing procedures will be proposed or implemented. Any such changes may affect the container shipping
industry and have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to render the shipment of certain types of goods by container uneconomical or impractical. These additional costs could reduce the
volume of goods shipped in containers, resulting in a decreased demand for container vessels. In addition, it is unclear what financial costs any new security procedures might create for container vessel owners, or whether companies responsible for
the global traffic of containers at sea, referred to as container line operators, may seek to pass on certain of the costs associated with any new security procedures to vessel owners.
If our vessels fail to maintain their class certification and/or fail any annual survey, intermediate survey,
drydocking or special survey, those vessels would be unable to carry cargo, thereby reducing our revenues and profitability and violating certain covenants in our loan agreements.
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The
classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Our vessels are currently classed with Det Norske Veritas (“DNV”), Bureau
Veritas, American Bureau of Shipping (“ABS”) and Nippon Kaiji Kyokai. ISM and International Ship and Port Facilities Security (“ISPS”) certifications have been awarded to the vessels by Bureau Veritas or Liberian Flag Administration and to the
Manager by Bureau Veritas.
A vessel must undergo annual surveys, intermediate surveys, dry-dockings and special surveys. In lieu of a special survey, a vessel’s
machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to have its underwater parts inspected by class every 30 to 36 months, but for vessels
subject to enhanced survey requirements and above 15 years of age, its underwater parts must be inspected in dry-dock.
If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel
will be unable to carry cargo between ports and will be unemployable and uninsurable. That status could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation
of covenants, could have a material adverse impact on our financial condition and results of operations.
Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in class” by a classification society
that is a member of the International Association of Classification Societies (“IACS”). All of our vessels that we have purchased, and may agree to purchase in the future, must be certified as being “in class” prior to their delivery under our
standard purchase contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel. We have all of our vessels, and intend to have all vessels that we acquire in the
future, classed by IACS members. See Item 4: “Information on the Company – Business Overview – Environmental and Other Regulations in the Shipping Industry” for more information.
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Rising fuel prices may adversely affect our results of operations and the marketability of our vessels.
Fuel (bunkers) is a significant, if not the largest, operating expense for many of our shipping operations when our vessels are under
voyage charter. When a vessel is operating under a time charter, these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the amount of time charter hire and, therefore, fuel costs also
indirectly affect time charter rates. Fuel prices are highly based on, and are highly correlated to, the price of oil. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical
developments, such as the war between Russia and Ukraine, which remain ongoing as of the date of this annual report, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and other oil and gas
producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. In 2020, the COVID-19 pandemic resulted in crude oil prices hitting a major slump as oil demand drastically declined following
lockdowns and travel restrictions. By April 2020, prices fell to $18.44/bbl, after OPEC and Russia failed to agree on maintaining production cuts, and Saudi Arabia increased its own production. As the COVID-19 pandemic continued to spread around the
world, oil prices dropped to historical lows during 2020 and closed the year at $43.52/bbl. Oil traded lower throughout the year, as rising COVID-19 infections and the new strain, sparked demand concerns. Prices edged slightly higher in December
2020, ranging around $48/bbl, upon the rolling out of the COVID-19 vaccines, coupled by Saudi Arabia’s announcement regarding a large output reduction for February and March 2021. In February 2021, the average WTI (for West Texas Intermediate), stood
at $59/bbl, the highest value since the start of the pandemic, with hopes of steady vaccination roll out and OPEC production limits having led to cautious optimism at global markets. Since then, we have seen a significant increase, after Western
countries imposed sanctions on Russia, raising fears of supply disruptions from one of the largest producers of oil and gas. Following Russia’s invasion in Ukraine and fears over low crude oil inventories, prices rose to over $130/bbl in March 2022.
Prices starting waning towards the end of 2022 and the beginning of 2023, to around $80/bbl. Oil prices remained high and well above their 10-year average of about $63/bbl (for WTI) throughout 2023. At year-end 2023, the price of WTI/bbl stood at
around $72/bbl. Oil prices remained high throughout 2024, on average around $75/bbl, and well above their 10-year average of about $63/bbl (for WTI) throughout 2024. At year-end 2024, the price of WTI/bbl was $71.87 and currently stands at around
$60/bbl, due to increasing trade risks. Prices are currently influenced by the escalating US-China trade war, geopolitical conflicts in the Middle East and further economic slowdown fears n. Any increases in the price of fuel, especially if exceeding
its 10-year average, may adversely affect our operations, particularly if such increases are combined with lower containership rates.
Upon redelivery of vessels at the end of a period time or trip time charter, we may be obligated to repurchase bunkers on board at
prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. We may also be obligated to value our bunkers inventories on board at the end of a period time or trip time charter, at a lower value
than the acquisition value, if prevailing market prices are significantly lower at the time of the vessel redelivery from the charterer.
Rising crew costs may adversely affect our profits.
Crew costs are a significant expense for us under our charters. There is a limited supply of well-qualified crew. We generally bear crewing
costs under our charters. An increase in the world vessel operating fleet will likely result in higher demand for crews which, in turn, might drive crew costs further up. Moreover, the COVID-19 pandemic had affected the rotation of our crew members
due to quarantine restrictions placed on embarking and disembarking on our vessels. Any such disruptions could impact the cost of rotating our crew. Any increase in crew costs may adversely affect our profitability especially if such increase is
combined with lower containership rates.
Maritime claimants could arrest or attach our vessels, which would interrupt our business or have a negative effect on
our cash flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders and other parties may be entitled to a maritime lien
against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through judicial or foreclosure proceedings. The arresting or attachment of one or
more of our vessels could interrupt our cash flow and require us to pay large sums to have the arrest or attachment lifted which would have a material adverse effect on our financial condition and results of operations.
In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the
vessel that is subject to the claimant’s maritime lien, and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one of our vessels for claims relating to
another of our vessels.
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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 or stowaways, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may
face governmental or other regulatory claims, which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends. Under some jurisdictions, vessels used for the conveyance of
illegal drugs could result in forfeiture of the subject vessel to the government of such jurisdiction.
Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.
A government could requisition for title or seize one or more of our vessels. Requisition for title occurs when a government takes control
of a vessel and becomes the owner. Also, a government could requisition one or more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates.
Generally, requisitions occur during a period of war or emergency. Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of the payment would be uncertain. Although none of our
vessels have been requisitioned by a government for title or hire, a government requisition of one or more of our vessels could have a material adverse effect on our financial condition and results of operations.
World events outside our control may negatively affect our ability to operate, thereby reducing our revenues and
results of operations or our ability to obtain additional financing, thereby restricting the implementation of our business strategy.
We operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the
continued global trade war between the U.S. and China, current political instability in the Middle East, terrorist or other attacks, war or international hostilities. Terrorist attacks such as the attacks on the United States on September 11, 2001,
and similar attacks that followed, the continuing response to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets and may affect our business, results of operations and
financial condition. The continuing conflicts between Russia and Ukraine, Israel and Hamas and related conflicts in the Middle East, the seizures and attacks on vessels travelling through the Red Sea region, the Gulf of Aden, the Persian Gulf and the
Arabian Sea by the Houthi and Iraq, Iran, Afghanistan, Libya, Egypt, Syria and Palestine may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial
markets. The trade and financial sanctions imposed on Russia due to its invasion in Ukraine, have caused turbulence in the global markets. These uncertainties could also have a material adverse effect on our ability to obtain additional financing on
terms acceptable to us or at all. Terrorist attacks on vessels may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers, including disruptions in the Red Sea in connection with
the conflict between Israel and Hamas. Future terrorist attacks could result in increased volatility and turmoil of the financial markets in the United States of America and globally and could result in an economic recession in the United States of
America or the world. Additionally, any escalations between the North Atlantic Treaty Organization countries and Russia could result in retaliation from Russia that could potentially affect the shipping industry. There may also be long-term adverse
impacts from the COVID-19 pandemic that negatively affect industrial production. In addition, the continued global trade war between the U.S. and China, including the introduction by the U.S. of tariffs on selected imported goods from additional
regions, including the EU, the UK, Canada, Mexico and Vietnam, among others, and the announcement of a reciprocal tariff policy on most foreign imports (which is presently suspended for 90 days until July 9, 2025), may provoke further retaliation
measures from the affected countries which has the potential to impede trade. Any of these occurrences could have a material adverse impact on our financial condition, costs and operating cash flows.
An increase in trade protectionism, the unravelling of multilateral trade agreements and a decrease in
the level of China’s export of goods and import of raw materials could have a material adverse impact on our charterers’ business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.
Our operations expose us to the risk that increased trade protectionism may adversely affect our business. Recently,
government leaders have declared that their countries may turn to trade barriers to protect or revive their domestic industries in the face of foreign imports, thereby depressing the demand for shipping.
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The U.S. government has recently implemented more protective trade measures. There is significant uncertainty about the
future relationship between the United States and China and other exporting countries, such as Canada and Mexico, and the European Union, among others, including with respect to trade policies, treaties, government regulations, and tariffs. For
example, U.S.-China trade tensions, including the introduction by the U.S. government of tariffs affecting certain goods imported by China, has provoked retaliatory trade actions from China, and may provoke additional tariffs or trade restrictions.
Additionally, new tariffs have recently been imposed by the U.S. on imports from the EU, the UK, Canada, Mexico and Vietnam, among other countries, as well as on imports of steel and aluminum and automobiles and auto parts, among other goods. The
U.S. has also announced the imposition of a reciprocal tariff policy on most foreign imports subject to certain specified exclusions, that applied an additional 10% duty against all trading partners beginning on April 5, 2025. Additional
country-specific duties against certain trading partners were initially effective beginning on April 9, 2025, but are now subject to a suspension for 90 days until July 9, 2025 (although additional tariffs against China presently remain in effect).
It is unknown whether and to what extent new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry. If any new tariffs, legislation and/or regulations are implemented, or if
existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the ongoing U.S.-China trade tension, such changes could have an adverse effect on our business, results of operations and
financial condition.
Additionally, the U.S. trade war with China may escalate beyond tariffs. As outlined in the Office of the United States
Trade Representative’s (USTR) Notice of Action issued on April 17, 2025, the United States has also proposed certain phased service fees to be levied against Chinese vessel owners and operators and on certain Chinese-built vessels calling on U.S.
ports, subject to certain exceptions. The Notice of Action also proposes restrictions on services to promote the transport of U.S. goods on U.S. vessels, among other recommendations as outline in the Notice of Action. It remains uncertain whether
and to what extent the USTR’s proposed action will be implemented in whole or part, or the effect that it would have on us or our industry generally.
Furthermore, the government of China has implemented economic policies aimed at increasing domestic consumption of
Chinese-made goods. This may have the effect of reducing the supply of goods available for export and may, in turn, result in a decrease of demand for container shipping. Many of the reforms, particularly some limited price reforms that result in the
prices for certain commodities being principally determined by market forces, are unprecedented or experimental and may be subject to revision, change or abolition.
Restrictions on imports, including in the form of tariffs, could have a major impact on global trade and demand for
shipping. Specifically, increasing trade protectionism in the markets that our charterers serve may cause an increase in (i) the cost of goods exported from exporting countries, (ii) the length of time required to deliver goods from exporting
countries, (iii) the costs of such delivery and (iv) the risks associated with exporting goods. These factors may result in a decrease in the quantity of goods to be shipped. Protectionist developments, or the perception they may occur, may have a
material adverse effect on global economic conditions, and may significantly reduce global trade, including trade between the United States and China. These developments would also have an adverse impact on our charterers’ business, operating results
and financial condition which could, in turn, affect our charterers’ ability to make timely charter hire payments to us and impair our ability to renew charters and grow our business. Any of these developments could have a material adverse effect on
our business, results of operations and financial condition, as well as our cash flows, including cash available for dividends to our stockholders.
Disruptions in world financial markets and the resulting governmental action could have a material adverse impact on
our ability to obtain financing, our results of operations, financial condition and cash flows, and could cause the market price of our common stock to decline.
Europe, the United States and other parts of the world have exhibited weak economic conditions, are exhibiting volatile economic trends or
have been in a recession. For example, during the 2008-2009 crisis, the credit markets in the United States experienced sudden and significant contraction, deleveraging and reduced liquidity, and the United States federal government and state
governments have since implemented a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements.
The SEC, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws. A number of financial
institutions and especially banks that traditionally provide debt to shipping companies like ours had experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. As a
result, access to credit markets around the world has been reduced. The extension of Quantitative Easing (“QE”) and more recently the reversal of it, high levels of Non-Performing Loans (“NPLs”) in Europe and stricter lending requirements may reduce
bank lending capacity and/or make the terms of any lending more onerous.
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We face risks related to changes in economic environments, changes in interest rates, and instability in the banking and securities markets
around the world, among other factors. Major market disruptions and the changes in market conditions and regulatory changes worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future
financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, including proposals to reform the financial system, together with the concurrent
decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, and might cause the price of our common stock on the Nasdaq Capital Market to decline.
In addition, public health threats, such as pandemics and epidemics, influenza and other highly communicable diseases or viruses, outbreaks
of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers.
If there are further disruptions in world financial markets, we may require substantial additional financing to fund acquisitions of
additional vessels and to implement our business plans. Sufficient financing may not be available on terms that are acceptable to us or at all. If we cannot raise the financing we need in a timely manner and on acceptable terms, we may not be able to
acquire the vessels necessary to implement our business plans and consequently we may not be able to pay dividends.
We rely on information technology, and if we are unable to protect against service interruptions, data corruption,
cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.
We rely on information technology networks and systems to process, transmit and store electronic and financial information; to capture
knowledge of our business; to coordinate our business across our operation bases; and to communicate internally and with customers, suppliers, partners and other third-parties. These information technology systems, some of which are managed by our
Manager or by third parties, may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyberattacks, telecommunication failures, user errors or catastrophic events. Our information
technology systems are becoming increasingly integrated, so damage, disruption or shutdown to the system could result in a more widespread impact. Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our
information technology systems and networks, or to steal data, or for ransomeware. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information or alteration
of information in our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and results of operations. If our information technology systems suffer severe damage,
disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted and our business could be negatively affected. In addition, cyber-attacks could lead to potential
unauthorized access and disclosure of confidential information and data loss and corruption. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future. Further, as the methods of cyber-attacks
continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyber-attacks.
Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection with the
ongoing conflict between Russia and Ukraine. It is possible that such attacks could have collateral effects on additional critical infrastructure or financial institutions globally, which could adversely affect our business, operating results and
financial condition. At this time, it is difficult to assess the likelihood of such threat and any potential impact.
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Further, in July 2023, the SEC adopted amendments to its rules on cybersecurity risk management, strategy, governance, and incident
disclosure. The amendments, require us to report material cybersecurity incidents involving our information systems and periodic reporting regarding our policies and procedures to identify and manage cybersecurity risks, among other disclosures
(please refer to Part II, Item 16K “Cybersecurity”). A failure to disclose could result in the imposition of injunctions, fines and other penalties by the SEC. Complying with these obligations could cause us to incur substantial costs and could
increase negative publicity surrounding any cybersecurity incident. Our Manager detected a cybersecurity incident in 2024 which was resolved in an efficient manner. Due to the swift and methodical actions taken by our Manager’s IT systems team,
external security consultants and other relevant stakeholders, the Company determined that there were no material adverse effects on the Company’s business, strategies or financial condition.
The increased number of our shore personnel working remotely might increase our vulnerability to cyber-attacks and risk
of cyber-security breaches which would affect our operations and financial results.
We, and our Manager, have implemented a policy permitting personnel to work remotely when necessary. While adapting to new ways of
operating, employees are encouraged and in certain cases required to operate remotely. When not working at our shore office location, our staff is working remotely, typically, from their private residences. While we have taken measures to ensure
secure communications with our office information systems and systems on-board our vessels, we do not control all of the equipment and communication systems that each of our staff is using at their residence. Consequently, we may face an increased
risk of cyber-security attacks and cyber-security breaches which could impede our ability to manage our operations and affect our financial results.
Seasonal fluctuations could affect our operating results and the amount of available cash with which we service our
debt or could pay dividends.
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. To the
extent we operate vessels in the spot market, this seasonality may result in quarter-to-quarter volatility in our operating results which could affect our ability to continue the payment of dividends to our common shareholders. For example, the
containership market is typically stronger in the spring and fall months following the celebration of Chinese New Year in the first quarter of each year and in anticipation of the increased demand during the year-end holiday season. In addition,
unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality has not materially affected our operating results and the amount of available cash with which we service any future
debt or could pay dividends, because our fleet is currently employed on period time charters, but this seasonality may materially affect our operating results if our vessels are employed in the spot market in the future.
Reliance on suppliers may limit our ability to obtain supplies and services when needed.
We rely on a significant number of third-party suppliers of consumables, spare parts and equipment to operate, maintain, repair and upgrade
our fleet of ships. Delays in delivery or unavailability or poor quality of supplies could result in off-hire days due to consequent delays in the repair and maintenance of our fleet or lead to our time charters being terminated. This would
negatively impact our revenues and cash flows. Cost increases could also negatively impact our future operations.
We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a
material adverse effect on us.
We may be involved in various litigation matters from time to time. These matters may include, among other things, contract disputes,
personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. Although we
intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse
effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition and operating cash flows.
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Company Risk Factors
We depend entirely on Eurobulk to manage and charter our fleet, which may adversely affect our operations if Eurobulk
fails to perform its obligations.
We have no employees and we currently contract the commercial and technical management of our fleet, including crewing, maintenance and
repair, to Eurobulk, our affiliated ship management company. We may lose the Manager’s services or the Manager may fail to perform its obligations to us which could have a material adverse effect on our financial condition and results of our
operations. Although we may have rights against our Manager if it defaults on its obligations to us, you will have no recourse against our Manager. Further, we will need to seek approval from our lenders to change the Manager as our ship manager.
Because the Manager is a privately held company, there is little or no publicly available information about it and
there may be very little advance warning of operational or financial problems experienced by the Manager that may adversely affect us.
The ability of the Manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances
beyond our control could impair the Manager’s financial strength, and because the Manager is privately held it is unlikely that information about its financial strength would become public unless the Manager began to default on its obligations. As a
result, there may be little advance warning of problems affecting the Manager, even though these problems could have a material adverse effect on us.
We may have difficulty properly managing our growth through acquisitions of secondhand vessels and we may not realize
expected benefits from these acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our shareholders.
We intend to grow our business through selective acquisitions of secondhand vessels of older vintage, typically older than twenty years of
age, to the extent that they are available, although we may acquire vessels of any age. Our future growth will primarily depend on:
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the availability of employment for our vessels;
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locating and identifying suitable secondhand vessels;
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obtaining required financing on acceptable terms;
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consummating vessel acquisitions;
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enlarging our customer base;
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hiring additional shore-based employees and seafarers;
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continuing to meet technical and safety performance standards; and
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managing joint ventures or significant acquisitions and integrating the new ships into our fleet.
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Ship values are correlated with charter rates. During periods in which charter rates are high, ship values are generally high as well, and
it may be difficult to consummate ship acquisitions at favorable prices. During periods in which charter rates are low and employment is scarce, ship values are low and any vessel acquired without an attached time charter will automatically incur
additional expenses to operate, insure, maintain and finance the ship, thereby significantly increasing our operating and finance costs. In addition, any vessel acquisition may not be profitable at or after the time of acquisition and may not
generate cash flows sufficient to justify the investment. We may not be successful in executing any future growth plans and we cannot give any assurance that we will not incur significant expenses and losses in connection with such growth efforts.
Other risks associated with vessel acquisitions that may harm our business, financial condition and operating results include the risks that we may:
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fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;
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be unable to hire, train or retain qualified shore-based and seafaring personnel to manage and operate our growing business and fleet;
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decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;
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significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;
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incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired; or
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incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.
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If we fail to properly manage our growth through acquisitions of secondhand vessels we may not realize the expected benefits from these
acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our shareholders. Unlike newbuild vessels, secondhand vessels typically do not carry warranties as to their condition. While we generally inspect
existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for
secondhand vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flows, liquidity and our ability to pay dividends to our shareholders.
Our business depends upon certain members of our senior management who may not necessarily continue to work for us.
Our future success depends to a significant extent upon our Chairman and Chief Executive Officer (“CEO”), Aristides J. Pittas, certain
members of our senior management and our Manager. Mr. Pittas has substantial experience in the container shipping industry and has worked with us and our Manager for many years. He, our Manager and certain members of our senior management team are
crucial to the execution of our business strategies and to the growth and development of our business. If these individuals were no longer to be affiliated with us or our Manager, or if we were to otherwise cease to receive services from them, we may
be unable to recruit other employees with equivalent talent and experience, which could have a material adverse effect on our financial condition and results of operations.
Certain of our shareholders hold shares of Euroholdings in amounts to give them a significant percentage of the total
outstanding voting power represented by our outstanding shares.
As of April 30, 2025, Containers Shareholders Trinity Ltd., or “CST”, Friends Investment Company Inc., or “Friends”, Eurobulk Marine
Holdings Inc., or “EMH”, and Family United Navigation Co., or “Family United”, our largest shareholders and affiliates of the company, partly owned by our Chairman and CEO, Vice Chairman and people affiliated or working with Eurobulk amongst others,
own approximately 57.3% of the outstanding shares of our common stock and unvested incentive award shares, representing 57.3% of total voting power. As a result of this share ownership and for as long as CST, Friends, EMH and Family United own a
significant percentage of our outstanding common stock, CST, Friends, EMH and Family United will be able to influence the outcome of any shareholder vote, including the election of directors, the adoption or amendment of provisions in our amended
and restated articles of incorporation or bylaws, as amended, and possible mergers, corporate control contests and other significant corporate transactions. The interests of CST, Friends, EMH and Family United may be different from your interests.
24
Our corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the
Marshall Islands, and as such we are entitled to exemption from certain Nasdaq corporate governance standards. As a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate
governance requirements.
Our Company’s corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall
Islands. Therefore, we are exempt from many of Nasdaq’s corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance
with Nasdaq corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. For a list of the practices followed by us in lieu of Nasdaq’s corporate governance rules, we refer
you to the section of this annual report entitled “Board Practices—Corporate Governance” under Item 6.C.
We and our principal officers have affiliations with the Manager that could create conflicts of interest detrimental to
us.
Our principal officers are also principals, officers and employees of the Manager, which is our ship management company. These
responsibilities and relationships could create conflicts of interest between us and the Manager. Conflicts may also arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus other vessels that are or
may be managed in the future by the Manager. Circumstances in any of these instances may make one decision advantageous to us but detrimental to the Manager and vice versa. Eurobulk currently manages vessels for Euroseas and Euroholdings, and one
containership vessel that is not owned by Euroseas or Euroholdings, potentially causing conflicts such as those described above. Further, it is possible that in the future Eurobulk may manage additional vessels which will not belong to Euroseas or
Euroholdings and in which the Pittas family may have non-controlling, little or even no power or participation, and Eurobulk may not be able to resolve all conflicts of interest in a manner beneficial to us and our shareholders.
Companies affiliated with Eurobulk or our officers and directors may acquire vessels that compete with our fleet.
Our Parent or companies affiliated with Eurobulk or our officers and directors may acquire additional containership vessels in the future.
These vessels could be in competition with our fleet and other companies affiliated with Eurobulk might be faced with conflicts of interest with respect to their own interests and their obligations to us.
We have received from our Parent the right of first offer under certain conditions with respect to any vessel sales by our Parent of vessels older than
fifteen years of age and a right of first refusal over any employment opportunity for a containership vessel of older than fifteen years age pursuant to a charter presented or available to the Parent with respect to any
vessel owned or chartered in, directly or indirectly, by it.
Our officers do not devote all of their time to our business.
Our officers are involved in other business activities that may result in their spending less time than is appropriate or necessary in
order to manage our business successfully. Our Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Administrative Officer, Investor Relations Officer, Internal Auditor and Secretary are not employed directly by us, but
rather their services are provided pursuant to our Master Management Agreement with Eurobulk. All our corporate officers, except for our Chief Finacial Officer, hold similar positions with our Parent and EuroDry Ltd. (“EuroDry”), a publicly listed
company spun-off from our Parent, Euroseas Ltd., in May 2018, and our CEO is also President of Eurobulk and involved in the management of other affiliates and is a member of the board of other companies. Therefore, our officers may spend a material
portion of their time providing services to other companies. They may also spend a material portion of their time providing services to Eurobulk and its affiliates on matters unrelated to us.
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We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to
satisfy our financial obligations or to make dividend payments.
We are a holding company, and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our
operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments to you depends on our subsidiaries and their ability to distribute funds to us. If we
are unable to obtain funds from our subsidiaries, we may be unable or our Board of Directors may exercise its discretion not to pay dividends.
We may not be able to pay dividends.
The declaration and payment of any dividends will be subject at all times to the discretion of our Board of Directors. The timing and
amount of dividends will depend on our earnings, financial condition, cash requirements and availability, restrictions in any future loan agreements, growth strategy, charter rates in the container shipping industry, the provisions of Marshall
Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the
par value of the shares), but, if there is no surplus, dividends may be declared out of the net profits (basically, the excess of our revenue over our expenses) for the fiscal year in which the dividend is declared or the preceding fiscal year.
Marshall Islands law also prohibits the payment of dividends while a company is insolvent or if it would be rendered insolvent upon the payment of a dividend. As a result, we may not be able to pay dividends.
If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which
would have a material adverse effect on our business and our ability to pay dividends.
In order to fund our capital expenditures, we may be required to incur borrowings or raise capital through the sale of debt or equity
securities. Our ability to access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic
conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures would limit our ability to continue to operate some of our vessels and could have a material adverse
effect on our business, results of operations and financial condition and our ability to pay dividends. Even if we are successful in obtaining such funds through financings, the terms of such financings could further limit our ability to pay
dividends.
We may enter into loan agreements that contain restrictive covenants that may limit our liquidity and corporate
activities.
Even though we currently do not have any loans, we may enter in the future into loan agreements that, typically, impose operating and financial restrictions on us. These restrictions may limit our ability to:
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incur additional indebtedness;
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create liens on our assets;
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sell capital stock of our subsidiaries;
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make investments;
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engage in mergers or acquisitions;
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pay dividends;
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make capital expenditures;
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change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and
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sell our vessels.
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Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. The lenders’ interests may be
different from our interests, and we may not be able to obtain the lenders’ permission when needed. This may prevent us from taking actions that are in our best interest.
Servicing future debt would limit funds available for other purposes.
To finance our fleet, we may incur secured debt under loan agreements for our vessels. In such a case, we must dedicate a portion of our
cash flow from operations to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital expenditures and other purposes. As of December 31, 2024, we did not have any loans. If, in the future, we are
unable to service our debt, it could have a material adverse effect on our financial condition, results of operations and cash flows.
If we enter in the future into loan agreements, a further rise in interest rates could cause an increase in our costs and have a material
adverse effect on our financial condition and results of operations. Historically, to finance vessel purchases, we borrowed, and may continue to borrow, under loan agreements that provide for periodic interest rate adjustments based on indices that
fluctuate with changes in market interest rates. If interest rates increase significantly, it would increase our costs of financing our acquisition of vessels, which could have a material adverse effect on our financial condition and results of
operations. Any increase in debt service would also reduce the funds available to us to purchase other vessels.
Our ability to obtain debt financing may be dependent on the performance of our then existing charters and the
creditworthiness of our charterers.
The actual or perceived credit quality of our charterers, and any defaults by them, may be one of the factors that materially affect our
ability to obtain the debt financing that we will require to purchase additional vessels or may significantly increase our costs of obtaining such financing. We may be unable to obtain debt financing or may be able to obtain debt financing only at a
higher-than-anticipated cost, which may materially affect our results of operations, cash flows and our ability to implement our business strategy.
Credit market volatility may affect our ability to incur debt.
The credit markets have recently experienced extreme volatility and disruption, which has limited credit capacity for certain issuers, and
lenders have requested shorter terms and lower leverage ratios. The market for new debt financing is extremely limited and, in some cases, not available at all. If current levels of market disruption and volatility continue or worsen, we may not be
able to draw new debt, which may require us to seek other funding sources to meet our liquidity needs or to fund planned expansion.
If we enter into new loan agreements in the future, we will be exposed to volatility in SOFR, and we may selectively
enter from time to time into derivative contracts, which can result in higher than market interest rates and charges against our income. Volatility in SOFR could affect our profitability, earnings and cash flow.
Any future indebtedness we may enter into will accrue interest based on SOFR, which is volatile. SOFR is a broad measure of the cost of
borrowing cash in the overnight U.S. treasury repo market. Our obligations under our credit facilities which accrued interest based on SOFR were fully repaid by March 2024 and as of April 30, 2025 we had no such obligations.
If we enter into new loan agreements, in order to manage our exposure to interest rate fluctuations under SOFR, we may use interest rate
derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments may effectively protect us from adverse interest rate movements. The use of interest rate
derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position.
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As we expand our business, our Manager may need to upgrade our operations and financial systems, and add more staff and
crew. If we cannot upgrade these systems or recruit suitable employees, our performance may be adversely affected.
Our Manager’s current operating and financial systems may not be adequate if we expand the size of our fleet, and our attempts to improve
those systems may be ineffective. In addition, if we expand our fleet, we will have to rely on our Manager to recruit suitable additional seafarers and shore-side administrative and management personnel. Our Manager may not be able to continue to
hire suitable employees as we expand our fleet. If our Manager’s affiliated crewing agent encounters business or financial difficulties, we can make satisfactory arrangements with unaffiliated crewing agents or else we may not be able to adequately
staff our vessels. If we are unable to operate our financial and operations systems effectively or to recruit suitable employees, our performance may be materially adversely affected.
If we acquire additional ships on the secondhand market and those vessels are not delivered on time, our earnings and
financial condition could be adversely affected.
We expect to acquire additional vessels in the future from the secondhand markets. The delivery of any vessels we might decide to acquire
could be delayed or certain events may arise which could result in us not taking delivery of a vessel, such as a total loss of a vessel, a constructive loss of a vessel or substantial damage to a vessel prior to delivery. A delay in the delivery of
any of these vessels to us or the failure of the contract counterparty to deliver a vessel at all could cause us to breach our obligations under a related time charter and could adversely affect our earnings, our financial condition and the amount of
dividends, if any, that we pay in the future.
We may acquire vessels in other shipping segments in which we have limited operating experience.
Although our initial fleet is in the containership feeder segment, we might expand not only by purchasing additional containership vessels
but also by acquiring vessels in other shipping segments. We expect to operate such vessels through Eurobulk, which has expertise in operating containership, drybulk or other dry cargo vessels, or through other managers with expertise in the relevant
segment as appropriate. If we acquire other vessels in which Eurobulk has less expertise or engage other managers with whom we have no current relationships we might experience less efficient operation of such ships which could adversely affect our
earnings, our financial condition and the amount of dividends, if any, that we pay in the future.
We may not be able to acquire additional vessels.
We might not be able to acquire additional vessels to grow our fleet for a variety of reasons including lack of finding suitable candidates
at prices that we consider worth investing, lack of funds, inability to raise debt amongst others. If we fail to acquire vessels, we will not have any income after our existing vessels, both of which are older than 25 years, are sold or scrapped
which would adversely affect our financial condition and the amount of dividends, if any, that we pay in the future.
Labor interruptions could disrupt our business.
Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective
manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay
dividends.
We or our Manager may be unable to attract and retain key management personnel and other employees in the shipping
industry, which may negatively affect the effectiveness of our management and our results of operations.
Our success depends to a significant extent upon the abilities and efforts of our management team. Our success will depend upon our and our
Manager’s ability to hire additional employees and to retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition and operating cash flows. Difficulty in hiring
and retaining personnel could adversely affect our results of operations. We do not currently intend to maintain “key man” life insurance on any of our officers.
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Risks involved with operating ocean-going vessels could affect our business and reputation, which may reduce our
revenues.
The operation of an ocean-going vessel carries inherent risks. These risks include, among others, the possibility of:
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marine disaster;
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piracy;
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environmental accidents;
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grounding, fire, explosions and collisions;
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cargo and property losses or damage;
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business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes, adverse weather
conditions, natural disasters or other disasters outside our control, such as any future pandemics and epidemics; and
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work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts.
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Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo,
loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. Any of these circumstances or
events could increase our costs or lower our revenues, which could result in reduction in the market price of our shares of common stock. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable
vessel owner and operator.
The operation of containerships has certain unique operational risks which could affect our business, financial
condition, results of operations and ability to pay dividends.
The operation of certain ship types, such as containerships, has certain unique risks. Containerships operate at higher speeds as compared
to other ocean-going vessels in order to move cargoes around the world quickly and minimize delivery delays. These high speeds can result in greater impact in collisions and groundings resulting in more damage to the vessel when compared to vessels
operating at lower speeds. In addition, due to the placement of the containers on a containership, there is a greater risk that containers carried on deck will be lost overboard if an accident does occur. Furthermore, with the highly varied cargo
that can be carried on a single containership, there can be additional difficulties with any clean-up operation following an accident. Also, we may not be able to correctly control the contents and condition of cargoes within the containers which may
give rise to events such as customer complaints, accidents on-board the ships or problems with authorities due to carriage of illegal cargoes. Any of these circumstances or events could negatively impact our business, financial condition, results of
operations and ability to pay dividends. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.
Our vessels may suffer damage and may face unexpected drydocking costs, which could affect our cash flows and financial
condition.
If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may
be substantial. We may have to pay drydocking costs that our insurance does not cover. The loss of earnings while these vessels are being repaired and reconditioned, as well as the actual cost of these repairs, would decrease our earnings. In
addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility
that is not conveniently located near our vessels’ positions. The loss of earnings and any costs incurred while these vessels are forced to wait for space or to travel to more distant drydocking facilities would decrease our earnings.
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Purchasing and operating previously owned vessels may result in increased operating costs and vessels off-hire, which
could adversely affect our earnings. The aging of our fleet may result in increased operating costs in the future, which could adversely affect our results of operations.
Although we inspect the secondhand vessels prior to purchase, this inspection does not provide us with the same knowledge about their
condition and cost of any required (or anticipated) repairs that it would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties on secondhand vessels.
In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of April 30, 2025, the
vessels in our fleet had an average age of approximately 26.7 years. As our vessels age, they may become less fuel efficient and more costly to maintain and will not be as advanced as more recently constructed vessels due to improvements in design
and engine technology. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of
vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions may not justify those expenditures or
enable us to operate our vessels profitably during the remainder of their useful lives.
If we sell vessels, we are not certain that the price for which we sell them will equal their carrying amount at that time.
Unless we set aside reserves for vessel replacement, at the end of a vessel’s useful life, our revenue will decline,
which would adversely affect our cash flows and income.
As of April 30, 2025, the vessels in our fleet had an average age of approximately 26.7 years. We currently do not maintain cash reserves
for vessel replacement. Unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. Typically, we estimate the initial life of our vessels to be 25 years
from the completion of their construction which in the case of our current fleet, has already been exceeded. Thus, we expect their revised life to be up to their next drydocking typically during their 28th year of age which will be further assessed
at the completion of such period based on the Company’s intentions of future use of each vessel. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our
fleet upon the expiration of their useful lives, our business, financial condition and results of operations may be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.
Scrap price per lightweight ton is volatile which could affect the price we get when we decide to sell our vessels for
scrap.
The scrap price of vessels, expressed per lightweight ton, has fluctuated significantly. Since 2012, Bangladesh-based prices, for example,
for feeder vessels like those in our fleet have ranged from about $250/lightweight ton in February 2016 to about $650/lightweight ton in March 2023, and they stood, as of the end of March 2025 at about $475/lightweight ton. Prices also vary by the
place where scrapping takes place with prices in Bangladesh being typically higher than those in India or Pakistan. If scrap prices are low when we decide to scrap our ships it could adversely affect our earnings, our financial condition and the
amount of dividends, if any, that we pay in the future.
Environmental requirements related to the scrapping of vessels could decrease our net sale proceeds when we decide to
sell our vessels for scrap.
Increased requirements about environmentally friendly scrapping of vessels could make it more difficult for us to find buyers for our
vessels when we decide to scrap them. As a result, we might have to accept a lower price per lightweight ton and incur additional expenses which could adversely affect our earnings, our financial condition and the amount of dividends, if any, that we
pay in the future.
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Technological innovation could reduce our charter income and affect the demand and the value of our vessels.
The charter rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency,
operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and
straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or have longer physical
lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels and the resale value of our vessels could significantly decrease. Similarly,
technologically advanced vessels are needed to comply with environmental laws, the investment in which, along with the foregoing, could have a material adverse effect on our results of operations. As a result, our available cash could be adversely
affected.
Developments in technology could also affect global trade flows and supply chains causing disruptions in the demand for our vessels.
Decreasing the cost of labor through automation and digitization and increasing the consumers power to demand goods, technology is changing the business models and production of goods in many industries. Consequently, supply chains are being pulled
closer to the end-customer and are required to be more responsive to changing demand patterns. As a result, fewer intermediate and raw inputs are traded, which could lead to a decrease in shipping activity. If automation and digitization become more
commercially viable and/or production becomes more regional or local, total containerized trade volumes would decrease, which would adversely affect demand for our services. Supply chain disruptions caused by geopolitical events, rising tariff
barriers and environmental concerns may also accelerate these trends.
A decrease in spot charter rates may provide an incentive for some charterers to default on their charters.
We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to
meet their obligations could cause us to suffer losses or otherwise adversely affect our business.
We enter into, among other things, charter-party agreements. When we enter into a time charter, charter rates under that charter are fixed
for the term of the charter. Such agreements subject us to counterparty risks. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our
control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various
expenses. If the spot charter rates or short-term time charter rates in the containership shipping industry remain significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing
charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. In addition, in depressed market conditions, our charterers may no longer need a vessel that is currently under charter or may be able to
obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their obligations under those contracts, especially when the contracted charter rates are significantly
above market levels. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot
market or on time charters may be at lower rates given currently decreased charter rate levels. As a result, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations
and cash flows, as well as our ability to pay dividends in the future and compliance with covenants in our credit facilities.
We may not have adequate insurance to compensate us adequately for damage to, or loss of, our vessels.
We procure insurance for our fleet against risks commonly insured by vessel owners and operators which includes hull and machinery
insurance, protection and indemnity insurance (which, in turn, includes environmental damage and pollution insurance) and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally maintain insurance against loss of
hire which covers business interruptions that result in the loss of use of a vessel in cases we consider such protection appropriate. We may not be adequately insured against all risks and we may not be able to obtain adequate insurance coverage for
our fleet in the future. The insurers may not pay particular claims. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Our insurance policies contain
deductibles for which we will be responsible and limitations and exclusions which may increase our costs. Since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Moreover, the
insurers may default on any claims they are required to pay. If our insurance is not enough to cover claims that may arise, it may have a material adverse effect on our financial condition, results of operations and cash flows. Additionally, our
insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations.
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Because we obtain some of our insurance through protection and indemnity associations (“P&I Associations”), we may also be subject to calls in amounts based not only on our own claim records, but also the claim records of
other members of the P&I Associations.
We are indemnified for legal liabilities incurred while operating our vessels through membership in P&I Associations or clubs. P&I
Associations are mutual insurance associations whose members must contribute to cover losses sustained by other association members. The objective of a P&I Association is to provide mutual insurance based on the aggregate tonnage of a member’s
vessels entered into the association. Claims are paid through the aggregate premiums of all members of the association, although members remain subject to calls for additional funds if the aggregate premiums are insufficient to cover claims submitted
to the association. We cannot assure you that the P&I Association to which we belong will remain viable or that we will not become subject to additional funding calls which could adversely affect us. Claims submitted to the association may
include those incurred by members of the association as well as claims submitted to the association from other P&I Associations with which our P&I Association has entered into inter-association agreements.
We may be subject to calls in amounts based not only on our claim records but also the claim records of other members of the protection and
indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our
business, results of operations, cash flows, financial condition and ability to pay dividends.
Our vessels are exposed to operational risks, including terrorism, cyber-terrorism and piracy that may not be
adequately covered by our insurance.
The operation of any vessel includes risks such as weather conditions, mechanical failure, collision, fire, contact with floating objects,
cargo or property loss or damage and business interruption due to political circumstances in countries, piracy, terrorist and cyber-terrorist attacks, armed hostilities and labor strikes. Such occurrences could result in death or injury to persons,
loss, damage or destruction of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates
and damage to our reputation and customer relationships generally.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean
and in the Gulf of Aden off the coast of Somalia. The frequency of sea piracy worldwide has generally decreased since 2013. Sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Sulu
Sea and the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our vessels.
If these piracy attacks occur in regions in which our vessels are deployed that insurers characterized as “war risk” zones or Joint War
Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including the employment of onboard security guards, could
increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter-hire until the vessel is released. A charterer may
also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents,
which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact
on our business, financial condition and earnings.
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We may not be adequately insured against all risks, and our insurers may not pay particular claims. With respect to war risks insurance,
which we usually obtain for certain of our vessels making port calls in designated war zone areas, such insurance may not be obtained prior to one of our vessels entering into an actual war zone, which could result in that vessel not being insured.
Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Under the terms of our credit facilities, we will be subject to restrictions on the use of any proceeds
we may receive from claims under our insurance policies. Furthermore, in the future, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts
based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain
deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs in the event of a claim or decrease any recovery in the event of a loss. If the damages from a catastrophic
oil spill or other marine disaster exceeded our insurance coverage, the payment of those damages could have a material adverse effect on our business and could possibly result in our insolvency.
Recent action by the IMO’s Maritime Safety Committee and U.S. agencies indicate that cybersecurity regulations for the maritime industry
are likely to be further developed in the near future in an attempt to combat cybersecurity threats. This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital
expenditures. However, the impact of such regulations is hard to predict at this time. We do not carry cyber-attack insurance, which could have a material adverse effect on our business, financial condition and results of operations.
We occasionally carry loss of hire insurance when our vessels are trading in areas where a history of piracy has been reported. Loss of
hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking or unscheduled repairs due to damage to the vessel. Accordingly, any loss of a vessel or any extended period
of vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, financial condition and results of operations.
If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed
by the U.S. government, the United Kingdom, the European Union, the United Nations, or other governmental authorities, or engage in other such transactions or dealings that would be violative of applicable sanctions, it could lead to monetary fines
or other penalties and/or adversely affect our reputation and the market for our shares of common stock and its trading price.
Although we intend to maintain compliance with all applicable sanctions and embargo laws, and we endeavor to take precautions reasonably
designed to mitigate such risks, it is possible that, in the future, vessels in our fleet may call on ports located in countries or territories that are the subject of country-wide or territory-wide comprehensive sanctions or embargoes imposed by the
U.S. government or other applicable governmental authorities (“Sanctioned Jurisdictions”) on charterers’ instructions and/or without our consent in violation of applicable sanctions laws. If such activities result in a violation of applicable
sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our common stock could be adversely affected.
Beginning in February 2022, in response to the ongoing conflict in Ukraine, the United States, the United Kingdom, and the European Union,
among other countries, announced various economic sanctions against Russia. The ongoing conflict could result in the imposition of further economic sanctions or new categories of export restrictions against individuals or entities in or connected to
Russia. The United States has issued several Executive Orders that prohibit certain transactions related to Russia, including prohibiting the import of certain Russian energy products into the United States (including crude oil, petroleum, petroleum
fuels, oils, liquefied natural gas and coal), and all new investments in Russia by U.S. persons, among other prohibitions and export controls, and has issued numerous determinations authorizing the imposition of sanctions on persons who operate or
have operated in the energy, metals and mining, and marine sectors of the Russian Federation economy, among others. Increased restrictions on these sectors, or the expansion of sanctions to new sectors, may pose additional risks that could adversely
affect our business and operations. While in general much uncertainty remains regarding the global impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business, financial condition, results of
operation and cash flows.
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Furthermore, the United States, in conjunction with the G7, have implemented a Russian petroleum “price cap policy” which prohibits a
variety of specified services related to the maritime transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing, shipping, insurance (including reinsurance and protection and
indemnity), flagging, and customs brokering. Further, effective as of February 27, 2025, the United States has also prohibited the provision of petroleum services by U.S. persons to persons located in Russia. Due to their nature, the Company’s
vessels do not transport any crude oil, petroleum products, or provide petroleum services. Although these sanctions do not presently apply to the maritime transport of containerized cargoes transported by our vessels, the expansion of such sanctions
could adversely affect our business.
Our business could also be adversely impacted by trade tariffs, trade embargoes or other economic sanctions that limit trading activities
between the United States or other countries and countries in the Middle East, Asia or elsewhere as a result of terrorist attacks, hostilities or diplomatic or political pressures, including as a result of ongoing tensions involving Russia, Iran, and
China, and the current conflicts between Russia and Ukraine and in the Middle East.
Governments may also turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping
demand. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods and (c) the risks associated with exporting goods. Such increases may
significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results and financial condition and could thereby
affect their ability to make timely charter hire payments to us and to renew and increase the number of their charters with us. This could have a material adverse effect on our business, results of operations or financial condition.
In particular, leaders in the United States have indicated the United States may seek to implement more protective trade measures. There is
significant uncertainty about the future relationship between the United States and China and other exporting countries, such as Canada and Mexico, among others, including with respect to trade policies, treaties, government regulations, and tariffs.
Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade.
Applicable sanctions and embargo laws and regulations vary in their application, and by jurisdiction, as they do not all apply to the same
covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time, and the lists of persons and entities designated under these laws and regulations are amended frequently.
Moreover, many sanctions regimes, including the United States, provide that entities owned by the persons or entities designated in such lists are also subject to sanctions. The U.S., U.K., and EU have enacted new sanctions programs in recent years.
Additional countries or territories, as well as additional persons or entities within or affiliated with those countries or territories, have, and in the future will, become the target of sanctions. These require us to be diligent in ensuring our
compliance with sanctions laws. Further, the U.S. has increased its focus on sanctions enforcement with respect to the shipping sector. Current or future counterparties of ours, including charterers, may be affiliated with persons or entities that
are or may be in the future the subject of sanctions or embargoes imposed by the U.S. government, the U.K., the EU, and/or other international bodies. If we determine that such sanctions or embargoes require us to terminate existing or future
contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected, we could face monetary fines or penalties, or we may suffer reputational
harm.
In addition, if we become a casualty in a Sanctioned Jurisdiction our underwriters may not provide required security, which could lead to
the detention and subsequent loss of our vessel and the imprisonment of our crew, and our insurance policies may not cover the costs and losses associated with the incident. Further, our lenders may determine that any non-compliance with applicable
sanctions and embargoes imposed by the United Kingdom, the European Union, the United Nations, or the United States constitutes an event of default under current or future debt facility agreements. An event of default may lead to an acceleration of
the repayment of debt under the facility in question and, due to the cross-default provisions, under all other facilities as well, which could have a material adverse effect on our future performance, results of operations, cash flows and financial
position, and could lead to bankruptcy or other insolvency proceedings.
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All of the Company’s revenues are from chartering-out its vessels on voyage or time charter contracts. The Company’s vessels can also enter into pooling
arrangements under which an international company and trading house involved in the use and/or transportation of commodities directs the Company’s vessel to carry cargoes on its behalf. Under time charters and pooling arrangements, the Company has no
contractual relationship with the owner of the cargo, based solely on the instructions of the charterer. The vessel is directed to a load port to load the cargo, and to a discharge port to offload the cargo, based solely on the instructions of the
charterer.
Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations in 2024, and intend to
maintain such compliance, there can be no assurance that we will be in compliance with all applicable sanctions and embargo laws and regulations in the future, particularly as the scope of certain laws may be unclear and may be subject to changing
interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to
divest their interest, or not to invest, in us. For example, certain investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries or territories identified by the
U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate
applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may
be adversely affected if, for example, we enter into charters with individuals or entities who, pursuant to contracts with third parties, provide services to or engage in operations associated with countries or
territories subject to U.S. sanctions or embargoes. Investor perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in the countries or
territories that we operate in.
As a result of sanctions arising from the Russian invasion of Ukraine, the ability to make payments to accounts at
certain Russian banks may be limited, which could affect our ability to pay the wages of any crew members or consultants who hold such accounts.
As a result of sanctions arising from the Russian invasion of Ukraine, our ability to make payments to accounts at certain Russian banks
may be limited. Currently our vessels have only a small number of Ukrainian crew members. Although wage payments have not been affected by this issue as of April 30, 2025, continuing or additional sanctions may
affect our ability to pay the wages of any crew members or consultants who hold such accounts, which could adversely impact our operations.
We expect to operate substantially outside the United States, which will expose us to political and governmental
instability, which could harm our operations.
We expect that our operations will be primarily conducted outside the United States and may be adversely affected by changing or adverse
political and governmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with the operation of our vessels, which
could harm our business, financial condition and results of operations. Past political efforts to disrupt shipping in these regions, particularly in the Arabian Gulf, have included attacks on ships and mining of waterways. In addition, terrorist
attacks outside this region, such as the attacks that occurred against targets in the United States on September 11, 2001 and on a number of occasions in other countries following that, as well as continuing or new unrest and hostilities in Iraq,
Iran, Afghanistan, Libya, Egypt, Ukraine, Syria, Gaza and elsewhere in the world, may lead to additional armed conflicts or to further acts of terrorism and civil disturbance. Any such attacks or disturbances may disrupt our business, increase vessel
operating costs, including insurance costs, and adversely affect our financial condition and results of operations. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic
sanctions or a disruption of or limit to trading activities or other adverse events or circumstances in or affecting the countries and regions where we operate or where we may operate in the future.
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The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.
We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in countries around the world.
Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could apply. If we become a debtor
under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a
debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S.
bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.
We are an “emerging growth company” and we cannot be certain that the reduced disclosure and other requirements applicable to emerging
growth companies will not make our common shares less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions.
If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control
over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) for so long as we are an emerging growth company.
For as long as we take advantage of the reduced reporting obligations, the information that we provide our shareholders may be different
from information provided by other public companies.
As a “foreign private issuer” under the rules and regulations of the SEC, the Company is permitted to, and may, file
less or different information with the SEC than a company incorporated in the United States or otherwise not filing as a “foreign private issuer,” and may follow certain home country corporate governance practices in lieu of certain NASDAQ
requirements applicable to U.S. issuers, even if the Company no longer qualifies as an “emerging growth company”.
Since the consummation of the Spin-Off, the Company is a “foreign private issuer” under the Exchange Act and therefore is exempt from
certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover, the
Company is not required to file periodic reports and financial statements with the SEC as frequently or within the same timeframes as U.S. companies with securities registered under the Exchange Act.
In addition, as a “foreign private issuer” whose shares are listed on the NASDAQ, the Company is permitted, subject to certain exceptions,
to follow certain home country rules in lieu of certain NASDAQ listing requirements. A foreign private issuer must disclose in its annual reports filed with the SEC each NASDAQ requirement with which it does not comply, followed by a description of
its applicable home country practice. The Company has the option to rely on available exemptions under the NASDAQ listing rules that allow it to follow its home country practice, including, among other things, the ability to opt out of (i) the
requirement that the Company’s Board of Directors be comprised of a majority of independent directors, (ii) the requirement that the Board of Director’s independent directors meet regularly in executive sessions and (iii) the requirement that Board
of Directors obtain shareholder approval prior to the issuance of securities in connection with certain acquisitions, private placements of securities, or the establishment or amendment of certain share option, purchase or other compensation plans.
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Additionally, the Company is an “emerging growth company”. As such, since the consummation of the Spin-Off, the Company may take advantage
of exemptions from certain reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies until the earliest of (a) the last day of its fiscal year following the fifth anniversary of the completion
of this offering, (b) the last date of the Company’s fiscal year in which the Company has total annual gross revenue of at least $1.235 billion, (c) the date on which the Company is deemed to be a “large accelerated filer” under the rules of the SEC
with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the previous three years.
These exemptions include:
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not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
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not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the
auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
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not being required to submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency” and
“say-on-golden parachutes;” and
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not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the chief executive officer’s compensation to median employee compensation.
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Even if the Company no longer qualifies as an emerging growth company, as long as the Company continues to qualify as a foreign private
issuer under the Exchange Act, the Company will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the
Exchange Act;
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the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders
who profit from trades made in a short period of time; and
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific
information or current reports on Form 8-K upon the occurrence of specified significant events.
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Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure
rules. Thus, even if the Company no longer qualifies as an emerging growth company, but remains a foreign private issuer, the Company will continue to be exempt from the more stringent compensation disclosures required of companies that are neither
an emerging growth company nor a foreign private issuer.
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Obligations associated with being a public company require significant company resources and management attention.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the other rules
and regulations of the SEC, including the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). Section 404 of Sarbanes-Oxley requires that we evaluate and determine the effectiveness of our internal control over financial reporting.
We work with our legal, accounting and financial advisors to identify any areas in which changes should be made to our financial and
management control systems to manage our growth and our obligations as a public company. We evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting
systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow us to satisfy our
obligations as a public company on a timely and reliable basis. In addition, compliance with reporting and other requirements applicable to public companies do create additional costs for us and will require the time and attention of management. Our
limited management resources may exacerbate the difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. We may not be able to predict or estimate the amount of the additional costs we
may incur, the timing of such costs or the degree of impact that our management’s attention to these matters will have on our business.
Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.
We generate all our revenues in U.S. dollars, but we incur approximately 20% of our vessel operating expenses and drydocking expenses, all
of our vessel management fees, and approximately 7% in 2024 of our general and administrative expenses in currencies other than the U.S. dollar. This could lead to fluctuations in our operating expenses, which would affect our financial results.
Expenses incurred in foreign currencies increase when the value of the U.S. dollar falls, which would reduce our profitability and cash flows.
We depend upon a few significant customers for a large part of our revenues and the loss of one or more of these
customers could adversely affect our financial performance.
We have historically derived a significant part of our revenues from a small number of charterers. During 2024, 2023, and 2022,
approximately 78%, 86%, and 62%, respectively, of our revenues were derived from our top two charterers. The ability of each of our counterparties to perform their obligations under a charter with us depends on a number of factors that are beyond our
control and may include, among other things, general economic conditions, the conditions of the shipping industry, prevailing prices for the commodities and products which we transport and the overall financial condition of the counterparty. If one
or more of our charterers chooses not to charter our vessels or is unable to perform under one or more charters with us and we are not able to find a replacement charter, we could suffer a loss of revenues that could adversely affect our financial
condition and results of operations.
United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United
States federal income tax consequences to United States holders.
A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if
either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive
income”. For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in
connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States shareholders of a PFIC are subject to a disadvantageous United
States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. In addition, United States
shareholders of a PFIC are required to file annual information returns with the United States Internal Revenue Service, or IRS.
Based on our current method of operation, we do not believe that we have been, are or will be a PFIC with respect to any taxable year. In
this regard, we treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities should not
constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passive assets.
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There is substantial legal authority supporting this position consisting of case law and IRS pronouncements concerning the characterization
of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for
other tax purposes. Accordingly, in the absence of legal authority directly relating to PFIC rules, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could
determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations changed.
If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United
States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or the Code, (which election could itself have adverse consequences
for such shareholders, as discussed in Item 10 of this Annual Report under “Taxation — United States Federal Income Taxation of U.S. Holders”), such shareholders would be subject to United States federal income tax at the then prevailing income tax
rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our shares, as if the excess distribution or gain had been recognized ratably over the United States shareholder’s holding period of our
shares. See “Taxation — United States Federal Income Taxation of U.S. Holders” in this Annual Report under Item 10 for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are
treated as a PFIC.
Based on the current and expected composition of our and our subsidiaries’ assets and income, it is not anticipated that we will be treated
as a PFIC. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurances regarding our status as a PFIC for the current taxable year or any future
taxable year. See the discussion in the section entitled “Item 10.E. Taxation — Passive Foreign Investment Company Status and Significant Tax Consequences”. We urge U.S. Holders to consult with their own tax advisors regarding the possible
application of the PFIC rules.
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay, results
of operations and financial results.
We are subject to income and other taxes in the United States and foreign jurisdictions, and our results of operations and financial
results may be affected by tax and other initiatives around the world. For instance, there is a high level of uncertainty in today’s tax environment stemming from global initiatives put forth by the OECD two-pillar base erosion and profit shifting
project. In October 2021, members of the OECD put forth two proposals: (i) Pillar One reallocates profit to the market jurisdictions where sales arise versus physical presence; and (ii) Pillar Two compels multinational corporations with €750 million
or more in annual revenue to pay a global minimum tax of 15% on income received in each country in which they operate. The reforms aim to level the playing field between countries by discouraging them from reducing their corporate income taxes to
attract foreign business investment. Over 140 countries agreed to enact the two-pillar solution to address the challenges arising from the digitalization of the economy and, in 2024, these guidelines were declared effective and must now be enacted by
those OECD member countries. It is possible that these guidelines, including the global minimum corporate tax rate measure of 15%, could increase the burden and costs of our tax compliance, the amount of taxes we incur in those jurisdictions and our
global effective tax rate, which could have a material adverse impact on our results of operations and financial results.
As a Marshall Islands corporation and with some of our subsidiaries being Marshall Islands entities and also
having subsidiaries in other offshore jurisdictions, our operations may be subject to economic substance requirements,
which could impact our business.
We are a Marshall Islands corporation and some of our subsidiaries are Marshall Islands entities. The Marshall Islands has enacted economic
substance laws and regulations with which we may be obligated to comply. We believe that we and our subsidiaries are compliant with the Marshall Islands economic substance requirements. However, if there were a change in the requirements or
interpretation thereof, or if there were an unexpected change to our operations, any such change could result in noncompliance with the economic substance legislation and related fines or other penalties, increased monitoring and audits, and
dissolution of the non-compliant entity, which could have an adverse effect on our business, financial condition or operating results.
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EU Finance ministers rate jurisdictions for tax rates and tax transparency, governance and real economic activity. Countries that are
viewed by such finance ministers as not adequately cooperating, including by not implementing sufficient standards in respect of the foregoing, may be put on a “grey list” or a “blacklist”. Effective October 23, 2023 the Marshall Islands has been
designated as a cooperating jurisdiction for tax purposes. If the Marshall Islands is added to the list of non-cooperative jurisdictions in the future and sanctions or other financial, tax or regulatory measures were applied by European Member States
to countries on the list or further economic substance requirements were imposed by the Marshall Islands, our business could be harmed.
If management is unable to provide reports as to the effectiveness of our internal control over financial reporting,
investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.
Under Section 404 of Sarbanes-Oxley, we are required to include in each of our annual reports on Form 20-F a report containing our
management’s assessment of the effectiveness of our internal control over financial reporting. If, in such annual reports on Form 20-F, our management cannot provide a report as to the effectiveness of our internal control over financial reporting as
required by Section 404, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.
We may have to pay tax on United States source income, which would reduce our earnings.
Under Section 883 of the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as us and our
subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation
qualifies for exemption from tax under Section 883 of the Code, or Section 883, and the applicable Treasury Regulations promulgated thereunder.
We intend to take the position that we qualified for this statutory tax exemption for United States federal income tax return reporting
purposes for our 2024 taxable year and we intend to so qualify for future taxable years. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for any future taxable year and thereby
become subject to United States federal income tax on our U.S.-source shipping income. For example, in certain circumstances we may no longer qualify for exemption under Section 883 for a particular taxable year if shareholders, other than “qualified
shareholders”, with a five percent or greater interest in our common shares owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year. Due to the factual nature of the issues involved,
there can be no assurances on our tax-exempt status. In addition, we may fail to qualify if our common stock comes to represent 50% or less of the value or outstanding voting power of our stock.
If we are not entitled to exemption under Section 883 for any taxable year, we would be subject for those years to an effective 2% United
States federal income tax on the shipping income we derive during the year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would result
in decreased earnings available for distribution to our shareholders.
Failure to comply with the U.S. Foreign Corrupt Practices Act (FCPA) could result in fines, criminal penalties, and an
adverse effect on our business.
We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are
committed to doing business in accordance with applicable anti-corruption laws, and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977. We are subject,
however, to the risk that we, our affiliated entities or respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws. Any such violation could result in substantial fines,
sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our
reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and time- and attention-consuming for our senior management.
40
It may be difficult to enforce service of process and enforcement of judgments against us and our officers and directors.
We are a Marshall Islands corporation, and our subsidiaries are incorporated in jurisdictions outside of the United States. Our executive
offices are located outside of the United States in Maroussi, Greece. A majority of our directors and officers reside outside of the United States, and a substantial portion of our assets and the assets of our officers and directors are located
outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside of the United States, judgments you may
obtain in the U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws.
There is also substantial doubt that the courts of the Marshall Islands, Greece or jurisdictions in which our subsidiaries are organized
would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. In addition, the protection afforded minority shareholders in the Marshall Islands is different than those offered in the United
States.
Risk Factors Relating To Our Common Stock
The trading volume for our common stock has been low, which may cause our common stock to trade at lower prices and
make it difficult for you to sell your common stock.
Although our shares of common stock have traded on the Nasdaq Global Market since March 18, 2025, the trading volume has been low. Such
limited liquidity may cause our common stock to trade at lower prices and make it difficult to sell your common stock.
The market price of our common stock has recently been volatile and may continue to be volatile in the future, and as a
result, investors in our common stock could incur substantial losses on any investment in our common stock.
The market price of our common stock has been and may in the future be subject to significant fluctuations as a result of many factors,
some of which are beyond our control.
Among the factors that have in the past and could in the future affect our stock price are:
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actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;
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changes in market valuations or sales or earnings estimates or publication of research reports by analysts;
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changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts;
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speculation in the press or investment community about our business or the shipping industry;
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changes in market valuations of similar companies and stock market price and volume fluctuations generally;
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payment of dividends;
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strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings;
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changes in government and other regulatory developments;
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41
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additions or departures of key personnel;
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general market conditions and the state of the securities markets; and
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domestic and international economic, market and currency factors unrelated to our performance.
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The international container shipping industry has been highly unpredictable. In addition, the stock markets in general, and the markets for
container shipping and shipping stocks in general, have experienced extreme volatility that has sometimes been unrelated or disproportionate to the operating performance of particular companies. In addition, the COVID-19 pandemic caused broad stock
market and industry fluctuations. These broad market fluctuations may adversely affect the trading price of our common stock. As a result of this volatility, our shares may trade at prices lower than you originally paid for such shares and you may
incur substantial losses on your investment in our common stock.
Investors may purchase our common stock to hedge existing exposure or to speculate on the price of our common stock. Speculation on the
price of our common stock may involve long and short exposures. To the extent an aggregate short exposure in our common stock becomes significant, investors with short exposure may have to pay a premium to purchase common stock for delivery to common
stock lenders at times if and when the price of our common stock increases significantly, particularly over a short period of time. Those purchases may in turn, dramatically increase the price of our common stock. This is often referred to as a
“short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to our business prospects, operating performance, financial condition or other traditional measures of value for the Company
or our common stock.
If our common stock does not meet the Nasdaq Capital Market’s minimum share price requirement, and if we cannot cure such deficiency within the prescribed timeframe, our common stock could be delisted.
Under the rules of Nasdaq, listed companies are required to maintain a share price of at least $1.00 per share. Under new rules recently
implemented by Nasdaq and approved by the SEC in October 2024, if a company’s share price declines below $1.00 for a period of 30 consecutive trading days, there will be an immediate initiation of delisting procedures if the company fails to regain
compliance with the minimum bid price requirement following the second compliance period granted under Nasdaq’s listing rules, with a maximum of 360 days to regain compliance. In addition, a company that does not meet the minimum bid price
requirement and has conducted a reverse stock split, at any ratio, in the prior year will also be subject to immediate initiation of delisting procedures. The new rules also eliminate a company’s ability to trade while appealing a delisting
determination.
We have not completed a reverse stock split within the past year. However, if the price of our common stock closes below $1.00 for 30
consecutive days, and if we cannot cure that deficiency within the required timeframe, or if we complete a reverse stock split in the future and thereafter lose compliance with the minimum price requirement, then Nasdaq could initiate delisting
procedures for our common stock and our stock will not be tradeable during our appeal of a delisting determination.
We expect to be a “controlled company” under Nasdaq corporate governance rules and we may be exempt from certain
corporate governance requirements that could adversely affect our public shareholders.
Since members of the Pittas family directly or indirectly hold of a majority of the voting power of our issued and outstanding share
capital we qualify as a “controlled company” under the Nasdaq listing rules. Under these rules a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to
comply with certain corporate governance requirements, including, without limitation (i) the requirement that a majority of the Board of Directors consist of independent directors, (ii) the requirement that the compensation of our officers be
determined or recommended to the Board of Directors by a compensation committee that is comprised solely of independent directors, and (iii) the requirement that director nominees be selected or recommended to the Board of Directors by a majority of
independent directors or a nominating and corporate governance committee comprised solely of independent directors.
42
We have elected not to rely on the “controlled company” exemption. Our status as a controlled company, however, could cause our common
shares to appear less attractive to certain investors or otherwise harm our trading price.
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business,
our share price and trading volume could decline.
The trading market for our common shares will depend, in part, upon the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over analysts as to whether they will cover us, and if they do, whether such coverage will continue. If analysts do not commence coverage of the Company, or if one or more of these analysts cease
coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. In addition, if one or more of the analysts who cover us downgrade
our shares or change their opinion of our shares, our share price may likely decline.
Our Amended and Restated Articles of Incorporation, Bylaws and Shareholders’ Rights Plan contain anti-takeover
provisions that may discourage, delay or prevent (1) merger or acquisition, (2) the removal of incumbent directors and officers and (3) the ability of public shareholders to benefit from a change in control.
Our current amended and restated articles of incorporation and bylaws contain certain anti-takeover provisions. These provisions include
blank check preferred stock, the prohibition of cumulative voting in the election of directors, a classified Board of Directors, advance written notice for shareholder nominations for directors, removal of directors only for cause, advance written
notice of shareholder proposals for the removal of directors and limitations on action by shareholders. Prior to the Spin-off, we adopted a shareholders’ rights plan that will expire on September 30, 2034, pursuant to which our Board of Directors may
cause the substantial dilution of any person that attempted to acquire us without the approval of our Board of Directors. These anti-takeover provisions, either individually or in the aggregate, may discourage, delay or prevent (1) our merger or
acquisition by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest, (2) the removal of incumbent directors and officers, and (3) the ability of public shareholders to benefit from a change in
control. These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders’ ability to realize any
potential change of control premium.
Future sales of our common stock could cause the market price of our common stock to decline.
Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may
depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future. Additionally, following the consummation of the Spin-Off, pursuant to a
registration rights agreement that the Company entered into with certain shareholders, we are obligated upon the demand of the shareholders to register up to 1,614,881 shares of our common stock held by such shareholders, representing 57.3% of our
common stock. If a portion of such shares, higher than the average trading volume of our common stock at the time of their registration, are offered for sale, our share price may decline. Please see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions.”
We may issue additional shares of our stock in the future and our stockholders may elect to sell large numbers of shares held by them from
time to time. Our amended and restated articles of incorporation authorize us to issue up to 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.
Issuance of preferred stock may adversely affect the voting power of our shareholders and have the effect of
discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.
Our Board of Directors may decide in the future to issue preferred shares in one or more series and to determine the rights, preferences,
privileges and restrictions with respect to, among other things, dividends, conversion, voting, redemption, liquidation and the number of shares constituting any series subject to prior shareholders’ approval. If our Board determines to issue
preferred shares, such issuance may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. The issuance of preferred shares with voting and conversion rights may also adversely affect the voting power of the
holders of common shares. This could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders’ ability to realize any
potential change of control premium.
43
Because the Republic of the Marshall Islands, where we are incorporated, does not have a well-developed body of
corporate law, shareholders may have fewer rights and protections than under typical state law in the United States, such as Delaware, and shareholders may have difficulty in protecting their interests with regard to actions taken by our Board of
Directors.
Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws, as amended, and by the Marshall
Islands Business Corporations Act (the “BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands
interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial
precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. For example, under Marshall Islands law, a copy of the notice of any meeting of the shareholders must be given not less than 15 days before the meeting,
whereas in Delaware such notice must be given not less than 10 days before the meeting. Therefore, if immediate shareholder action is required, a meeting may not be able to be convened as quickly as it can be convened under Delaware law. Also, under
Marshall Islands law, any action required to be taken by a meeting of shareholders may only be taken without a meeting if consent is in writing and is signed by all of the shareholders entitled to vote, whereas under Delaware law action may be taken
by consent if approved by the number of shareholders that would be required to approve such action at a meeting. Therefore, under Marshall Islands law, it may be more difficult for a company to take certain actions without a meeting even if a
majority of the shareholders approve of such action. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of Delaware and other states with substantially similar legislative provisions, public shareholders may have
more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.
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Item 4.
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Information on the Company
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A.
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History and Development of the Company
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Euroholdings Ltd. was incorporated by the Parent under the laws of the Republic of the Marshall Islands on March 20, 2024 to serve as the
holding company of the Euroholdings Ltd. Predecessor and former vessel owning subsidiaries of the Parent in connection with the Spin-Off. The Parent has contributed the Euroholdings Ltd. Predecessor to the Company prior to the Spin-off in exchange
for all of the Company’s issued and outstanding common shares. On January 10, 2025, Diamantis Shipowners Ltd., one of the Subsidiaries, entered into a memorandum of agreement (the “MoA”) to sell its vessel, the M/V “Diamantis P”, to an unrelated
third-party for a gross price of $13.15 million in cash. Pursuant to the terms of the MoA, the vessel was delivered to her new owners on January 15, 2025. The proceeds from the sale of the vessel, which were paid concurrently with the delivery of the
vessel, remain with Diamantis Shipowners Ltd. and therefore with the Company. The Company intends to use the proceeds from the sale of M/V Diamantis to acquire one or more additional vessels in the future, although no such vessel has yet been
identified and there can be no guarantee that a suitable vessel can be found. The Parent received 2,816,615 shares, which the Parent distributed on March 17, 2025 (the “Distribution Date”) on the basis of one share for every 2.5 shares of the
Parent’s common stock to Euroseas shareholders of record as of March 7, 2025 (the “Record Date”), on a pro rata basis. Common shares of Euroholdings began trading on the Nasdaq Capital Market under the ticker symbol “EHLD” on March 18, 2025 and
Euroholdings became an independent publicly traded company on March 18, 2025.
Our containerships transport dry and refrigerated containerized cargoes, mainly including manufactured products and perishables. As of
April 30, 2025, our fleet consisted of two containerships. The total cargo carrying capacity of the two containerships is 40,882 dwt or 3,171 teu. We focus on owning and operating vessels of older vintage, typically older than 20 years of age, to the
end of their useful life and we intend to acquire additional container carrier vessels as well as vessels in other sectors, principally, in the secondhand market based on our assessment of market conditions.
44
Our executive offices are located at 4 Messogiou & Evropis Street, 151 24, Maroussi, Greece. Our telephone number is +30-211-1804005.
The SEC maintains an Internet website at www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our website address is www.euroholdings.gr. The
information contained on our website is not part of this annual report.
The Company expects to expand the above strategy and acquire additional elder vessels, either by utilizing liquidity generated from the
initial fleet or by combining with other companies with similar fleets or by issuing new shares. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist.
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B.
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Business Overview
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Our fleet consists of containerships that transport container boxes providing scheduled service between ports. Please see the information
in the section titled “Our Fleet”, below. During 2022, 2023, and 2024 we had a fleet utilization of 97.2%, 94.0% and 99.3 %, respectively, we generated net revenue amounting to $24.48 million, $16.50 million and $15.64 million respectively, and our
vessels achieved daily time charter equivalent rates of $25,176, $16,785 and $15,025, respectively.
Our business strategy is focused on providing consistent shareholder returns by investing in vessels of older vintage in the containership
or other sectors, typically older than twenty years, carefully selecting the timing and the structure of our investments in containership vessels and by reliably, safely and competitively operating the vessels we own, through our affiliated Manager,
Eurobulk. As Eurobulk represents a continuous ship-owning and management history that dates back to the 19th century, we believe that one of our advantages in the industry is our ability to select and safely operate containership or other vessels of
any age. The limited operating horizon of elder vessels should minimize valuation uncertainty and better reflect the market value of the vessels and their contracted revenues.
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Our Fleet
As of April 30, 2025, the profile and deployment of our fleet are the following:
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Name
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Type
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Dwt
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TEU
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Year Built
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Employment (*)
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TCE Rate ($/day)
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Container Carriers
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JOANNA (**)
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Feeder
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22,301
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1,732
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1999
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TC until Mar-26
Then until Sep-26
Then until Nov-26
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$19,000
$9,500
$16,500
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AEGEAN EXPRESS
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Feeder
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18,581
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1,439
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1997
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TC until Oct-25
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$16,700
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Total Container Carriers
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2
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40,882
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3,171
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(*)
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TC denotes time charter. All dates listed are the earliest redelivery dates under each TC unless noted.
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(**)
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Period to Nov-2026 is at the option of the charterer.
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We plan to expand our fleet by acquiring additional elder vessels, either by utilizing liquidity generated from the initial fleet or by
combining with other companies with similar fleets or by issuing new shares. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist. We employ our vessels mainly
in the time charter market but may also employ them in the spot market. As of April 30, 2025, all of our vessels are employed under time charter contracts.
As of April 30, 2025, approximately 89% of our ship capacity days for the remainder of 2025 and 42% of our ship capacity days in 2026 are
under contract.
In “Critical Accounting Estimates – Impairment of vessels” below, we discuss our policy for impairing the carrying values of our vessels.
During the past few years, the market values of vessels have experienced extraordinarily high volatility, and substantial declines in many vessel classes. As a result, the charter-free market value, or basic market value, of certain of our vessels
may decline below those vessels’ carrying value. We may not impair those vessels’ carrying value under our impairment accounting policy, due to our belief that future undiscounted cash flows expected to be earned by such vessels over their operating
lives would exceed such vessels’ carrying amounts.
The table set forth below indicates (i) the carrying value of each of our vessels as of December 31, 2023 and 2024, respectively and (ii)
if we believe our vessel had a basic market value below its carrying value. As of December 31, 2024 and December 31, 2023, the basic charter-free market value of each vessel was higher than the vessel’s carrying value. For purposes of this
calculation, we have assumed that the vessels would be sold at a price that reflects our estimate of their basic market values as of the respective year end. However, we are not holding our vessels for sale, except as otherwise noted in this report.
Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if
inspected would be certified in class without any notations. Our estimates are based on information available from various industry sources, including:
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reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;
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news and industry reports of similar vessel sales;
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news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive
information that can be used as part of our estimates;
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46
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approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers
have generally disseminated;
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offers that we may have received from potential purchasers of our vessels; and
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vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and
various other shipping industry participants and observers.
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As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In
addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.
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Name
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Capacity
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Purchase Date
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Carrying Value as of December 31, 2023 (in millions)
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Carrying Value as of December 31, 2024 (in millions)
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Container Carriers (1)
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(teu)
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JOANNA
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1,732
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Jul-2013
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$1.83
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$2.10
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AEGEAN EXPRESS
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1,439
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Sep-2016
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$1.49
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$1.49
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DIAMANTIS P (2)
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2,008
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Aug-2019
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$2.65
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$2.65
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Total Container Carriers
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5,179
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$5.97
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$6.24
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| (1) |
As of December 31, 2024 and December 31, 2023, the basic charter-free market value of each vessel was higher than the vessel’s carrying value.
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| (2) |
M/V “Diamantis P” was agreed to be sold on January 10, 2025 and was delivered to her new owners on January 15, 2025 and the Company recognized a gain on sale of approximately $10.2 million.
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We note that as of April 30, 2025, all our container vessels are employed under time charter contracts of durations from 6 to 18 months,
with options to extend for a further two months. If we sell those vessels with the charters attached, the sale price may be affected by the relationship of the charter rate to the prevailing market rate for a comparable charter with the same terms.
We refer you to the risk factor entitled “The market value of our vessels can
fluctuate significantly, which may adversely affect our financial condition, cause us to breach any future financial covenants, result in the
incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels” and the discussion in Item 3.D under “Industry Risk Factors.”
47
Our Competitive Strengths and Business Strategy
We believe that we possess the following competitive strengths:
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Experienced Management Team. Our management team has significant experience in all aspects of
commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from
the Massachusetts Institute of Technology. Dr. Anastasios Aslidis, our Chief Strategy Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 30 years of experience in the shipping
industry as finance executive and, prior to that, as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry. Mr. Symeon Pariaros, our Chief Administrative Officer, has
more than 25 years of experience in shipping in the chartering, finance and investment areas. He holds a Bachelor’s degree in Manufacturing Engineering with Management and Business from Brunel University in London. Ms. Athina Atalioti, our
Chief Financial Officer has more than eight years of experience in finance in shipping, real estate and energy sectors and in the structuring and evaluation of transactions. She holds a Master of Science degree in General Structural
Engineering from Imperial College in London.
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Cost Efficient Vessel Operations. We believe that because of the efficiencies afforded to us
through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite
the average age of our fleet being approximately 26.7 years on April 30, 2025, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $7,414 per day for
the year ended December 31, 2024. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize
off-hire days. Our professional, well-trained masters, officers and onboard crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and
minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2024, our operational fleet utilization was 99.6%, same as 2023, while our commercial utilization rate was 99.6%, from 97.4% in
2023. Our total fleet utilization rate in 2024 was 99.3% from 94.0% in 2023.
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Strong Relationships with Customers and Financial Institutions. We believe ourselves,
Eurobulk and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility
through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of
ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers.
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●
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Business Strategy. Our business strategy is focused on providing consistent shareholder
returns by carefully timing and structuring acquisitions and sales of elder containerships or other elder vessels and by reliably, safely and competitively operating our vessels through Eurobulk. We continuously evaluate purchase and sale
opportunities, as well as employment opportunities for our vessels. We have no current indebtedness, which keeps our cost breakeven level low and enables us to use cash flow that would otherwise be dedicated to debt service for new projects
and other purposes.
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Management of Our Fleet
The operations of our vessels continue to be managed by Eurobulk Ltd., or Eurobulk, an affiliated ship management company owned by our
Chairman and CEO and his family. Eurobulk manages our fleet under a Master Management Agreement with us and separate management agreements with each shipowning company, all of which we entered into as part of the Spin-off and which contain
substantially similar terms to the agreements between Eurobulk and our Parent. Under our Master Management Agreement, Eurobulk is responsible for all aspects of management and compliance for the Company, including the provision of the services of our
Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Administrative Officer, Investor Relations Officer, Internal Auditor and Secretary. Eurobulk is responsible for all commercial management and technical management
services.
48
The Company also uses brokers for various services, as is industry practice. Eurochart S.A. (“Eurochart”), an affiliated company controlled
by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of 1% of the vessel sales price and 1.25% of charter revenues. In addition, Technomar Crew
Management Services Corp (“Technomar”) is a company owned by certain members of the Pittas family, together with another unrelated ship management company, which provides crewing services. Please see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions.”
Our Customers
We have well-established relationships with major containership charterers, which we serve by carrying a variety of cargoes over a
multitude of routes around the globe. We are a relationship driven company, and our top three customers in 2024 include two of our top three customers from 2023 and 2022. Our top three customers per year accounted for approximately 95% of our
revenues in 2024, 99% of our revenues in 2023 and 82% of our revenues in 2022. In 2024, ZIM, Samudera and CMA CGM accounted for 57%, 21% and 17% of our revenues, respectively. In 2023, ZIM, CMA CGM and Summit Shipping Line accounted for 53%, 29% and
17% of our revenues, respectively, while in 2022, ZIM, CMA CGM and New Golden Sea Shipping accounted for 39%, 24% and 19% of our revenues, respectively.
We charter our vessels to customers pursuant to time charter contracts. We carefully evaluate the length and rate of each charter at the
time of fixing or renewing a contract considering market conditions, trends and expectations. Currently, both of our vessels are employed on time charters with durations ranging from 6 to 18 months until the earliest redelivery period. Under time
charter contract, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil) and canal and port charges. We remain responsible for paying the chartered vessel’s operating
expenses, including the cost of crewing, insuring, repairing and maintaining the vessel. We pay commissions on all chartering arrangements of 1.25% to Eurochart, a company affiliated with our CEO. During the year ended December 31, 2024, we paid
$207,338 for chartering commissions to EuroChart. We pay additional commission of usually up to 1.25% each to any other brokers involved in the transaction, plus address commission of usually up to 3.75% deducted from charter hire. These additional
commissions, as well as changes to charter rates will cause our commission expenses to fluctuate from period to period. Our time charters are for fixed terms and will expire in accordance with the schedule set forth in the table above. Our time
charters are subject to earlier termination in the event one of our vessels is a total or constructive loss as the result of casualty or is off-hire for more than a specified period. Charter-hire is generally paid semi-monthly or monthly in advance.
Following the expiration of our existing time charters, we expect to employ our fleet under short-to-medium-term time charters, depending
on market conditions and our ability to secure such contracts.
We believe that our dependence on our key charter customers is moderate, because in the event of a charterer default our vessels can
generally be re-chartered at the market rate, in the spot or charter market, although it is likely that such rate will be lower than the charter rate agreed with the charterer. In addition, as of the date of this report, none of our charterers have
reported any inability to pay their obligations to us as a result of ongoing conflicts such as the war in Ukraine, the war in Palestine and current events in the Red Sea region.
The Containership Industry and Other Shipping Sectors
Containership shipping refers to the transport of containerized trade which encompasses mainly the carriage of finished goods, but an
increasing number of other cargoes in container boxes. Containerized trade has been the fastest growing sector of seaborne trade, although in the last three years the rate of growth has slowed. Containerships are categorized by their size measured in
terms of twenty-foot equivalent unit (“teu”) capacity and whether they have their own gearing (cranes). The different categories of containerships are as follows: (i) Post-Panamax vessels are generally vessels with carrying capacity of more than
4,000 teu; (ii) Panamax vessels are vessels with carrying capacity from 3,000 to 4,000 teu, and, in some designs, even up to 5,000 teu; these vessels are called such because the measurements of their beam and draft are the maximum allowable through
the original Panama Canal; and (iii) Feeder containerships are vessels with carrying capacity from 500 to 3,000 teu and are usually equipped with cargo loading and unloading gear. Containerships are primarily employed in time charter contracts with
liner companies, which in turn employ them as part of the scheduled liner operations. Feeder containerships are put in liner schedules feeding containers to and from central regional ports (hubs) where larger containerships provide cross ocean or
longer haul service. The length of the time charter contract can range from several months to years.
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Other shipping sectors, like drybulk or tanker, resemble to the containership sector in terms of the interaction of demand for and supply
of vessels and business cycle characteristics but each one has its own economic drivers and vessels supply dynamics. Drybulk vessels carry dry cargoes in bulk like iron ore, coal, grains, steel products and other minor bulk commodities and are
categorized depending on their size and gearing as handy (10,000 - 40,000 dwt), Handy/Supramax (40,000-60,000 dwt), Ultramax (60,000-65,000 dwt), Panamax/Kamsarmax (65,000-85,000 dwt) and Capesize vessels (85,000-200,000+ dwt), the latter grouping
including various sub-segments like mini capes (85,000-120,000 dwt), typical Capesize vessels of around 180,000 dwt and Newcastlemax size of about 300,000 dwt. Typically, vessels up to Ultramax size have gearing.
Tanker vessels include crude carriers or product carriers and carry crude oil and oil products, respectively. They range in size from
10,000-110,000 dwt for product carriers and 100,000-300,000 dwt for crude carriers. Product carriers have coated tanks.
Our Competitors
We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price,
vessel location, size, age and vessel condition, as well as on reputation. Eurobulk arranges our charters (whether spot charters or time charters) through Eurochart S.A. (“Eurochart”), an affiliated brokering company which negotiates the terms of the
charters based on market conditions. We currently compete with other shipowners of carriers primarily in the Feeder containership sectors. Ownership of containerships is highly fragmented and is divided among state controlled and independent
shipowners. Some of our publicly listed competitors include Danaos Corporation (NYSE: DAC), Costamare Inc. (NASDAQ: CMRE) and Global Ship Lease Inc. (NYSE: GSL).
Seasonality
The containership shipping industry’s seasonal trends are driven by the import patterns of manufactured goods and refrigerated cargoes by
the major importers, such as the United States, Europe and Japan. The volume of containerized trade is usually higher in the fall in preparation for the holiday season. During this period, container shipping rates are higher and, as a result, so are
charter rates. Seasonality is present in other shipping sectors and has to do with the grain harvesting period for the drybulk vessels or the heating and cooling seasons for the tanker vessels, amongst other factors.
Environmental and Other Regulations in the Shipping Industry
Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions
and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission,
transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense,
including vessel modifications and implementation of certain operating procedures.
A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the
local port authorities (applicable national authorities such as the USCG, harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these
entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary
suspension of the operation of one or more of our vessels.
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Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to
maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation
of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However,
because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives
of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.
While we do not carry oil as cargo, we do carry fuel oil (bunkers) in our containerships. We currently maintain, for each of our vessels,
pollution liability insurance coverage of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, that would have a material adverse effect on our financial condition and operating cash flows.
International Maritime Organization
The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the
“IMO”), has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL,” the International Convention for
the Safety of Life at Sea of 1974 (“SOLAS Convention”), and the International Convention on Load Lines of 1966 (the “LL Convention”). MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air
emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a
different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management,
respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.
Air Emissions
In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on
sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks and the
shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as explained below. Emissions of
“volatile organic compounds” from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or “PCBs”) are also prohibited. We believe that all our
vessels are currently compliant in all material respects with these regulations.
The Marine Environment Protection Committee, or “MEPC,” adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide,
particulate matter and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in
any fuel oil used on board ships. On October 27, 2016, MEPC 70 agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation can be met by using low-sulfur compliant fuel oil,
alternative fuels or certain exhaust gas cleaning systems. Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention (“IAPP”) Certificates from their flag states that specify sulfur content. Additionally, at
MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships were adopted and took effect on March 1, 2020, with the exception of vessels fitted with exhaust gas cleaning equipment (“scrubbers”) which can carry fuel
of higher sulfur content. These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs.
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Sulfur content standards are even stricter within certain “Emission Control Areas,” or (“ECAs”). As of January 1, 2015, ships operating
within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated five ECAs, including specified portions of the Baltic Sea
area, Mediterranean Sea area, North Sea area, North American area and United States Caribbean area. The Mediterranean Sea became an ECA on May 1, 2024, and compliance obligations will begin May 1, 2025. Ocean-going vessels in these areas will be
subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local regulations that impose stricter emission controls. In July 2023, MEPC 80 announced three new ECA proposals, including the
Canadian Arctic waters and the North-East Atlantic Ocean, which were adopted in draft amendments to Annex IV that will enter into force in March 2026. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to
emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or
otherwise increase the costs of our operations.
The amended Annex VI also established new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on
their date of installation. Tier III NOx standards were designed for the control of NOx produced by vessels and apply to ships that operate in the North American and U.S. Caribbean Sea ECAs with marine diesel engines installed and constructed on or
after January 1, 2016. Tier III requirements could apply to additional areas designated for Tier III NOx in the future. At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after
January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010. As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.
At the MEPC 70, Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to
collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO used such data as part of its initial roadmap for developing its strategy to reduce
greenhouse gas emissions from ships, as discussed further below.
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to
develop and implement Ship Energy Efficiency Management Plans (“SEEMPs”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index (“EEDI”). Under these
measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to
April 1, 2022 for several ship types, including gas carriers, general cargo ships, and LNG carriers.
Additionally, in 2022, MEPC 75 amended Annex VI to impose new regulations to reduce greenhouse gas emissions from ships. These amendments
introduce requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements include (1) a technical requirement to
reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”). The attained EEXI is required to be
calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types and categories. With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to document and verify their actual
annual operational CII achieved against a determined required annual operational CII. All ships above 400 gross tonnage must also have an approved SEEMP on board. For ships above 5,000 gross tonnage, the SEEMP needs to include certain mandatory
content. That same year, MEPC amended MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (“HFO”) by ships in Arctic waters on and after July 1, 2024. In 2021, MEPC 77 adopted a non-binding resolution which urges Member
States and ship operators to voluntarily use distillate or other cleaner alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of Black Carbon emissions from ships when operating in or near the
Arctic. MEPC 79 adopted amendments to MARPOL Annex VI, Appendix IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption
Database. MEPC 79 also revised the EEDI calculation guidelines to include a CO2 conversion factor for ethane, a reference to the updated ITCC guidelines, and a clarification that in case of a ship with multiple load line certificates, the maximum
certified summer draft should be used when determining the deadweight. These amendments entered into force on May 1, 2024. In July 2023, MEPC 80 approved the plan for reviewing CII regulations and guidelines, which must be completed at the latest by
January 1, 2026. This review commenced at MEPC 82 in Fall 2024, and there will be no immediate changes to the CII framework, including correction factors and voyage adjustments, before the review is completed.
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We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could
require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.
Safety Management System Requirements
The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of Limitation of
Liability for Maritime Claims (the “LLMC”) sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution
Prevention (the “ISM Code”), our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other
things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and for responding to emergencies. We rely upon the safety management system that we and our technical
management team have developed for compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected
vessels and may result in a denial of access to, or detention in, certain ports.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences
compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the
ISM Code. We have obtained applicable documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The documents of compliance and safety management certificates
are renewed as required.
Although all our vessels are currently ISM Code-certified, such certification may not be maintained by all our vessels at all times.
Non-compliance with the ISM Code may subject such party to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. For
example, the U.S. Coast Guard and E.U. authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and E.U. ports.
Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance
with the International Maritime Dangerous Goods Code (“IMDG Code”). Effective January 1, 2018, the IMDG Code includes (1) the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2)
marking, packing and classification requirements for dangerous goods and (3) mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from the UN Recommendations on the Transport of Dangerous
Goods, including (1) provisions regarding IMO type 9 tank, (2) abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas. Additional amendments, which came
into force on June 1, 2022, include (1) addition of a definition of dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical waste, (4) addition of various ISO standards for gas cylinders,
(5) a new handling code, and (6) changes to stowage and segregation provisions. The newest edition of the IMDG Code took effect on January 1, 2024, although the changes are largely incremental.
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The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”). As
of February 2017, all seafarers are required to meet the STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classification societies, which have incorporated SOLAS and
STCW requirements into their class rules, to undertake surveys to confirm compliance.
The IMO’s Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in
Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in
the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions. The Polar Code applies to new ships constructed after January 1, 2017, and after January 1,
2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.
Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for
the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. By IMO resolution, administrations are encouraged to ensure that cyber-risk management systems are incorporated by ship-owners
and managers by their first annual Document of Compliance audit after January 1, 2021. In February 2021, the U.S. Coast Guard published guidance on addressing cyber risks in a vessel’s safety management system. This might cause companies to create
additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. To comply with these regulations, we developed a Cybersecurity Manual for all our vessels that was reviewed by IMO’s Maritime
Safety Committee in March 2021.
In June 2022, SOLAS also set out new amendments that took effect January 1, 2024, which include new requirements for: (1) the design for
safe mooring operations, (2) the Global Maritime Distress and Safety System (“GMDSS”), (3) watertight integrity, (4) watertight doors on cargo ships, (5) fault-isolation of fire detection systems, (6) life-saving appliances, and (7) safety of ships
using LNG as fuel. These new requirements may impact the cost of our operations.
Pollution Control and Liability Requirements
The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of
the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) in 2004. The BWM Convention entered into force on September 8,
2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing
regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water
management certificate.
On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry
into force date and not the dates originally in the BWM Convention. This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation of ballast water management systems on such vessels
at the first IOPP renewal survey following entry into force of the convention.
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The MEPC maintains guidelines for approval of ballast water management systems (G8). At MEPC 72, amendments were adopted to extend the date
existing vessels are subject to certain ballast water standards. Ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2 standard”
specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. The standards have been in force since 2019, and for most ships, compliance with the D-2 standard involved
installing on-board systems to treat ballast water and eliminate unwanted organisms. Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or
physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). Since September 8, 2024, all ships have met the D-2 standard. Costs of compliance with these regulations may be substantial.
Additionally, in November 2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water management system for the initial survey or when performing an additional survey for retrofits. This
analysis will not apply to ships that already have an installed BWM system certified under the BWM Convention. These amendments have entered into force on June 1, 2022. In December 2022, MEPC 79 agreed that it should be permitted to use ballast tanks
for temporary storage of treated sewage and grey water. MEPC 79 also established that ships are expected to return to D-2 compliance after experiencing challenging uptake water and bypassing a BWM system should only be used as a last resort. In July
2023, MEPC 80 approved a plan for a comprehensive review of the BWM Convention over the next three years and the corresponding development of a package of amendments to the Convention. MEPC 80 also adopted further amendments relating to Appendix II
of the BWM Convention concerning the form of the Ballast Water Record Book, which came into force in February 2025. A protocol for ballast water compliance monitoring devices and unified interpretation of the form of the BWM Convention certificate
were also adopted. In March 2024, MEPC 81 adopted amendments to the BWM Convention concerning the use of Ballast Water Record Books in electronic form, which are expected to enter into force in October 2025. Pursuant to the ongoing review, in Fall
2024, MEPC 82 approved the 2024 Guidance on ballast water record keeping and reporting and the 2024 Guidance for Administrations on the type approval process for ballast water management systems to support harmonized evaluation by Administrations.
Once mid-ocean exchange ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could
increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful
species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements.
The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose
strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered
owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance
with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.
Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such
as the United States where the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.
Anti‑Fouling Requirements
In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the “Anti‑fouling
Convention.” The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross
tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the
anti‑fouling systems are altered or replaced. Vessels of 24 meters in length or more but less than 400 gross tonnage engaged in international voyages will have to carry a Declaration on Anti-fouling Systems signed by the owner or authorized agent. We
have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.
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In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling systems containing cybutryne,
which applied to ships from January 1, 2023, or, for ships already bearing such an anti-fouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last application to the ship of such a
system. In addition, the IAFS Certificate has been updated to address compliance options for anti-fouling systems to address cybutryne. Ships which are affected by this ban on cybutryne must receive an updated IAFS Certificate no later than two years
after the entry into force of these amendments. Ships which are not affected (i.e. with anti-fouling systems which do not contain cybutryne) must receive an updated IAFS Certificate at the next Anti-fouling application to the vessel. These amendments
were formally adopted at MEPC 76 in June 2021 and entered into force on January 1, 2023.
Compliance Enforcement
Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead
to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities prohibit vessels not in compliance with the ISM Code by applicable
deadlines from trading in U.S. and European Union ports, respectively. As of the date of this annual report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our
operations.
United States Regulations
The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act
The U.S. Oil Pollution Act of 1990 (“OPA”) established an extensive regulatory and liability regime for the protection and cleanup of the
environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its
200-nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), which applies to the discharge of hazardous substances other than oil, except in
limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.
Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results
solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA
defines these other damages broadly to include:
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(i)
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injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
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(ii)
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injury to, or economic losses resulting from, the destruction of real and personal property;
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(iii)
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loss of subsistence use of natural resources that are injured, destroyed or lost;
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(iv)
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net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal
property, or natural resources;
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(v)
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lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources;
and
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(vi)
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net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as
protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
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OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. On December 23, 2023, the USCG issued
a final rule to adjust the limitation of liability under the OPA. Effective March 23, 2023, the new adjusted limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, amount to the greater of $1,300
per gross ton or $1,076,000 (previous limit was $1,200 per gross ton or $997,100). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating
regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship) or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if the
responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or
(iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.
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CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as
well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous
substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the
greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from
willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused
to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require
owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may
satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by
providing applicable certificates of financial responsibility.
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory
initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may
be revised as a result of political changes. For example, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and
safety protections under the 2016 PSSR. However, under a new administration, in August 2023, the BSEE released a final Well Control Rule, which strengthens testing and performance requirements, and may affect offshore drilling operations. In January
2021, the Biden administration issued an executive order temporarily blocking new leases for oil and gas drilling in federal waters, but ultimately, the order was rendered ineffective by a permanent injunction issued by a Louisiana court. After being
blocked by the courts, in September 2023, the Biden administration announced a scaled back offshore oil drilling plan, including just three oil lease sales in the Gulf of Mexico. On January 6, 2025, the Biden administration announced a ban on new
offshore oil and gas drilling in more than 625 million acres of U.S. waters on the Atlantic and Pacific coasts and in Alaska, but Louisiana-led states and fossil fuel groups are challenging the ban. On January 20, 2025, President Trump issued an
executive order revoking this ban, but will also likely face legal challenge over this revocation. The Trump administration has also proposed leasing new sections of U.S. waters to oil and gas companies for offshore drilling. With these rapid
changes, compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business.
OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within
their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills and many U.S. states that border a navigable waterway have
enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. Moreover, some states have enacted legislation providing for
unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws.
These laws may be more stringent than U.S. federal law. We intend to comply with all applicable state regulations in the ports where the Company’s vessels call.
57
We currently maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for each of our vessels. If the
damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and results of operations.
Other United States Environmental Initiatives
The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to
emissions of volatile organic compounds and other air contaminants. The CAA requires states to adopt State Implementation Plans, or “SIPs,” some of which regulate emissions resulting from vessel loading and unloading operations which may affect our
vessels.
The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless
authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the
remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA
and Department of the Army proposed a revised, limited definition of WOTUS. In 2019 and 2020, the agencies repealed the prior WOTUS Rule and promulgated the Navigable Waters Protection Rule (“NWPR”) which significantly reduced the scope and oversight
of EPA and the Department of the Army in traditionally non-navigable waterways. On August 30, 2021, a federal district court in Arizona vacated the NWPR and directed the agencies to replace the rule with the pre-2015 definition. In January 2023, the
revised WOTUS rule was codified in place of the vacated NWPR. On May 25, 2023, the United States Supreme Court ruled in the case Sackett v. EPA that only wetlands and permanent bodies of water with a “continuous surface connection” to “traditional
interstate navigable waters” are covered by the CWA, further narrowing the application of the WOTUS rule. In August 2023, the EPA and the Department of the Army issued the final WOTUS rule that largely reinstated the pre-2015 definition and applied
the Sackett ruling.
The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of
equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering U.S.
Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on
December 4, 2018 and replaces the 2013 Vessel General Permit (“VGP”) program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of
invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National
Invasive Species Act (“NISA”), such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA establishes a new framework
for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation,
compliance, and enforcement regulations within two years of EPA’s promulgation of standards. On September 24, 2024, the EPA finalized its rule on Vessel Incidental Discharge Standards of Performance, which means that the U.S. Coast Guard must now
develop corresponding regulations regarding ballast water within two years of that date. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard
regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent (“NOI”) or retention of a PARI form and submission
of annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation of
other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.
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European Union Regulations
In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting
substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a
polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability
for pollution may result in substantial penalties or fines and increased civil liability claims.
Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the
monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may
cause us to incur additional expenses.
The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk
ships, as determined by type, age and flag as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.
The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to
comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those
in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so called “SOx-Emission Control
Area”). As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.
Effective January 2024, the European Union Emissions Trading System (“EU ETS”) was extended to cover CO2 emissions from all ships of 5,000
gross tonnage and above entering EU ports, regardless of the flag they fly. The system covers: a) 50% of emissions from voyages starting or ending outside of the EU (allowing the third country to decide on appropriate action for the remaining share
of emissions) and b) 100% of emissions that occur between two EU ports and when ships are within EU ports. The EU ETS covers CO2 (carbon dioxide), CH4 (methane) and N2O (nitrous oxide) emissions, but the two latter only as from 2026. Shipping
companies will need to surrender to the relevant EU authorities the allowances that correspond to the emissions covered by the EU ETS. These allowances are normally purchased by the entity responsible for the purchase of bunkers, i.e. the charterers
in the case of time charter agreements. In the case of voyage charter agreements, the cost of the allowances is normally included in the charter rate. There is a phase-in period requiring shipping companies to surrender allowances corresponding to
40% of their covered 2024 emissions in 2025; 70% of their covered 2025 emissions in 2026; and 100% of their covered 2026 emissions in 2027. In connection with the EU ETS regulation target CO2 emissions reductions, we are implementing and continuing
to adopt measures to decarbonize our fleet and improve the Carbon Intensity Indicator (“CII”) and working to minimize the financial impact via the inclusion of a clause in our charter party agreements which imposes an obligation on the charterer to
cover the cost associated with the CO2 emissions generated during voyages to and from and within the EU.
The EU also adopted the FuelEU Maritime regulation, a proposal included in the “Fit-for-55” legislation. From January 2025, FuelEU Maritime
sets requirements on the annual average GHG intensity of energy used by ships trading within the EU or European Economic Area (EEA). This intensity is measured as GHG emissions per energy unit (gCO2e/MJ) and, in turn, GHG emissions are calculated in
a well-to-wake perspective. The calculation takes into account emissions related to the extraction, cultivation, production and transportation of fuel, in addition to emissions from energy used on board the ship. The baseline for the calculation is
the average well-to-wake GHG intensity of the fleet in 2020: 91.16 gCO2e/MJ. This will start at a 2% reduction in 2025, increasing to 6% in 2030, and accelerating from 2035 to reach an 80% reduction by 2050.
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Additional EU regulations which are part of the EU’s “Fit-for-55,” could also affect our financial position in terms of compliance and
administration costs when they take effect.
International Labour Organization
The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006
(“MLC 2006”). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying
the flag of a Member and operating from a port, or between ports, in another country. We believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.
Greenhouse Gas Regulation
Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations
Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. International negotiations are continuing with
respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding
commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships.
The U.S. initially entered into the agreement, but on June 1, 2017, the Trump administration announced that the United States intends to withdraw from the Paris Agreement, and the withdrawal became effective on November 4, 2020. On January 20, 2021,
the Biden administration issued an executive order to rejoin the Paris Agreement, which the U.S. officially rejoined on February 19, 2021. In January 2025, President Trump signed an executive order to begin the withdrawal of the United States from
the Paris Agreement.
At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction
of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies “levels of
ambition” to reduce greenhouse gas emissions, and notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition. At MEPC 77, the Member States agreed to
initiate the revision of the Initial IMO Strategy on Reduction of greenhouse gas (“GHG”) emissions from ships, recognizing the need to strengthen the “levels of ambition”. In July 2023, MEPC 80 adopted the 2023 IMO Strategy on Reduction of GHG
Emissions from Ships, which builds upon the initial strategy’s levels of ambition. The revised levels of ambition include (1) further decreasing the carbon intensity from ships through improvement of energy efficiency; (2) reducing carbon intensity
of international shipping; (3) increasing adoption of zero or near-zero emissions technologies, fuels, and energy sources; and (4) achieving net zero GHG emissions from international shipping. Furthermore, the following indicative checkpoints were
adopted in order to reach net zero GHG emissions from international shipping: i) reduce the total annual greenhouse gas emissions from international shipping by at least 20%, striving for 30%, by 2030, compared to 2008 levels; and ii) reduce the
total annual greenhouse gas emissions from international shipping by at least 70%, striving for 80%, by 2040, compared to 2008 levels. In March 2024, MEPC 81 further developed the goal-based marine fuel standard regulating the phased reduction of
marine fuel’s GHG intensity as part of its mid-term measures. In Fall 2024, MEPC 82 made further progress on the development of these mid-term measures, and the Committee is expected to approve amendments at MEPC 83 (Spring 2025) for adoption in
October 2025.These regulations could cause us to incur additional substantial expenses.
The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The
EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide
emissions and other information. Under the European Climate Law, the EU committed to reduce its net greenhouse gas emissions by at least 55% by 2030 through its “Fit-for-55” legislation package. As part of that initiative, the European Union’s carbon
market, EU ETS, has been extended to cover CO2 emissions from all large ships entering EU ports starting January 2024.
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In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit
greenhouse gas emissions from certain mobile sources and proposed regulations to limit greenhouse gas emissions from large stationary sources. However, in March 2017, the Trump administration issued an executive order to review and possibly eliminate
the EPA’s plan to cut greenhouse gas emissions, and on August 13, 2020, the EPA released rules rolling back standards to control methane and volatile organic compound emissions from new oil and gas facilities. In early 2021, the Biden administration
directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules. The resulting final rule was issued in December 2023. Such rules may be subject to revision or revocation following the change in federal
administration beginning in 2025. The EPA or individual states could enact these or other environmental regulations that could affect our operations.
Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we
operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with
certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.
Vessel Security Regulations
Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel
security such as the U.S. Maritime Transportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters
subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.
Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates
compliance with the International Ship and Port Facility Security Code (“the ISPS Code”). The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attain an International Ship
Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may be detained, expelled from or refused entry at port until they obtain an ISSC. The various
requirements, some of which are found in the SOLAS Convention, include, for example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly
equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on
shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a vessel’s history including the name of the ship, the state whose flag the
ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance with
flag state security certification requirements.
The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security
measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial impact on us. We intend
to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.
The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off
the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could
significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.
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Inspection by Classification Societies
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The
classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage
and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS. All of our vessels are certified as being
“in class” by all the applicable Classification Societies (e.g., Bureau Veritas, Det Norske Veritas, Nippon Kaiji Kyokai).
A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s
machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to have its underwater parts inspected by class every 30 to 36 months, but for vessels
subject to enhanced survey requirements and above 15 years of age, its underwater parts must be inspected in dry-dock. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the
vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation
of covenants, could have a material adverse impact on our financial condition and results of operations.
The following table lists the upcoming intermediate or special survey for the vessels in our current fleet. Special surveys typically require drydocking of the
vessels while intermediate surveys may not, depending on the age of the vessel and its condition. The intermediate surveys listed in the table below will not require drydocking of the vessels, unless otherwise specified below. M/V Diamantis underwent
her intermediate survey with dry-dock in January 2025 before being spun-off to Euroholdings Ltd.
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Vessel
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Next
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Type
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AEGEAN EXPRESS
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September 2025
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Intermediate Survey (In water)
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JOANNA
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October 2027
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Intermediate Survey (In water)
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Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or
damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other
environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive
economic zone of the United States for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the
shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain adequate insurance coverage at reasonable rates.
Hull and Machinery Insurance
We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance
and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally maintain insurance against loss of hire (for certain charters for which we consider it appropriate), which covers business interruptions that result in
the loss of use of a vessel.
Protection and Indemnity Insurance
Protection and indemnity insurance is provided by mutual protection and indemnity associations, or “P&I Associations,” and covers our
third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions
with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance,
extended by protection and indemnity mutual associations, or “clubs.”
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Our current protection and indemnity insurance coverage for pollution is $1.0 billion per vessel per incident. The 12 P&I Associations
that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. The International Group’s website states that the Pool provides a
mechanism for sharing all claims in excess of $10 million up to, currently, approximately $8.9 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on
our claim records as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.
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C.
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Organizational structure
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Euroholdings is the sole owner of all outstanding shares of the subsidiaries listed in Note 1 of our combined carve-out financial
statements under “Item 18. Financial Statements” and in Exhibit 8.1 to this annual report.
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D.
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Property, plants and equipment
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We do not own any real estate property. As part of the management services provided by Eurobulk during the period in which we have
conducted business to date, we have shared, at no additional cost, offices with Eurobulk. We do not have current plans to lease or purchase office space, although we may do so in the future.
Our interests in our vessels are owned through our wholly-owned vessel owning subsidiaries and these are our only material properties.
Please refer to Note 1, “Basis of Presentation and General Information”, of the attached Financial Statements for a listing of our vessel owning subsidiaries.
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Item 4A.
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Unresolved Staff Comments
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None.
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Item 5.
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Operating and Financial Review and Prospects
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The following discussion should be read in conjunction with “Item 3. Key Information – D. Risk Factors”, “Item 4. Business Overview”, and
our historical combined carve-out financial statements and footnotes thereto contained in this annual report. This discussion contains forward-looking statements, which are based on our assumptions about the future of our business. Our actual results
may differ materially from those contained in the forward-looking statements. Please read “Forward-Looking Statements” for additional information regarding forward-looking statements used in this annual report. Reference in the following discussion
to “we,” “our” and “us” refer to Euroholdings and our subsidiaries, except where the context otherwise indicates or requires.
Lack of Historical Operating Data for Vessels before Their Acquisition
Vessels are generally acquired free of charter. Where a vessel has been under a voyage charter or a short-term time charter, the vessel is
usually delivered to the buyer free of charter. Where a vessel is under a medium to longer-term time charter when being sold and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer’s consent and the buyer
entering into a separate direct agreement (called a “novation agreement”) with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter because it is a separate service agreement between the vessel owner and
the charterer.
We value any asset or liability arising from the market value of any time charter assumed when a vessel is acquired. Where vessel is
acquired with existing time charter, we determine the present value of the difference between: (i) the contractual charter rate and (ii) the market rate for a charter of equivalent duration prevailing at the time the vessel is delivered. The discount
rate used is the Company’s Weighted Average Cost of Capital (WACC). The cost of the acquisition is allocated to the vessel and the in-place time charter attached on the basis of their relative fair values. The capitalized above-market (asset) charter
is amortized as a reduction to time charter revenue over the remaining term of the assumed time charter.
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To the extent that we purchase a vessel and assume or renegotiate a related time charter, among others, we will be required to take the
following steps before the vessel will be ready to commence operations:
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obtain the charterer’s consent to us as the new owner;
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●
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obtain the charterer’s consent to a new technical manager;
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●
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in some cases, obtain the charterer’s consent to a new flag for the vessel;
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●
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arrange for a new crew for the vessel, and where the vessel is on charter, in some cases, the crew must be approved by the charterer;
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●
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replace all hired equipment on board, such as gas cylinders and communication equipment;
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implement a new planned maintenance program for the vessel; and
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●
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ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.
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When we charter a vessel pursuant to a long-term time charter agreement with varying rates, we recognize revenue on a straight line basis,
equal to the average revenue during the term of the charter.
The following discussion is intended to help you understand how acquisitions of vessels affect our business and results of operations.
Our business is mainly comprised of the following elements:
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employment and operation of our vessels; and
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management of the financial, general and administrative elements involved in the conduct of our business and ownership of our vessels.
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The employment and operation of our vessels mainly require the following components:
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vessel maintenance and repair;
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crew selection and training;
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vessel spares and stores supply;
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●
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contingency response planning;
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onboard safety procedures auditing;
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●
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auditing;
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●
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vessel insurance arrangement;
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●
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vessel chartering;
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●
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vessel security training and security response plans (ISPS);
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●
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obtaining of ISM certification and audit for each vessel within the six months of taking over a vessel;
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vessel hiring management;
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vessel surveying; and
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vessel performance monitoring.
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The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels
mainly requires the following components:
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●
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management of our financial resources, including banking relationships, i.e., administration of bank loans that we may enter into in the future and
bank accounts;
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management of our accounting system and records and financial reporting;
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administration of the legal and regulatory requirements affecting our business and assets; and
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●
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management of the relationships with our service providers and customers.
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The principal factors that affect our profitability, cash flows and shareholders’ return on investment include:
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●
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rates and periods of charter hire;
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levels of vessel operating expenses;
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●
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depreciation expenses;
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financing costs; and
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●
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fluctuations in foreign exchange rates.
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A.
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Operating results
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We charter our vessels to customers pursuant to short- to medium-term time charters (up to 2 years), although we may also charter our
vessels under certain market conditions for longer periods. We carefully evaluate the length and rate of the time charter contract at the time of fixing or renewing a contract considering market conditions, trends and expectations.
Factors Affecting Our Results of Operations
We believe that the important measures for analysing trends in the results of our operations consist of the following:
Calendar days. We define calendar days as the total number of days in a period during which each
vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and
affect both the amount of revenues and the amount of expenses that we record during that period.
Available days. We define available days as the total number of Calendar days in a period net of
off-hire days associated with scheduled repairs, drydockings or special or intermediate surveys, or days of vessels in lay-up. The shipping industry uses available days to measure the number of days in a period during which vessels were available to
generate revenues.
Voyage days. We define voyage days as the total number of Available days in a period net of
off-hire days associated with unscheduled repairs or days waiting to find employment but including days our vessels were sailing for repositioning. The shipping industry uses voyage days to measure the number of days in a period during which vessels
actually generate revenues or are sailing for repositioning purposes. Our definition of voyage days may not be comparable to that used by other companies in the shipping industry.
Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during
a period by the number of our available days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are
off-hire either waiting to find employment, or commercial off-hire, or for reasons such as unscheduled repairs or other off-hire time related to the operation of the vessels, or operational off-hire. We distinguish our fleet utilization into
commercial and operational. We calculate our commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period. We calculate our operational fleet utilization by
dividing our available days net of operational off-hire days during a period by our available days during that period.
Spot Charter Rates. We calculate spot charter rates on contracts made in the spot market for the
use of a vessel for a specific voyage (“voyage charter”) to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally commits to a
minimum amount of cargo and the charterer is liable for any short loading of cargo or “dead” freight. Spot charter rates are volatile and fluctuate on a seasonal and year to year basis. The fluctuations are caused by imbalances in the availability of
cargoes for shipment and the number of vessels available at any given time to transport these cargoes.
65
Time Charter Equivalent (“TCE”). A standard maritime industry performance measure used to evaluate performance is the daily TCE. Daily TCE revenues are time charter revenues and voyage charter revenues, gross of commissions, minus voyage expenses divided by the
number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter whereas under spot market
voyage charters, we pay such voyage expenses. We believe that the daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of containerships on time charter or on the spot market
(containerships are, generally, chartered on a time charter basis) and provides additional meaningful information in conjunction with time charter revenue generated by our vessels. Our definition of TCE may not be comparable to that used by other
companies in the shipping industry.
Items that impact our financial performance and General Information
We use the following measures to describe our financial performance:
Time charter revenue and Voyage charter revenue. Our charter revenues are driven primarily by the
number of vessels in our fleet, the number of voyage days during which our vessels generate revenues and the amount of daily charter revenue that our vessels earn under charters, which, in turn, are affected by a number of factors, including our
decisions relating to vessel acquisitions and disposals, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and
specifications of our vessels, levels of supply and demand in the transportation market, the number of vessels on time charters, voyage charters and in pools and other factors affecting charter rates in the containership market.
Commissions. We pay commissions on all chartering arrangements of 1.25% to Eurochart, a company
affiliated with our CEO, plus additional commission of usually up to 1.25% to other brokers involved in the transaction, plus address commission of usually up to 3.75% deducted from charter hire. These additional commissions, as well as changes to
charter rates will cause our commission expenses to fluctuate from period to period. Eurochart also receives a fee equal to 1% of the vessel sales price calculated as stated in the relevant memorandum of agreement for any vessel sold by it on our
behalf. Eurochart also receives a commission of 1% of the vessel purchase price for acquisitions the Company makes using Eurochart’s services, which is paid by the seller or the buyer of the vessel, depending on the terms stated in the relevant
memorandum of agreement.
Voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to
a particular voyage which would otherwise be paid by the charterer under a time charter contract or paid by the Company when the vessel is off hire. Under time charters, the charterer pays voyage expenses whereas under spot market voyage charters, we
pay such expenses. The amounts of such voyage expenses are driven by the mix of charters undertaken during the period. Voyage expenses are also incurred, when our vessels are idle or are sailing for repositioning purposes or for drydocking, which we
pay.
Vessel operating expenses. Vessel operating expenses include crew wages and related costs, the cost
of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Our vessel operating expenses, which generally represent fixed costs, have historically changed in
line with the size of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general (including, for instance, developments relating to market prices for insurance or inflationary increases) may also cause
these expenses to increase.
Related party management fees. These are the fees that we pay to our affiliated ship manager
(Eurobulk) under our management agreements for the technical and commercial management that Eurobulk performs on our behalf.
Vessel depreciation. We depreciate our vessels on a straight-line basis with reference to the cost
of the vessel, age and scrap value as estimated at the date of acquisition. Depreciation is calculated over the remaining useful life of the vessel. Remaining useful lives of property are periodically reviewed and revised to recognize changes in
conditions, new regulations or other reasons. Revisions of estimated lives are recognized over current and future periods.
66
Dry-docking expenses. Dry-docking expenses relate to regularly scheduled intermediate survey or
special survey necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Our vessels are required to be drydocked approximately every 30 to 60 months for major
repairs and maintenance that cannot be performed while the vessels are trading. Dry-docking expenses are accounted for using the direct expense method as this method eliminates the significant amount of time and subjectivity to determine which costs
and activities related to drydocking and special survey should be deferred.
General and administrative expenses. We incur expenses consisting mainly of executive compensation,
share based compensation, professional fees, directors’ liability insurance and reimbursement of our directors’ and officers’ travel-related expenses. We acquire executive services of our chief executive officer, chief financial officer, chief
strategy officer, chief administrative officer, investor relations officer, internal auditor and corporate secretary, through Eurobulk as part of our Master Management Agreement.
Other operating income. Other operating income includes income from all other operating activities
which are not related to the principal activities of the Company, such as gain from insurance claims.
Interest and other financing costs. We traditionally finance vessel acquisitions partly with loan
facilities on which we incur interest expense. The interest rate we pay will generally be linked to SOFR, although from time to time we may utilize fixed rate loans or could use interest rate swaps to eliminate our interest rate exposure. Interest
due is expensed in the period incurred. We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of the relevant debt liability and amortize them to interest
and other financing costs over the term of the underlying obligation using the effective interest method; the un-amortized portion is written-off if the loan is prepaid early.
In evaluating our financial condition, we focus on the above measures to assess our historical operating performance and we use future
estimates of the same measures to assess our future financial performance. In addition, we use the amount of cash at our disposal and our total indebtedness to assess our short-term liquidity needs and our ability to finance additional acquisitions
with available resources (see also discussion under “Capital Expenditures” below). In assessing the future performance of our present fleet, the greatest uncertainty relates to the spot market performance which affects those of our vessels that are
not employed under fixed time charter contracts as well as the level of the new charter rates for the charters that are to expire. Decisions about the acquisition of additional vessels or possible sales of existing vessels are based on financial and
operational evaluation of such action and depend on the overall state of the containership vessel market, the availability of purchase candidates, available employment, anticipated drydocking cost and our general assessment of economic prospects for
the sectors in which we operate.
Results from Operations of Euroholdings Ltd. Predecessor
The following table sets forth the results of the carve-out operations of the three Subsidiaries that were contributed to the Company, the
Euroholdings Ltd. Predecessor, for the years ended December 31, 2022, 2023 and 2024. This information should be read together with our audited combined carve-out financial statements and related notes included elsewhere in this annual report.
|
|
||||||||||||
|
|
2022
|
2023
|
2024
|
|||||||||
|
Income Statement Data
|
||||||||||||
|
Time charter revenue
|
25,863,714
|
17,458,102
|
16,043,730
|
|||||||||
|
Voyage charter revenue
|
-
|
-
|
473,055
|
|||||||||
|
Commissions
|
(1,383,464
|
)
|
(961,530
|
)
|
(876,154
|
)
|
||||||
|
Net revenue
|
24,480,250
|
16,496,572
|
15,640,631
|
|||||||||
|
Voyage expenses
|
312,228
|
253,264
|
1,010,520
|
|||||||||
|
Vessel operating expenses
|
6,136,353
|
6,492,939
|
6,351,471
|
|||||||||
|
Dry-docking expenses
|
1,347,216
|
888,266
|
2,616,834
|
|||||||||
|
Vessel depreciation
|
793,571
|
1,465,858
|
43,070
|
|||||||||
|
Related party management fees
|
842,718
|
927,573
|
971,346
|
|||||||||
|
General and administrative expenses
|
797,544
|
780,439
|
817,098
|
|||||||||
|
Other operating income
|
-
|
(2,271,816
|
)
|
-
|
||||||||
|
Operating income
|
14,250,620
|
7,960,049
|
3,830,292
|
|||||||||
|
Interest and other financing costs
|
(234,326
|
)
|
(224,874
|
)
|
(65,989
|
)
|
||||||
|
Foreign exchange gain/(loss)
|
8,230
|
(2,681
|
)
|
8,940
|
||||||||
|
Net income
|
14,024,516
|
7,732,494
|
3,773,243
|
|||||||||
67
Other information
|
Fleet Data (1)
|
2022
|
2023
|
2024
|
|||||||||
|
Average number of vessels
|
3
|
3
|
3
|
|||||||||
|
Calendar days
|
1,095
|
1,095
|
1,098
|
|||||||||
|
Available days
|
1,044
|
1,091
|
1,039
|
|||||||||
|
Voyage days
|
1,015
|
1,025
|
1,032
|
|||||||||
|
Utilization Rate (percent)
|
97.2
|
%
|
94.0
|
%
|
99.3
|
%
|
||||||
|
|
||||||||||||
|
Average TCE rate (3)
|
25,174
|
16,785
|
15,025
|
|||||||||
|
Vessel Operating Expenses
|
5,604
|
5,930
|
5,785
|
|||||||||
|
Management Fees
|
770
|
847
|
885
|
|||||||||
|
G&A Expenses
|
728
|
713
|
744
|
|||||||||
|
Total Operating Expenses excluding drydocking expenses (2)
|
7,102
|
7,490
|
7,414
|
|||||||||
|
Drydocking expenses
|
725
|
811
|
2,383
|
|||||||||
(1) For the definition of calendar days, available days, voyage days and utilization rate, see above in this Item.
(2) We calculate daily total operating expenses excluding drydocking expenses by dividing total operating expenses excluding drydocking
expenses for the relevant period by ownership days for such period. We calculate total vessel operating expenses as the sum of vessel operating expenses, related party management fees and general and administrative expenses. This measure assists our
management and investors by increasing the comparability of our performance from period to period. Drydocking expenses include costs of shipyard, paints and agent expenses, which costs may vary from period to period.
(3) Time charter equivalent rate, or TCE rate, is a measure of the average daily net revenue performance of our vessels and is determined
by dividing time charter revenue and voyage charter revenue, if any, gross of commissions, less voyage expenses or time charter equivalent revenue, or TCE revenues, by the number of voyage days during the relevant time period. TCE revenues, a
non-U.S. GAAP measure, provides additional meaningful information in conjunction with time charter revenue and voyage charter revenue, the most directly comparable U.S. GAAP measure, because it assists the Company’s management in making decisions
regarding the deployment and use of its vessels and because the Company believes that it provides useful information to investors regarding the Company’s financial performance. TCE revenues and TCE rate are also standard shipping industry performance
measures used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters, pool agreements and bareboat charters) under which the vessels may be
employed between the periods (see also above in this Item). Our definition of TCE revenues and TCE rate may not be comparable to that used by other companies in the shipping industry.
The following table reflects the reconciliation of TCE revenues to time charter revenue and voyage charter revenue, if any, as reflected in
the combined carve-out income statements (see discussion above) and our calculation of TCE rates for the periods presented.
68
|
|
Year Ended December 31,
|
|||||||||||
|
|
2022
|
2023
|
2024
|
|||||||||
|
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day)
|
||||||||||||
|
Time charter revenue
|
25,863,714
|
17,458,102
|
16,043,730
|
|||||||||
|
Voyage charter revenue
|
-
|
-
|
473,055
|
|||||||||
|
Voyage Expenses
|
(312,228
|
)
|
(253,264
|
)
|
(1,010,520
|
)
|
||||||
|
Time Charter Equivalent or TCE Revenues
|
25,551,486
|
17,204,838
|
15,506,265
|
|||||||||
|
Voyage days
|
1,015
|
1,025
|
1,032
|
|||||||||
|
Average TCE Rate
|
25,174
|
16,785
|
15,025
|
|||||||||
Year ended December 31, 2024 compared to year ended December 31, 2023
Time charter revenue & Voyage charter revenue. Time charter revenue and voyage charter
revenue, collectively, “Voyage revenue”, for 2024 amounted to $16.52 million, decreasing by 5.4% compared to $17.46 million for the year ended December 31, 2023. In 2024 and 2023, we operated an average of 3 vessels. In the year 2024, our fleet had
1,032 voyage days earning revenue as compared to 1,025 voyage days earning revenue in 2023. Market charter rates in 2024 were on average at lower levels for our containership vessels compared to the same period of 2023, which was reflected in the
average earnings of our ships. While employed, our vessels generated a TCE rate of $15,025 per day per vessel in 2024 compared to a TCE rate of $16,785 per day per vessel in 2023, a decrease of 10.5%. We had 58.7 scheduled off-hire days, including
drydocking, 3.7 commercial off-hire days and 4.0 operational off-hire days in 2024, compared to 3.7 scheduled off-hire days (including drydocking), 28.9 commercial off-hire days and 37.5 operational off-hire days in 2023. The average TCE rate our
vessels achieve is a combination of the time charter rate earned by our vessels under time charter contracts, which is not influenced by market developments during the duration of the fixed term time charter (unless the two charter parties
renegotiate the terms of the charter or the charterer is unable to make the contracted payments or we enter into new charter party agreements), and the TCE rate earned by our vessels employed in the spot market, which is influenced by market
developments.
Commissions. We paid a total of $0.88 million in charter commissions for the year ended December
31, 2024, representing 5.3% of voyage revenues. This represents a slight decrease over the year ended December 31, 2023, when commissions paid were $0.96 million, representing 5.5% of voyage revenues.
Voyage expenses. For the year ended December 31, 2024, voyage expenses amounted to $1.01 million
compared to $0.25 million for the same period of 2023. Voyage expenses for the year 2024 related to expenses incurred by one of our vessels while employed under a voyage charter and vessels repositioning between time charters, as well as owners’
expenses at certain ports. For the year 2023 voyage expenses relate to vessels repositioning between time charters and owners’ expenses at certain ports. Our vessels are generally chartered under time charter contracts. Voyage expenses are dependent
on the number of voyage charters, if any, the cost of fuel, port costs and canal tolls and the number of days our vessels sailed without a charter.
Vessel operating expenses. Vessel operating expenses were $6.35 million in 2024 compared to $6.49
million in 2023. In 2024 and 2023, we operated an average of 3 vessels. Daily vessel operating expenses per vessel amounted to $5,785 per day in 2024 versus $5,930 per day in 2023, a decrease of 2.4% mainly due to higher costs for spare parts in 2023
due to certain mechanical damages incurred onboard our vessels.
Related party management fees. These are part of the fees we pay to Eurobulk under our Master
Management Agreement. During 2024, Eurobulk charged us 810 Euros per day per vessel, totaling $0.97 million for the year, or $885 per day per vessel. During 2023, Eurobulk charged us 775 Euros per day per vessel totaling $0.93 million for the year,
or $847 per day per vessel. The increase in related party management fees is mainly attributable to the increase in daily vessel management fee due to inflation.
General and administrative expenses. These expenses represent an allocation of the expenses
incurred by Euroseas based on the number of calendar days of Euroholdings’ vessels compared to the number of calendar days of the total Euroseas fleet. These expenses consist mainly of executive compensation, professional fees, directors’ and
officers’ liability insurance and other miscellaneous corporate expenses. In 2024, we had a total of $0.82 million of general and administrative expenses as compared to $0.78 million in 2023.
69
Dry-docking expenses. These are expenses we pay for our vessels to complete a drydocking as part
of an intermediate or special survey or, in some cases, an in-water survey in lieu of a drydocking. In 2024, two vessels passed their special survey with drydock for a total cost of $2.62 million. In 2023, one vessel completed an in-water survey in
lieu of drydock and one vessel complated its special survey, which commenced in 2022 for a total cost of $0.89 million.
Vessel depreciation. Vessel depreciation for 2024 was $0.04 million, compared to $1.47 million for
2023. The increased amount in 2023 is due to the fact that two of the three vessels of the Company were fully depreciated during 2023 while the last one was fully depreciated in the first semester of 2024.
Other operating income. Other operating income for the year ended December 31, 2023 amounted to
$2.27 million. The operating income for the year 2023 relates to loss of hire insurance for one of our vessels, M/V “Aegean Express”. The vessel suffered a grounding incident en-route to its scheduled drydocking which resulted in additional off-hire
time due to the required repairs. The Company made a claim for a loss of hire with its insurance carrier, which the insurance carrier approved. After payment of fees and commissions, the amount recovered was $2.27 million corresponding to 60 days of
loss of hire coverage after a deductible of period of 14 days at the charter rate of $41,000 per day less commissions and other expenses. No such case existed in 2024.
Interest and other financing costs. Interest expense and other financing costs for the year 2024
amounted to $0.07 million. Comparatively, during the same period in 2023, interest and other financing costs amounted to $0.22 million. Interest expense charged was lower in 2024 due to the decreased amount of debt during the period as compared to
the same period of last year. The Company’s outstanding debt was fully repaid in March 2024.
Net income. As a result of the above, net income for the year ended December 31, 2024 was $3.77
million, as compared to a net income of $7.73 million for the year ended December 31, 2023.
Inflation
In addition to the increase in management fees discussed above, inflation affects our operating expenses as well as our administrative
expenses. In the event that global inflationary pressures increase, these pressures would have an even greater influence on our operating, voyage and administrative expenses.
Year ended December 31, 2023 compared to year ended December 31, 2022
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part A, Item 5,
“Operating and Financial Review and Prospects” in our Registration Statement on Form 20-F filed with the Commission on January 7, 2025.
Implications of Being an Emerging Growth Company
We had less than $1.235 billion in revenue during our last fiscal year, which means that we qualify as an “emerging growth company” as
defined in the JOBS Act. An emerging growth company may take advantage or specified reduced reporting and other burdens that are otherwise applicable generally to public companies.
These provisions include:
|
●
|
exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal controls over financial reporting under
Section 404(b) of Sarbanes-Oxley;
|
|
●
|
exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private
companies; and
|
70
|
●
|
exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit
firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and financial statements.
|
We may take advantage of these provisions until the end of the fiscal year following the fifth anniversary of our initial public offering or such earlier time
that we are no longer an emerging growth company. We will cease to be an emerging growth company if, among other things, we have more than $1.235 billion in “total annual gross revenues” during the most recently completed fiscal year. We may choose
to take advantage of some, but not all, of these reduced burdens. For as long as we take advantage of the reduced reporting obligations, the information that we provide shareholders may be different from information provided by other public
companies.
|
B.
|
Liquidity and Capital Resources
|
Historically, our sources of funds have been equity provided by our shareholders, operating cash flows and long-term borrowings. Our
principal use of funds has been capital expenditures to maintain the quality of our vessels during operations and the periodically required drydockings, comply with international shipping standards and environmental laws and regulations, fund working
capital requirements and, if necessary, operating shortfalls, make principal repayments on outstanding loan facilities, and make cash distributions to our Parent.
Our short-term liquidity requirements include paying operating expenses, funding working capital requirements, and maintaining cash
reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary sources of short-term liquidity are cash generated from operating activities, available cash balances, proceeds from vessel sale and portions from
debt and equity financings.
Our long-term liquidity requirements are funding future vessel acquisitions. Sources of funding for our long-term liquidity requirements
include cash flows from operations, bank borrowings, issuance of debt and equity securities, and vessel sales.
Our total cash and cash equivalents as at December 31, 2024 were $0.13 million, a decrease of $0.36 million from $0.49 million at December
31, 2023. On January 15, 2025, we sold M/V “Diamantis P” to a third-party buyer for further trading at a gross price of $13.15 million. The gain on the sale of the vessel was approximately $10.2 million. In the Company’s opinion, the working capital,
together with proceeds from the abovementioned sale, if needed, is sufficient for the Company’s known short-term and long-term liquidity requirements.
We hold cash and cash equivalents primarily in U.S. Dollars, with a minor balance held in Euros. We conduct our funding and treasury
activities based on corporate policies designed to minimize borrowing costs and maximize investment returns while maintaining the safety of the funds and appropriate levels of liquidity for our purposes.
We are exposed to market risk from changes in market rates for vessels. We may use interest rate swaps to manage interest costs and the
risks associated with changing interest rates of any loans we enter into in the future. Please refer to “Item 11 – Quantitative and Qualitative Disclosures about Market Risk.”
We expect to rely on cash available, funds generated from operating cash flows, funds from our shareholders, equity offerings, and
long-term borrowings to meet our liquidity needs going forward and to finance our capital expenditures and working capital needs in 2025 and beyond. As of December 31, 2024, all long-term borrowings had been repaid in full.
71
Cash Flows
As of December 31, 2024, we had nil working capital. For the year ended December 31, 2024, we reported a net income of $3.77 million and
generated net cash from operating activities of $4.96 million. Our cash balance amounted to $0.13 million as of December 31, 2024. We intend to fund our working capital requirements via cash on hand and cash flows from operations and, if needed,
using some of the proceeds from the sale of M/V “Diamantis P” that took place in January 2025.
We believe we will have adequate funding through the sources described above and, accordingly, we believe we have the ability to continue
as a going concern and finance our obligations as they come due over the next twelve months following the date of the issuance of our financial statements. Consequently, our combined carve-out financial statements have been prepared on a going
concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Year ended December 31, 2024 compared to year ended December 31, 2023
Net cash from operating activities.
Our net surplus from cash flows provided by operating activities for 2024 was $4.96 million as compared to a surplus of $9.30 million in
2023.
The major drivers of the change of cash flows from operating activities for the year ended December 31, 2024 compared to the year ended
December 31, 2023 is mostly due to the fact that two of our vessels were employed in time charter contracts booked under lower market rates than those experienced in 2023 (our TCE rate decreased from $16,785 for the year ended December 31, 2023 to
$15,025 for the year ended December 31, 2024), as well as due to the collection of amounts claimed for “M/V Aegean Express” hull and maintenance as well as loss of hire insurance claims during 2023.
Net cash used in investing activities.
Net cash flows used in investing activities were $0.21 million for the year ended December 31, 2024 compared to $0.56 million used in
investing activities for the year ended December 31, 2023. The decrease in cash outflows used in investing activities of $0.35 million from 2023 is attributable to the decrease in cash paid for vessel improvements.
Net cash used in financing activities.
Net cash flows used in financing activities included repayments of long-term bank loans and net transfers to Parent. There were $1.93
million repayments of long-term bank loans in the year ended December 31, 2024, compared to $0.70 million for the year ended December 31, 2023, with the increase attributed to the full repayment of the “M/V Aegean Express” outstanding loan in March
2024. Net transfers to the Parent amounted to $3.19 million in 2024 as compared to $8.37 million in 2023 for total funds used in financing activities of $5.12 million during 2024 as compared to total funds used in financing activities in 2023 of
$9.07 million.
Year ended December 31, 2023 compared to year ended December 31, 2022
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part A, Item 5,
“Operating and Financial Review and Prospects” in our Registration Statement on Form 20-F filed with the Commission on January 7, 2025.
Debt Financing
We operate in a capital-intensive industry which requires significant amounts of investment, and we have historically funded a major
portion of this investment through long term debt. We maintain debt levels we consider prudent based on our market expectations, cash flow, interest coverage and percentage of debt to capital.
72
As of December 31, 2023, we had one outstanding loan with an outstanding balance of $1.93 million (refer to Note 8 of our attached combined carve-out financial statements for
further details). This loan was fully repaid in March 2024, which means that since that date, we do not have any outstanding debt obligations.
Our loan agreements, typically, contain covenants.
Although following the full repayment of our bank debt in March 2024 we have no loans, typically, our loans have various covenants such as
minimum requirements regarding the security cover ratio (the ratio of fair value of vessel to outstanding loan less cash in retention accounts) and restrictions as to changes in management and ownership of the ship-owning companies, distribution of
profits or assets (in effect not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum
fleet-wide leverage, sale of capital stock of our subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash).
When necessary, we do provide supplemental collateral in the form of restricted cash or cross-collateralize vessels to ensure compliance with security cover ratio (“loan-to-value” ratio). Increases in restricted cash required to satisfy loan
covenants would reduce funds available for investment or working capital and could have a negative impact on our operations. If we cannot cure any violated covenants, we might be required to repay all or part of our loans, which, in turn, might
require us to sell one or more of our vessels under distressed conditions.
Capital Expenditures
We make capital expenditures from time to time in connection with our vessels and may make capital expenditures to acquire additional
vessels or participate in joint ventures to acquire vessels.
We currently have one vessel scheduled for drydocking over the next 12 months (refer to section above “B. Liquidity and Capital Resources –
Cash Flows” for a discussion of how we plan to cover our working capital requirements and capital commitments).
Dividends
We have no independent operating history and thus no dividends were paid other than payments to our Parent from the Euroholdings Ltd.
Predecessor. Just prior to the completion of the Spin-off, the Euroholdings Ltd. Predecessor paid $567,794 as a dividend or other distribution to the Parent an amount approximately equal to the cash flow during the period between June 30, 2024 and
December 31, 2024 and any excess working capital over the book value of the vessels as of December 31, 2024.
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C.
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Research and development, patents and licenses, etc.
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Not applicable.
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D.
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Trend information
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Our results of operations depend primarily on the charter rates that we are able to realize. Charter rates paid for container vessels are
primarily a function of the underlying balance between vessel supply and demand.
The demand for containership capacity is determined by the underlying demand for commodities transported in these vessels, which in turn is
influenced by trends in the global economy. One of the main drivers of the containerized trade has been the growth in exports of finished goods. Demand for containership capacity is also affected by the operating efficiency of the global fleet, i.e.,
the average speed the fleet operates, and port congestion. A factor affecting mainly the containership sector, especially during periods of high fuel prices and/or low charter rates, is slow-steaming (i.e., the practice of running a vessel at lower
speeds to economize on fuel costs). Slow-steaming increases the number of ships required to carry a given amount of trade volume and thus increases demand for ships as do higher levels of port congestion, leading to higher charter rates if all other
factors influencing rates are unchanged.
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The supply of containerships is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through
scrapping or loss. According to industry sources, as of April 15, 2025, the capacity of the fully cellular worldwide container vessel fleet was approximately 31.36 million teu with approximately another 8.95 million teu, or, about 28.55% of the
present fleet capacity on order. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline. The level of scrapping activity is generally a
function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs. The average age at which a vessel is scrapped over the last ten years has been between 25 and 27 years, with
smaller vessels scrapped at a later age. During strong markets, the average age at which the vessels are scrapped increases; in 2021, due to the exceptional positive increase in the containership market, there were only 11,990 teu of containerships
that were scrapped, the lowest level seen since 2006. Containership scrap markets remained subdued in 2022, with only 10 containerships accounting for 14,140 teu reported as sold for scrap within the year. Recycling activity picked up in 2023, with
82 containerships accounting for 156,420 teu sent to the scrapyard, while in 2024, only 58 containerships accounting for 82,670 teu were sent to the scrapyard. Scrap markets are expected to be increase in 2025, amid supply pressure from fleet growth.
Declining shipping charter rates have a negative impact on our earnings when our vessels are employed in the spot market or when they are
to be re-chartered after completing a time charter contract. As of April 30, 2025, approximately 89% of our ship capacity days in the remainder of 2025 and 42% of our ship capacity days in 2026 are under time charter contracts. If the market rates
decrease from current levels or the supply of vessels increases, our vessels may have difficulty securing employment and, if so, may be employed at rates lower than their present charters, when their present charters expire. The extent to which
epidemics or pandemics, the wars in Ukraine and Palestine and the events in the Red Sea region will impact our future results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted.
We recognize that the ongoing war between Russia and Ukraine has disrupted supply chains and caused instability in the global economy,
while the United States and the European Union, among other countries, announced sanctions against Russia. As discussed above, President Biden issued an executive order setting out sanctions against certain Russian products and investments in Russia,
and the United States has also prohibited a variety of specified services related to the maritime transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing, shipping, insurance
(including reinsurance and protection and indemnity), flagging, and customs brokering. The ongoing conflict could result in the imposition of further economic sanctions against Russia, and the Company’s business may be adversely impacted. Currently,
the Company’s charter contracts have not been affected by the events in Russia and Ukraine; however, it is possible that in the future third parties with whom the Company has or will have charter contracts may be impacted by such events. While in
general much uncertainty remains regarding the global impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business, financial condition, results of operation and cash flows.
Since October 7, 2023, Israel and Hamas have been at war in Palestine. Regional militant groups, such as Hezbollah, have also launched
attacks directed against Israel. There is widespread uncertainty about the degree of any increased escalation of the war, interventions by other groups or nations, and resulting instability in the Middle East. The impacts of the war on the global
economy, including commodity pricing and the disruption of shipping routes, are also currently unknown. Following attacks on merchant vessels in the region of the Bab al-Mandab Strait and the Gulf of Aden at the southern end of the Red Sea, there is
disruption in the maritime trade towards Mediterranean Sea through Suez-Canal. As a result, we have diverted our fleet from sailing in the specific region. While our vessels currently do not sail in the Red Sea, we will continue to monitor the
situation to assess whether the trade disruption could have any impact on our operations or financial performance. Any dramatic escalation of the trade disruptions could lead to increased operational costs incurred by our business, or otherwise harm
our financial condition, results of operation and cash flows.
While our vessels do not currently sail in the Black Sea or the Red Sea, it is possible that the continued conflict in Ukraine and the
Middle East, including any effect on our ability to pay the wages of crew members or consultants who may hold accounts at Russian banks that are subjected to sanctions, any increased shipping costs, disruptions of global shipping routes, any impact
on the global supply chain and any impact on current or potential customers caused by the events in Russia and Ukraine, Israel and the Middle East, could adversely affect our operations or financial performance. Due to the recent nature of these
activities, the full impact on our business is not yet known.
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E.
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Critical Accounting Estimates
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The discussion and analysis of our financial condition and results of operations is based upon our combined carve-out financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported
amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting estimates are those that reflect significant judgments or uncertainties, and potentially result in materially different
results under different assumptions and conditions. We have described below what we believe are our most critical accounting estimates that involve a high degree of judgment and the methods of their application.
Impairment of vessels
We review our vessels held for use for impairment whenever events or changes in circumstances (such as vessel market values, vessel sales
and purchases, business plans and overall market conditions) indicate that the carrying amount of the vessels may not be recoverable. If indicators for impairment are present, we determine future undiscounted net operating cash flows for the related
vessels and compare them to their carrying values. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the vessel is less than its carrying
amount, we record an impairment loss calculated by comparing the vessel’s carrying value to its estimated fair market value. We estimate fair market value primarily through the use of vessel valuations performed on an individual vessel basis, which
are mainly based on recent sales and purchase transactions.
The carrying values of the Company’s vessels may not represent their fair market value at any point in time since the market prices of
second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings.
As of December 31, 2023 and 2024, we had no indicators of impairment on our vessels as their fair values exceeded their carrying values. In
case of vessels with impairment indicators, the Company determines the charter rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years (based on the length of charters that can be secured at
the time of the analysis, generally, one to two years) and on inflation-unadjusted historical average rates for similar vessels, from year three onwards, for the remaining period for which we have determined that the vessel will be in operation.
These rates are used for the period a vessel is not under a charter contract; if there is a contract, the fixed charter rate of the contract is used for the period of the contract.
Our impairment exercise is highly sensitive on variances in the time charter rates and it also requires assumptions for:
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the effective fleet utilization rate;
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estimated scrap values;
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vessel operating costs;
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future drydocking costs; and
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probabilities of sale for each vessel.
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Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company’s past experience in
finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company’s data for its own vessels; past estimates for such costs have generally been very close to the actual
levels observed. Specifically, we use our budgeted operating expenses multiplied by an annual escalation rate and our budgeted drydocking costs, assuming a five-year special survey cycle. Overall, the assumptions are based on historical trends as
well as future expectations. The estimated salvage value of each vessel is $250 per light weight ton, in accordance with the Company’s vessel depreciation policy. We use a probability weighted approach for developing estimates of future cash flows
used to test the vessels for recoverability when alternative uses are under consideration (i.e. sale or continuing operation of a vessel). Although management believes that the assumptions used to evaluate potential impairment are reasonable and
appropriate, such assumptions are highly subjective.
There can be no assurance as to how long-term charter rates and vessel values will increase as compared to their current levels and as
compared to historical average levels for similarly aged vessels or whether they will improve by any significant degree. Charter rates, which improved significantly beginning in the second half of 2020 and declined again beginning in the second
semester of 2022, but still remain above historical averages, may return to their previously very depressed levels which could adversely affect our revenue, profitability and future assessments of vessel impairment. The impairment analysis may
determine that the carrying value of a vessel is recoverable if the vessel is held and operated to the end of its useful life, however, if the vessel is sold when the market is depressed, the Company might suffer a loss on the sale. Whether the
Company realizes a gain or loss on the sale of a vessel is primarily a function of the relative market values of vessels at the time the vessel was acquired less the accumulated depreciation and impairment, if any, versus the relative market values
on the date a vessel is sold.
Recent Accounting Pronouncements
Please refer to Note 2 of the financial statements included in Item 18 of this annual report for a description of recent accounting
pronouncements that may apply to us.
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Item 6.
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Directors, Senior Management and Employees
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A.
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Directors and Senior Management
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The following sets forth the name and position of each of our directors and executive officers.
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Name
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Age
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Position
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Aristides J. Pittas
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65
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Chairman, President and CEO; Class A Director
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Dr. Anastasios Aslidis
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65
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Chief Strategy Officer and Treasurer; Class A Director
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Athina Atalioti
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32
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Chief Financial Officer
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Stephania Karmiri
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57
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Secretary
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Aristides P. Pittas
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73
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Vice Chairman; Class B Director
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Panagiotis Kyriakopoulos
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64
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Class B Director
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George Taniskidis
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64
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Class C Director
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Apostolos Tamvakakis
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67
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Class C Director
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Aristides J. Pittas has been a member of our Board of Directors and our Chairman and Chief
Executive Officer since our inception on March 20, 2024. He is also member of the Board of Directors and Chairman and Chief Executive Officer of Euroseas Ltd. since May 2005, EuroDry Ltd. since January 2018 and a member of the Board of Directors and
the Audit Committee of Pyxis Tankers Inc. Since 1997, Mr. Pittas has also been the President of Eurochart, our affiliate. Eurochart is a shipbroking company specializing in chartering and selling and purchasing ships. Since January 1995, Mr. Pittas
has been the President and Managing Director of Eurobulk, our affiliated ship management company. He resigned as Managing Director of Eurobulk in June 2005. Eurobulk is a ship management company that provides ocean transportation services. From
September 1991 to December 1994, Mr. Pittas was the Vice President of Oceanbulk Maritime SA, a ship management company. From March 1990 to August 1991, Mr. Pittas served both as the Assistant to the General Manager and the Head of the Planning
Department of Varnima International SA, a shipping company operating tanker vessels. From June 1987 until February 1990, Mr. Pittas was the head of the Central Planning department of Eleusis Shipyards S.A. From January 1987 to June 1987, Mr. Pittas
served as Assistant to the General Manager of Chios Navigation Shipping Company in London, a company that provides ship management services. From December 1985 to January 1987, Mr. Pittas worked in the design department of Eleusis Shipyards S.A.
where he focused on shipbuilding and ship repair. Mr. Pittas has a B.Sc. in Marine Engineering from University of Newcastle-Upon-Tyne and a MSc in both Ocean Systems Management and Naval Architecture and Marine Engineering from the Massachusetts
Institute of Technology.
Dr. Anastasios Aslidis has been our Chief Strategy
Officer since January 8, 2025 and Treasurer and member of our Board of Directors since our inception on March 20, 2024; he was our Chief Financial Officer from our inception to January 8, 2025. He is also member of the Board of Directors, Treasurer
and Chief Financial Officer of Euroseas Ltd. since September 2005, EuroDry Ltd. since January 2018, a member of the Board of Directors and chairman of the Audit Committee of Cosmos Health Inc. and a member of the Board of Directors of Vianair Inc.
Prior to joining Euroseas, Dr. Aslidis was a partner at Marsoft, an international consulting firm focusing on investment and risk management in the maritime industry. Dr. Aslidis has more than 30 years of experience in the maritime industry. He also
served as consultant to the Boards of Directors of shipping companies (public and private) advising on strategy development, asset selection and investment timing. Dr. Aslidis holds a Ph.D. in Ocean Systems Management (1989) from the Massachusetts
Institute of Technology, M.S. in Operations Research (1987) and M.S. in Ocean Systems Management (1984) also from the Massachusetts Institute of Technology, and a Diploma in Naval Architecture and Marine Engineering from the National Technical
University of Athens (1983).
Athina Atalioti has been our Chief
Financial Officer since January 8, 2025. Ms. Atalioti has been a member of the finance team of the Parent since March 2022 and has been involved in all corporate finance matters including preparation of financial results, financial analysis of
transactions, investment evaluation, financial modelling & planning, board communications and interfacing with investment banking community and with equity analysts. Prior to joining the Parent, Ms. Atalioti was a Senior Associate at Grifon
Capital, an affiliate of Fortress Investment Group, where she participated in evaluating investment opportunities totaling $27 billion across the real estate, shipping, and energy sectors. Ms. Atalioti holds an MSc in General Structural Engineering
(2016) from the Imperial College London and a Diploma in Civil Engineering from the National Technical University of Athens (2015).
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Stephania Karmiri has been our Secretary since our inception on March 20, 2024. Since July 1995,
Mrs. Karmiri has been the Administration Manager at Eurobulk, our affiliated ship management company. Eurobulk is a ship management company that provides ocean transportation services. At Eurobulk, Mrs. Karmiri has been responsible for dealing with
sale and purchase transactions, vessel registrations/deletions, bank loans, ensuring compliance of the company’s bank accounts, dealing with corporate matters of the entities, and supervising office administration. From May 1992 to June 1995, she was
secretary to the technical department of Oceanbulk Maritime SA, a ship management company. From 1988 to 1992, Mrs. Karmiri served as an assistant to brokers at Allied Shipbrokers, a company that provides shipbroking services for sale and purchase
transactions. Mrs. Stephania Karmiri has a BSc in Business Administration from the University of Patras.
Aristides P. Pittas has been our Vice Chairman and a member of our Board of Directors since July
31, 2024. He is also member of the Board of Directors and Vice Chairman of Euroseas Ltd. since May 2005 and EuroDry Ltd. since January 2018. Mr. Pittas has been a shareholder in over 100 oceangoing vessels during the last 20 years. Since February
1989, Mr. Pittas has been the Vice President of Oceanbulk Maritime SA, a ship management company. From November 1987 to February 1989, Mr. Pittas was employed in the supply department of Drytank SA, a shipping company. From November 1981 to June
1985, Mr. Pittas was employed at Trust Marine Enterprises, a brokerage house as a sale and purchase broker. From September 1979 to November 1981, Mr. Pittas worked at Gourdomichalis Maritime SA in the operation and Freight Collection department. Mr.
Pittas has a B.Sc in Economics from Athens School of Economics.
Panagiotis Kyriakopoulos has been a member of our Board of Directors since July 31, 2024. He has
also been a member of the Board of Directors of Euroseas Ltd. since May 2005 and EuroDry Ltd. since May 5, 2018. Since July 2002, he has been the Chief Executive Officer of CambridgeFinance Ltd., one of the leading Mass Media, Infrastructure and
Technology management companies in Greece. From July 1997 to July 2002 he was the C.E.O. of the Hellenic Post Group, the Universal Postal Service Provider, having the largest retail network in Greece for postal and financial services products. From
March 1996 until July 1997, Mr. Kyriakopoulos was the General Manager of ATEMKE SA, one of the leading construction companies in Greece listed on the Athens Stock Exchange. From December 1986 to March 1996, he was the Managing Director of Globe Group
of Companies, a group active in the areas of shipowning and management, textiles and food and distribution. The company was listed on the Athens Stock Exchange. From June 1983 to December 1986, Mr. Kyriakopoulos was an assistant to the Managing
Director of Armada Marine S.A., a company active in international trading and shipping, owning and managing a fleet of twelve vessels. Presently he is a BoD member of the Hellenic Federation of Enterprises (SEV) as well as Quest Group SA, Ellaktor
SA, Reds SA, Aktor Concessions SA. He has also been an investor in the shipping industry for more than 20 years. Mr. Kyriakopoulos has a B.Sc. degree in Marine Engineering from the University of Newcastle upon Tyne, a MSc. degree in Naval
Architecture and Marine Engineering with specialization in Management from the Massachusetts Institute of Technology and a Master degree in Business Administration (MBA) from Imperial College, London.
George Taniskidis has been a member of our Board of Directors since July 31, 2024. He has also
been a member of the Board of Directors of Euroseas Ltd. since May 2005 and EuroDry Ltd. since May 5, 2018. He is the Chairman of Optima Bank and Chairman of Core Capital Partners, a consulting firm specializing in debt restructuring. He was Chairman
and Managing Director of Millennium Bank and a member of the Board of Directors of BankEuropa (subsidiary bank of Millennium Bank in Turkey) until May 2010. He was also a member of the Executive Committee and the Board of Directors of the Hellenic
Banks Association. From 2003 until 2005, he was a member of the Board of Directors of Visa International Europe, elected by the Visa issuing banks of Cyprus, Malta, Portugal, Israel and Greece. From 1990 to 1998, Mr. Taniskidis worked at XIOSBANK
(until its acquisition by Piraeus Bank in 1998) in various positions, with responsibility for the bank’s credit strategy and network. Mr. Taniskidis studied Law in the National University of Athens and in the University of Pennsylvania Law School,
where he received a L.L.M. After law school, he joined the law firm of Rogers & Wells in New York, where he worked until 1989 and was also a member of the New York State Bar Association. He is also a member of the Young Presidents Organization.
78
Apostolos Tamvakakis has been a member of our Board of Directors since July 31, 2024. Mr.
Tamvakakis has also been a member of the Board of Directors of Euroseas Ltd. since June 2013 and EuroDry Ltd. since May 5, 2018. From January 2015 to February 2017 he was independent non-executive Vice Chairman of the Board of Directors of Piraeus
Bank. Since July 2012 he participated as a Member of the Board of Directors and Committees in various companies. From December 2009 to June 2012, Mr. Tamvakakis was appointed Chief Executive Officer of the National Bank of Greece. From May 2004 to
March 2009, he served as Chairman and Managing Director of Lamda Development, a real estate development company of the Latsis Group and from March 2009 to December 2009, he served on the management team of the Geneva-based Latsis Group, as Head of
Strategy and Business Development. From October 1998 to April 2004, he served as Deputy CEO of National Bank of Greece. Prior to that, he served as Deputy CEO of National Mortgage Bank of Greece, as Deputy General Manager of ABN AMRO Bank, as Manager
of Corporate Finance at Hellenic Investment Bank and as Planning Executive at Mobil Oil Hellas. He also served as Vice-Chairman of Athens Stock Exchange, Chairman of the Steering Committee of Interalpha Group of Banks, Chairman of Ethnokarta,
National Securities, AVIS (Greece), ETEVA and the Southeastern European Board of the Europay Mastercard Group. Mr. Tamvakakis has also served in numerous boards of directors and committees. He is the Chairman and Managing Partner of EOS Capital
Partners Alternative Investment Fund Manager, the investment manager of a private equity fund “EOS Hellenic Renaissance Fund”. He holds the positions of Vice Chairman of Gek Terna, Plaisio Computers, Hellenic Juices SA and is a member of the BoD of
ERGO Insurance Company, Eurocatering SA, Minerva SA and S. Mentekidis AE. He is a graduate of the Athens University of Economics and has an M.A. in Economics from the Saskatchewan University in Canada with major in econometrics and mathematical
economics.
79
Family Relationships
Aristides P. Pittas, Vice Chairman, is the cousin of Aristides J. Pittas, our Chairman, President and CEO.
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B.
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Compensation
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Executive Compensation
We have no direct employees. The services of our Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief
Administrative Officer, Investor Relations Officer, Internal Auditor and Secretary are provided by Eurobulk. These services are provided to us under our Master Management Agreement with Eurobulk under which we will pay a fee, before bonuses, adjusted
annually for Eurozone inflation to account for the increased management cost associated with us being a public company and other services to our subsidiaries. The amount of executive compensation to be paid to Eurobulk for the services of our
executives, Mr. Aristides J. Pittas, Ms. Athina Atalioti, Dr. Anastasios Aslidis, Mr. Symeon Pariaros Ms. Eirini Pitta, our Secretary Ms. Stephania Karmiri, and our Internal Auditor. was set at $500,000 for the year 2025 and will be applied pro rata
starting as of the Distribution date.
Director Compensation
Our directors who are also our officers or have executive positions or beneficially own greater than 10% of the outstanding common stock
receive no compensation for serving on our Board of Directors or its committees.
Directors who are not our officers, do not have any executive position or do not beneficially own greater than 10% of the outstanding
common stock receive the following compensation: an annual retainer of $5,000, plus $1,250 for attending a quarterly meeting of the Board of Directors, plus an additional retainer of $3,000 if serving as Chairman of the Audit Committee. They also
participate in the Company’s Equity Incentive Plan.
All directors are reimbursed reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors or any committee of
our Board of Directors.
Equity Incentive Plan
Prior to the Spin-off, our Board of Directors approved an equity incentive plan (the “2025 Equity Incentive Plan”). The 2025 Equity
Incentive Plan will be administered by the Board of Directors which can make awards totaling in aggregate up to 200,000 shares over 10 years after the 2025 Equity Incentive Plan’s adoption date. Officers, directors and employees (including any
prospective officer or employee) of the Company and its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to)
the Company and its subsidiaries and affiliates are eligible to receive awards under the 2025 Equity Incentive Plan. Awards may be made under the 2025 Equity Incentive Plan in the form of incentive stock options, non-qualified stock options, stock
appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares and cash awards.
On the date of the Spin-off, 35,760 non-vested shares corresponding to 89,400 unvested shares of our Parent were issued to 30 key persons
of which 29,300 will vest on July 1, 2025, 30,050 will vest on November 14, 2025 and 30,050 will vest on November 13, 2026; awards to officers and directors amount to 17,420 shares and the remaining 18,340 are awarded to employees of Eurobulk.
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C.
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Board Practices
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The current term of our Class A directors expires in 2028, the current term of our Class B directors expires in 2026 and the current term
of our Class C directors expires in 2027.
There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.
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Our Board of Directors does not have separate compensation or nomination committees, and instead, the entire Board of Directors performs
those responsibilities.
Audit Committee
We currently have an Audit Committee comprised of three independent members of our Board of Directors. The Audit Committee is responsible
for (1) the appointment, replacement, compensation and oversight of the work of the independent auditors and approving any non-audit work performed by such auditor, (2) the appointment, replacement, compensation and oversight of the work of the
internal auditor, (3) reviewing and approving the overall scope of the audit, (4) annually reviewing an independent auditors’ report describing the auditing firms’ internal quality control procedures, any material issues raised by the most recent
internal quality-control review or peer review of the auditing firm, (5) assisting the board in monitoring the integrity of our financial statements, the independent accountant’s qualifications and independence, the performance of the independent
accountants and our internal audit function and our compliance with legal and regulatory requirements, (6) discussing the annual audited financial and quarterly statements with management and the independent auditor, (7) discussing earnings press
releases, as well as financial information and earning guidance, (8) discussing policies with respect to risk assessment and risk management, (9) meeting separately, periodically, with management, internal auditors and the independent auditor, (10)
reviewing with the independent auditor any audit problems or difficulties and management’s response, (11) establishing hiring policies for employees or former employees of the independent auditors, (12) annually reviewing the adequacy of the audit
committee’s written charter, (13) handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time and (14) reporting regularly to the full board of directors. The members of the Audit
Committee are Mr. Panos Kyriakopoulos (Chairman and “audit committee financial expert” as such term is defined in Regulation S-K), Mr. Apostolos Tamvakakis and Mr. George Taniskidis.
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Code of Ethics
We have adopted a code of ethics that complies with the applicable guidelines issued by the SEC. Our code of ethics is posted on our
website: http://www.euroseas.gr under “Corporate Governance.” We intend to disclose any waivers of the code of ethics on our website under “Corporate Governance.”
Corporate Governance
Our Company’s corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall
Islands. We are exempt from many of Nasdaq’s corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq
corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. The practices that we follow in lieu of Nasdaq’s corporate governance rules are described below.
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We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may
not be able to maintain a Board of Directors with a majority of independent directors in the future.
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In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing
the executive officers’ compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee.
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In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and
recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become board members in writing. No formal written
charter has been prepared or adopted because this process is outlined in our bylaws.
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In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands
law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of
Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of
Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are
entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
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As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate
governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding
business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may
designate in writing a proxy to act on their behalf.
|
|
|
●
|
In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom
are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands.
|
82
|
|
●
|
The Board of Directors adopted a new Equity Incentive Plan in March 2025. Shareholder approval was not necessary since Marshall
Islands law permits the Board of Directors to take such actions.
|
|
|
●
|
As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers, or 5% or greater
shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company, or assets to be acquired, or in the consideration to be paid in the transaction(s) and the
present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more.
|
|
|
●
|
In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of
the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances.
|
Other than as noted above, we are in full compliance with all other applicable Nasdaq corporate governance standards.
|
D.
|
Employees
|
We have no salaried employees, although we pay Eurobulk for the services of our Chief Executive Officer, Chief Financial Officer, Chief
Strategy Officer, Chief Administrative Officer, Investor Relations Officer, Internal Auditor and Secretary: Mr. Aristides J. Pittas, Ms. Athina Atalioti, Dr. Anastasios Aslidis, Mr. Symeon Pariaros, Ms. Eirini Pitta, Mr. Konstantinos Siadimas and Ms.
Stephania Karmiri, respectively. Eurobulk also ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that all of our vessels employ experienced and competent
personnel. As of December 31, 2024, 27 officers and 50 crew members served on board the vessels in our fleet.
|
E.
|
Share Ownership
|
With respect to the ownership of our common stock by each of our directors and executive officers, and all of our directors and executive
officers as a group, see “Item 7. Major Shareholders and Related Party Transactions”.
All of the shares of our common stock have the same voting rights and are entitled to one vote per share.
Equity Incentive Plan
See Item 6.B of this annual report, “Compensation”.
Options
No options were granted during the fiscal year ended December 31, 2024. There are currently no options outstanding to acquire any of our
shares.
Warrants
We do not currently have any outstanding warrants.
|
F.
|
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
|
Not Applicable.
83
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
|
A.
|
Major Shareholders
|
The following table sets forth certain information regarding the beneficial ownership of our voting stock as of April 30, 2025 by each
person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of our voting stock, each of our directors and executive officers, and all of our directors and executive officers and 5% owners as a group. All of our
shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.
|
Name of Beneficial Owner (1)
|
|
Number of Shares of Common Stock Beneficially Owned
|
|
|
Percent of common Stock (15)
|
|
||
|
Containers Shareholders Trinity Ltd. (2)
|
|
|
1,098,805
|
|
|
|
39.0
|
%
|
|
Friends Investment Company Inc. (3)
|
|
|
216,208
|
|
|
|
7.7
|
%
|
|
Eurobulk Marine Holdings Inc. (4)
|
|
|
211,268
|
|
|
|
7.5
|
%
|
|
Family United Navigation Co. (5)
|
|
|
88,600
|
|
|
|
3.1
|
%
|
|
Aristides J. Pittas(6)
|
|
|
35,740
|
|
|
|
1.3
|
%
|
|
Anastasios Aslidis (7)
|
|
|
18,915
|
|
|
|
(*
|
)
|
|
Panagiotis Kyriakopoulos (8)
|
|
|
5,920
|
|
|
|
(*
|
)
|
|
Aristides P. Pittas (9)
|
|
|
8,760
|
|
|
|
(*
|
)
|
|
Apostolos Tamvakakis (10)
|
|
|
3,337
|
|
|
|
(*
|
)
|
|
George Taniskidis (11)
|
|
|
1,920
|
|
|
|
(*
|
)
|
|
Stephania Karmiri (12)
|
|
|
300
|
|
|
|
(*
|
)
|
|
Symeon Pariaros (13)
|
|
|
1,140
|
|
|
|
(*
|
)
|
|
Athina Atalioti (14)
|
-
|
(*
|
)
|
|||||
|
Konstantinos Siadimas (15)
|
|
|
840
|
|
|
|
(*
|
)
|
|
All directors and officers and 5% owners as a group
|
|
|
1,691,753
|
|
|
|
58.6
|
%
|
* Indicates less than 1.0%.
|
(1)
|
Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and
generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by him/her. For the entities included above there is no agreement for joint voting in place.
|
|
(2)
|
Represents 1,098,805 shares of common stock held of record by Containers Shareholders Trinity Ltd. (“CST”). A majority of the
shareholders of CST are members of the Pittas family. Investment power and voting control by CST resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by CST may be taken by a majority
of the members on its Board of Directors.
|
|
(3)
|
Represents 216,208 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the
Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the
members on its Board of Directors.
|
|
(4)
|
Represents 211,268 shares of common stock held of record by Eurobulk Marine Holdings Inc. (“EMH”). A majority of the shareholders of
EMH are members of the Pittas family. Investment power and voting control by EMH resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by EMH may be taken by a majority of the members
on its Board of Directors.
|
84
|
(5)
|
Represents 88,600 shares of common stock held of record by Family United Navigation Co. (“FUN”). A majority of the shareholders of FUN
are members of the Pittas family. Investment power and voting control by FUN resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by FUN may be taken by a majority of the members on
its Board of Directors.
|
|
(6)
|
Does not include 509,243 shares of common stock held of record by CST, and Friends by virtue of ownership interest in above entities
by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,200 shares vesting on July 1, 2025, 2,200 shares of common stock vesting on November 15, 2025 and 2,200 shares vesting on
November 13, 2026.
|
|
(7)
|
Does not include 3,738 shares of common stock held of record by CST by virtue of ownership interest in above entity by Mr. Aslidis.
Mr. Aslidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 1,500 shares vesting on July 1, 2025, 1,500 shares of common stock vesting on November 15, 2025 and 1,500 shares vesting on November 13, 2026.
|
|
(8)
|
Includes 280 shares vesting on July 1, 2025, 280 shares of common stock vesting on November 15, 2025 and 280 shares vesting on
November 13, 2026.
|
|
(9)
|
Does not include 143,876 shares of common stock held of record by CST, Friends and Family United Navigation Co., by virtue of
ownership interest in above entities by Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 620 shares vesting on July 1, 2025, 620 shares of common stock
vesting on November 14, 2025 and 620 shares vesting on November 13, 2026.
|
|
(10)
|
Includes 280 shares vesting on July 1, 2025, 280 shares of common stock vesting on November 14, 2025 and 280 shares vesting on
November 13, 2026.
|
|
(11)
|
Does not include 18,151 shares held of record by Friends, by virtue of Mr. Taniskidis’ ownership in CST and Friends. Mr. Taniskidis
disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 280 shares vesting on July 1, 2025, 280 shares of common stock vesting on November 14, 2025 and 280 shares vesting on November 13, 2026.
|
|
(12)
|
Includes 100 shares vesting on July 1, 2025, 250 shares vesting on November 14, 2025 and 100 shares vesting on November 13, 2026.
|
|
(13)
|
Includes 380 shares vesting on July 1, 2025, 380 shares of common stock vesting on November 14, 2025 and 380 shares vesting on
November 13, 2026.
|
|
(14)
|
Includes 100 shares vesting on July 1, 2025, 250 shares vesting on November 14, 2025 and 100 shares vesting on November 13, 2026.
|
|
(15)
|
Includes 280 shares vesting on July 1, 2025, 280 shares of common stock vesting on November 14, 2025 and 280 shares vesting on
November 13, 2026.
|
|
(15)
|
Voting stock includes 35,760 unvested shares for a total of 2,816,615 issued and outstanding shares of the Company as of April 30,
2025.
|
85
|
B.
|
Related Party Transactions
|
The operations of our vessels are managed by Eurobulk, an affiliated ship management company owned by our Chairman and CEO and his family,
under a Master Management Agreement with us and separate management agreements with each shipowning company. Under our Master Management Agreement, Eurobulk is responsible for all aspects of management and compliance for the Company, including the
provision of the services of our Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Administrative Officer, Investor Relations Officer, Internal Auditor and Secretary. Eurobulk is also responsible for all commercial
management services, which include obtaining employment for our vessels and managing our relationships with charterers. Eurobulk also performs technical management services, which include managing day-to-day vessel operations, performing general
vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising dry docking and repairs,
arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions
described above and certain accounting services.
Our Master Management Agreement with Eurobulk, was entered into as part of the Spin-off Distribution and is the substantially similar to
the Master Management Agreement between our Parent and Eurobulk, relating to our vessels that were previously owned by Euroseas. The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such
as sale of the Company or Eurobulk or the bankruptcy of either party. The Master Management Agreement will run through January 1, 2029 and will authomatically be extended extended after each period for an additional five-year period unless terminated
on or before the 90th day preceding the termination date. Pursuant to the Master Management Agreement, vessels we may acquire in the future will enter into a separate management agreement with Eurobulk with a rate and term coinciding with the rate
and remaining term of the Master Management Agreement pursuant to the Master Management Agreement.
The Master Management Agreement will be adjusted annually for inflation in the Eurozone every January 1st. For the year ended
December 31, 2022 the fixed vessel management fee amounted to Euro 720 per day per vessel in operation. From January 1, 2023, the vessel fixed management fee was adjusted for inflation at Euro 775 per day per vessel in operation. From January 1,
2024, the vessel fixed management fee was adjusted for inflation at Euro 810 (approximately $842, using the exchange rate as of December 31, 2024, which was $1.04 per euro) per day per vessel in operation. We paid Eurobulk $842,718, $927,573 and
$971,346 in 2022, 2023 and 2024, respectively for daily management fees for the vessels managed, and we were allocated $425,360, $436,493 and $394,516 in 2022, 2023 and 2024, respectively, of the annual fee paid by Euroseas to Eurobulk, which is a
proportion of the fixed annual management fee paid to Eurobulk included in General and Administrative expenses.
Starting January 1, 2025, the daily management fee per vessel was adjusted to 850 Euros per vessel (approximately $884, using the exchange
rate as of December 31, 2024, which was $1.04 per Euro), to reflect further inflation. This cost is reduced by half (425 Euros per vessel per day or approximately $442, using the exchange rate as of December 31, 2024, which was $1.04 per Euro) for
any vessels that are laid up. This fee will remain effective and adjusted for inflation every year until the expiration of the Management Agreement on January 1, 2029.
We receive chartering and sale and purchase services from Eurochart, an affiliate, and pay a commission of 1.25% on charter revenue and 1%
on vessel sale price. During 2024, the Company paid Eurochart $207,338 for chartering commissions and nil for vessel sales. During 2023 and 2022, the Company paid Eurochart $227,556 and $312,315 for chartering commissions and nil commissions for
vessel sales.
Technomar S.A., a crewing agent, and Sentinel Marine Services Inc., an insurance brokering company, are affiliates to whom we pay a fee of
about $50 per crew member per month and a commission on insurance premiums not exceeding 5%, respectively. Total fees charged by Sentinel and Technomar were $21,489 and $42,764 in 2022, $18,756 and $37,523 in 2023 and $19,928 and $41,870 in 2024 ,
respectively.
Aristides J. Pittas is currently the Chairman of each of Eurochart and Eurobulk, both of which are our affiliates.
86
The Parent has granted us a right of first refusal, pursuant to a Right of First Refusal Agreement, to acquire any vessel which it may
consider to sell in the future if the vessel is older than 15 years of age at the time of the sale. Additionally, pursuant to the Right of First Refusal Agreement, Parent grants us a right of first refusal under certain conditions over any employment
opportunity for a container vessel pursuant to a market charter presented or available to Parent with respect to any vessel owned or chartered in, directly or indirectly, by Parent. For a complete description of the rights granted to us by Parent, we
encourage you to read the Right of First Refusal Agreement, which we have filed as an exhibit hereto.
We have entered into a contribution and conveyance agreement with the Parent, dated as of January 8, 2025, pursuant to which the Parent has
contributed certain vessel-owning subsidiaries to us in exchange for our common shares. The Company has agreed to pay any and all sales, use and similar taxes arising out of the contributions, conveyances and deliveries to be made pursuant to the
agreement, and will pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection therewith. For a complete description of the terms of this agreement, we encourage you to read the contribution and
conveyance agreement, which we have filed as an exhibit hereto.
We have entered into a registration rights agreement with Friends Investment Company Inc., Containers Shareholders Trinity
Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co. pursuant to which we will grant them the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of our
common stock held by the holders. Under the registration rights agreement, the holders have the right to request us to register the sale of shares held by it on its behalf and may require us to make available shelf registration statements permitting
sales of shares into the market from time to time over an extended period. In addition, they have the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us. For a complete description of the
registration rights agreement, we encourage you to read the agreement, which we have filed as an exhibit hereto.
|
C.
|
Interests of Experts and Counsel
|
Not Applicable.
|
Item 8.
|
Financial Information
|
|
A.
|
Combined Carve-out Financial Statements and Other Financial Information
|
See Item 18.
Legal Proceedings
To our knowledge, there are no material legal proceedings to which we are a party or to which any of our properties are subject, other than
routine litigation incidental to our business. In our opinion, the disposition of these lawsuits should not have a material impact on our combined carve-out results of operations, financial position and cash flows.
Dividend Policy
The declaration and payment of dividends, if any, are subject to the discretion of our board of directors. Our board of directors will
review and amend our dividend policy from time to time in light of our business plans and other factors.
Marshall Islands law generally prohibits the payment of dividends (i) other than from surplus, (ii) when a company is insolvent or (iii) if
the payment of the dividend would render the company insolvent.
We believe that, under current law, any dividends that we may pay in the future from earnings and profits constitute “qualified dividend income” and as such
are generally subject to a 20% United States federal income tax rate with respect to non-corporate United States shareholders. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent
of a United States shareholder’s tax basis in its common stock on a dollar-for-dollar basis and thereafter as capital gain. Please see the section of this registration statement entitled “Taxation” under Item 10.E for additional information relating
to the tax treatment of our dividend payments.
87
|
B.
|
Significant Changes
|
There have been no significant changes since the date of the annual financial statements included in this annual report, other than those
described in Note 15 “Subsequent Events” of our combined carve-out financial statements and Note 4 of the Euroholdings Ltd. financial statement as of December 31, 2024.
|
Item 9.
|
The Offer and Listing
|
|
A.
|
Offer and Listing Details
|
The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol “EHLD”
since March 18, 2025.
|
B.
|
Plan of Distribution
|
Not Applicable.
|
C.
|
Markets
|
The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol “EHLD”
since March 18, 2025. Shares of Euroholdings Ltd. were distributed on March 17, 2025 (the “Distribution Date”) to shareholders of record of Euroseas Ltd. as of March 7, 2025 (the “Record Date”). Euroseas shareholders received one share of common
stock of Euroholdings for every 2.5 shares of common stock of Euroseas they owned as of the Record Date. A “when-issued” public trading market for Eurholdings’s common stock began on March 7, 2025 on Nasdaq Capital Market under the symbol “EHLDV” and
continued through the close of trading on March 17, 2025. Beginning on March 18, 2025, “when-issued” trading under the symbol “EHLDV” ended and Euroholdings began trading “regular-way” trading on the Nasdaq Capital Market under the symbol “EHLD”.
|
D.
|
Selling Shareholders
|
Not Applicable.
|
E.
|
Dilution
|
Not Applicable.
|
F.
|
Expenses of the Issue
|
Not Applicable.
|
Item 10.
|
Additional Information
|
|
A.
|
Share Capital
|
Not Applicable.
|
B.
|
Memorandum and Articles of Association
|
88
Amended and Restated Articles of Incorporation and Bylaws
Our current amended and restated articles of incorporation were filed with the SEC as Exhibit 1.1 (Amended and Restated Articles of
Incorporation) to our Registration Statement on Form 20-F on January 7, 2025, and our current bylaws, were filed with the SEC as Exhibits 1.2 (Bylaws) to our Registration Statement on Form 20-F on January 7, 2025. The information contained in these
exhibits is incorporated by reference herein.
Purpose
Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which
corporations may now or hereafter be organized under the Business Corporations Act of the Marshall Islands, or the BCA.
Authorized Capitalization
Information regarding the rights, preferences and restrictions attaching to each class of our shares is described in Exhibit 2.2 to this
annual report titled “Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.”
|
C.
|
Material Contracts
|
As of May 15, 2025, we have not entered into any other new material contracts in the last two years, other than those
disclosed herein, entered in the ordinary course of business or already attached in the exhibits. We also refer you to “Item 4. Information on the Company -A. History and Development of the Company,” “Item 5. Operating and Financial Review and
Prospects -B. Liquidity and Capital Resources” and “Item 7. Major Shareholders and Related Party Transactions -B. Related Party Transactions” for a discussion of existing material agreements.
|
D.
|
Exchange Controls
|
Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or
restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our shares.
|
E.
|
Taxation
|
The following is a discussion of the material Marshall Islands, Liberian and United States federal income tax considerations applicable to
us and U.S. Holders and Non-U.S. Holders, each as discussed below, of our common stock.
Marshall Islands Tax Considerations
We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and
no Marshall Islands withholding tax will be imposed upon payments of dividends by us to holders of our common stock that are not residents or domiciled or carrying any commercial activity in the Marshall Islands. The holders of our common stock will
not be subject to Marshall Islands tax on the sale or other disposition of such common stock.
Liberian Tax Considerations
Certain of our subsidiaries are incorporated in the Republic of Liberia. Under the Consolidated Tax Amendments Act of 2010, our Liberian
subsidiaries will be deemed non-resident Liberian corporations wholly exempted from Liberian taxation effective as of 1977, and distributions we make to our shareholders will be made free of any Liberian withholding tax.
89
United States Federal Income Tax
The following are the material United States federal income tax consequences to us of our activities and to U.S. Holders and Non-U.S.
Holders, each as defined below, of our common stock. The following discussion of United States federal income tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the
United States Department of the Treasury, or the Treasury Regulations, all as of the date of this Annual Report, and all of which are subject to change, possibly with retroactive effect. This discussion is also based in part upon Treasury Regulations
promulgated under Section 883 of the Code. The discussion below is based, in part, on the description of our business as described in “Business” above and assumes that we conduct our business as described in that section. References in the following
discussion to “we” and “us” are to Euroholdings and its subsidiaries on a consolidated basis.
90
United States Federal Income Taxation of Our Company
Taxation of Operating Income: In General
Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States
federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance,
joint operating agreement, code sharing arrangement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as
“shipping income,” to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end,
in the United States exclusive of certain U.S. territories and possessions constitutes income from sources within the United States, which we refer to as “U.S.-source shipping income.”
Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within
the United States. We are not permitted by law to engage in transportation that produces income which is considered to be 100% from sources within the United States.
Shipping income attributable to transportation exclusively between non-United States ports will be considered to be 100% derived from
sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.
In the absence of exemption from tax under Section 883 of the Code, our gross U.S.-source shipping income would be subject to a 4% tax
imposed without allowance for deductions as described below.
Exemption of Operating Income from United States Federal Income Taxation
Under Section 883 of the Code and the Treasury Regulations thereunder, we will be exempt from United States federal income taxation on our
U.S.-source shipping income if:
|
|
●
|
we are organized in a foreign country, or our country of organization, that grants an “equivalent exemption” to corporations organized in the United
States; and
|
either
|
|
●
|
more than 50% of the value of our stock is owned, directly or indirectly, by “qualified shareholders,” individuals who are “residents” of our country of
organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States, which we refer to as the “50% Ownership Test,” or
|
|
|
●
|
our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country that grants an
“equivalent exemption” to United States corporations, or in the United States, which we refer to as the “Publicly-Traded Test.”
|
The Marshall Islands, Liberia and Panama, the jurisdictions where we and our ship-owning subsidiaries were incorporated, each grants an
“equivalent exemption” to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S.-source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.
The Treasury Regulations provide, in pertinent part, that the stock of a foreign corporation will be considered to be “primarily traded” on
an established securities market in a country if the number of shares of each class of stock that is traded during the taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded
during that year on established securities markets in any other single country. Our common stock is “primarily traded” on the Nasdaq Capital Market, which is an established securities market for these purposes.
91
The Treasury Regulations also require that our stock be “regularly traded” on an established securities market. Under the Treasury
Regulations, our common shares will be considered to be “regularly traded” on an established securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes
of stock entitled to vote and total value, are listed on such market, to which we refer as the Listing Threshold. Our common stock, which is listed on the Nasdaq Capital Market and is our only class of publicly-traded stock, constituted more than 50%
of our outstanding shares by value for the 2024 taxable year, and accordingly, we believe that we satisfied the listing threshold for the 2024 taxable year.
It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is
traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, or the Trading Frequency Test; and (ii) the aggregate number of shares of such class of stock traded
on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the Trading Volume Test. The Company
currently satisfies and anticipates that it will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be
deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.
Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be
“regularly traded” on an established securities market for any taxable year during which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified attribution rules, on more than
half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of outstanding shares, to which we refer as the “5% Override Rule.”
For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common
shares, or 5% Shareholders, the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the SEC, as owning 5% or more of our
common shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.
In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if
we can establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half
the number of days during the taxable year. In order to benefit from this exception to the 5% Override Rule, the Company must satisfy certain substantiation requirements in regards to the identity of its 5% Shareholders.
We believe that we were subject to the Five Percent Override Rule, but nonetheless satisfied the Publicly-Traded Test for the 2024 taxable
year because our nonqualified 5% Shareholders did not own more than 50% of our common stock for more than half of the days during the taxable year. We intend to take this position on our 2024 U.S. federal income tax returns.
Taxation in Absence of Exemption
To the extent that the benefits of Section 883 are unavailable for any taxable year, our U.S.-source shipping income, to the extent not
considered to be “effectively connected” with the conduct of a United States trade or business, as described below, was subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions which we refer to as
the “4% gross basis tax regime”. Since under the sourcing rules described above, no more than 50% of our shipping income is treated as being derived from United States sources, the maximum effective rate of United States federal income tax on our
shipping income will not exceed 2% under the 4% gross basis tax regime.
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To the extent the benefits of the Section 883 of the Code are unavailable and our U.S.-source shipping income is considered to be
“effectively connected” with the conduct of a United States trade or business, as described below, any such “effectively connected” U.S.-source shipping income, net of applicable deductions, would be subject to the United States federal corporate
income tax currently imposed at a rate of 21%. In addition, we may be subject to the 30% United States federal “branch profits” taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for
certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such United States trade or business.
Our U.S.-source shipping income would be considered “effectively connected” with the conduct of a United States trade or business only if:
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We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
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substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows
a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.
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We do not currently have, intend to have, or permit circumstances that would result in our having, any vessel sailing to or from the United States on a
regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, it is anticipated that none of our United States source shipping income will be “effectively connected” with the conduct of a
United States trade or business for any taxable year.
United States Taxation of Gain on Sale of Vessels
Regardless of whether we qualify for exemption under Section 883 of the Code, we will not be subject to United States federal income
taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside
of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the
United States.
United States Federal Income Taxation of U.S. Holders
As used herein, the term “U.S. Holder” means a beneficial owner of common stock that is a United States citizen or resident, United States
corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if (i) a court within the United States is able to exercise
primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a United States
person for United States federal income tax purposes.
This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which,
such as dealers in securities, investors whose functional currency is not the United States dollar, persons subject to an alternative minimum tax, persons subject to the “base erosion and anti-avoidance” tax, persons required to recognize income for
United States federal income tax purposes no later than when such income is reported on an “applicable financial statement” and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be
subject to special rules. This discussion deals only with holders who hold the common stock as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under
United States federal, state, local or foreign law of the ownership of common stock. This discussion does not address the tax consequences of owning our preferred stock.
If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the
activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.
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Distributions
Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a
U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United
States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in his common stock on a dollar-for-dollar basis and
thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations generally will not be entitled to claim a dividend received deduction with respect to any distributions they receive from us. Dividends
paid with respect to our common stock will generally be treated as “passive category income” or, in the case of certain types of U.S. Holders, “general category income” for purposes of computing allowable foreign tax credits for United States foreign
tax credit purposes.
Dividends paid on our common stock to a U.S. Holder who is an individual, trust or estate, or a U.S. Individual Holder, will generally be
treated as “qualified dividend income” that is taxable to such U.S. Individual Holders at preferential tax rates provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the
immediately preceding taxable year (which we do not believe we are, have been or will be), (2) our common stock is readily tradable on an established securities market in the United States (such as the Nasdaq Capital Market, on which our common stock
is listed), (3) the U.S. Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend, and (4) the U.S. Individual Holder is not under an
obligation (whether pursuant to a short sale or otherwise) to make payments with respect to positions in similar or related property. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in
the hands of a U.S. Individual Holder. Dividends paid on our stock prior to the date on which our common stock became listed on the Nasdaq Capital Market were not eligible for these preferential rates. Any dividends paid by us which are not eligible
for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder.
Special rules may apply to any “extraordinary dividend” generally, a dividend paid by us in an amount which is equal to or in excess of ten
percent of a shareholder’s adjusted tax basis (or fair market value in certain circumstances) in a share of our common stock. If we pay an “extraordinary dividend” on our common stock that is treated as “qualified dividend income,” then any loss
derived by a U.S. Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.
Sale, Exchange or other Disposition of Common Stock
Assuming we do not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable
gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such
stock. Such gain or loss will generally be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be
treated as U.S.-source income or loss, as applicable, for United States foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.
Passive Foreign Investment Company Status and Significant Tax Consequences
Special United States federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a passive
foreign investment company, or PFIC, for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common stock, either:
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at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in
the active conduct of a rental business); or
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at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as
“passive assets”.
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For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and
assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive
income. By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.
Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a PFIC with respect to
any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, the
gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute
passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a
PFIC. We believe there is substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage
charters as services income for other tax purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Moreover, in the absence of any legal authority
specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable
year, there can be no assurance that the nature of our operations will not change in the future.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year which included a U.S. Holder’s holding period in our
common stock, then such U.S. Holder would be subject to different United States federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “qualified electing fund,” which election we refer to as a “QEF
election”. As an alternative to making a QEF election, a U.S. Holder should be able to make a “mark-to-market” election with respect to our common stock, as discussed below. In addition, if we were to be treated as a PFIC, a U.S. Holder of our common
stock would be required to file annual information returns with the IRS.
In addition, if a U.S. Holder owns our common stock and we are a PFIC, such U.S. Holder must generally file IRS Form 8621 with the IRS.
U.S. Holders Making a Timely QEF Election
A U.S. Holder who makes a timely QEF election with respect to our common stock, or an Electing Holder, would report for United States
federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder. Our net operating losses or net capital losses would not
pass through to the Electing Holder and will not offset our ordinary earnings or net capital gain reportable to the Electing Holder in subsequent years (although such losses would ultimately reduce the gain, or increase the loss, if any, recognized
by the Electing Holder on the sale of his common stock). Distributions received from us by an Electing Holder are excluded from the Electing Holder’s gross income to the extent of the Electing Holder’s prior inclusions of our ordinary earnings and
net capital gain. The Electing Holder’s tax basis in his common stock would be increased by any amount included in the Electing Holder’s income. Distributions received by an Electing Holder, which are not includible in income because they have been
previously taxed, would decrease the Electing Holder’s tax basis in the common stock. An Electing Holder would generally recognize capital gain or loss on the sale or exchange of common stock.
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U.S. Holders Making a Timely Mark-to-Market Election
A U.S. Holder who makes a timely mark-to-market election with respect to our common stock would include annually in the U.S. Holder’s
income, as ordinary income, any excess of the fair market value of the common stock at the close of the taxable year over the U.S. Holder’s then adjusted tax basis in the common stock. The excess, if any, of the U.S. Holder’s adjusted tax basis at
the close of the taxable year over the then fair market value of the common stock would be deductible in an amount equal to the lesser of the amount of the excess or the net mark-to-market gains that the U.S. Holder included in income in previous
years with respect to the common stock. A U.S. Holder’s tax basis in his common stock would be adjusted to reflect any income or loss amount recognized pursuant to the mark-to-market election. A U.S. Holder would recognize ordinary income or loss on
a sale, exchange or other disposition of the common stock; provided, however, that any ordinary loss on the sale, exchange or other disposition may not exceed the net mark-to-market gains that the U.S. Holder included in income in previous years with
respect to the common stock.
U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election
A U.S. Holder who does not make a timely QEF Election or a timely mark-to-market election, which we refer to as a “Non-Electing Holder”,
would be subject to special rules with respect to (i) any “excess distribution” (generally, the portion of any distributions received by the Non-Electing Holder on the common stock in a taxable year in excess of 125% of the average annual
distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common stock), and (ii) any gain realized on the sale or other disposition of the common stock.
Under these rules, (i) the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s holding period for the common stock; (ii) the amount allocated to the current taxable year, and any taxable year prior to the first
taxable year in which we were a PFIC, would be taxed as ordinary income; and (iii) the amount allocated to each of the other prior taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for
that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. If a Non-Electing Holder dies while owning the common stock, the Non-Electing
Holder’s successor would be ineligible to receive a step-up in the tax basis of that common stock.
United States Federal Income Taxation of “Non-U.S. Holders”
A beneficial owner of common stock (other than a partnership) that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder.”
Dividends on Common Stock
Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with
respect to our common stock, unless that income is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with
respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.
Sale, Exchange or Other Disposition of Common Stock
Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale,
exchange or other disposition of our common stock, unless:
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such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States, if the Non-U.S. Holder is entitled to
the benefits of a United States income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
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the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions
are met.
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If the Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the
common stock, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in
the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, its earnings and profits that are attributable to the effectively connected income, subject to
certain adjustments, may be subject to an additional United States federal “branch profits” tax at a rate of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.
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Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information
reporting requirements. Such payments will also be subject to backup withholding tax if a U.S. Individual Holder:
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fails to provide an accurate taxpayer identification number;
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is notified by the IRS that he failed to report all interest or dividends required to be shown on your United States federal income tax returns; or
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in certain circumstances, fails to comply with applicable certification requirements.
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Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status
on an appropriate IRS Form W-8.
If a shareholder sells our common stock to or through a United States office of a broker, the payment of the proceeds is subject to both
United States backup withholding and information reporting unless the shareholder certifies that it is a non-U.S. person, under penalties of perjury, or the shareholder otherwise establishes an exemption. If a shareholder sells our common stock
through a non-United States office of a non-United States broker and the sales proceeds are paid outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information
reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if a shareholder sells our common stock through a non-United States office of a broker that is a
United States person or has some other contacts with the United States.
Backup withholding is not an additional tax. Rather, a shareholder generally may obtain a refund of any amounts withheld under backup
withholding rules that exceed the shareholder’s United States federal income tax liability by filing a refund claim with the IRS.
Individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who are Non-U.S.
Holders and certain United States entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code and the applicable Treasury Regulations) are required to file IRS Form 8938 (Statement of Specified Foreign Financial
Assets) with information relating to each such asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year. Specified foreign financial
assets would include, among other assets, our common stock, unless the common stock were held through an account maintained with a United States financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless
the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, the statute of limitations on the assessment and collection of United States federal income tax with respect to a taxable year for which the filing of
IRS Form 8938 is required may not close until three years after the date on which IRS Form 8938 is filed. U.S. Holders (including United States entities) and Non-U.S. Holders are encouraged to consult their own tax advisors regarding their reporting
obligations under Section 6038D of the Code.
Changes in Global Tax Laws
Long-standing international tax initiatives that determine each country’s jurisdiction to tax cross-border international trade and profits
are evolving as a result of, among other things, initiatives such as the Anti-Tax Avoidance Directives, as well as the Base Erosion and Profit Shifting reporting requirements, mandated and/or recommended by the EU, G8, G20 and Organization for
Economic Cooperation and Development, including the imposition of a minimum global effective tax rate for multinational businesses regardless of the jurisdiction of operation and where profits are generated (Pillar Two). As these and other tax laws
and related regulations change (including changes in the interpretation, approach and guidance of tax authorities), our financial results could be materially impacted. Given the unpredictability of these possible changes and their potential
interdependency, it is difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could adversely affect our financial results.
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On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar Two global corporate minimum tax rate of 15% on companies with
revenues of at least €750 million effective from 2024. Various countries have either adopted implementing legislation or are in the process of drafting such legislation. Any new tax law in a jurisdiction where we conduct business or pay tax could
have a negative effect on our company.
We encourage each shareholder to consult with his, her or its own tax advisor as to particular tax consequences to it of
holding and disposing of our common stock, including the applicability of any state, local or foreign tax laws and any proposed changes in applicable law.
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F.
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Dividends and paying agents
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Not Applicable.
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G.
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Statement by experts
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Not Applicable.
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H.
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Documents on display
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We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be
inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC’s website: http://www.sec.gov. You may obtain information on the operation of the public reference room by
calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.
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I.
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Subsidiary Information
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Not Applicable.
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J.
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Annual Report to Security Holders
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Not Applicable.
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Item 11.
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Quantitative and Qualitative Disclosures about Market Risk
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In the normal course of business, we face risks that are non-financial or non-quantifiable. Such risks principally include country risk,
credit risk and legal risk. Our operations may be affected from time to time in varying degrees by these risks but their overall effect on us is not predictable. We have identified the following market risks as those which may have the greatest
impact upon our operations:
Interest Rate Fluctuation Risk
We are not currently subject to interest rate risk due to the full repayment of our outstanding indebtedness in March 2024.
Foreign Currency Exchange Rate Risk
The international containership shipping industry’s functional currency is the U.S. dollar. We generate all of our revenues in U.S.
dollars, but incurred approximately 20% of our vessel operating expenses and drydocking expenses in 2024 in currencies other than U.S. dollars. Comparatively, in 2023 approximately 22% of our vessel operating expenses and drydocking expenses were in
currencies other than U.S. dollars. In addition, our vessel management fee is denominated in Euros and certain general and administrative expenses (about 7% in 2024) are mainly in Euros and some other currencies. As of December 31, 2024,
approximately 23% of our outstanding trade accounts payable were denominated in currencies other than the U.S. dollar, mainly in Euros. We do not use currency exchange contracts to reduce the risk of adverse foreign currency movements but we believe
that our exposure from market rate fluctuations is unlikely to be material. Net foreign exchange loss for the year ended December 31, 2023 was $2,681, while the net foreign exchange gain for the year ended December 31, 2024 was $8,940.
A hypothetical 10% immediate and uniform adverse move in all currency exchange rates from the rates in effect as of December 31, 2024,
would have increased our vessel operating expenses and dry-docking expenses by approximately $0.18 million and the fair value of our outstanding trade accounts payable by approximately $0.03 million.
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Item 12.
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Not Applicable.
PART II
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Item 13.
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Defaults, Dividend Arrearages and Delinquencies
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None.
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Item 14.
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Material Modifications to the Rights of Security Holders and Use of Proceeds
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On May 13, 2025, we adopted a shareholder rights agreement effective as of that date and declared a dividend distribution of one preferred
stock purchase right to purchase one one-thousandth of our Series A Participating Preferred Stock for each outstanding share of our common stock, to shareholders of record at the close of business on May 13, 2025. Each right entitles the registered
holder, upon the occurrence of certain events, to purchase from us one one-thousandth of a share of Series A Participating Preferred Stock at an exercise price of $30.00, subject to adjustment. The rights will expire on the earliest of (i) May 14,
2035 or (ii) redemption or exchange of the rights. The shareholder rights agreement was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the
Company. We believe that the shareholder rights agreement should enhance the board of directors’ negotiating power on behalf of shareholders in the event of a coercive offer or proposal. We are not currently aware of any such offers or proposals and
we adopted the plan as a matter of prudent corporate governance. Please see Exhibit 4.1 to this annual report for a description of our Shareholder Rights Agreement.
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Item 15.
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Controls and Procedures
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(a)
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Evaluation of Disclosure Controls and Procedures
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Pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act, the Company’s management, under the supervision and with the participation of
the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2024. The term disclosure controls and procedures is defined under
SEC rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2024, our disclosure
controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC.
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(b)
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Management’s Annual Report on Internal Control over Financial Reporting
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This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an
attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
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(c)
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Attestation Report of the Registered Public Accounting Firm
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This annual report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of
the SEC for newly public companies and because, as an emerging growth company, we are exempt from this requirement.
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(d)
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Changes in Internal Control over Financial Reporting
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No change in the Company’s internal control over financial reporting occurred during the period covered by this annual report that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our
internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be
met. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and
instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may
become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Item 16. [Reserved]
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Item 16A.
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Audit Committee Financial Expert
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Our Board of Directors has determined that all the members of our Audit Committee qualify as financial experts and they are all considered
to be independent according to Nasdaq and SEC rules. Mr. Panos Kyriakopoulos serves as the Chairman of our Audit Committee and as the Audit Committee’s financial expert with Mr. Apostolos Tamvakakis and Mr. George Taniskidis as members.
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Item 16B.
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Code of Ethics
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We have adopted a code of ethics that applies to officers and employees. Our code of ethics is attached as Exhibit 11.1 to this annual
report and is posted in our website, http://www.euroseas.gr, under “Corporate Governance”.
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Item 16C.
|
Principal Accountant Fees and Services
|
| (a) |
Audit Fees
|
Deloitte Certified Public Accountants S.A. (PCAOB ID No. 1163), an independent registered public accounting firm, has audited our annual
financial statements acting as our independent auditor. This table below sets forth the total amounts billed and accrued for Deloitte Certified Public Accountants S.A., the member firms of Deloitte and their respective affiliates (collectively,
“Deloitte”):
|
|
2023
(dollars in thousands)
|
2024
(dollars in thousands) |
|
Audit Fees
|
-
|
$ 154
|
|
Audit – Related fees
|
-
|
-
|
|
Tax Fees
|
-
|
-
|
|
Other Fees
|
-
|
-
|
|
Total
|
$
|
$ 154
|
Audit fees relate to related to the audit of Euroholdings Ltd. as of October 31, 2024, as well as the audit of Euroholdings Ltd.
Predecessor for the year ended Decemember 31, 2023 and 2022 and interim review for the period ended June 30, 2024 and 2023 for inclusion in the Registration statement on Form 20-F and reading the Registration statement and amendments.
All services provided by Deloitte Certified Public Accountants, S.A., were pre-approved by the Audit Committee.
101
| (b) |
Audit Committee’s Pre-Approval Policies and Procedures
|
The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independent
registered public accounting firm. As part of this responsibility, the Audit Committee pre-approves the audit and non-audit services performed by the independent registered public accounting firm in order to assure that they do not impair the
auditor’s independence from the Company. The Audit Committee has adopted a policy which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent registered public accounting firm may be
pre-approved.
| (c) |
Audit Work Performed by Other Than Principal Accountant if Greater Than 50%
|
Not applicable.
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Not Applicable.
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Not Applicable.
|
Item 16F.
|
Change in Registrant’s Certifying Accountant
|
None.
|
Item 16G.
|
Corporate Governance
|
Please see Item 6.C. Board Practices - Corporate Governance.
OTHER THAN AS NOTED IN THE SECTION ABOVE, WE ARE IN FULL COMPLIANCE WITH ALL OTHER APPLICABLE NASDAQ CORPORATE
GOVERNANCE STANDARDS.
|
Item 16H.
|
Mine Safety Disclosure
|
Not Applicable.
|
Item 16I.
|
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|
Not Applicable.
|
Item 16J.
|
Insider Trading Policies
|
(a) We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our
securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards applicable to us.
(b) Please see our Code of Ethics, which includes the Insider Trading Policy of the Company, which has been filed as Exhibit 11.1 to this annual
report.
102
|
Item 16K.
|
Cybersecurity
|
Risk Management and Strategy
We, via our Manager, have implemented a cybersecurity strategy involving various dedicated personnel and resources aimed at
preventing, detecting and responding to cyberattacks, as well as being able to recover promptly in the event of material impact following a cyberattack. Additionally, we regularly update our cybersecurity processes to address cybersecurity trends and
threats. Cybersecurity processes have been established to address material cybersecurity risks, including in connection with the following areas:
|
●
|
information technology and solution usage;
|
|
|
●
|
access control;
|
|
| ● |
patch management;
|
|
|
●
|
security on specific environments (i.e. cloud, virtualization, automated systems, etc.);
|
|
| ● |
log management;
|
|
| ● |
network security;
|
|
| ● |
systems security standards;
|
|
| ● |
remote access;
|
|
| ● |
cryptography;
|
|
| ● |
mobile devices;
|
|
| ● |
incident management.
|
In particular, we deploy a variety of methods of defense such as endpoint security, email and web filtering, access and
identity management and security monitoring to provide appropriate levels of protection against cybersecurity threats.
We, via our Manager, actively monitor our systems to prevent and detect any future cybersecurity threats and separately,
we monitor cybersecurity threats or incidents committed against other companies as such events become public. We have engaged outside consultants that perform penetration testing and other tests to identify and suggest improvements to minimize the
risk of a future cyber incident. This allows us to remain current with the latest trends in cybersecurity and make improvements to our defense strategy to consider newly-identified and developing areas of cybersecurity threats. Our Manager has put
in place response procedures for prompt cybersecurity incident identification, reporting and remediation if we are subject to an information system security breach. Our Manager utilizes security standards and has established cross-functional risk
control capabilities to facilitate operational implementation aligned with our cybersecurity processes.
The employees of our Manager, who are the main users of our digital assets, are trained to face cybersecurity threats and
attacks. The training covers areas such as personal digital footprint, privacy settings, phishing, information security at home and at work, ransomware, password hygiene and business email compromise.
In the event of a cyberattack, the Chief Technology Officer of our Manager uses the internal escalation channels to
inform the management as further described below.
We closely monitor changes in data protection rules and guidance. This allows us to maintain compliance with applicable
laws and to keep ahead of developments and regulatory shifts.
Ongoing risks from cybersecurity threats demand management vigilance,
investment, and oversight. Although we have put in place the cybersecurity processes described above, cybersecurity attacks and incidents and misuse or manipulation of any of our IT systems could have a material adverse effect on our business
strategy, results of operations or financial condition (see “Item 3. Key Information—D. Risk Factors—Industry Risk Factors—We rely on our information technology, and if we are unable to protect against service interruptions, data
corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.”)
The governance of cybersecurity risks is overseen by our board of directors, with the audit
committee dedicated to this area. This group receives regular updates on cybersecurity matters from our Manager. This approach ensures that we are prepared to identify, assess, and respond to cybersecurity challenges, aligning our risk management
with our organizational goals. As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy,
results of operations, or financial condition.
103
Governance
During 2024, our Manager has appointed a Chief Information Security Officer who has been overseeing the information,
cybersecurity, and technology security. The Chief Information Security Officer is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents. She develops appropriate plans to mitigate such risks.
Such plans are validated by the members of our Board. The Chief Information Security Officer belongs to the Safety & Quality division of our Manager and reports to our Chief Executive Officer. In March 2025, our Manager has appointed a a Chief
Technology Officer (CTO) who overtook the role of the Chief Information Security Officer.
The CTO belongs to the Safety & Quality division of our Manager and reports to our Chief Executive Officer. She
leverages 15 years of experience in the Information and Communication Technology sector within the maritime industry. She holds a PhD in Telecommunications and Networks from the School of Electrical and Computer Engineering (ECE) at the National
Technical University of Athens (NTUA), an MBA in Techno-Economics from NTUA and the University of Piraeus (UNIPI), and a Bachelor’s degree from ECE, NTUA. Currently, she is completing her MSc in Cybersecurity and Data Science at UNIPI. Our CTO is
certified as an ISO27001 and ISO22301 TÜV Austria Lead Auditor and as a Certified Information Security Manager (CISM) by ISACA. Additionally, she serves as the Secretary of the Board of Directors for the Association of Maritime Managers in
Information Technology and Communications (AMMITEC).
The Audit Committee oversees that the cybersecurity risks are well managed and reports on such management to the Board of
Directors. The Board of Directors is also informed of such risks, as well as other cybersecurity matters, through periodic reports from the Manager. Our Chief Executive Officer is responsible for overseeing the alignment of the cybersecurity strategy
with the strategic plan of the Company. In the event of a cybersecurity incident, we have implemented a process in which the Chief Technology Officer would report such incident to our Chief Executive Officer and the Audit Committee if the incident is
determined to present risk to us.
Cybersecurity Threats
We did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial
condition. For more information about the cybersecurity risks we face, please see Item 3. Key Information - D. Risk Factors - “We rely on information technology, and if we are unable to protect against service interruptions, data corruption,
cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.”
In September 2024, the IT department of our Manager discovered that there was a cyber-attack from a ransomware group that gained unauthorized
access to certain of our Manager’s systems and encrypted our data. With the assistance of cyber security consultants hired by our Manager, we investigated the incident, neutralized the attack and restored the back-up of our data, which remained
unaffected, within short period of time. There was no disruption of communication with the ships and third-party commercial partners. The Company analyzed the effects of the incident in terms of its financial cost, effect on employees both on shore
and on board, financial reporting, share price and reputation and concluded that there were no material effects on our business strategy, results of operations or financial condition. In designing a longer term response to this incident, we via our
Manager have strengthened and upgraded the security of our systems and engaged a third party firm to monitor our readiness in preventing new cyber threats.
104
PART III
|
Item 17.
|
Financial Statements
|
See Item 18.
|
Item 18.
|
Financial Statements
|
The financial statements set forth on pages F-1 through F-25, together with the report of independent registered public accounting firm,
are filed as part of this annual report.
|
Item 19.
|
Exhibits
|
|
1.1
|
|
|
|
1.2
|
|
|
|
2.1
|
|
|
|
2.2
|
||
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
8.1
|
|
|
|
11.1
|
||
|
12.1
|
|
|
|
12.2
|
|
|
|
13.1
|
|
|
|
13.2
|
|
|
|
97.1
|
||
|
**
|
Filed herewith.
|
|
(1)
|
Filed as an Exhibit to the Company’s Registration Statement on January 7, 2025.
|
105
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
|
EUROHOLDINGS LTD.
(Registrant)
By: /s/ Aristides J. Pittas
Aristides J. Pittas
Chairman, President and CEO
|
Date: May 15, 2025
106
Euroholdings Ltd. Predecessor
Combined carve-out financial statements
Index to combined carve-out financial statements
Pages
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
|
|
Combined carve-out balance sheets as of December 31, 2023 and 2024
|
F-3
|
|
|
|
|
Combined carve-out income statements for the years ended December 31, 2022, 2023 and 2024
|
F-4
|
|
|
|
|
Combined carve-out statements of changes in net parent investment for the years ended
December 31, 2022, 2023 and 2024
|
F-5
|
|
|
|
|
Combined carve-out statements of cash flows for the years ended December 31, 2022, 2023 and 2024
|
F-6
|
|
|
|
|
Notes to the combined carve-out financial statements
|
F-7
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Euroholdings Ltd.
Opinion on the Financial Statements
We have audited the accompanying combined carve-out balance sheets of Euroholdings Ltd. Predecessor (the “Company”) as of December 31, 2023 and 2024, the
related combined carve-out income statements, combined carve-out statements of changes in net parent investment and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as
the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2024, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
May 15, 2025
We have served as the Company’s auditor since 2024.
F-2
Euroholdings Ltd. Predecessor
Combined carve-out Balance Sheets
December 31, 2023 and 2024
(All amounts, except share data, expressed in U.S. Dollars)
|
|
Notes
|
2023
|
2024
|
|||||||||
|
Assets
|
||||||||||||
|
Current assets
|
||||||||||||
|
Cash and cash equivalents
|
493,387
|
129,541
|
||||||||||
|
Trade accounts receivable, net
|
520,659
|
443,229
|
||||||||||
|
Other receivables
|
265,114
|
65,259
|
||||||||||
|
Inventories
|
3
|
304,229
|
647,879
|
|||||||||
|
Prepaid expenses
|
52,157
|
107,799
|
||||||||||
|
Due from related company
|
7,9
|
627,843
|
980,952
|
|||||||||
|
Total current assets
|
2,263,389
|
2,374,659
|
||||||||||
|
Long-term assets
|
||||||||||||
|
Vessels, net
|
4
|
5,970,167
|
6,238,768
|
|||||||||
|
Total assets
|
8,233,556
|
8,613,427
|
||||||||||
|
Liabilities and shareholders’ equity
|
||||||||||||
|
Current liabilities
|
||||||||||||
|
Long-term bank loan, current portion
|
8
|
680,400
|
-
|
|||||||||
|
Trade accounts payable
|
461,943
|
1,510,281
|
||||||||||
|
Accrued expenses
|
5
|
158,982
|
710,587
|
|||||||||
|
Deferred revenues
|
63,738
|
153,791
|
||||||||||
|
Total current liabilities
|
1,365,063
|
2,374,659
|
||||||||||
|
Long-term liabilities
|
||||||||||||
|
Long-term bank loan, net of current portion
|
8
|
1,210,860
|
-
|
|||||||||
|
Total long-term liabilities
|
1,210,860
|
-
|
||||||||||
|
Total liabilities
|
2,575,923
|
2,374,659
|
||||||||||
|
Commitments and contingencies
|
10
|
|||||||||||
|
Net parent investment
|
5,657,633
|
6,238,768
|
||||||||||
|
Total liabilities and net parent investment
|
8,233,556
|
8,613,427
|
||||||||||
The accompanying notes are an integral part of these combined carve-out financial statements.
F-3
Euroholdings Ltd. Predecessor
Combined carve-out income statements
Years ended December 31, 2022, 2023 and 2024
(All amounts, except for share data, expressed in U.S. Dollars)
|
Notes
|
2022
|
2023
|
2024
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Time charter revenue
|
25,863,714
|
17,458,102
|
16,043,730
|
|||||||||||||
|
Voyage charter revenue
|
-
|
-
|
473,055
|
|||||||||||||
|
Commissions (including $312,315, $227,556, and $207,338, respectively, to related party)
|
7
|
(1,383,464
|
)
|
(961,530
|
)
|
(876,154
|
)
|
|||||||||
|
Net revenue
|
24,480,250
|
16,496,572
|
15,640,631
|
|||||||||||||
|
Operating expenses / (income)
|
||||||||||||||||
|
Voyage expenses
|
11
|
312,228
|
253,264
|
1,010,520
|
||||||||||||
|
Vessel operating expenses (including $64,253, $56,279 and $61,798, respectively, to related party)
|
7, 11
|
6,136,353
|
6,492,939
|
6,351,471
|
||||||||||||
|
Vessel depreciation
|
4
|
1,347,216
|
1,465,858
|
43,070
|
||||||||||||
|
Dry-docking expenses
|
793,571
|
888,266
|
2,616,834
|
|||||||||||||
|
Related party management fees
|
7
|
842,718
|
927,573
|
971,346
|
||||||||||||
|
General and administrative expenses (including $425,360, $436,493 and $394,516, respectively, to related party)
|
6
|
797,544
|
780,439
|
817,098
|
||||||||||||
|
Other operating income
|
13
|
-
|
(2,271,816
|
)
|
-
|
|||||||||||
|
Total operating expenses, net
|
10,229,638
|
8,536,523
|
11,810,339
|
|||||||||||||
|
Operating income
|
14,250,612
|
7,960,049
|
3,830,292
|
|||||||||||||
|
Other (expenses) / income
|
||||||||||||||||
|
Interest and other financing costs
|
8
|
(234,326
|
)
|
(224,874
|
)
|
(65,989
|
)
|
|||||||||
|
Foreign exchange gain / (loss)
|
8,230
|
(2,681
|
)
|
8,940
|
||||||||||||
|
Other expenses, net
|
(226,096
|
)
|
(227,555
|
)
|
(57,049
|
)
|
||||||||||
|
Net income
|
14,024,516
|
7,732,494
|
3,773,243
|
|||||||||||||
The accompanying notes are an integral part of these combined carve-out financial statements.
F-4
Euroholdings Ltd. Predecessor
Combined carve-out statement of changes in net parent investment
Years ended December 31, 2022, 2023 and 2024
(All amounts, except share data, expressed in U.S. Dollars)
|
Net parent investment
|
||||
|
Balance, January 1, 2022
|
4,015,338
|
|||
|
Net transfers to parent
|
(11,740,965
|
)
|
||
|
Net income
|
14,024,524
|
|||
|
Balance, December 31, 2022
|
6,298,897
|
|||
|
Net transfers to parent
|
(8,373,758
|
)
|
||
|
Net income
|
7,732,494
|
|||
|
Balance, December 31, 2023
|
5,657,633
|
|||
|
Net transfers to parent
|
(3,192,108
|
)
|
||
|
Net income
|
3,773,243
|
|||
|
Balance, December 31, 2024
|
6,238,768
|
|||
The accompanying notes are an integral part of these combined carve-out financial statements.
F-5
Euroholdings Ltd. Predecessor
Combined carve-out statements of cash flows
Years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
|
2022
|
2023
|
2024
|
||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net income
|
14,024,524
|
7,732,494
|
3,773,243
|
|||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
|
Vessel depreciation
|
1,347,216
|
1,465,858
|
43,070
|
|||||||||
|
Amortization for deferred financing costs
|
26,025
|
19,600
|
33,740
|
|||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
(Increase) / decrease in:
|
||||||||||||
|
Trade accounts receivable
|
(873,721
|
)
|
635,153
|
77,430
|
||||||||
|
Other receivables
|
(118,131
|
)
|
(64,311
|
)
|
199,855
|
|||||||
|
Due from related company
|
(37,758
|
)
|
(868
|
)
|
(353,109
|
)
|
||||||
|
Inventories
|
41,982
|
(17,140
|
)
|
(343,650
|
)
|
|||||||
|
Prepaid expenses
|
10,628
|
(12,146
|
)
|
(55,642
|
)
|
|||||||
|
Increase / (decrease) in:
|
||||||||||||
|
Trade accounts payable
|
(148,768
|
)
|
5,653
|
944,801
|
||||||||
|
Accrued expenses
|
2,497
|
(89,541
|
)
|
551,605
|
||||||||
|
Deferred revenues
|
(199,322
|
)
|
(378,093
|
)
|
90,053
|
|||||||
|
Net cash provided by operating activities
|
14,075,172
|
9,296,659
|
4,961,396
|
|||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Cash paid for vessel improvements
|
(201,381
|
)
|
(556,722
|
)
|
(208,134
|
)
|
||||||
|
Net cash used in investing activities
|
(201,381
|
)
|
(556,722
|
)
|
(208,134
|
)
|
||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Repayment of long-term bank loans
|
(3,084,460
|
)
|
(700,000
|
)
|
(1,925,000
|
)
|
||||||
|
Net transfers to parent
|
(11,740,965
|
)
|
(8,373,758
|
)
|
(3,192,108
|
)
|
||||||
|
Net cash used in financing activities
|
(14,825,425
|
)
|
(9,073,758
|
)
|
(5,117,108
|
)
|
||||||
|
Net decrease in cash and cash equivalents
|
(951,634
|
)
|
(333,821
|
)
|
(363,846
|
)
|
||||||
|
Cash and cash equivalents at beginning of year
|
1,778,842
|
827,208
|
493,387
|
|||||||||
|
Cash and cash equivalents at end of year
|
827,208
|
493,387
|
129,541
|
|||||||||
|
Supplemental cash flow information:
|
||||||||||||
|
Cash paid for interest
|
201,824
|
208,049
|
54,636
|
|||||||||
|
Non-cash investing activities:
|
||||||||||||
|
Vessel improvements included in liabilities
|
-
|
-
|
103,537
|
|||||||||
The accompanying notes are an integral part of these combined carve-out financial statements
F-6
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 1. |
Basis of Presentation and General Information
|
Euroholdings Ltd., referred to herein as “Euroholdings”, was formed by Euroseas Ltd. (or “Euroseas” or “Parent Company” or “Parent”) on March 20, 2024 under
the laws of the Republic of the Marshall Islands to serve as the holding company of three subsidiaries (the “Subsidiaries”) contributed by Euroseas to Euroholdings on January 8, 2025 in connection with the spin-off of Euroseas’ vintage vessels
(older than twenty-five years) (the “Spin-Off”). Euroseas contributed these Subsidiaries to Euroholdings, in exchange for common shares in Euroholdings, which Euroseas distributed on March 17, 2025 (the “Distribution Date”) to Euroseas shareholders
of record as of March 7, 2025 (the “Record Date”), on a pro rata basis. Euroseas shareholders received one share of common stock of Euroholdings for every two and a half shares of common stock of Euroseas they owned as of the Record Date. On March 18, 2025, the common shares of Euroholdings Ltd. began trading on Nasdaq Capital Market under the symbol “EHLD”.
The accompanying predecessor combined carve-out financial statements include the accounts of the Subsidiaries for all periods presented, as well as certain adjustments to reflect intercompany expense allocations made to the Subsidiaries by Euroseas of certain of its general and administrative expenses (Note 6) (collectively referred to herein as
“Euroholdings Ltd. Predecessor”, the “Predecessor” or “the Company”). The Subsidiaries have historically operated as part of Parent Company and not as a standalone company. These combined carve-out financial statements are derived from the
Parent Company’s consolidated financial statements and accounting records using the historical carrying costs of the assets and the liabilities of the wholly owned Subsidiaries listed below for the periods presented on a carve-out basis.
The operations of the Company’s vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members
of the Pittas family. Eurobulk has an office in Greece located at 4 Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance
consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note 7).
The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and
Family United Navigation Co., which, in turn, collectively own 57.3% of Euroseas shares as of December 31, 2024.
The Company is engaged in the ocean transportation of containers through ownership and operation of container carrier ship-owning companies. Details of the Company’s wholly
owned Subsidiaries are set out below:
| ● |
Joanna Maritime Ltd., incorporated in the Republic of Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna”, which was
built in 1999 and acquired on July 4, 2013.
|
| ● |
Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier
M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.
|
| ● |
Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier M/V “Diamantis P”,
which was built in 1998 and acquired on August 2, 2019. The vessel was sold on January 15, 2025 (see Note 19).
|
F-7
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 1. |
Basis of Presentation and General Information – continued
|
During the years ended December 31, 2022, 2023 and 2024, the following charterers individually accounted for more than 10% of the Company’s revenues as
follows:
|
Year ended December 31,
|
||||||||||||
|
Charterer
|
2022
|
2023
|
2024
|
|||||||||
|
Zim Integrated Shipping Services Ltd
|
39
|
%
|
53
|
%
|
57
|
%
|
||||||
|
Samudera Shipping Line Limited, Singapore
|
-
|
-
|
21
|
%
|
||||||||
|
CMA CGM, Marseille
|
24
|
%
|
29
|
%
|
17
|
%
|
||||||
|
Summit Shipping Line Pte. Ltd., Singapore
|
-
|
17
|
%
|
-
|
||||||||
|
New Golden Sea Shipping Pte. Ltd.
|
19
|
%
|
-
|
-
|
||||||||
|
Continental Shipping Line, Singapore
|
17
|
%
|
-
|
-
|
||||||||
F-8
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies
|
Basis of presentation
The accompanying combined carve-out financial statements include the accounts of the legal entities comprising the Company as discussed in Note 1. These
combined carve-out financial statements have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Euroseas. The combined carve-out financial
statements reflect the financial position, results of operations and cash flows of the Predecessor as they were historically managed, in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in
conjunction with the rules and regulations of the Securities and Exchange Commission, or the SEC.
These financial statements are presented as if such businesses had been combined throughout the periods presented. All intercompany accounts and
transactions between the entities comprising the Company have been eliminated. The Company has no common capital structure for the combined business and, accordingly, has not presented historical earnings per share.
During the periods presented the Company is dependent upon its Parent Company for a major part of its working capital and financing requirements, as
Euroseas Ltd. uses a centralized approach to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the net parent investment account. Accordingly, none of Euroseas Ltd.’s cash and
cash equivalents or debt and the related interest expense at the corporate level have been assigned to the Company in the combined carve-out financial statements. Net parent contributions to equity, financing part or all of the acquisition cost of
the vessels owned by the Subsidiaries are accounted for through the net parent investment account. Net parent investment represents Euroseas Ltd.’s interest in the Company’s net assets and includes the Company’s cumulative earnings as adjusted for
cash distributions to and cash contributions from Euroseas Ltd. Transactions with Euroseas Ltd. are reflected in the accompanying combined carve-out statements of cash flows as a financing activity, in the combined carve-out statement of changes in
net parent investment as “Net transfers to parent” and in the combined carve-out balance sheets within “Net parent investment”. Euroseas did not incur any debt in connection with the acquisition of the vessels, except for mortgage debt financing
directly allocated to the Company (see Note 8). As a result, there was no intercompany financing excluded from the asset or liability balances.
The combined carve-out income statements reflect intercompany expense allocations made to Euroholdings Ltd. Predecessor by Euroseas for certain corporate
functions and for shared services provided by Euroseas. These allocations were made by Euroseas on a pro-rata basis, based on the number of calendar days of Euroholdings’ vessels compared to the number of calendar days of the total Euroseas fleet.
See Note 6. “General and administrative expenses” and Note 7. “Related Party Transactions” for further information on expenses allocated by Euroseas.
Both the Company and Euroseas consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services
provided to or the benefit received by Euroholdings Ltd. Predecessor during the periods presented. Nevertheless, the combined carve-out financial statements may not be indicative of the Company’s future performance
and may not include all of the actual expenses that would have been incurred by the Company as an independent publicly traded company or reflect the Company’s financial position, results of operations and cash flows that would have been reported
if the Company had been a stand-alone entity during the periods presented.
Use of estimates
The preparation of the accompanying combined carve-out financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the combined carve-out financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
F-9
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies – continued
|
Other comprehensive income / (loss)
The Company has no other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented.
As such, no statement of comprehensive income / (loss) has been presented.
Foreign currency translation
The Company’s functional currency is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange
rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement
or translation are included in the accompanying combined carve-out income statements.
Cash equivalents
Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of three months or less.
Trade accounts receivable, net
The amount shown as trade accounts receivable, net, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each
balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables. Bad debts are written off in the period in which they are identified. No allowance for doubtful accounts was recorded for any
of the periods presented.
Inventories
Inventories consist of lubricants and bunkers, which are stated at the lower of cost and net realizable value, which is the estimated selling price less
reasonably predictable costs of disposal and transportation. Cost is determined using the FIFO (First-In First-Out) method.
Vessels
Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other
acquisition expenses to prepare the vessel for her initial voyage, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life,
increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are expensed as incurred.
Expenditures for vessel repair and maintenance are charged against income in the period incurred.
F-10
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies - continued
|
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated
scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful
life of 25 years from the completion of their construction. On nearing the completion of such period, each vessel’s useful life is further assessed based on the Company’s intentions of future use of such vessel and may be increased for up to 3
additional years. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining
useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is $250 per light weight ton as of December 31, 2023 and 2024.
Impairment of vessels
The Company reviews its vessels held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of
the vessels may not be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related vessels. When the estimate of future undiscounted net operating cash
flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company records a charge under “Impairment loss” in the combined carve-out income statements, to
reduce the vessel’s carrying value to its fair market value. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels. As of December 31,
2023 and 2024, there were no indicators of impairment for any of the Company’s vessels.
Insurance claims and insurance proceeds
Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date,
for which recovery from insurance companies is probable and the claim is not subject to litigation. Claims receivable amount to $63,217 and nil as of December 31, 2023 and 2024, respectively, and are presented under “Other receivables” in the
combined carve-out balance sheets. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the combined carve-out income
statements and the combined carve-out statements of cash flow.
F-11
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies – continued
|
Revenue and expense recognition
Revenues are generated from time charters or infrequently from voyage charter agreements. Under a time charter agreement a contract is entered into for the
use of a vessel for a specific period of time and a specified fixed or index-linked daily charter hire rate. Under a voyage charter agreement, a contract is made in the spot market for the use of a vessel for a specific voyage to transport a
specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally has a minimum amount of cargo and the charterer is liable for any short loading of
cargo or “dead” freight.
The time charter hire rate is generally payable 15 or 30 days in advance as determined in the charter party agreement. The duration of the time charter
contracts that the Company enters into depends on the market conditions, with the duration decreasing during weak market conditions. During 2022, 2023 and 2024 the duration of the Company’s time charter contracts ranged from 1 month to 3 years and
certain time charter contracts included renewal options up to 3 months. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. A
time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC 842, because (i) the vessel is an identifiable asset, (ii) the Company
does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is
responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during
the hire period.
The Company, making use of the practical expedient for lessors, elected not to separate the lease and non-lease components included in the time charter
revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of
the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the fee for expenses incurred running the vessel such as crewing expense,
repairs, insurance, maintenance and lubricants, respectively.
Both the lease component and non-lease component are earned by the passage of time. Revenues under a time charter contract are recognized on a straight-line
basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and are recorded in “Time charter revenue” in the combined carve-out income
statements. Time charter agreements may include ballast bonus payments made by the charterer which serve as compensation for the ballast trip of the vessel to the delivery port, which are deferred and also recognized on a straight-line basis over
the charter period.
The Company has determined that its voyage charter agreements do not contain a lease because the charterer under such contracts does not have the right to
control the use of the vessel since the Company, as the ship-owner, retains control over the operations of the vessel, and any change in the terms of the voyage charter requires the Company’s consent and are therefore considered service contracts
that fall under the provisions of ASC 606 “Revenue from contracts with customers”. The Company accounts for a voyage charter when all the following criteria are met: (i) the parties to the contract have approved the contract in the form of a
written charter agreement or fixture recap and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the services to be transferred, (iii) the Company can identify the payment terms for
the services to be transferred, (iv) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (v) it is probable that the Company will
collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The majority of revenue from voyage charter agreements is usually collected in advance.
F-12
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies – continued
|
The Company has determined that there is one single performance obligation for each of its voyage contracts, which is to provide the charterer with an
integrated transportation service within a specified time period. In addition, the Company has concluded that a contract for a voyage charter meets the criteria to recognize revenue over time because the charterer simultaneously receives and
consumes the benefits of the Company’s performance as the Company performs. Therefore, since the Company’s performance obligation under each voyage contract is met evenly as the voyage progresses, revenue is recognized on a straight-line basis over
the voyage days from the loading of cargo to its discharge.
Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.
Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance,
stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under time charter
agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is
responsible for paying the voyage related costs, such as the cost of bunkers, port charges, canal tolls and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance
and holds cleaning may be recovered from the charterer; such amounts recovered are recorded as other income within “Time charter revenue” in the combined carve-out income statements.
Under voyage charter agreements, all voyage costs are borne and paid by the Company. Voyage expenses consist primarily of bunker consumption, port and canal
expenses and agency fees related to the voyage. All voyage costs are expensed as incurred with the exception of the contract fulfilment costs that incur from the later of the end of the previous vessel employment and the contract date and until the
commencement of loading the cargo on the relevant vessel, which are capitalized to the extent the Company, in its reasonable judgement, determines that they (i) are directly related to a contract, (ii) will be recoverable and (iii) enhance the
Company’s resources by putting the Company’s vessel in a location to satisfy its performance obligation under a contract pursuant to the provisions of ASC 340-40 “Other assets and deferred costs”. These capitalized contract fulfilment costs are
recorded under “Other receivables” and are amortized on a straight-line basis as the related performance obligations are satisfied.
Commissions
Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period
and are presented as a separate line item in revenues to arrive at net revenues in the combined carve-out income statements.
Dry-docking and special survey expenses
Dry-docking and special survey expenses are expensed as incurred.
Pension and retirement benefit obligations – crew
The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to 9 months). Accordingly, they are not liable for
any pension or post-retirement benefits.
F-13
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Significant Accounting Policies – continued
|
Financing costs
Fees paid to lenders and fees required to be paid to third parties on the lenders’ behalf for obtaining new loans or for refinancing or amending existing
loans, are presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, similar to debt discounts. These costs are amortized as interest and other financing costs over the duration of the underlying loan
using the effective interest method. Any unamortized balance of costs relating to debt repaid or refinanced that meet the criteria for Debt Extinguishment pursuant to the provisions of Subtopic 470-50 “Modifications and Extinguishments”, is
expensed in the period in which the repayment is made or refinancing occurs. Any unamortized balance of costs relating to debt refinanced that do not meet the criteria for Debt Extinguishment, are amortized over the term of the refinanced debt.
Recent accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2023-07, which requires the disclosure of significant segment expenses that are part of an entity’s segment measure of profit or loss and regularly provided to the chief operating decision
maker. The Company adopted ASU 2023-07 as of January 1, 2024. The adoption of this ASU affected only the Company’s disclosures, with no impact to its financial condition and results of operations.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expenses Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses”. The standard is intended to require more detailed disclosure about specified categories of expenses (including employee compensation, depreciation and amortization) included in certain expense captions
presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may
be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact
this standard will have on its financial statements.
F-14
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Inventories
|
Inventories consisted of the following:
|
|
December 31, 2023
|
December 31, 2024
|
||||||
|
Lubricants
|
304,229
|
277,069
|
||||||
|
Bunkers
|
-
|
370,810
|
||||||
|
Total
|
304,229
|
647,879
|
||||||
F-15
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 3. |
Vessels, Net
|
The amounts in the accompanying combined carve-out balance sheets are as follows:
|
|
Cost
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
Balance, January 1, 2023
|
14,661,987
|
(7,782,684
|
)
|
6,879,303
|
||||||||
|
- Depreciation for the year
|
-
|
(1,465,858
|
)
|
(1,465,858
|
)
|
|||||||
|
- Vessel improvements
|
556,722
|
556,722
|
||||||||||
|
Balance, December 31, 2023
|
15,218,709
|
(9,248,542
|
)
|
5,970,167
|
||||||||
|
- Depreciation for the year
|
-
|
(43,070
|
)
|
(43,070
|
)
|
|||||||
|
- Vessel improvements
|
311,671
|
-
|
311,671
|
|||||||||
|
Balance, December 31, 2024
|
15,530,380
|
(9,291,612
|
)
|
6,238,768
|
||||||||
As of December 31, 2023 and 2024, there was no indication of impairment for the vessels as estimated fair value of each vessel exceeded its net book value.
During the year ended December 31, 2023, two vessels completed the installation of Water Ballast Treatment (“WBT”) systems with a total cost of $0.56
million. Vessel improvements during the year ended December 31, 2024 mainly relate to the installation of WBT system on one of the Company’s vessels. All these installations qualified as vessel improvements and were therefore capitalized.
On nearing the end of the initially estimated economic useful life of “Aegean Express”, “Diamantis P.” and “Joanna” in 2022, 2023 and 2024 respectively,
each vessel’s useful life was further assessed from 25 years based on the Company’s intentions of future use of such vessel and was increased by 3 additional years up to each vessel’s next drydocking. This change in accounting estimate did not have
any impact in the Company’s net income, given that all vessels were fully depreciated at the time of change of this accounting estimate.
| 5. |
Accrued Expenses
|
The accrued expenses consisted of:
|
December 31, 2023
|
December 31, 2024
|
|||||||
|
Accrued payroll expenses
|
69,715
|
12,360
|
||||||
|
Accrued interest expense
|
12,216
|
-
|
||||||
|
Accrued commissions
|
3,030
|
28,836
|
||||||
|
Accrued repair expenses
|
-
|
335,000
|
||||||
|
Accrued liability for emission allowances
|
-
|
224,851
|
||||||
|
Other accrued expenses
|
74,021
|
109,540
|
||||||
|
Total
|
158,982
|
710,587
|
||||||
F-16
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 6. |
General and administrative expenses
|
General and administrative expenses represent an allocation of the expenses incurred by Euroseas based on the number of calendar days of Euroholdings’
vessels compared to the number of calendar days of the total Euroseas fleet. These expenses consisted mainly of executive compensation, professional fees, directors’ liability insurance and reimbursement of directors’ and officers’ travel-related
expenses.
| 7. |
Related Party Transactions
|
The Company’s vessel owning companies are parties to management agreements with the Manager (see Note 1) which is controlled by members of the Pittas
family, whereby the Manager provides technical and commercial vessel management for a fixed daily management fee (see below), under Euroseas’ Master Management Agreement (“MMA”) with Eurobulk. An additional fixed management fee (see below) is paid
to the Manager for the provision of management executive services.
The MMA with Eurobulk provides for an annual adjustment of the daily vessel management fee due to inflation to take effect January 1 of each year. The
vessel management fee for laid-up vessels is half of the daily fee for the period they are laid-up. The MMA can be terminated by Eurobulk only for cause or by either party under other limited circumstances, such as
sale of Euroseas or Eurobulk or the bankruptcy of either party. The MMA, as periodically amended and restated, will automatically be extended after each five-year period for an additional five-year period unless terminated on or before the
90th day preceding the termination date. Pursuant to the MMA, each ship owning company has signed – and each future ship owning company when a vessel is acquired will sign - with the Manager, a management agreement with the rate and term of these
agreements set in the MMA effective at such time.
The MMA was renewed on January 1, 2018 for an additional five-year term until January 1, 2023. For the year ended December 31, 2022 the fixed vessel
management fee amounted to Euro 720 per day per vessel in operation. The MMA was further renewed on January 1, 2023 for an additional five-year term until January 1, 2028. From January 1, 2023, the vessel fixed management fee was adjusted for
inflation at Euro 775 per day per vessel in operation. From January 1, 2024, the vessel fixed management fee was adjusted for inflation at Euro 810 (approximately $842, using the exchange rate as of December 31, 2024, which was $1.04 per euro) per
day per vessel in operation. From January 1, 2025, the vessel fixed management fee was adjusted for inflation at Euro 850 (approximately $884, using the exchange rate as of December 31, 2024, which was $1.04 per euro) per day per vessel in
operation.
Vessel management fees paid to the Manager amounted to $842,718, $927,573 and $971,346 in 2022, 2023 and 2024, respectively, and are recorded under “Related
party management fees” in the combined carve-out income statements.
An additional fixed management fee is paid to Eurobulk relating to executive compensation. The amount of such executive compensation (including the
additional special bonus paid to the Manager’s employees and consultants) allocated to the Company was based on the proportion of the number of calendar days that related to Euroholdings’ vessels to the number of days of the entire fleet of
Euroseas. This amount was $425,360, $436,493 and $394,516 for 2022, 2023 and 2024, respectively.
F-17
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 7. |
Related Party Transactions - continued
|
Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company
during the normal course of operations for which a right of off-set exists. As of December 31, 2023 and 2024, the amount due from related company was $627,843 and $980,952, respectively, which represents the advance for next month’s operating
expenses, dry-dock expenses, vessel management fee and fee for management executive services. Based on the MMA between our Parent Company and the Manager an estimate of the next
month’s operating expenses, expected dry-dock expenses, vessel management fee and fee for management executive services are to be advanced by the Company’s ship-owning subsidiaries in the beginning of each month or the end of the previous
month to the Manager.
The Company uses brokers for various services, as is industry practice. Eurochart S.A. (“Eurochart”), an affiliated company controlled by certain members of
the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of 1% of the vessel sales price and 1.25% of charter revenues. A commission of 1% of the purchase price is
also paid to Eurochart by the seller of the vessel for the acquisitions the Company makes using Eurochart’s services. There were no commissions to Eurochart for vessel sales or acquisitions in 2022, 2023 and 2024. Commissions to Eurochart for
chartering services were $312,315, $227,556 and $207,338 in 2022, 2023 and 2024, respectively, recorded in “Commissions” in the combined carve-out income statements.
Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker
Sentinel Maritime Services Inc. (“Sentinel”). Technomar Crew Management Services Corp (“Technomar”) is a company owned by certain members of the Pittas family, together with another unrelated ship management company, which provides crewing
services. Sentinel is paid a commission on insurance premiums not exceeding 5%; Technomar is paid a fee of about $50 per crew member per month. Total fees charged by Sentinel and Technomar were $21,489 and $42,764 in 2022, $18,756 and $37,523 in
2023 and $19,928 and $41,870 in 2024, respectively. These amounts are recorded in “Vessel operating expenses” in the combined carve-out income statements.
F-18
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 8. |
Long-Term Bank Loan
|
This comprises a bank loan of one of the Company’s ship-owning companies and is as follows:
|
Borrower
|
December 31, 2023
|
December 31, 2024
|
||||||
|
Jonathan John Shipping Ltd. / Corfu Navigation Ltd.
|
1,925,000
|
-
|
||||||
|
Less: Current portion
|
(700,000
|
)
|
-
|
|||||
|
Long-term portion
|
1,225,000
|
-
|
||||||
|
Deferred charges, current portion
|
19,600
|
-
|
||||||
|
Deferred charges, long-term portion
|
14,140
|
-
|
||||||
|
Long-term bank loan, current portion net of deferred charges
|
680,400
|
-
|
||||||
|
Long-term bank loan, long-term portion net of deferred charges
|
1,210,860
|
-
|
||||||
On September 6, 2021, the Company signed a term loan facility with Sinopac Capital International (HK) Limited (“Sinopac”) for an amount of
up to $10,000,000, in order to refinance the existing indebtedness of M/V “Aegean Express” and M/V “EM Corfu”, a vessel that is owned by our Parent Company, amounting to $5,525,000 as of the date of refinancing, and for working capital purposes.
The facility was available in two advances. Both advances of $3,500,000 and $6,500,000 were drawn on September 9, 2021 by Jonathan John Shipping Ltd. and Corfu Navigation Ltd. as the borrowers. The loan was payable in sixteen consecutive quarterly
installments of $500,000 each, followed by a balloon payment of $2,000,000 to be paid together with the last installment in September 2025. The loan assigned to M/V “Aegean Express” was $3,500,000 and was payable in 16 instalments of $175,000 each
and a balloon of $700,000 to be paid together with the last installment in September 2025. The loan bore interest at Secured Overnight Financing Rate, or “SOFR” plus credit adjustment spread, plus a margin of 3.50% and was secured with the
following: (i) first priority mortgages over M/V “Aegean Express” and M/V “EM Corfu”, (ii) first assignment of earnings and insurance of the abovementioned vessels and (iii) other covenants and guarantees similar to the remaining loans of the
Company. The security cover ratio covenant for this facility stood at 120%. The loan was fully repaid in March 2024 and the collateral vessels became unencumbered.
Interest expense relating to the loan assigned to M/V “Aegean Express” for the years ended December 31, 2022, 2023 and 2024 amounted to
$208,300, $205,274 and $32,249 respectively.
F-19
Euroholdings Ltd. Predecessor
Notes to consolidated financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 9. |
Income Taxes
|
Under the laws of the countries of incorporation and/or vessels’ registration of the companies noted in Note 1, the companies are not subject to tax on
international shipping income, however, they are subject to registration and tonnage taxes, which have been included in “Vessel operating expenses” in the combined carve-out income statements.
Under the United States Internal Revenue Code of 1986, as amended (the “Code”), the U.S. source gross transportation income of a ship-owning or chartering
corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated
thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
Under the Code, a corporation will be exempt from U.S. federal income tax if its stock is primarily and regularly traded on an established securities market
in its country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States, which is referred to as the “Publicly Traded Test”. Under IRS regulations, a Company’s shares will be
considered to be regularly traded on an established securities market if (i) one or more classes of its shares representing 50% or more of its outstanding shares, by voting power of all classes of shares of the corporation entitled to vote and of
the total value of the shares of the corporation, are listed on the market and (ii) (A) such class of shares is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one sixth of the days in a short
taxable year; and (B) the aggregate number of shares of such class of shares traded on such market during the taxable year must be at least 10% of the average number of shares of such class of shares outstanding during such year or as appropriately
adjusted in the case of a short taxable year. Notwithstanding the foregoing, the treasury regulations provide, in pertinent part, that a class of the Company’s shares will not be considered to be “regularly traded” on an established securities
market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified share attribution rules, on more than half the days during the taxable year by
persons who each own 5% or more of the vote and value of such class of the Company’s outstanding shares (“5% Override Rule”).
The Company’s Parent’s stock has been trading on NASDAQ since 2007. For the taxable years 2022, 2023 and 2024 the Company believes that it was exempt from
U.S. federal income tax of 4% on U.S. source shipping income, as it believes that its Parent was subject to the 5% Override Rule, but nonetheless satisfied the Publicly Traded Test for the respective years, because the non-qualified 5% shareholders
did not own more than 50% of the Company’s common stock for more than half of the days during the taxable years.
F-20
Euroholdings Ltd. Predecessor
Notes to consolidated financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 10. |
Commitments and Contingencies
|
There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation
incidental to the Company’s business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.
As of December 31, 2024, future gross minimum revenues under non-cancellable time charter agreements total $15.3 million. The amount of $11.9 million is due
in the year ending December 31, 2025 and another $3.4 million due in the year ending December 31, 2026. In arriving at the future gross minimum revenues, the Company has deducted an estimated one off-hire day per quarter. Such off-hire
estimate may not be reflective of the actual off-hire in the future. In addition, the actual revenues could be affected by early delivery of the vessel by the charterers or any exercise of the charterers’ options to extend the terms of the
charters, which however cannot be estimated and hence not reflected above.
| 11. |
Voyage Expenses and Vessel Operating Expenses
|
These consisted of:
|
Year ended December 31,
|
||||||||||||
|
|
2022
|
2023
|
2024
|
|||||||||
|
Voyage expenses
|
||||||||||||
|
Port charges and canal dues
|
140,165
|
67,855
|
422,657
|
|||||||||
|
Bunkers
|
172,063
|
185,409
|
587,863
|
|||||||||
|
Total
|
312,228
|
253,264
|
1,010,520
|
|||||||||
|
Vessel operating expenses
|
||||||||||||
|
Crew wages and related costs
|
3,182,317
|
3,310,347
|
3,351,607
|
|||||||||
|
Insurance
|
676,620
|
660,898
|
653,702
|
|||||||||
|
Repairs and maintenance
|
251,661
|
209,259
|
284,791
|
|||||||||
|
Lubricants
|
575,018
|
463,440
|
492,517
|
|||||||||
|
Spares and consumable stores
|
1,141,448
|
1,502,020
|
1,223,938
|
|||||||||
|
Professional and legal fees
|
39,318
|
91,919
|
38,568
|
|||||||||
|
Other
|
269,971
|
255,056
|
306,348
|
|||||||||
|
Total
|
6,136,353
|
6,492,939
|
6,351,471
|
|||||||||
F-21
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 12. |
Financial Instruments
|
The principal financial assets of the Company consist of cash and cash equivalents, trade accounts receivable, net, other receivables, and amount due from
related company. The principal financial liabilities of the Company consist of trade accounts payable and accrued expenses.
Concentration of credit risk
Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash and trade accounts
receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit quality financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions
that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for
its trade accounts receivable as the Company in most cases gets paid in advance.
Fair value of financial instruments
The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosure about fair value measurements. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the
quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities;
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;
Level 3: Unobservable inputs that are not corroborated by market data.
The estimated fair values of the Company’s financial instruments such as cash and cash equivalents, trade accounts receivable, net, other receivables, trade
accounts payable, accrued expenses and amount due from related company approximate their individual carrying amounts as of December 31, 2023 and 2024, due to their short-term maturity. Cash and cash equivalents are considered Level 1 items as they
represent liquid assets with short-term maturities.
F-22
Euroholdings Ltd. Predecessor
Notes to the combined carve-out financial statements
as of December 31, 2023 and 2024 and for the
years ended December 31, 2022, 2023 and 2024
(All amounts expressed in U.S. Dollars)
| 13. |
Other operating income
|
In the year ended December 31, 2023, the Company recognized “Other operating income” of $2.27 million. The amount relates to loss of hire insurance in
relation to M/V Aegean Express presented under “Other operating income” in the combined carve-out income statement for the year ended December 31, 2023. No such case existed in the year ended December 31, 2024.
| 14. |
Segment reporting
|
The Company reports financial information and evaluates its operations and operating results by total consolidated net income and not by the type of vessel,
length of vessel employment, customer or type of charter. Although revenue can be identified for these types of charters or vessels, management cannot and does not identify expenses, profitability or other financial
information for these various types of charters or vessels. As a result, the Company’s management, including its Chief Executive Officer, Mr. Aristides J. Pittas, who is the chief operating decision maker (“CODM”), does not use discrete financial information to evaluate the operating results for each such type of charter or vessel, but is instead regularly provided with only the consolidated expenses as noted on the face of the consolidated
income statements and Note 11. The CODM assesses performance for the vessel operations segment and decides how to allocate resources based on consolidated net income. Net income is used to monitor budget
versus actual results of the Company. The Company’s consolidated financial results are used in assessing the performance of the segment and in deciding whether to reinvest profits in the Company. As a result,
management, including the CODM, reviews operating results solely by consolidated net income of the fleet, and thus the Company has determined that it operates under one operating and one reportable segment, that of operating container
carriers. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.
| 15. |
Subsequent Events
|
| a) |
Eurobulk Ltd. manages our fleet under a Master Management Agreement with the Company and separate management agreements with each of the Subsidiaries, all of which were entered into as part
of the Spin-off and which contain substantially similar terms to the agreements between Eurobulk Ltd. and Euroseas Ltd. From January 1, 2025, the vessel fixed management fee was adjusted for inflation at Euro 850 (approximately $884, using
the exchange rate as of December 31, 2024, which was $1.04 per euro) per day per vessel in operation. The amount of executive compensation was set at $500,000 for the year 2025 and will be applied pro rata starting as of the Spin-off date
of Euroholdings Ltd.
|
| b) |
On January 10, 2025, the Company entered into a memorandum of agreement to sell the M/V “Diamantis P”, a 1998 built, 2,008 TEU container carrier to a third-party buyer for
further trading for a gross price of $13.15 million, following approval by the Board of Directors on January 10, 2025. The vessel was delivered to her new owners on January 15, 2025. The gain recognized on the sale of the vessel is
approximately $10.2 million.
|
F-23
EUROHOLDINGS LTD.
|
INDEX TO BALANCE SHEET
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Balance Sheet as of December 31, 2024
|
F-3
|
|
Notes to Balance Sheet
|
F-4
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Euroholdings Ltd.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Euroholdings Ltd. (the Company) as of December 31, 2024, and the related notes (collectively referred to as the “financial statement”). In our
opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statement based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
May 15, 2025
We have served as the Company’s auditor since 2024.
F-2
Euroholdings Ltd.
Balance Sheet
December 31, 2024
(All amounts, except share data, expressed in U.S. Dollars)
|
|
Notes
|
December 31, 2024
|
||||||
|
Assets
|
||||||||
|
Total assets
|
0
|
|||||||
|
Liabilities and shareholders’ deficit
|
||||||||
|
Current liabilities
|
||||||||
|
Due to Parent
|
645
|
|||||||
|
Total current liabilities
|
645
|
|||||||
|
Total liabilities
|
645
|
|||||||
|
Shareholder’s deficit
|
||||||||
|
Common shares ($0.01 par value; 100,000,000 shares authorized, 500 issued and outstanding)
|
2
|
5
|
||||||
|
Accumulated deficit
|
3
|
(650
|
)
|
|||||
|
Total Shareholder’s deficit
|
(645
|
)
|
||||||
|
Total Liabilities & Shareholder’s deficit
|
0
|
|||||||
The accompanying notes are an integral part of this financial statement.
F-3
Euroholdings Ltd.
Notes to the Balance sheet
as of December 31, 2024
(All amounts expressed in U.S. Dollars)
| 1. |
Basis of Presentation and General Information
|
Euroholdings Ltd., (the ‘‘Company”, or “Euroholdings”), was incorporated by Euroseas Ltd. (“Euroseas” or “ESEA” or “Parent”), as a wholly-owned subsidiary, on March 20, 2024
(“date of inception”) under the laws of the Republic of the Marshall Islands, having an authorized share capital of 500 shares, par value $0.01 per share, issued to ESEA. The Company was formed to serve as the holding company of the following three
vessel-owning subsidiaries (the “Subsidiaries”, or “Euroholdings Ltd. Predecessor”) to be contributed by Euroseas to Euroholdings in connection with the spin-off of Euroseas’ vintage vessels (the “Spin-off”):
|
●
|
Joanna Maritime Ltd., incorporated in the Republic of Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V
“Joanna”, which was built in 1999 and acquired on July 4, 2013.
|
|
●
|
Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU
container carrier M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.
|
|
●
|
Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier
M/V “Diamantis P”, which was built in 1998 and acquired on August 2, 2019. The vessel was sold on January 15, 2025.
|
Euroseas contributed these Subsidiaries to Euroholdings, in exchange for common shares in Euroholdings, which Euroseas distributed to holders of Euroseas common stock on a pro rata basis.
The Company, upon consummation of the Spin-off transaction will act as a global provider of shipping transportation services, specializing in the ownership
of vessels. Each of the vessels to be contributed to the Company by ESEA will be owned through a separate wholly-owned subsidiary.
The accompanying balance sheet has been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. A statement of
comprehensive income, statement of cash flow and a statement of equity have been omitted as the expenses incurred by the Company through the balance sheet date are nominal and relate to expenses of $ 650 for incorporating the Company which were
paid by the Parent.
The accompanying balance sheet has been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the
realization of assets and satisfaction of liabilities in the normal course of business. The movement in share capital is presented in Note 2.
F-4
Euroholdings Ltd.
Notes to the Balance sheet
as of December 31, 2024
(All amounts expressed in U.S. Dollars)
| 2. |
Share Capital
|
On July 31, 2024, the Company’s articles of incorporation were amended and restated. Under the Company’s amended and restated articles of incorporation dated July 31, 2024,
authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, none of which of which are issued and outstanding. 500 common shares, with a par value of $0.01 are
issued and outstanding to the Company’s sole shareholder, Euroseas Ltd.
Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the
shareholders. Subject to preferences that may be applicable to any outstanding preferred shares, holders of the Company’s common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of
Directors; (ii) are entitled to share ratably in all of the Company’s assets available for distribution upon liquidation, dissolution or winding up; and (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund
provisions. All issued shares of the Company’s common stock when issued will be fully paid for and non-assessable. The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares
which the Company has issued or may issue in the future.
| 3. |
Accumulated deficit
|
Accumulated deficit from date of inception to December 31, 2024 refers to the incorporation expenses of the Company.
| 4. |
Subsequent Events
|
On January 8, 2025, Euroseas Ltd. contributed to the Company the Subsidiaries in connection with
the spin-off of Euroseas’ vintage vessels (older than twenty-five years).
On January 10, 2025, the Company entered into a memorandum of agreement to sell the M/V “Diamantis
P”, a 1998 built, 2,008 TEU container carrier to a third party buyer for further trading for a gross price of $13.15 million, following approval by the Board of Directors on January 10, 2025. The vessel was delivered to her new owners on January
15, 2025. The gain recognized on the sale of the vessel is approximately $10.2 million.
On March 17, 2025 (the “Distribution Date”), Euroseas contributed the three subsidiaries to the Company, in exchange for 2,816,615 common shares in Euroholdings, which Euroseas distributed to Euroseas shareholders of record as of March 7, 2025 (the “Record Date”), on a pro rata basis. Euroseas shareholders received one share of common stock of Euroholdings
for every two and a half shares of common stock of Euroseas they owned as of the Record Date. On March 18, 2025, the common shares of Euroholdings Ltd. began trading on Nasdaq Capital Market under the symbol “EHLD” and Euroholdings became
an independent publicly traded company focusing on managing elder vessels, as well as other maritime opportunities.
On May 13, 2025, the Company adopted a shareholder rights agreement effective as of that date and declared a dividend distribution of
one preferred stock purchase right for each share of the Company’s common stock, par value $0.01 per share held of record as of the close of business on May 13, 2025. Each right entitles the registered holder, upon the occurrence of certain
events, to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock at an exercise price of $30.00, subject to adjustment. The rights will expire on the earliest of (i) May 14, 2035 or (ii) redemption
or exchange of the rights. The shareholder rights agreement was designed to enable the Company to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the Company.
Eurobulk Ltd. manages the Company’s fleet under a Master Management Agreement with the Company and separate management agreements
with each of the Subsidiaries, all of which were entered into as part of the Spin-off and which contain substantially similar terms to the agreements between Eurobulk Ltd. and Euroseas Ltd. From January 1, 2025, the vessel fixed management fee was
adjusted for inflation at Euro 850 (approximately $884, using the exchange rate as of December 31, 2024, which was $1.04 per euro) per day per vessel in operation. The amount of executive compensation was set at $500,000 for the year 2025 and will
be applied pro rata starting as of the Spin-off date of Euroholdings Ltd.
As part of the Spin-off, the Company’s Board of Directors approved an equity incentive plan (the “2025 Equity Incentive Plan”). The
2025 Equity Incentive Plan will be administered by the Board of Directors which can make awards totaling in aggregate up to 200,000 shares over 10 years after the 2025 Equity Incentive Plan’s adoption date. Officers, directors and employees
(including any prospective officer or employee) of the Company and its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or
service provider to) the Company and its subsidiaries and affiliates are eligible to receive awards under the 2025 Equity Incentive Plan. Awards may be made under the 2025 Equity Incentive Plan in the form of incentive stock options, non-qualified
stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares and cash awards. On the date of the Spin-off, 35,760 non-vested shares corresponding to 89,400
unvested shares of the Company’s former Parent were issued to 30 key persons of which 29,300 will vest on July 1, 2025, 30,050 will vest on November 14, 2025 and 30,050 will vest on November 13, 2026; awards to officers and directors amount to
17,420 shares and the remaining 18,340 were awarded to employees of Eurobulk.
Also, as part of the Spin-off, the Company entered into a Right of First Refusal Agreement (“RFR”) with Euroseas under which the
Company received a right of first refusal under certain conditions to acquire any vessel which Euroseas may consider to sell in the future if the vessel is older than 15 years of age at the time of the sale. Additionally, Euroseas granted to the
Company a right of first refusal under certain conditions over any employment opportunity for a container vessel pursuant to a market charter presented or available to Euroseas with respect to any vessel owned or chartered in, directly or
indirectly, by Euroseas.
Furthermore, as part of the Spin-off, the Company entered into a Registration Rights Agreement with certain shareholders (i.e. Friends
Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Family United Navigation Co) to register upon request for re-sale up to 1,614,881 shares of the Company’s common stock held by such shareholders,
representing 57.3% of the Company’s common stock.
F-5
Exhibit 2.2
DESCRIPTION
OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
As of May 15, 2025, Euroholdings Ltd. (the “Company”) had common stock, par value
$0.01 per share, registered under Section 12 of the Securities Exchange Act of 1934, as amended.
The following description sets forth certain material terms and provisions of the
Company’s common stock. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of the Company’s Amended and Restated Articles of Incorporation (the
“Articles of Incorporation”), and the Company’s Bylaws, as amended (the “Bylaws”), each of which is incorporated by reference as an exhibit to the annual report on Form 20-F of which this Exhibit is a part. We encourage you to refer to our Articles
of Incorporation and Bylaws for additional information.
Authorized Capitalization
Under our Articles of Incorporation, we are authorized to issue up to one hundred
twenty million (120,000,000) registered shares (of which one hundred million (100,000,000) shall be shares of common stock and twenty million (20,000,000) shall be preferred shares); all of the shares shall have a par value of one cent (US$0.01) per
share. All of our shares of stock are in registered form. As of December 31, 2024 and April 30, 2025, there were 500 shares and 2,816,615 shares issued and outstanding, respectively.
DESCRIPTION OF COMMON SHARES
The number of common shares issued and outstanding as of the last day of the
fiscal year for the annual report on Form 20-F to which this description is attached or incorporated by reference as an exhibit, is provided on the cover page of such annual report on Form 20-F. Holders of our common shares do not have conversion,
redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares that we may issue in the future.
Voting Rights
Each outstanding common share entitles the holder to one vote on all matters
submitted to a vote of shareholders. At any annual or special general meeting of shareholders where there is a quorum, the affirmative vote of a majority of the votes cast by holders of shares of stock represented at the meeting shall be the act of
the shareholders.
Dividend Rights
Subject to preferences that may be applicable to any outstanding preferred
shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for dividends.
Limitations on Ownership
Under Marshall Islands law generally, there are no limitations on the right of
non-residents of the Marshall Islands or owners who are not citizens of the Marshall Islands to hold or vote our common shares.
Directors
Our directors are elected by a plurality of the votes cast at a meeting of the
shareholders by the holders of shares entitled to vote in the election. Cumulative voting may not be used to elect directors.
Our Board of Directors must consist of at least three directors, such number to
be determined by the Board of Directors by a majority vote of the entire Board of Directors from time to time. Shareholders may change the number of our directors only by an affirmative vote of the holders of the majority of the outstanding shares of
capital stock entitled to vote generally in the election of directors.
Our Board of Directors is divided into three classes as set out below in “Classified Board of Directors.” Each director is elected to serve until the third succeeding annual meeting after his election and until his successor shall
have been elected and qualified, except in the event of his death, resignation or removal.
Shareholder Meetings
Under our Bylaws, as amended, annual shareholder meetings will be held at a time
and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called at any time by the Board of Directors. Notice of every annual and special meeting of shareholders must be
given to each shareholder of record entitled to vote at least 15 but no more than 60 days before such meeting.
Dissenters’ Rights of Appraisal and Payment
Under the Marshall Islands Business Corporations Act (the “BCA”), our
shareholders have the right to dissent from various corporate actions, including any merger or consolidation or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of
their shares. In the event of any further amendment of our Articles of Incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The
dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of
proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which the Company’s shares are primarily traded on a local or national securities exchange.
Shareholders Derivative Actions
Under the BCA, any of our shareholders may bring an action in our name to procure
a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a shareholder or a holder of a beneficial interest of shares both at the time the derivative action is commenced and at the time of the
transaction to which the action relates, or that the shares or his interest therein devolved upon him by operation of law.
Limitations on Liability and Indemnification of Officers and Directors
The BCA authorizes corporations to limit or eliminate the personal liability of directors and
officers to corporations and their shareholders for monetary damages for breaches of directors’ fiduciary duties provided that such provision shall not eliminate or limit the liability of a director: (i) for any breach of the director’s duty of
loyalty to the corporation or its shareholders; (ii) for acts or omissions not undertaken in good faith or which involve intentional misconduct or a knowing violation of law; or (iii) for any transaction from which the director derived an improper
personal benefit. Our Bylaws, as amended, include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law.
Our Bylaws, as amended, provide that we must indemnify our directors and officers to the fullest
extent authorized by law. We are also expressly authorized to carry directors’ and officers’ insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions
and insurance are useful to attract and retain qualified directors and executive officers.
The limitation of liability and indemnification provisions in our Bylaws, as amended, may discourage
shareholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if
successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions.
Anti-takeover Effect of Certain Provisions of our Articles of Incorporation and
Bylaws
Several provisions of our Articles of Incorporation and Bylaws, as amended, which
are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change in control and enhance the ability of our Board of Directors to maximize shareholder
value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a
proxy contest or otherwise that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.
Blank Check Preferred Stock
Under the terms of our Articles of Incorporation, our Board of Directors has
authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a
change in control of our company or the removal of our management.
Classified Board of Directors
Our Articles of Incorporation and our Bylaws, as amended, provide for the
division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This
classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a
majority of our Board of Directors for two years.
Election and Removal of Directors
Our Articles of Incorporation prohibit cumulative voting in the election of
directors. Our Bylaws, as amended require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our Bylaws, as amended, also provide that our directors may be removed only for cause and
by either action of the Board of Directors or the holders of 51% of the issued and outstanding voting shares of the Company. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Limited Actions by Shareholders
Our Articles of Incorporation and our Bylaws, as amended, provide that any action
required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. No business may be conducted at the special meeting other than business
brought before the meeting by the Board of Directors, the Chairman of the Board or the President. Our Articles of Incorporation and our Bylaws, as amended, provide that, subject to certain exceptions, the business transacted at the special meeting is
limited to the purposes stated in the notice. Accordingly, a shareholder may not call a special meeting and shareholder consideration of a proposal may be delayed until the next annual meeting.
Advance Notice Requirements for Shareholder Proposals and Director Nominations
Our Bylaws, as amended, provide that shareholders seeking to nominate candidates
for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our
principal executive offices not less than 150 days nor more than 180 days prior to the one-year anniversary of the immediately preceding annual meeting of shareholders. Our Bylaws, as amended, also specify requirements as to the form and content of a
shareholder’s notice. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.
Certain Business Combinations
Our Articles of Incorporation also prohibit us, subject to several exclusions,
from engaging in any “business combination”1 with any interested shareholder for a period of three years following the date the shareholder became an interested shareholder.
Preferred Stock
Our Board of Directors is authorized to provide for the issuance of preferred
stock in one or more series with designations as may be stated in the resolution or resolutions providing for the issue of such preferred stock. At the time that any series of our preferred stock is authorized, our Board of Directors will fix the
dividend rights, any conversion rights, any voting rights, redemption provisions, liquidation preferences and any other rights, preferences, privileges and restrictions of that series, as well as the number of shares constituting that series and
their designation. Our Board of Directors could, without shareholder approval, cause us to issue preferred stock which has voting, conversion and other rights and preferences that could adversely affect the voting power and other rights of holders of
our common stock or make it more difficult to effect a change in control. In addition, preferred stock could be used to dilute the share ownership of persons seeking to obtain control of us and thereby hinder a possible takeover attempt which, if our
shareholders were offered a premium over the market value of their shares, might be viewed as being beneficial to our shareholders. The material terms of any series of preferred stock that we offer through a prospectus supplement will be described in
that prospectus supplement. As of December 31, 2024 and April 30, 2025, there are no preferred shares issued and outstanding.
Preferred Stock Purchase Rights
We have entered into a Stockholders Rights Agreement, (the “Rights Agreement”),
with Equiniti Trust Company, LLC.
Under the Rights Agreement, we will declare a dividend payable of one preferred
stock purchase right, or Right, for each share of common stock outstanding immediately following the consummation of Euroseas’s distribution of our common shares. Each Right entitles the registered holder to purchase from us one one-thousandth of a
share of Series A Participating Preferred Stock, par value $0.01 per share, at an exercise price of $30 per share. The Rights will separate from the common stock and become exercisable only if a person or group acquires beneficial ownership of 15% or
more of our common stock (including through entry into certain derivative positions) in a transaction not approved by our Board of Directors. In that situation, each holder of a Right (other than the acquiring person, whose Rights will become void
and will not be exercisable) will have the right to purchase, upon payment of the exercise price, a number of shares of our common stock having a then-current market value equal to twice the exercise price. In addition, if the Company is acquired in
a merger or other business combination after an acquiring person acquires 15% or more of our common stock, each holder of the Right will thereafter have the right to purchase, upon payment of the exercise price, a number of shares of common stock of
the acquiring person having a then-current market value equal to twice the exercise price. The acquiring person will not be entitled to exercise these Rights. Until a Right is exercised, the holder of a Right will have no rights to vote or receive
dividends or any other stockholder rights.
The Rights may have anti-takeover effects. The Rights will cause substantial
dilution to any person or group that attempts to acquire us without the approval of our Board of Directors. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our Board of
Directors can approve a redemption of the Rights or a permitted offer, the Rights should not interfere with a merger or other business combination approved by our Board of Directors.
1 [As such term is defined in our Articles of Incorporation.]
We have summarized the material terms and conditions of the Rights Agreement
and the Rights below. For a complete description of the Rights, we encourage you to read the Rights Agreement, which we have filed as an exhibit hereto.
Detachment of the Rights
The Rights are attached to all certificates representing our currently
outstanding common stock, or, in the case of uncertificated common shares registered in book entry form, which we refer to as “book entry shares,” by notation in book entry accounts reflecting ownership, and will attach to all common stock
certificates and book entry shares we issue prior to the Rights distribution date that we describe below. The Rights are not exercisable until after the Rights distribution date and will expire 10 years after the date thereof, unless we redeem or
exchange them earlier as we describe below. The Rights will separate from the common stock and a Rights distribution date would occur, subject to specified exceptions, on the earlier of the following two dates:
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the 10th day after public announcement that a person or group has acquired ownership of 15% or more of the Company’s common stock; or
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the 10th business day (or such later date as determined by the Company’s Board of Directors) after a person or group announces a tender or exchange offer which would result in
that person or group holding 15% or more of the Company’s common stock.
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“Acquiring person” is generally defined in the Rights Agreement as any person,
together with all affiliates or associates, who beneficially owns 15% or more of the Company’s common stock. However, the Company, any subsidiary of the Company or any employee benefit plan of the Company or of any subsidiary of the Company, or any
person holding shares of common stock for or pursuant to the terms of any such plan, are excluded from the definition of “acquiring person.” In addition, persons who beneficially own 15% or more of the Company’s common stock on the effective date of
the Rights Agreement are excluded from the definition of “acquiring person” until such time as they acquire additional shares in excess of 2% of the Company’s then outstanding common stock as specified in the Rights Agreement for purposes of the
Rights, and therefore, until such time, their ownership cannot trigger the Rights. For purposes of the Stockholders Rights Agreements, Containers Shareholders Trinity Ltd., Friends Investment Company Inc., Eurobulk Marine Holdings, Inc., Aristides
Pittas or any of their respective Affiliates will not be considered an Acquiring Person regardless of the beneficial ownership. Specified “inadvertent” owners that would otherwise become an acquiring person, including those who would have this
designation as a result of repurchases of common stock by us, will not become acquiring persons as a result of those transactions.
Our Board of Directors may defer the Rights distribution date in some
circumstances, and some inadvertent acquisitions will not result in a person becoming an acquiring person if the person promptly divests itself of a sufficient number of shares of common stock.
Until the Rights distribution date:
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our common stock certificates and book entry shares will evidence the Rights, and the Rights will be transferable only with those certificates; and
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any new common stock will be issued with Rights and new certificates or book entry shares, as applicable, will contain a notation incorporating the Rights Agreement by
reference.
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As soon as practicable after the Rights distribution date, the Rights agent
will mail certificates representing the Rights to holders of record of common stock at the close of business on that date. After the Rights distribution date, only separate Rights certificates will represent the Rights.
We will not issue Rights with any shares of common stock we issue after the
Rights distribution date, except as our Board of Directors may otherwise determine.
Flip-In Event
A “flip-in event” will occur under the Rights Agreement when a person becomes
an acquiring person other than pursuant to certain kinds of permitted offers. An offer is permitted under the Rights Agreement if a person will become an acquiring person pursuant to a merger or other acquisition agreement that has been approved by
our Board of Directors prior to that person becoming an acquiring person.
If a flip-in event occurs and we have not previously redeemed the Rights as
described under the heading “Redemption of Rights” below or, if the acquiring person acquires less than 50% of our outstanding common stock and we do not exchange the Rights as described under the heading “Exchange of Rights” below, each Right, other
than any Right that has become void, as we describe below, will become exercisable at the time it is no longer redeemable for the number of shares of common stock, or, in some cases, cash, property or other of our securities, having a current market
price equal to two times the exercise price of such right.
When a flip-in event occurs, all Rights that then are, or in some circumstances
that were, beneficially owned by or transferred to an acquiring person or specified related parties will become void in the circumstances the Rights Agreement specifies.
Flip-Over Event
A “flip-over event” will occur under the Rights Agreement when, at any time
after a person has become an acquiring person:
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we are acquired in a merger or other business combination transaction, other than specified mergers that follow a permitted offer of the type we describe above; or
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50% or more of our assets or earning power is sold or transferred.
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If a flip-over event occurs, each holder of a Right, other than any Right that
has become void as we describe under the heading “Flip-In Event” above, will have the right to receive the number of shares of common stock of the acquiring company which has a current market price equal to two times the exercise price of such Right.
Anti-dilution
The number of outstanding Rights associated with our common stock is subject to
adjustment for any stock split, stock dividend or subdivision, combination or reclassification of our common stock occurring prior to the Rights distribution date. With some exceptions, the Rights Agreement will not require us to adjust the exercise
price of the Rights until cumulative adjustments amount to at least 1% of the exercise price. It also will not require us to issue fractional shares of our Series A Participating Preferred Stock that are not integral multiples of one-thousandth of a
share, and, instead we may make a cash adjustment based on the market price of the common stock on the last trading date prior to the date of exercise.
Redemption of Rights
At any time until the date on which the occurrence of a flip-in event is first
publicly announced, we may order redemption of the Rights in whole, but not in part, at a redemption price of $0.01 per right. The redemption price is subject to adjustment for any stock split, stock dividend or similar transaction occurring before
the date of redemption. At our option, we may pay that redemption price in cash or shares of common stock. The Rights are not exercisable after a flip-in event if they are timely redeemed by us or until ten days following the first public
announcement of a flip-in event. If our Board of Directors timely orders the redemption of the Rights, the Rights will terminate on the effectiveness of that action.
Exchange of Rights
We may, at our option, exchange the Rights (other than Rights owned by an
acquiring person or an affiliate or an associate of an acquiring person, which have become void), in whole or in part. The exchange will be at an exchange ratio of one share of common stock per right, subject to specified adjustments at any time
after the occurrence of a flip-in event and prior to any person other than us or our existing stockholders becoming the beneficial owner of 50% or more of our outstanding common stock for the purposes of the Rights Agreement.
Amendment of Terms of Rights
During the time the Rights are redeemable, we may amend any of the provisions
of the Rights Agreement, other than by decreasing the redemption price. Once the Rights cease to be redeemable, we generally may amend the provisions of the Rights Agreement, other than to decrease the redemption price, only as follows:
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to cure any ambiguity, defect or inconsistency;
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to make changes that do not materially adversely affect the interests of holders of Rights, excluding the interests of any acquiring person; or
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to shorten or lengthen any time period under the Rights Agreement, except that we cannot lengthen the time period governing redemption or lengthen any time period that
protects, enhances or clarifies the benefits of holders of Rights other than an acquiring person.
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Marshall Islands Company Considerations
Our corporate affairs are governed by our Articles of Incorporation and Bylaws,
as amended, and by the BCA. You should be aware that the BCA differs in certain material respects from the laws generally applicable to U.S. companies incorporated in the State of Delaware. While the BCA also provides that it is to be interpreted
according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Republic of the Marshall Islands and we cannot predict whether
Republic of the Marshall Islands courts would reach the same conclusions as U.S. courts. Thus, you may have more difficulty in protecting your interests in the face of actions by the management, directors or controlling shareholders than would
shareholders of a corporation incorporated in a U.S. jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the BCA and the Delaware General Corporation Law
relating to shareholders’ rights.
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Marshall Islands
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Delaware
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Shareholder Meetings and Voting Rights
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Held at a time and place as designated or in the manner provided in the bylaws.
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Held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated,
as determined by the board of directors.
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Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be
authorized by the articles of incorporation or by the bylaws.
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Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be
authorized by the certificate of incorporation or by the bylaws.
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May be held within or outside the Republic of the Marshall Islands.
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May be held within or outside Delaware.
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Notice:
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Notice:
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Whenever shareholders are required or permitted to take action at a meeting, written notice shall state the place,
date and hour of the meeting and, unless it is the annual meeting, indicate that it is being issued by or at the direction of the person calling the meeting.
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Whenever shareholders are required or permitted to take any action at a meeting, written notice shall state the
place, if any, date and hour of the meeting and the means of remote communication, if any, by which shareholders may be deemed to be present and vote at the meeting.
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A copy of the notice of any meeting shall be given not less than 15 nor more than 60 days before the meeting.
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Written notice of any meeting shall be given not less than 10 nor more than 60 days before the date of the meeting.
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Any action required or permitted to be taken by meeting of shareholders may be taken without meeting if consent is in
writing and is signed by all the shareholders entitled to vote.
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Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken at a
meeting of shareholders may be taken without a meeting, without prior notice and without a vote if consent is in writing and signed by the holders of outstanding stock having the number of votes necessary to authorize or take action at a
meeting.
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Each shareholder entitled to vote may authorize another person to act for him by proxy.
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Each shareholder entitled to vote may authorize another person or persons to act for each shareholder by proxy.
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Unless otherwise provided in the articles of incorporation or bylaws, a majority of shares entitled to vote shall
constitute a quorum but in no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting.
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The certificate of incorporation or bylaws may specify the number necessary to constitute a quorum but in no event
shall a quorum consist of less than one-third of the shares entitled to vote at the meeting. In the absence of such specifications, a majority of shares entitled to vote at the meeting shall constitute a quorum.
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When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders.
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When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders.
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Except as otherwise required by the BCA or the articles of incorporation, directors shall be elected by a plurality
of the votes cast by holders of shares entitled to vote, and, except as required or permitted by the BCA or the articles of incorporation, any other corporate action shall be authorized by a majority of votes cast by holders of shares
entitled to vote thereon
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Unless otherwise specified in the certificate of incorporation or bylaws, directors shall be elected by a plurality
of the votes of the shares entitled to vote on the election of directors, and, in all other matters, the affirmative vote of the majority of the shares entitled to vote on the subject matter shall be the act of the shareholders.
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The articles of incorporation may provide for cumulative voting.
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The certificate of incorporation may provide for cumulative voting.
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Merger or Consolidation
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Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized
by a majority vote of the holders of outstanding shares at a shareholder meeting.
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Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a
board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting.
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Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made
in the corporation’s usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting.
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Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property
and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote.
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Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation
may merge such other corporation into itself without the authorization of the shareholders of any corporation.
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Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the
other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the
outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting.
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Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be
authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation.
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Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of
shareholders, except to the extent that the certificate of incorporation otherwise provides.
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Dissenters’ Rights of Appraisal
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Shareholders have a right to dissent from a merger or consolidation or sale or exchange of all or substantially all
assets not made in the usual and regular course of business, and receive payment of the fair value of their shares, subject to exceptions.
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Appraisal rights shall be available for the shares of a corporation in a merger or consolidation, subject to
exceptions.
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A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles
of incorporation has the right to dissent and to receive payment for such shares if the amendment:
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The certificate of incorporation may provide that appraisal rights are available for shares as a result of an
amendment to the certificate of incorporation, any merger or consolidation or the sale of all or substantially all of the assets.
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Alters or abolishes any preferential right of any outstanding shares having preferences; or
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Creates, alters, or abolishes any provision or right in respect to the redemption of any
outstanding shares; or
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Excludes or limits the right of such holder to vote on any matter, except as such right may be
limited by the voting rights given to new shares then being authorized of any existing or new class.
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Shareholders’ Derivative Actions
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An action may be brought in the right of a corporation to procure a judgment in its favor by a holder of shares or of
a beneficial interest in such shares. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or
his interest therein devolved upon him by operation of law.
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In any derivative suit instituted by a shareholder or a corporation, it shall be averred in the complaint that the
plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law.
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Complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by
the board or the reasons for not making such effort.
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Delaware Court of Chancery Rule 23.1 governs the procedures for derivative actions by shareholders.
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Such action shall not be discontinued, compromised or settled without the approval of the High Court of the Republic
of the Marshall Islands.
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Attorney’s fees may be awarded if the action is successful.
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Corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the
plaintiff owns less than 5% of any class of stock and the shares have a value of $50,000 or less.
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Directors
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Board must consist of at least one member.
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Board must consist of at least one member.
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Removal:
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Removal:
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● Any or all of the directors may be removed for cause by vote of the
shareholders.
● If the articles of incorporation or the bylaws so provide, any or all of
the directors may be removed without cause by vote of the shareholders.
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● Any or all of the directors may be removed, with or without cause, by
the holders of a majority of the shares entitled to vote except: (1) unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified, stockholders may effect such removal only for cause, or
(2) if the corporation has cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which such director is a part.
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Number of board members may be fixed by the bylaws, by the shareholders, or by action of the board under the specific
provisions of a bylaw.
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Number of board members may be changed by amendment of the bylaws, by the shareholders or by action of the board
under specific provision of a bylaw; however if the board is authorized to change the number of directors, it can only do so by a majority of the entire board.
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Number of board members shall be fixed by the bylaws, unless the certificate of incorporation fixes the number of
directors, in which case a change in the number shall be made only by amendment of the certificate.
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Duties of Directors
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Members of a board of directors owe a fiduciary duty to the company to act honestly and in good faith with a view to
the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
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The business and affairs of a corporation are managed by or under the direction of its board of directors. In
exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.
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Exhibit 4.1
SHAREHOLDERS RIGHTS AGREEMENT
Dated as of May 13, 2025
between
EUROHOLDINGS LTD.
and
EQUINITI TRUST COMPANY, LLC,
as Rights Agent
Dated as of May 13, 2025
between
EUROHOLDINGS LTD.
and
EQUINITI TRUST COMPANY, LLC,
as Rights Agent
This Shareholders Rights Agreement (this “Rights Agreement”) is made and entered into as of May 13, 2025, by and between
Euroholdings Ltd., a Marshall Islands company (the “Company”), and Equiniti Trust Company, LLC, as rights agent (the “Rights Agent”).
WHEREAS, the Board of Directors of the Company (the “Board”) has (a) authorized and declared a dividend of one right (the “Right”)
for each share of the Company’s common stock, par value $0.01 per share (the “Common Stock”) held of record as of the Close of Business (as hereinafter defined) on May 13, 2025 (the “Record Date”) and (b) has further authorized the
issuance of such Right in respect of each share of Common Stock that shall become outstanding (i) at any time between the Record Date and the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined) or (ii) upon the exercise or conversion, prior to the earlier of the Redemption Date or the Final Expiration Date, of any option or other security exercisable for or convertible into shares of Common Stock, which option or other
such security is outstanding on the Distribution Date; and
WHEREAS, each Right represents the right of the holder thereof to purchase one one-thousandth of a share of Series A Participating
Preferred Stock (as such number may hereafter be adjusted pursuant to the provisions hereof), upon the terms and subject to the conditions set forth herein, having the rights, preferences and privileges set forth in the Statement of Designation of
Series A Participating Preferred Stock, attached hereto as Exhibit A.
NOW THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Rights Agreement, the following terms have the meanings indicated:
“Acquiring Person” shall mean any Person, other than a Permitted Person and/or its Affiliates who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, as reported in any SEC filing or submission, but shall not include the Company, any Subsidiary of the Company, or
any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person holding shares of Common Stock for or pursuant to the terms of any employee benefit plan of the Company or pursuant to a dividend or distribution paid in
shares of Common Stock.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person if such Person shall become the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding solely as a result of a grant under a Company equity incentive plan, a dividend or distribution paid or made by the Company on the outstanding shares of Common Stock in shares of Common Stock or
pursuant to a split or subdivision of the outstanding shares of Common Stock; provided, however, that a Person who (i) becomes the Beneficial Owner of 15% or more of the shares of Common Stock of the Company then outstanding by reason of a grant
under a Company equity incentive plan, dividend or distribution paid or made by the Company on the outstanding shares of Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock and (ii)
becomes the Beneficial Owner of any additional shares of Common Stock of the Company (other than pursuant to an additional grant under a Company equity incentive plan, dividend or distribution paid or made by the Company on the outstanding shares of
Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock), shall be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional shares of Common Stock of
the Company such Person does not beneficially own 15% or more of the shares of Common Stock of the Company then outstanding.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person as the result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15% or more of the shares of Common Stock of the Company then outstanding; provided, however,
that a Person who (i) becomes the Beneficial Owner of 15% or more of the shares of Common Stock of the Company then outstanding by reason of share purchases by the Company, any Subsidiary of the Company or any employee benefit plan of the Company and
(ii) after such share purchases, becomes the Beneficial Owner of additional shares of Common Stock of the Company in an amount equal to or in excess of 1% or more of the Company’s then outstanding Common Stock (other than pursuant to a grant under a
Company equity incentive plan, a dividend or distribution paid or made by the Company on the outstanding shares of Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock), shall be
deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional shares of Common Stock of the Company such Person does not beneficially own 15% or more of the shares of Common Stock of the Company then outstanding.
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Notwithstanding the foregoing, (i) if the Company’s Board determines in good faith that a Person who would otherwise be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph, has become such inadvertently (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of the shares of Common Stock that
would otherwise cause such Person to be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph, or (B) such Person was aware of the extent of the shares of Common Stock it beneficially owned but had no actual
knowledge of the consequences of such beneficial ownership under this Rights Agreement) and without any intention of changing or influencing control of the Company, and if such Person divested or divests as promptly as practicable a sufficient number
of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph, then such Person shall not be deemed to be or have ever been an “Acquiring Person” for any
purposes of this Rights Agreement; and (ii) if, as of the date hereof, any Person, other than a Permitted Person and/or its Affiliates, is the Beneficial Owner of 15% or more of the shares of Common Stock outstanding, such Person shall not be or
become an “Acquiring Person,” as defined herein, unless and until such time as such Person shall become the Beneficial Owner of additional shares of Common Stock in an amount equal to or in excess of 2% or more of the Company’s then outstanding
Common Stock (calculated without including the shares of Common Stock already held by such Person), other than pursuant to a grant under a Company equity incentive plan, a dividend or distribution paid or made by the Company on the outstanding shares
of Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock, unless upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person is not then the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding.
“Adjustment fraction” shall have the meaning set forth in Section 11(a)(i) hereof.
“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Rights Agreement.
A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “Beneficially Own” any securities:
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which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3
thereunder (or any comparable or successor law or regulation);
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| (ii) |
which such Person or any of such Person’s Affiliates or Associates has (A) the right to acquire or direct the acquisition of (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed pursuant to this subsection (ii)(A) to be the Beneficial Owner
of, or to Beneficially Own, (1) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities which a Person or any of such Person’s Affiliates or Associates may be deemed to have the right to acquire pursuant to any merger or other acquisition agreement between the Company and such Person (or one or more
of its Affiliates or Associates) if such agreement has been approved by the Board of the Company prior to there being an Acquiring Person; or (B) the right to vote pursuant to any agreement, arrangement or understanding or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security under this subsection (ii)(B) if the agreement, arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
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which are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to subsection (ii)(B) above) or disposing of any securities of the Company; provided, however, that in no case shall an officer or director of the Company
be deemed (x) the Beneficial Owner of any securities beneficially owned by another officer or director of the Company solely by reason of actions undertaken by such persons in their capacity as officers or directors of the Company or (y) the
Beneficial Owner of securities held of record by the trustee of any employee benefit plan of the Company or any Subsidiary of the Company for the benefit of any employee of the Company or any Subsidiary of the Company, other than the officer
or director, by reason of any influence that such officer or director may have over the voting of the securities held in the plan.
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“Board” shall have the meaning set forth in the recitals.
“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in New York are authorized
or obligated by law or executive order to close.
“Close of Business” on any given date shall mean 5:00 P.M., New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
“Common Stock” shall have the meaning set forth in the recitals. Common Stock when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person.
“Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Company” shall have the meaning set forth in the preamble, subject to the terms of Section 13(a)(iii)(C) hereof.
“Current Per Share Market Price” of any security (a “Security” for purposes of this definition), for all computations other
than those made pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading Days immediately prior to but not including such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any Security on any date shall be deemed to be the average of the daily closing prices per share of such Security for the ten (10) consecutive Trading Days
immediately prior to but not including such date; provided, however, that in the event that the Current Per Share Market Price of the Security is determined during a period following the announcement by the issuer of such Security of
(i) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such shares or (ii) any subdivision, combination or reclassification of such Security, and prior to the expiration of the applicable
thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Current Per Share Market
Price shall be appropriately adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the Nasdaq Capital Market or, if the Security is not
listed or admitted to trading on the Nasdaq Capital Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last sale price or, if such last sale price is not reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of the Company. If on any such date no market maker is making a market in the Security, the fair value of such shares on such date as determined in good faith by the Board of the Company shall be
used. If the Preferred Shares are not publicly traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to be the Current Per Share Market Price of the shares of Common Stock as determined pursuant to this
definition, as appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof, multiplied by 1000. If the Security is not publicly held or so listed or traded, Current Per Share Market Price
shall mean the fair value per share as determined in good faith by the Board of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.
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“Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Distribution Date” shall mean the earlier of (i) the Close of Business on the tenth calendar day after the Shares Acquisition Date
(or, if the tenth calendar day after the Shares Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of Business on the tenth Business Day (or such later date as may be determined by action of
the Company’s Board) after the date that a tender or exchange offer by any Person (other than a Permitted Person and/or its Affiliates, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if, assuming the successful consummation thereof, such Person would be an Acquiring Person.
“Equivalent Shares” shall mean Preferred Shares and any other class or series of capital stock of the Company which is entitled to
the same rights, privileges and preferences as the Preferred Shares.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof.
“Exercise Price” shall have the meaning set forth in Section 4(a) hereof.
“Expiration Date” shall mean the earliest to occur of: (i) the Close of Business on the Final Expiration Date, (ii) the Redemption
Date, or (iii) the time at which the Board orders the exchange of the Rights as provided in Section 24 hereof.
“Final Expiration Date” shall mean May 14, 2035.
“Permitted Person” shall mean Containers Shareholders Trinity Ltd., Friends Investment Company Inc., Eurobulk Marine Holdings, Inc.,
Aristides Pittas or any of their respective Affiliates.
“Person” shall mean any individual, firm, corporation, limited liability company, partnership, trust or other entity, and shall
include any successor (by merger or otherwise) thereof or thereto.
“Post-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.
“Preferred Shares” shall mean shares of Series A Participating Preferred Stock, $0.01 par value, of the Company having the rights
and preferences set forth in the Form of Statement of Designation, Preferences and Rights included as Exhibit A to this Rights Agreement.
“Pre-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.
“Principal Party” shall have the meaning set forth in Section 13(b) hereof.
“Record Date” shall have the meaning set forth in the recitals at the beginning of this Rights Agreement.
“Redemption Date” shall have the meaning set forth in Section 23(a) hereof.
“Redemption Price” shall have the meaning set forth in Section 23(a) hereof.
“Right” shall have the meaning set forth in the recitals.
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“Rights Agent” shall mean Equiniti Trust Company, LLC, or its successor or replacement as provided in Sections 19 and 21 hereof.
“Rights Agreement” shall have the meaning set forth in the preamble hereof.
“Rights Certificate” shall mean a certificate substantially in the form attached hereto as Exhibit B.
“Section 11(a)(iii) Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of Section 13(a) hereof.
“SEC” shall mean the U.S. Securities and Exchange Commission and any successor thereto.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Shares Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such; provided that, if such Person is determined not to have become an Acquiring Person as
defined herein, then no Shares Acquisition Date shall be deemed to have occurred.
“Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Subsidiary” of any Person shall mean any corporation or other entity of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having similar authority of such corporation or other entity is Beneficially Owned, directly or indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.
“Substitution Period” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Summary of Rights” shall mean a summary of this Rights Agreement substantially in the form attached hereto as Exhibit C.
“Total Exercise Price” shall have the meaning set forth in Section 4(a) hereof.
“Trading Day” shall mean a day on which the principal national securities exchange on which a referenced security is listed or
admitted to trading is open for the transaction of business or, if a referenced security is not listed or admitted to trading on any national securities exchange, a Business Day.
A “Triggering Event” shall be deemed to have occurred upon any Person, becoming an Acquiring Person.
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as rights agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such co-Rights Agent as it may deem necessary or desirable. The Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions of any such
co-Rights Agent appointed by the Company.
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3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates for shares of Common Stock registered in the names of the
holders thereof (which certificates shall also be deemed to be Rights Certificates) and not by separate Rights Certificates and (ii) the right to receive Rights Certificates will be transferable only in connection with the transfer of shares of
Common Stock. Until the earlier of the Distribution Date or the Expiration Date, the surrender for transfer of certificates for shares of Common Stock shall also constitute the surrender for transfer of the Rights associated with the shares of
Common Stock represented thereby. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested
and provided with all necessary information, send) by first-class, postage-prepaid mail, to each record holder of shares of Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the
Company, or the transfer agent or registrar for the Common Stock, a Rights Certificate, in substantially the form of Exhibit B hereto, evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11 hereof, then at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates and may be transferred by the transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of shares of Common Stock, and the holders of such Rights Certificates as listed in the
records of the Company or any transfer agent or registrar for the Rights shall be the record holders thereof.
The Company shall promptly notify the Rights Agent of the occurrence of the Distribution Date and, if such notification is given orally,
the Company shall confirm same in writing on or prior to the next Business Day. Until such notice is received by the Rights Agent, whether written or oral, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not
occurred.
(b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of the Summary of Rights by first-class, postage-prepaid mail, to each record holder of shares of Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company or the transfer agent or registrar for the Common Stock. With respect to certificates for shares of Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof together with the Summary of Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the
surrender for transfer of any certificate for shares of Common Stock outstanding on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Unless the Board by resolution adopted at or before the time of the issuance of any shares of Common Stock specifies to the contrary, Rights shall be issued in respect of all shares of Common Stock
that are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date or, in certain circumstances provided in Section 22 hereof, after the Distribution Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear a legend in substantially the following form:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A SHAREHOLDERS RIGHTS
AGREEMENT BETWEEN EUROHOLDINGS LTD. AND EQUINITI TRUST COMPANY, LLC, AS THE RIGHTS AGENT, DATED AS OF MAY 13, 2025, (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF EUROHOLDINGS LTD. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. EUROHOLDINGS LTD. WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
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With respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the shares of Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby.
(d) In the event that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such shares of Common Stock shall be
deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock which are no longer outstanding.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase shares of Series A Preferred Stock and of assignment to be printed on the reverse thereof) shall be substantially in the form of Exhibit
B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties or responsibilities of the Rights
Agent) and as are not inconsistent with the provisions of this Rights Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or a
national market system, on which the Rights may from time to time be listed or traded, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date (or in the case of Rights issued with respect to shares of Common Stock issued by the Company after the Record Date, as of the date of issuance of such shares of Common Stock) and on their face shall entitle the holders thereof to
purchase such number of one one-thousandth of a Preferred Share as shall be set forth therein at the price set forth therein (such exercise price per one one-thousandth of a Preferred Share being hereinafter referred to as the “Exercise Price”
and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right being hereinafter referred to as the “Total Exercise Price”), but the number and type of securities purchasable upon the exercise of each Right and
the Exercise Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Company’s Board has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent the Rights Agent has knowledge thereof and to the extent feasible) a legend in substantially the following form:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT
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5. Countersignature and Registration.
(a) The Rights Certificates shall be duly executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President or any Vice President,
either manually or by facsimile signature, and by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal (if any) or a facsimile thereof. The Rights
Certificates shall be either manually or by facsimile signature countersigned by the Rights Agent and shall not be valid for any purpose unless countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who signed such Rights Certificates on behalf of the Company had not ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, receipt by the Rights Agent of notice to that effect and all other relevant information referred to in Section 3(a), the Rights Agent will keep or cause to be kept, at
its office designated for such purposes, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any
Rights Certificate or Rights Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Rights Certificates, entitling the registered holder to purchase a like number of one one-thousandth of a Preferred
Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be) as the Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. The Rights Certificates are transferable only on the registry books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have properly completed and signed the certificate contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Sections 7(e), 14 and 24 hereof, countersign and deliver to the person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or
charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
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7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
(a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date and prior to the Close of Business on the Expiration Date by surrender of the Rights Certificate, with the form of election to purchase on the reverse side thereof properly completed and duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the Exercise Price for each one one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as
the case may be) as to which the Rights are exercised.
(b) The Exercise Price for each one one-thousandth of a Preferred Share issuable pursuant to the exercise of a Right shall initially be $30.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the Exercise Price for the number of one
one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) to be purchased and an amount equal to any applicable tax or charge required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for the Preferred Shares) a certificate or certificates for the number of one one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such requests or (B) if the Company shall have elected to deposit the total number of one one-thousandth of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-thousandth of a Preferred
Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) as are to be purchased (in which case certificates for the Preferred Shares (or, following a Triggering Event, other securities, cash or other
assets as the case may be) represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt thereof, deliver such cash to or upon the order of the registered holder of such Rights
Certificate. The payment of the Exercise Price (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and an amount equal to any applicable tax or charge required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, may be made in cash or by certified bank check, wire transfer, cashier’s check or bank draft payable to the order of the Company. In the event that the Company is obligated to issue securities of
the Company other than Preferred Shares, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when necessary to comply with this Rights Agreement.
(d) In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such Rights Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14 hereof.
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(e) Notwithstanding anything in this Rights Agreement to the contrary, from and after the first occurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such (a “Post-Event Transferee”), (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the
Company’s Board has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e) (a “Pre-Event Transferee”) or (iv) any subsequent transferee receiving transferred
Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly or through one or more intermediate transferees, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Rights Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights Certificates or to any other Person as a result of the Company’s failure to make any determinations with respect to an Acquiring Person or any of such Acquiring Person’s
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall, in addition to having complied with the requirements of Section 7(a), have (i) properly completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best efforts to cause to be reserved and kept available out of its authorized and unissued Preferred Shares not reserved for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities), the number of Preferred Shares (and, following the occurrence of the Triggering Event, Common Stock and/or other
securities) that will be sufficient to permit the exercise in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares on a national securities exchange, then so long as the Preferred Shares (and, following the occurrence of a Triggering Event, shares of
Common Stock and/or other securities) issuable and deliverable upon exercise of the Rights may be listed on such exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be exercised), all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise.
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(c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Triggering Event in which the consideration to be delivered by the
Company upon exercise of the Rights is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act with respect
to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the date of expiration of the Rights. The Company may
temporarily suspend, for a period not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a public announcement and notify the Rights Agent that the exercisability of the Rights has been temporarily suspended, as well as a public announcement and notification to
the Rights Agent at such time as the suspension is no longer in effect. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this Rights Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction, unless the requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available, and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (or other securities of the Company) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such securities (subject to payment of the Exercise Price), be duly and validly authorized and issued and fully paid and non-assessable shares.
(e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes or charges which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any Preferred Shares (or other securities of the Company) upon the exercise of Rights. The Company shall not, however, be required to pay any tax or charge which may be payable in respect of any transfer or delivery of
Rights Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares (or other securities of the Company) in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depositary receipts for Preferred Shares (or other securities of the Company) upon the exercise of any Rights until any such tax or charge shall
have been paid (any such tax or charge being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax or charge is due.
10. Record Date. Each Person in whose name any certificate for a number of one one-thousandth of a Preferred Share (or other securities of the Company) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of Preferred Shares (or other securities of the Company) represented thereon, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Total Exercise Price with respect to which the Rights have been exercised (and any applicable taxes or charges) was made; provided, however, that if the date of such surrender and payment is a
date upon which the transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a holder of Preferred Shares (or other securities of the Company) for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided
herein.
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11. Adjustment of Exercise Price, Number of Shares or Number of Rights. The Exercise Price, the number and kind of shares or other property covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) Notwithstanding anything in this Rights Agreement to the contrary, in the event the Company shall at any time after the date of this Rights Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares (by reverse stock split or otherwise) into a smaller number of Preferred Shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided
in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall be adjusted so that the Exercise Price
thereafter shall equal the result obtained by dividing the Exercise Price in effect immediately prior to such time by a fraction (the “Adjustment Fraction”), the numerator of which shall be the total number of Preferred Shares (or shares of
capital stock issued in such reclassification of the Preferred Shares) outstanding immediately following such time and the denominator of which shall be the total number of Preferred Shares outstanding immediately prior to such time; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of such Right; and (2) the number of one
one-thousandth of a Preferred Share (or share of such other capital stock) issuable upon the exercise of each Right shall equal the number of one one-thousandth of a Preferred Share (or share of such other capital stock) as was issuable upon
exercise of a Right immediately prior to the occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however, that, no such adjustment shall be made pursuant to
this Section 11(a)(i) to the extent that there shall have simultaneously occurred an event described in clause (A), (B), (C) or (D) of Section 11(n) with a proportionate adjustment being made thereunder. Each share of Common Stock that shall become
outstanding after an adjustment has been made pursuant to this Section 11(a)(i) shall have associated with it the number of Rights, exercisable at the Exercise Price and for the number of one one-thousandth of a Preferred Share (or shares of such
other capital stock) as one share of Common Stock has associated with it immediately following the adjustment made pursuant to this Section 11(a)(i).
(i) Subject to Section 24 of this Rights Agreement, in the event a Triggering Event shall have occurred, then promptly following such Triggering Event each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive for each Right, upon exercise thereof in accordance with the terms of this Rights Agreement and payment of the Exercise Price in effect immediately prior to the occurrence of the Triggering
Event, in lieu of a number of one one-thousandth of a Preferred Share, such number of shares of Common Stock of the Company as shall equal the result obtained by multiplying the Exercise Price in effect immediately prior to the occurrence of the
Triggering Event by the number of one one-thousandth of a Preferred Share for which a Right was exercisable (or would have been exercisable if the Distribution Date had occurred) immediately prior to the first occurrence of a Triggering Event, and
dividing that product by 50% of the Current Per Share Market Price for shares of Common Stock on the date of occurrence of the Triggering Event; provided, however, that the Exercise Price and the number of shares of Common Stock of
the Company so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 11(e) hereof to reflect any events occurring in respect of the shares of Common Stock of the Company after the
occurrence of the Triggering Event.
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(ii) In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the Company may, if the Company’s Board determines that such action is necessary or appropriate and not contrary
to the interest of holders of Rights and, in the event that the number of shares of Common Stock which are authorized by the Company’s Articles of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights, or if any necessary regulatory approval for such issuance has not been obtained by the Company, the Company shall: (A) determine the excess of (1) the value of the shares
of Common Stock issuable upon the exercise of a Right (the “Current Value”) over (2) the Exercise Price (such excess, the “Spread”) and (B) with respect to each Right, make adequate provision to substitute for such shares of Common
Stock, upon exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other equity securities of the Company including, without limitation, shares or units of shares of any series of preferred stock which the Company’s Board has
deemed to have the same value as Common Stock (such shares or units of shares of preferred stock are herein called “Common Stock Equivalents”), except to the extent that the Company has not obtained any necessary shareholder or regulatory
approval for such issuance, (4) debt securities of the Company, except to the extent that the Company has not obtained any necessary shareholder or regulatory approval for such issuance, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Company’s Board based upon the advice of a nationally recognized investment banking firm selected by the Company’s Board; provided,
however, if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Triggering Event and (y) the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the “Section 11(a)(iii) Trigger Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Exercise Price, Common Stock (to the extent available), except to the extent that the Company has not obtained any necessary shareholder or regulatory approval for such issuance, and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread. If the Company’s Board shall determine in good faith that it is likely that sufficient additional Common Stock could be authorized for issuance upon exercise in full of the
Rights or that any necessary regulatory approval for such issuance will be obtained, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(iii) Trigger Date,
in order that the Company may seek shareholder approval for the authorization of such additional shares or take action to obtain such regulatory approval (such period, as it may be extended, the “Substitution Period”). To the extent that the
Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares, to take any action to obtain any required regulatory approval and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the Current Per Share Market Price of the Common
Stock on the Section 11(a)(iii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to have the same value as the Common Stock on such date.
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(b) In case the Company shall, at any time after the date of this Rights Agreement, fix a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling such
holders (for a period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase Preferred Shares or Equivalent Shares or securities convertible into Preferred Shares or Equivalent Shares at a price per share
(or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Shares) less than the then Current Per Share Market Price of the Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as the case may be, which the aggregate offering price of the total number of Preferred Shares or Equivalent Shares, as the case
may be, to be offered or issued (and/or the aggregate initial conversion price of the convertible securities to be offered or issued) would purchase at such current market price, and the denominator of which shall be the number of Preferred Shares
and Equivalent Shares (if any) outstanding on such record date, plus the number of additional Preferred Shares or Equivalent Shares, as the case may be, to be offered for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Company’s Board, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Preferred Shares and Equivalent Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Exercise Price shall be
adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall, at any time after the date of this Rights Agreement, fix a record date for the making of a distribution to all holders of the Preferred Shares or of any class or series of
Equivalent Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash
dividend, if any, or a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11(b)), then, in each such case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Per Share Market Price of a Preferred Share or an Equivalent Share on such record date, less the
fair market value per Preferred Share or Equivalent Share (as determined in good faith by the Board of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the case may be, and the denominator of which shall be such Current Per Share Market Price of a Preferred Share
or Equivalent Share on such record date; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would
have been in effect if such record date had not been fixed.
(d) Notwithstanding anything to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided,
however, that any adjustments which by reason of this Section 11(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share or one hundred-thousandth of a Preferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(d), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date of the transaction which requires such adjustment or (ii) the Expiration Date.
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(e) If as a result of an adjustment made pursuant to Section 11(a) or 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than
Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right and, if required, the Exercise Price thereof, shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(f) All Rights originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of one
one-thousandth of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as provided in Section 11(h), upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Preferred Shares (calculated to the nearest one hundred-thousandth of a share) obtained
by (i) multiplying (x) the number of Preferred Shares covered by a Right immediately prior to this adjustment, by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment of the Exercise Price.
(h) The Company may elect on or after the date of any adjustment of the Exercise Price as a result of the calculations made in Section 11(b) or (c) to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandth of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the Company
shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates to be distributed as such shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the
public announcement.
(i) Irrespective of any adjustment or change in the Exercise Price or the number of Preferred Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price per one one-thousandth of a Preferred Share and the number of one one-thousandth of a Preferred Share which were expressed in the initial Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing the Exercise Price below the par or stated value, if any, of the number of one one-thousandth of a Preferred Share issuable upon
exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue as fully paid and nonassessable shares such number of one
one-thousandth of a Preferred Share at such adjusted Exercise Price.
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(k) In any case in which this Section 11 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised after such record date of the number of one one-thousandth of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise over
and above the number of one one-thousandth of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) upon the occurrence of the event requiring such adjustment.
(l) Notwithstanding anything in this Section 11 to the contrary, prior to the Distribution Date, the Company shall be entitled to make such reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares or Common Stock, (ii) issuance wholly
for cash of any Preferred Shares or Common Stock at less than the current market price, (iii) issuance wholly for cash of Preferred Shares or Common Stock or securities which by their terms are convertible into or exchangeable for Preferred or
Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares or Common Stock shall not be taxable to such shareholders.
(m) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
(n) In the event the Company shall at any time after the date of this Rights Agreement (A) declare a dividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstanding shares of
Common Stock, (C) combine the outstanding Common Stock (by reverse stock split or otherwise) into a smaller number of shares of Common Stock, or (D) issue any shares of its capital stock in a reclassification of the shares of Common Stock
(including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11(a) and Section 7(e)
hereof: (1) each share of Common Stock (or shares of capital stock issued in such reclassification of the Common Stock) outstanding immediately following such time shall have associated with it the number of Rights as were associated with one share
of Common Stock immediately prior to the occurrence of the event described in clauses (A)-(D) above; (2) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Exercise Price thereafter shall equal the result obtained by multiplying the Exercise Price in effect immediately prior to such time by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the event described in clauses (A)-(D) above, and the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such event; provided, however,
that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of such Right; and (3) the number of one one-thousandth of
a Preferred Share (or shares of such other capital stock) issuable upon the exercise of each Right outstanding after such event shall equal the number of one one-thousandth of a Preferred Share (or shares of such other capital stock) as were
issuable with respect to one Right immediately prior to such event. Each share of Common Stock that shall become outstanding after an adjustment has been made pursuant to this Section 11(n) shall have associated with it the number of Rights,
exercisable at the Exercise Price and for the number of one one-thousandth of a Preferred Share (or shares of such other capital stock) as one share of Common Stock has associated with it immediately following the adjustment made pursuant to this
Section 11(n). If an event occurs which would require an adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
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12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare a certificate setting
forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such certification or give such notice shall not affect the validity of such adjustment or the force or
effect of the requirement for such adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement contained therein and shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of any adjustment unless and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following a Shares Acquisition Date, directly or indirectly:
(i) the Company shall consolidate with, or merge with or into, any other Person (other than a wholly-owned Subsidiary of the Company in a transaction the principal purpose of which is to change the state
of incorporation of the Company and which complies with Section 11(m) hereof);
(ii) any Person shall consolidate with the Company, or merge with or into the Company and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with
such merger, all or part of the shares of Common Stock shall be changed into or exchanged for stock or other securities of any other person (or the Company); or
(iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or one or more of its wholly owned Subsidiaries in one or more transactions, each of which individually (and
together) complies with Section 11(m) hereof),
then, concurrent with and in each such case:
(A) each holder of a Right (except as provided in Section 7(e) hereof) shall thereafter have the right to receive, upon the exercise thereof, at a price equal to the Total Exercise Price applicable
immediately prior to the occurrence of the Section 13 Event in accordance with the terms of this Rights Agreement, such number of validly authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal
Party, free of any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by dividing such Total Exercise Price by 50% of the Current Per Share Market Price of the shares of Common Stock of
such Principal Party on the date of consummation of such Section 13 Event, provided, however, that the Exercise Price and the number of shares of Common Stock of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(e) hereof;
(B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Rights Agreement;
(C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event;
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(D) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of its Common Stock) in connection with the consummation of any such transaction as
may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights;
(E) upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect of such Principal Party, each holder of a Right
shall thereupon be entitled to receive, upon exercise of a Right and payment of the Total Exercise Price as provided in this Section 13(a), such cash, shares, rights, warrants and other property which such holder would have been entitled to receive
had such holder, at the time of such transaction, owned the shares of Common Stock of the Principal Party receivable upon the exercise of such Right pursuant to this Section 13(a), and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and other property; and
(F) For purposes hereof, the “earning power” of the Company and its Subsidiaries shall be determined in good faith by the Company’s Board on the basis of the operating earnings of each
business operated by the Company and its Subsidiaries during the three fiscal years preceding the date of such determination (or, in the case of any business not operated by the Company or any Subsidiary during three full fiscal years preceding
such date, during the period such business was operated by the Company or any Subsidiary).
(b) For purposes of this Rights Agreement, the term “Principal Party” shall mean:
(ii) in the case of any transaction described in clause (i) or (ii) of Section 13(a) hereof: (A) the Person that is the issuer of the securities into which the shares of Common Stock are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer the shares of Common Stock of which have the greatest aggregate market value of shares outstanding, or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if there is more than one such Person, the Person the shares of Common Stock of which have the greatest aggregate market value of shares outstanding or (y) if the Person that is
the other party to the merger does not survive the merger, the Person that does survive the merger (including the Company if it survives) or (z) the Person resulting from the consolidation; and
(iii) in the case of any transaction described in clause (iii) of Section13(a) hereof, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if more than one Person that is a party to such transaction or transactions receives the same portion of the assets or earning power so transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so transferred, or if the Person receiving the greatest portion of the assets or earning power cannot be determined, whichever of such Persons is the issuer of shares of
Common Stock having the greatest aggregate market value of shares outstanding; provided, however, that in any such case described in the foregoing clause (b)(i) or (b)(ii), if the shares of Common Stock of such Person are not at
such time or have not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary of another Person the shares of Common Stock of which are and
have been so registered, the term “Principal Party” shall refer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of which are and have been so registered, the term
“Principal Party” shall refer to whichever of such Persons is the issuer of shares of Common Stock having the greatest aggregate market value of shares outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the venture as if the Person owned by the joint venture
was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall bear the obligations set forth in this Section 13 in the same ratio as its interest in such Person bears to the total of such interests.
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(c) The Company shall not consummate any Section 13 Event unless the Principal Party shall have a sufficient number of authorized shares of Common Stock that have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement confirming that such Principal Party
shall, upon consummation of such Section 13 Event, assume this Rights Agreement in accordance with Sections 13(a) and 13(b) hereof, that all rights of first refusal or preemptive rights in respect of the issuance of shares of Common Stock of such
Principal Party upon exercise of outstanding Rights have been waived, that there are no rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the Rights and that such transaction shall not result in a default by such Principal Party under this Rights Agreement, and further providing that, as soon as practicable
after the date of such Section 13 Event, such Principal Party will:
(i) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange or to meet the eligibility requirements
for quotation on the Nasdaq Capital Market or another national securities exchange and list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on the Nasdaq Capital Market or another national
securities exchange; and
(iii) deliver to holders of the Rights historical financial statements for such Principal Party which comply in all respects with the requirements for registration on Form F-1 (or any successor form) under
the Exchange Act.
In the event that at any time after the occurrence of a Triggering Event some or all of the Rights shall not have been exercised at the time of a transaction
described in this Section 13, the Rights which have not theretofore been exercised shall thereafter be exercisable in the manner described in Section 13(a) (without taking into account any prior adjustment required by Section 11(a)(ii)).
(d) In case the “Principal Party” for purposes of Section 13(b) hereof has provision in any of its authorized securities or in its articles of incorporation or bylaws or other instrument governing its
corporate affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to Section 13 hereof), in connection with, or as a consequence of, the consummation of a Section 13
Event, shares of Common Stock or Equivalent Shares of such Principal Party at less than the then Current Per Share Market Price thereof or securities exercisable for, or convertible into, shares of Common Stock or Equivalent Shares of such
Principal Party at less than such then Current Per Share Market Price, or (ii) providing for any special payment, tax or similar provision in connection with the issuance of the shares of Common Stock of such Principal Party pursuant to the
provisions of Section 13 hereof, then, in such event, the Company hereby agrees with each holder of Rights that it shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been canceled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with or as a consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after the Distribution Date, effect or permit to occur any Section 13 Event, if (i) at the time or immediately after such Section 13
Event there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Section 13 Event, the shareholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes of Section 13(b) hereof shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates or (iii) the form or nature of organization of the Principal Party would preclude or limit the exercisability of the Rights.
(f) The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.
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14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable, as determined pursuant to this Rights
Agreement.
(b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share). Interests in fractions of Preferred Shares in integral multiples of one one-thousandth
of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a Preferred Share. For purposes of this Section 14(b), the current market value of a Preferred Share shall be one thousand times the closing price of a share of Common Stock (as determined pursuant to the terms hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock upon the exercise or exchange of Rights. In
lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value
of a share of Common Stock. For purposes of this Section 14(c), the current market value of a share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to the terms hereof) for the Trading Day immediately
prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly waives his or her right to receive any fractional Rights or any fractional shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of a Right.
(e) Whenever a payment for fractional Rights or fractional Preferred Shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments.
The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of, any payment for fractional Rights or fractional Preferred Shares under any Section of
this Rights Agreement relating to the payment of fractional Rights or fractional Preferred Shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.
15. Rights of Action. (a) All rights of action in respect of this Rights Agreement, excepting the rights of action given to the Rights Agent under Section 18 and Section 20 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the shares of Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the
shares of Common Stock) or any Permitted Person, without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the shares of Common Stock), may, in his or her own behalf and for his
or her own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his or her right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Rights Agreement. Without limiting the foregoing or any remedies available to the holders of Rights or the Permitted Persons, it is specifically acknowledged that the holders of Rights or the
Permitted Persons may not have an adequate remedy at law for any breach of this Rights Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Rights Agreement.
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(a) Notwithstanding anything in this Rights Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right, any Permitted Person or other Person as a
result of its inability to perform any of its obligations under this Rights Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final) issued by a court or by a
governmental, regulatory, self-regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company shall use all reasonable efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible.
16. Agreement of Rights Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the shares of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name the Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose to be the holder of
the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder
of any Rights Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions hereof.
18. The Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the preparation, delivery, amendment, administration and execution of this Rights Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for any action
taken, suffered or omitted to be taken by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under this Rights Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. The provisions of this Section 18 and Section 20 below shall survive the termination of this Rights Agreement, the
exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.
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(b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Rights Agreement in
reliance upon any Rights Certificate or certificate for the Preferred Shares or shares of Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel
as set forth in Section 20 hereof.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, that such Person would be eligible for appointment as a successor Rights Agent under Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Rights Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in
its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Rights Agreement.
20. Rights and Duties of Rights Agent. The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Rights Agreement (and no implied duties) upon the following
terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company or an employee of the Rights Agent), and the written advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in accordance with such written advice or opinion.
(b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of Current Per Share Market Price) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer,
the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted to be taken by it in good faith under the provisions of this Rights Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own gross negligence, bad faith or willful misconduct (which gross negligence or bad faith must be determined
by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Rights Agreement or in the Rights Certificates (except its countersignature thereof)
or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any liability for or be under any responsibility in respect of the validity of this Rights Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Rights Certificate; nor shall it be responsible for any change in the exercisability of the Rights or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt by the Rights Agent of a certificate furnished
pursuant to Section 12 hereof, upon which the Rights Agent may rely, describing such change or adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred
Shares to be issued pursuant to this Rights Agreement or any Rights Certificate or as to whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as
may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall not be liable for or in respect of any action taken, suffered or omitted by it in accordance with instructions of any such officer or for any delay in acting while waiting
for those instructions. The Rights Agent shall be fully authorized and protected in relying upon the most recent instructions received by any such officer. Any application by the Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted by the Rights Agent under this Rights Agreement and the date on and/or after which such action shall be taken or suffered or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be
less than five (5) Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Rights Agreement. Nothing herein shall preclude
the Rights Agent or any such shareholder, affiliate, director, officer or employee from acting in any other capacity for the Company or for any other Person.
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(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its directors, officers and employees) or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act,
default, neglect or misconduct, absent gross negligence or bad faith in the selection and continued employment thereof (which gross negligence or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court
of competent jurisdiction).
(j) No provision of this Rights Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in
the exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may
be, has either not been properly completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the
Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Rights Agreement upon thirty (30) days’ written notice, pursuant to
Section 26 hereof, to the Company and to each transfer agent of the Preferred Shares and the Common Stock and to the holders of the Rights Certificates. The Company may remove the Rights Agent or any successor Rights Agent upon written notice,
pursuant to Section 26 hereof, to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Stock and to the holders of the Rights Certificates. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such
removal or after receiving written notice of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his or her Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be
(a) a Person organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise stock transfer powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million or (b) an Affiliate of such a Person. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Shares and the Common Stock, and mail a written notice thereof to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Rights Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board to reflect any adjustment or change in the Exercise Price and the number or kind or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Rights Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement or upon the exercise, conversion or exchange of other securities of the Company
outstanding at the date hereof or upon the exercise, conversion or exchange of securities hereinafter issued by the Company and (b) may, in any other case, if deemed necessary or appropriate by the Board of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued and this sentence shall be null and void ab initio if, and to the extent
that, such issuance or this sentence would create a significant risk of or result in material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued or would create a significant risk of or result in
such options’ or employee plans’ or arrangements’ failing to qualify for otherwise available special tax treatment and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.
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23. Redemption.
(a) The Company may, at its option and with the approval of the Board, at any time prior to the Close of Business on the earlier of (i) the Distribution Date and (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being herein
referred to as the “Redemption Price”) and the Company may, at its option, pay the Redemption Price either in shares of Common Stock (based on the Current Per Share Market Price thereof at the time of redemption) or cash. Such redemption of
the Rights by the Company may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. The date on which the Board elects to make the redemption effective shall be referred to as the
“Redemption Date”.
(b) Immediately upon the action of the Board of the Company ordering the redemption of the Rights, written notice of which shall have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give or any defect in, any such notice shall not affect the legality or validity of such redemption. Within ten (10) days after the action of the Board ordering the redemption of the Rights, the Company shall
mail a notice of such redemption to the Rights Agent and the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of shares of Common Stock prior to the Distribution Date.
24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to subsection 24(c) below, the Company may, at its option, by action of the Board, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board shall not be empowered to effect such exchange at any time after any Person (other than a Permitted Person and/or its Affiliates, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to subsection 24(a) of this Section 24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.
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(c) In the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with Section
24(a), the Company shall either take such action as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights or alternatively, at the option of a majority of the Board, with respect to each Right (i)
pay cash in an amount equal to the Current Value, in lieu of issuing shares of Common Stock in exchange therefor, or (ii) issue debt or equity securities or a combination thereof, having a value equal to the Current Value, in lieu of issuing shares
of Common Stock in exchange for each such Right, where the value of such securities shall be determined by a nationally recognized investment banking firm selected by majority vote of the Board, or (iii) deliver any combination of cash, property,
shares of Common Stock and/or other securities having a value equal to the Current Value in exchange for each Right. For purposes of this Section 24(c) only, the Current Value shall mean the product of the Current Per Share Market Price of shares
of Common Stock on the date of the occurrence of the event described above in subparagraph (a), multiplied by the number of shares of Common Stock for which the Right otherwise would be exchangeable if there were sufficient shares available. To the
extent that the Company determines that some action need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c), the Board may temporarily suspend the exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order to seek any authorization of additional shares of Common Stock and/or to decide the appropriate form of distribution to be made pursuant to the above provision and to
determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable, an amount in cash equal to the same fraction of the current market value
of a whole share of Common Stock (as determined pursuant to the terms hereof).
(e) The Company may, at its option, by majority vote of the Board, at any time before the Share Acquisition Date, exchange all or part of the then outstanding Rights for rights of substantially equivalent
value, as determined reasonably and with good faith by the Board, based upon the advice of one or more nationally recognized investment banking firms.
(f) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to subsection 24(e) of this Section 24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of rights in exchange therefor as has been determined by the Board in accordance with subsection 24(e) above. The Company shall
give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry books of the transfer agent for the shares of Common Stock of the Company. Any notice which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Rights will be effected.
25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any Triggering Event or Section 13 Event, the Company shall give notice thereof to each holder of Rights in accordance with Section 26
hereof at least twenty (20) days prior to occurrence of such Triggering Event or such Section 13 Event.
(b) In case any Triggering Event set forth in Section 11(a)(ii) hereof shall occur, then the Company shall as soon as practicable thereafter give to the Rights Agent and to each holder of a Rights
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
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26. Notices. Notices or demands authorized by this Rights Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by facsimile, as a pdf attachment to an e-mail or by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:
Euroholdings Ltd.
4 Messogiou & Evropis Street
151 24 Maroussi, Greece
Attention: Stefania Karmiri
4 Messogiou & Evropis Street
151 24 Maroussi, Greece
Attention: Stefania Karmiri
with a copy to:
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
Attention: Anthony Tu-Sekine
One Battery Park Plaza
New York, New York 10004
Attention: Anthony Tu-Sekine
Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Rights Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by facsimile, as a pdf attachment to an e-mail or by first-class mail, postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Equiniti Trust Company, LLC
48 Wall Street, 23rd Floor
New York, NY 10005
Attention: Relationship Management
Attention: Relationship Management
with a copy to:
Equiniti Trust Company, LLC
48 Wall Street, 22nd Floor
New York, NY 10005
email: LegalTeamUS@equiniti.com
Attention: Legal Department
48 Wall Street, 22nd Floor
New York, NY 10005
email: LegalTeamUS@equiniti.com
Attention: Legal Department
Notices or demands authorized by this Rights Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
27. Supplements and Amendments. Prior to the occurrence of a Distribution Date, the Company may supplement or amend this Rights Agreement in any respect without the approval of any holders of Rights
and the Rights Agent shall, if the Company so directs, execute such supplement or amendment. From and after the occurrence of a Distribution Date, the Company and the Rights Agent may from time to time supplement or amend this Rights Agreement
without the approval of any holders of Rights in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) shorten or lengthen any time
period hereunder or (iv) to change or supplement the provisions hereunder in any manner that the Company may deem necessary or desirable and that shall not adversely affect the interests of the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person); provided, this Rights Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company and, if reasonably requested by the Rights Agent, an opinion of counsel, that states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything contained in this Rights Agreement to the contrary, the Rights Agent may, but shall not be obligated
to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or immunities under this Rights Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Stock.
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28. Successors. All the covenants and provisions of this Rights Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
29. Determinations and Actions by the Board, etc. For all purposes of this Rights Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of the Company shall have the exclusive power and authority to administer this Rights Agreement and to exercise all rights and powers specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration of this Rights Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Rights Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including a determination to redeem or not redeem the Rights or to amend the Rights Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other parties and (y)
not subject the Board to any liability to the holders of the Rights. The Rights Agent is entitled always to assume the Company’s Board acted in good faith and shall be fully protected and incur no liability in reliance thereon.
30. Benefits of this Rights Agreement. Nothing in this Rights Agreement shall be construed to give to any Person other than the Company, the Rights Agent, the Permitted Persons and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of shares of Common Stock) any legal or equitable right, remedy or claim under this Rights Agreement; but this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent, the Permitted Persons and the registered holders of the Rights Certificates (and, prior to the Distribution Date, the shares of Common Stock).
31. Severability. If any term, provision, covenant or restriction of this Rights Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything
in this Rights Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of the Company determines in its good faith judgment that severing
the invalid language from this Rights Agreement would adversely affect the purpose or effect of this Rights Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close of Business on
the tenth Business Day following the date of such determination by the Board. Without limiting the foregoing, if any provision requiring a specific group of directors to act is held by any court of competent jurisdiction or other authority to be
invalid, void or unenforceable, such determination shall then be made by the Board in accordance with applicable law and the Company's Certificate of Incorporation and bylaws.
32. Governing Law. This Rights Agreement and each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.
33. Counterparts. This Rights Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
34. Descriptive Headings. Descriptive headings of the several Sections of this Rights Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any
of the provisions hereof.
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IN WITNESS WHEREOF, the parties have executed this Shareholders Rights Agreement as of the date first written above.
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EUROHOLDINGS LTD.
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By:
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/s/ Anastasios Aslidis
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Name: Anastasios Aslidis
Title: Director, Chief Strategy Officer & Treasurer
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EQUINITI TRUST COMPANY, LLC, as Rights Agent
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By:
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/s/ Matthew D. Paseka
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Name: Matthew D. Paseka
Title: Senior Vice President, Relationship Director
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Exhibit A
FORM OF STATEMENT OF DESIGNATION OF RIGHTS, PREFERENCES
AND PRIVILEGES OF SERIES A PARTICIPATING PREFERRED
STOCK OF EUROHOLDINGS LTD.
AND PRIVILEGES OF SERIES A PARTICIPATING PREFERRED
STOCK OF EUROHOLDINGS LTD.
The undersigned, Mr. Aristides J. Pittas and Ms. Stephania Karmiri do hereby certify:
1. That they are the duly elected and acting President and Secretary, respectively, of Euroholdings Ltd., a Marshall Islands company (the “Company”).
2. That pursuant to the authority conferred by the Company’s Articles of Incorporation, as amended, the Company’s Board on [•] adopted the following resolution
designating and prescribing the relative rights, preferences and limitations of the Company’s Series A Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board (the “Board”) of the Company by the Articles of Incorporation, the
Board does hereby establish a series of preferred stock, par value $0.01 per share, and the designation and certain powers, preferences and other special rights of the shares of such series, and certain qualifications, limitations and restrictions
thereon, are hereby fixed as follows:
Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Participating Preferred Stock”.
The Series A Participating Preferred Stock shall have a par value of $0.01 per share, and the number of shares constituting such series shall initially be 1,000,000, which number the Board may from time to time increase or decrease (but not below the
number then outstanding).
Section 2. Proportional Adjustment. In the event the Company shall at any time after the issuance of any share or shares of Series
A Participating Preferred Stock (i) declare any dividend on the common stock of the Company par value $0.01 per share (the “Common Stock”) payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case the Company shall simultaneously effect a proportional adjustment to the number of outstanding shares of Series A Participating Preferred Stock.
Section 3. Dividends and Distributions.
(a) Subject to the prior and superior right of the holders of any shares of any series of preferred stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive when, as and if declared by the Board out of funds legally available for the purpose, quarterly dividends payable quarterly (each such date
being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock.
(b) The Company shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (a) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock).
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(c) Dividends shall begin to accrue on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date immediately preceding the date of issue of such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a record
date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 4. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights:
(a) Each share of Series A Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Company.
(b) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Company.
(c) Except as required by law, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate action.
Section 5. Certain Restrictions.
(a) The Company shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire for consideration any shares of Common Stock after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock unless concurrently therewith it shall declare a dividend on the Series A Participating Preferred Stock as required by Section 3 hereof.
(b) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 3 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Company shall not (i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; (ii) declare or pay dividends on,
make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; (iv) purchase or otherwise acquire for
consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as
determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective Series A classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or classes.
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(c) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (a) of this
Section 5, purchase or otherwise acquire such shares at such time and in such manner.
Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Company
in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth herein and, in the Articles of Incorporation, as then amended.
Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Company, the holders of
shares of Series A Participating Preferred Stock shall be entitled to receive an aggregate amount per share equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued
and unpaid dividends on such shares of Series A Participating Preferred Stock.
Section 8. Consolidation, Merger, etc. In case the Company shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed
or exchanged.
Section 9. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable.
Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Company’s preferred
stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.
Section 11. Amendment. The Articles of Incorporation of the Company shall not be further amended in any manner which would
materially alter or change the powers, preference or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority of the outstanding shares of Series A
Participating Preferred Stock, voting separately as a class.
Section 12. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the Secretary or any Assistant Secretary of this Company be, and they hereby
are, authorized and directed to prepare and file a Statement of Designation of Rights, Preferences and Privileges in accordance with the foregoing resolution and the provisions of Marshall Islands law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
33
We further declare under penalty of perjury that the matters set forth in the foregoing Statement of Designation are true and correct of
our own knowledge.
Executed on ______________, 20__.
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Aristides J. Pittas
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Chief Executive Officer, President and Chairman
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Stephania Karmiri
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Secretary
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Exhibit B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- Rights
NOT EXERCISABLE AFTER [___________, 20___] OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $0.01 PER RIGHT ANDTO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
EUROHOLDINGS LTD.
EUROHOLDINGS LTD.
This certifies that [ ], or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of May 13, 2025 (the “Rights Agreement”), between Euroholdings Ltd., a Marshall Islands company (the “Company”),
and Equiniti Trust Company, LLC, as rights agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New York time, on
[__________] at the office of the Rights Agent, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid non- assessable share of Series A Participating Preferred Stock, $0.01 par value per share (the “Preferred Shares”),
of the Company, at a purchase price of $0.01 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Rights Certificate (and the number of one one-thousandths of a Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of
[__________], based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths of a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, covenants and restrictions of the Rights Agreement, which terms, covenants and
restrictions are hereby incorporated herein by reference and made a part hereof, and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company.
This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $0.01 per Right or (ii) may be exchanged in whole or in part for Preferred Shares, par value $0.01 per share, or shares of the Company’s Common Stock, par value $0.01 per share.
No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.
35
WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of [_________, 20].
ATTEST:
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EUROHOLDINGS LTD.
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By:
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Name:
Title:
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Aristides J. Pittas
Chief Executive Officer, President and Chairman
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By:
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Countersigned:
EQUINITI TRUST COMPANY, LLC
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By: ___________________________
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| Authorized Signatur |
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Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint Equiniti Trust Company, LLC
as Attorney-in-Fact, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.
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Dated:
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Signature
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Signature Guaranteed:
Signatures must be guaranteed by a participant in the Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion Program or
the Medallion Signature Program.
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The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [•] is [•] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [•] did [•] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate thereof.
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Dated:
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Signature
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FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights represented by the Rights Certificate.)
(To be executed by the registered holder
if such holder desires to exercise Rights represented by the Rights Certificate.)
TO: EUROHOLDINGS LTD.
The undersigned hereby irrevocably elects to exercise Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares be issued in the name of:
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(Please print name and address)
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Please insert social security
or other tax identifying number |
If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
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(Please print name and address)
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Please insert social security
or other tax identifying number |
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Signature
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Signatures must be guaranteed by a participant in the Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion Program or
the Medallion Signature Program.
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned or transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
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Dated:
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Signature
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NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the case may be, must conform to the name as written upon the
face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
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Exhibit C
SUMMARY OF RIGHTS
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Distribution and Transfer of Rights; Distribution Date:
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The rights will separate from the common stock and become exercisable upon the earlier of (1) the 10th day after public announcement that a person or
group has acquired ownership of 15% or more of the company’s common stock or (2) the 10th business day (or such later date as determined by the company’s board of directors) after a person or group announces a tender or exchange offer which
would result in that person or group holding 15% or more of the company’s common stock.
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Preferred Stock Purchaseable Upon Exercise of Rights:
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On the Distribution Date, each holder of a right will be entitled to purchase for $30.00 (the “Exercise Price”) a fraction (1/1000th) of one share of
the company’s preferred stock which has similar economic terms as one share of common stock.
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Flip-in:
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If an acquiring person (an “Acquiring Person”) acquires more than 15% of the company’s common stock then each holder of a right (except that acquiring
person) will be entitled to buy at the Exercise Price, a number of shares of the company’s common stock which has a market value of twice the Exercise Price.
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Flip-over:
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If after an Acquiring Person acquires more than 15% of the company’s common stock, the company merges into another company (either as the surviving
corporation or as the disappearing entity) or the company sells more than 50% of its assets or earning power, then each holder of a right (except for those owned by the acquirer) will be entitled to purchase at the Exercise Price, a number of
shares of common stock of the surviving entity which has a then current market value of twice the Exercise Price.
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Exchange Provision:
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Any time after the date an Acquiring Person obtains more than 15% of the company’s common stock and before that Acquiring Person acquires more than
50% of the company’s outstanding common stock, the company may exchange each right owned by all other rights holders, in whole or in part, for one share of the company’s common stock.
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Redemption of Rights:
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The company can redeem the rights at any time prior to the Distribution Date if a person has acquired ownership of 15% or more of the company’s common
stock.
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Expiration of Rights:
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The rights expire on the earliest of (1) May 14, 2035 or (2) the exchange or redemption of the rights as
described above.
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Amendment of Terms of Rights:
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The terms of the rights and the Shareholders Rights Plan may be amended without the consent of the rights holders at any time on or prior to the
Distribution Date. After the Distribution Date, the terms of the rights and the Shareholders rights Plan may be amended to make changes, which do not adversely affect the rights of the rights holders (other than the Acquiring Person).
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Voting Rights:
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The rights will not have any voting rights.
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Anti-dilution Provisions:
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The rights will have the benefit of certain customary anti-dilution protections.
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Exhibit 4.2
EUROHOLDINGS LTD.
2025 EQUITY INCENTIVE PLAN
2025 EQUITY INCENTIVE PLAN
ARTICLE I
General
General
1.1. Purpose
The Euroholdings Ltd. 2025 Equity Incentive Plan (the "Plan") is designed to provide certain Key Persons (as defined below), whose
initiative and efforts are deemed to be important to the successful conduct of the business of Euroholdings Ltd. (the "Company"), with incentives to (a) acquire a proprietary interest in the success of the Company, (b) maximize their performance in
respect of the provision of their services to the Company, a Subsidiary (as defined below) and/or an Affiliate (as defined below) and (c) enhance the long-term performance of the Company.
1.2. Administration
(a) Administration. The Plan shall be administered by the Company's Board of Directors (referred to herein as the "Board") or
such committee of the Board as may be designated by the Board to administer the Plan (the Board or such committee, as applicable, being referred to herein as the "Administrator"); provided that (i) in the event the Company is subject to
Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act"), the Administrator shall be composed of two or more directors, each of whom is a "Non-Employee Director" (a "Non-Employee Director") under Rule 16b-3 (as promulgated
and interpreted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, or any successor rule or regulation thereto as in effect from time to time ("Rule 16b-3")), and (ii) the Administrator shall be composed solely of two or more
directors who are "independent directors" under the rules of any stock exchange on which the Company's Common Stock (as defined below) is traded; provided further, however, that, (A) the requirement in the preceding clause (i)
shall apply only when required to exempt an Award (as defined below) intended to qualify for an exemption under the applicable provisions referenced therein, (B) the requirement in the preceding clause (ii) shall apply only when required pursuant to
the applicable rules of the applicable stock exchange and (C) if at any time the Administrator is not so composed as required by the preceding provisions of this sentence, that fact will not invalidate any grant made, or action taken, by the
Administrator hereunder that otherwise satisfies the terms of the Plan. Subject to the terms of the Plan, applicable law and the applicable rules and regulations of any stock exchange on which the Common Stock is listed for trading, and in addition
to other express powers and authorizations conferred on the Administrator by the Plan, the Administrator shall have the full power and authority to: (1) designate the Key Persons to receive Awards under the Plan; (2) determine the types of Awards
granted to a participant under the Plan; (3) determine the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards; (4) determine the terms and conditions of any
Awards; (5) determine whether, and to what extent, and under what circumstances, Awards may be settled or exercised in cash, shares, other securities, other Awards or other property, or cancelled, forfeited or suspended, and the methods by which
Awards may be settled, exercised, cancelled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances cash, shares, other securities, other Awards, other property and other amounts payable with respect to an Award
shall be deferred, either automatically or at the election of the holder thereof or the Administrator; (7) construe, interpret and implement the Plan and any Award Agreement (as defined below); (8) prescribe, amend, rescind or waive rules and
regulations relating to the Plan, including rules governing its operation, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (9) correct any defect, supply any omission and reconcile any inconsistency in
the Plan or any Award Agreement; and (10) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Administrator, may be made at any time and shall be final, conclusive and binding upon all
Persons (as defined below).
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(b) General Right of Delegation. Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or
any charter, by-laws or other agreement governing the Administrator, the Administrator may delegate all or any part of its responsibilities to any Person or Persons selected by it; provided, however, that in no event shall an officer of
the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (i) individuals who are subject to Section 16 of the 1934 Act, to the extent applicable, or (ii) officers of the Company to whom authority
to grant or amend Awards has been delegated hereunder or directors of the Company; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under applicable securities
laws (including, without limitation, Rule 16b-3, to the extent applicable) and the rules of any applicable stock exchange. Any delegation hereunder shall be subject to the restrictions and limits that the Administrator specifies at the time of such
delegation, and the Administrator may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 1.2(b) shall serve in such capacity at the pleasure of the Administrator.
(c) Indemnification. No member of the Board, the Administrator or any officer or employee of the Company or any Subsidiary or any
Affiliate or any of their agents (each such Person, a "Covered Person") shall be liable for any action taken or omitted to be taken, or any determination made in good faith, on behalf of the Company with respect to the Plan or any Award hereunder.
Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys' fees) that may be imposed upon or incurred by such Covered Person in connection with or
resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all
amounts paid by such Covered Person, with the Company's approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the
Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of
the Company's choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further
appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person's bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise
prohibited by law or by the Company's articles of incorporation or bylaws, in each case as may amended and/or restated from time to time. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which
Covered Persons may be entitled under the Company's articles of incorporation or bylaws, in each case as may be amended and/or restated from time to time, as a matter of law, or otherwise, or any other power that the Company may have to indemnify
such Persons or hold them harmless.
(d) Delegation of Authority to Senior Officers. The Administrator may, in accordance with and subject to the terms of Section
1.2(b), delegate, on such terms and conditions as it determines, to one or more senior officers of the Company the authority to make grants of Awards to Key Persons who are employees of the Company or any Subsidiary (including any such prospective
employee) and consultants or service providers to (including Persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company or any Subsidiary.
(e) Awards to Non-Employee Directors. Notwithstanding anything to the contrary contained herein, the Board may, in its sole
discretion, at any time and from time to time, grant Awards to Non-Employee Directors or administer the Plan with respect to such Awards. In any such case, the Board shall have all the authority and responsibility granted to the Administrator herein
with respect to such Awards.
1.3. Persons Eligible for Awards
The Persons eligible to receive Awards under the Plan are those directors, officers and employees (including any prospective officer or
employee) of the Company or a Subsidiary or an Affiliate and consultants and service providers to (including Persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company or a Subsidiary
or an Affiliate (collectively, "Key Persons") as the Administrator shall select.
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1.4. Types of Awards
Awards may be made under the Plan in the form of (a) non-qualified stock options (i.e., stock options that are not “incentive stock
options” for purposes of Sections 421 and 422 of the Code (as defined below)), (b) stock appreciation rights, (c) restricted stock, (d) restricted stock units, (e) phantom stock units, (f) unrestricted stock, (g) dividend equivalents, (h) other
equity-based or equity-related awards and (i) cash awards, all as more fully set forth in the Plan. The term "Award" means any of the foregoing that are granted under the Plan.
1.5. Shares Available for Awards; Adjustments for Changes in Capitalization
(a) Maximum Number. Subject to adjustment as provided in Section 1.5(c):
(i) the maximum aggregate number of shares of common stock of the Company, par value $0.01 ("Common Stock"), that may
be delivered pursuant to Awards granted under the Plan shall be 200,000. The following shares of Common Stock shall again become available for Awards under the Plan: (A) any shares that are subject to an Award under the Plan and that remain unissued
upon the cancellation or termination of such Award for any reason whatsoever; (B) any shares of restricted stock forfeited pursuant to the Plan or the applicable Award Agreement; provided that any dividend equivalent rights with respect to
such shares that have not theretofore been directly remitted to the grantee are also forfeited; and (C) any shares in respect of which an Award is settled for cash without the delivery of shares to the grantee. Any shares used to pay the exercise
price or tax withholding obligation related to an Award shall again become available to be delivered pursuant to Awards under the Plan. Awards that are payable solely in cash shall not be counted against the aggregate number of shares of Common
Stock available for Awards under the Plan; and
(ii) no non-employee director of the Company may be granted options, stock appreciation rights, restricted stock,
restricted stock units, phantom stock units, dividend equivalents, unrestricted stock or other equity-based or equity-related Awards for more than 5,000 shares of Common Stock during any calendar year or cash Awards under the Plan in excess of
$200,000 during any calendar year, inclusive of Board, committee or other service fees.
(b) Source of Shares. Shares issued pursuant to the Plan may be authorized but unissued Common Stock or treasury shares. The
Administrator may direct that any stock certificate or book entry interest evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.
(c) Adjustments.
(i) In the event that any dividend or other distribution (whether in the form of cash, Company shares, other securities
or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase or exchange of Company shares or other securities of the Company, issuance of warrants or other rights to purchase Company
shares or other securities of the Company, or other similar corporate transaction or event, affects the Company shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then, subject to the provisions of Section 1.5(c)(iv) below, the Administrator shall, in such manner as it may deem equitable, adjust any or all
of the number of shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan.
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(ii) The Administrator shall make adjustments in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or infrequently occurring events (including the events described in Section 1.5(c)(i) or the occurrence of a Change in Control (as defined below), subject to the provisions of Section 1.5(c)(iv) below) affecting the Company, a
Subsidiary or an Affiliate, or the financial statements of the Company, a Subsidiary or an Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles
or law, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, including
providing for (A) adjustment to (1) the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price (as
defined below) with respect to any Award and (B) a substitution or assumption of Awards, accelerating the exercisability or vesting of, or lapse of restrictions on, Awards, or accelerating the termination of Awards by providing for a period of time
for exercise prior to the occurrence of such event, or, if deemed appropriate or desirable, providing for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award (it being understood that, in such
event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value (as defined below) of a share subject to such option or stock appreciation right may be cancelled and terminated without
any payment or consideration therefor); provided, however, that with respect to options and stock appreciation rights, unless otherwise determined by the Administrator, such adjustment shall be
made in accordance with the provisions of Section 424(h) of the Code.
(iii) In the event of (A) a dissolution or liquidation of the Company, (B) a sale of all or substantially all the
Company's assets or (C) a merger, reorganization or consolidation involving the Company or a Subsidiary, the Administrator shall have the power to:
(1) provide that outstanding options, stock appreciation rights, phantom stock units and/or restricted stock units (including any related
dividend equivalent right) and/or other Awards granted under the Plan shall either continue in effect, be assumed or an equivalent award shall be substituted therefor by the successor entity or a parent or subsidiary entity;
(2) cancel, effective immediately prior to the occurrence of such event, options, stock appreciation rights, phantom stock units and/or
restricted stock units (including each dividend equivalent right related thereto) and/or other Awards granted under the Plan outstanding immediately prior to such event (whether or not then exercisable) and, in full consideration of such
cancellation, pay to the holder of such Award a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the shares subject to such Award (or the value of such Award, as
determined by the Administrator, if not based on the Fair Market Value of shares) over the aggregate Exercise Price of such Award (or the grant price of such Award, if any, if applicable)(it being understood that, in such event, (x) any option or
stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor
and (y) any phantom stock unit that by its terms may be cancelled without payment therefor may be cancelled and terminated without any payment or consideration therefor to the extent so provided in the applicable Award Agreement); or
(3) notify the holder of an option or stock appreciation right in writing or electronically that each option and stock appreciation right
shall be fully vested and exercisable for a period of 30 days from the date of such notice, or such shorter period as the Administrator may determine to be reasonable, and the option or stock appreciation right shall terminate upon the expiration of
such period (which period shall expire no later than immediately prior to the consummation of the corporate transaction).
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(iv) In connection with the occurrence of any Equity Restructuring (as defined below), and notwithstanding anything to
the contrary in this Section 1.5(c):
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The number and type of securities or other property subject to each outstanding Award and the Exercise Price or grant price thereof, if applicable, shall be equitably adjusted; and
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| (B) |
The Administrator shall make such equitable adjustments, if any, as the Administrator may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of
shares that may be issued under the Plan (including, but not limited to, adjustment of the limitation set forth in Section 1.5(a)). The adjustments provided under this Section 1.5(c)(iv) shall be nondiscretionary and shall be final and
binding on the affected participant and the Company.
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1.6. Definitions of Certain Terms
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the
Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Administrator.
(b) Unless otherwise specifically set forth in the applicable Award Agreement, in connection with a termination of employment or
consultancy/service relationship, for purposes of the Plan, the term "for Cause" shall be defined as follows:
(i) if there is an employment, severance, consulting, service, change in control or other agreement governing the
relationship between the grantee, on the one hand, and the Company or a Subsidiary or an Affiliate, on the other hand, that contains a definition of "cause" (or similar phrase or phrase of similar meaning), for purposes of the Plan, the term "for
Cause" shall mean those acts or omissions that would constitute "cause" (or similar phrase or phrase of similar meaning) under such agreement; or
(ii) if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term "for Cause" shall
mean any of the following:
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any failure by the grantee substantially to perform the grantee's employment or consulting/service or Board membership duties;
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| (B) |
any excessive unauthorized absenteeism by the grantee;
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| (C) |
any refusal by the grantee to obey the lawful orders of the Board or any other Person to whom the grantee reports;
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any act or omission by the grantee that is or may be injurious to the Company, any Subsidiary or any Affiliate, whether monetarily, reputationally or otherwise;
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any act by the grantee that is inconsistent with the best interests of the Company, any Subsidiary or any Affiliate;
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the grantee's gross negligence that is injurious to the Company, any Subsidiary or any Affiliate, whether monetarily, reputationally or otherwise;
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| (G) |
the grantee's material violation of any of the policies of the Company, any Subsidiary or any Affiliate, as applicable, including, without limitation, those policies relating to discrimination
or sexual harassment;
|
| (H) |
the grantee's material breach of his or her employment or service contract with the Company, any Subsidiary or any Affiliate;
|
| (I) |
the grantee's unauthorized (1) removal from the premises of the Company, any Subsidiary or any Affiliate of any document (in any medium or form) relating to the Company, any Subsidiary or any
Affiliate or the customers or clients of the Company, any Subsidiary or any Affiliate or (2) disclosure to any Person of any of the Company's, any Subsidiary's or any Affiliate's, confidential or proprietary information;
|
| (J) |
the grantee's being convicted of, or entering a plea of guilty or nolo contendere to, any crime that constitutes a felony or involves moral turpitude; and
|
| (K) |
the grantee's commission of any act involving dishonesty or fraud.
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Any rights the Company, any Subsidiary or any Affiliate may have under the Plan in respect of the events giving rise to a termination "for Cause" shall be in
addition to any other rights the Company, any Subsidiary or any Affiliate may have under any other agreement with a grantee or at law or in equity. Any determination of whether a grantee's employment or consultancy/service relationship is (or is
deemed to have been) terminated "for Cause" shall be made by the Administrator. If, subsequent to a grantee's voluntary termination of employment or consultancy/service relationship or involuntary termination of employment or consultancy/service
relationship without Cause, it is discovered that the grantee's employment or consultancy/service relationship could have been terminated "for Cause", the Administrator may deem such grantee's employment or consultancy/service relationship to have
been terminated "for Cause" upon such discovery and determination by the Administrator.
(c) "Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
(d) Unless otherwise specifically set forth in the applicable Award Agreement, "Disability" shall mean the grantee's being unable to
engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or the grantee's,
by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of the grantee's employer. The existence of a Disability shall be determined by the Administrator.
(e) "Equity Restructuring" shall mean a non-reciprocal transaction between the Company and its shareholders, such as a stock dividend,
stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price thereof and causes a change in the per share value
of the shares underlying outstanding Awards.
(f) "Exercise Price" shall mean (i) in the case of options, the price specified in the applicable Award Agreement as the price-per-share
at which such share can be purchased pursuant to the option or (ii) in the case of stock appreciation rights, the price specified in the applicable Award Agreement as the reference price-per-share used to calculate the amount payable to the grantee.
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(g) The "Fair Market Value" of a share of Common Stock on any day shall be the closing price on the Nasdaq Capital Market (or the
Over-the-Counter Bulletin Board or such other market on which the Common Stock is trading, if not trading on the Nasdaq Capital Market), as reported for such day in The Wall Street Journal (or, if not reported in The Wall Street Journal, such other
reliable source as the Administrator may determine), or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day. If no quotation is made for the applicable day, the Fair
Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day. Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked
price that satisfies the preceding sentences, or if otherwise deemed necessary or appropriate by the Administrator, the Fair Market Value of a share of Common Stock on any day shall be determined by such methods and procedures as shall be established
from time to time by the Administrator. The "Fair Market Value" of any property other than Common Stock shall be the fair market value of such property determined by such methods and procedures as shall be established from time to time by the
Administrator.
(h) Unless otherwise specifically set forth in the applicable Award Agreement, in connection with a termination of employment or
consultancy/service relationship, for purposes of the Plan, the term “Good Reason” shall be defined as follows:
(i) if there is an employment, severance, consulting, service, change in control or other agreement governing the
relationship between the grantee, on the one hand, and the Company or a Subsidiary or an Affiliate, on the other hand, that contains a definition of “good reason” (or similar phrase or phrase of similar meaning, including “constructive termination”
by the Company, Subsidiary or Affiliate, as applicable), for purposes of the Plan, the term “Good Reason” shall mean those acts or omissions that would constitute “good reason” (or similar phrase or phrase of similar meaning) under such agreement; or
(ii) if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term "Good Reason"
shall mean any of the following subsequent to a Change in Control:
| (A) |
a material diminution in the grantee's base compensation;
|
| (B) |
a material diminution in the grantee's authority, duties, or responsibilities;
|
| (C) |
a relocation of the grantee’s primary office location beyond a fifty (50) mile radius of the grantee’s primary office prior to such relocation; or
|
| (D) |
any other action or inaction that constitutes a material breach by the Company, a Subsidiary or an Affiliate (or the acquiror or successor thereof, as applicable) of the employment, severance,
consulting, service, change in control or other agreement governing the relationship between the grantee, on the one hand, and the Company or a Subsidiary or an Affiliate (or the acquiror or successor thereof, as applicable), on the other
hand;
|
provided that, for purposes of this clause (ii), in order for the grantee’s termination of employment or consultancy/service
relationship to be deemed to be for “Good Reason”, (x) such termination must occur within six months of the initial existence of the applicable condition arising without the consent of the grantee, (y) the grantee must provide notice to the Company
(or its acquiror or successor, as applicable) of the existence of the applicable condition no later than 90 days following the initial existence of the condition, and (z) the Company (or its acquiror or successor, as applicable) must have failed to
remedy the condition within 30 days of its receipt of the notice from the grantee of the existence of such condition.
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(i) "Person" shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental body or other entity of any kind.
(j) "Repricing" shall mean (i) lowering the Exercise Price of an option or a stock appreciation right after it has been granted, (ii) the
cancellation of an option or a stock appreciation right in exchange for cash or another Award when the Exercise Price exceeds the Fair Market Value of the underlying shares subject to the Award and (iii) any other action with respect to an option or
a stock appreciation right that is treated as a repricing under (A) generally accepted accounting principles or (B) any applicable stock exchange rules.
(k) "Subsidiary" shall mean any entity in which the Company, directly or indirectly, has a 50% or more equity interest.
ARTICLE II
Awards Under The Plan
Awards Under The Plan
2.1. Agreements Evidencing Awards
Each Award granted under the Plan shall be evidenced by a written agreement or certificate ("Award Agreement"), which shall contain such
provisions as the Administrator may deem necessary or desirable and which may, but need not, require execution or acknowledgment by a grantee. The Award shall be subject to all of the terms and provisions of the Plan and the applicable Award
Agreement.
2.2. Grant of Stock Options and Stock Appreciation Rights
(a) Stock Option Grants. The Administrator may grant non-qualified stock options ("options") to purchase shares of Common Stock
from the Company to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan. No option will be treated as
an "incentive stock option" for purposes of the Code. It shall be the intent of the Administrator to not grant an Award in the form of stock options to any Key Person who is then subject to the requirements of Section 409A of the Code with respect
to such Award if the Common Stock underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A. Furthermore, it shall be the intent of the Administrator, in granting options to Key Persons who are subject to
Sections 409A and/or 457A of the Code, to structure such options so as to comply with the requirements of Sections 409A and/or 457A of the Code, to the extent applicable.
(b) Option Exercise Price. Each Award Agreement with respect to an option shall set forth the Exercise Price of such Award and,
unless otherwise specifically provided in the Award Agreement, the Exercise Price of an option shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than
the greater of (i) the Fair Market Value of a share of Common Stock on the date of grant and (ii) the par value of a share of Common Stock. Repricing of options granted under the Plan shall not be permitted (1) to the extent such action would cause
adverse tax consequences to the grantee under Section 409A or 457A of the Code, to the extent applicable, or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the
applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of an option shall be deemed null and void if it would cause such adverse tax consequences or if
any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.
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(c) Stock Appreciation Right Grants; Types of Stock Appreciation Rights. The Administrator may grant stock appreciation rights to
such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan. The terms of a stock appreciation right may
provide that it shall be automatically exercised for a payment upon the happening of a specified event that is outside the control of the grantee and that it shall not be otherwise exercisable. Stock appreciation rights may be granted in connection
with all or any part of, or independently of, any option granted under the Plan. It shall be the intent of the Administrator to not grant an Award in the form of stock appreciation rights to any Key Person (i) who is then subject to the requirements
of Section 409A of the Code with respect to such Award if the Common Stock underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A or (ii) if such Award would create adverse tax consequences for such Key
Person under Section 457A of the Code. Furthermore, it shall be the intent of the Administrator, in granting stock appreciation rights to Key Persons who are subject to Sections 409A and/or 457A of the Code, to structure such stock appreciation
rights so as to comply with the requirements of Sections 409A and/or 457A of the Code, to the extent applicable.
(d) Nature of Stock Appreciation Rights. The grantee of a stock appreciation right shall have the right, subject to the terms of
the Plan and the applicable Award Agreement, to receive from the Company an amount equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Exercise Price of the
stock appreciation right, multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised. Each Award Agreement with respect to a stock appreciation right shall set forth the Exercise Price of such Award and,
unless otherwise specifically provided in the Award Agreement, the Exercise Price of a stock appreciation right shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise
Price be less than the greater of (A) the Fair Market Value of a share of Common Stock on the date of grant and (B) the par value of a share of Common Stock. Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common
Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or any combination of both, all as the Administrator shall determine. Repricing of stock appreciation rights granted under the Plan shall not be
permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Section 409A or 457A of the Code, to the extent applicable, or (2) without prior shareholder approval, to the extent such approval would be required to
be obtained by the Company pursuant to the applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of a stock appreciation right shall be deemed null and
void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action. Upon the exercise of a stock appreciation right granted in connection with an
option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised. Upon the exercise of an option in connection with which a stock appreciation right has been
granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised.
2.3. Exercise of Options and Stock Appreciation Rights
Subject to the other provisions of this Article II and the Plan, each option and stock appreciation right granted under the Plan shall be
exercisable as follows:
(a) Timing and Extent of Exercise. Options and stock appreciation rights shall be exercisable at such times and under such
conditions as determined by the Administrator and set forth in the corresponding Award Agreement, but in no event shall any portion of such Award be exercisable subsequent to the tenth anniversary of the date on which such Award was granted. Unless
the applicable Award Agreement otherwise specifically provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such Award is then exercisable.
(b) Notice of Exercise. An option or stock appreciation right shall be exercised by the filing of a written notice with the
Company or the Company's designated exchange agent (the "Exchange Agent"), if any, on such form and in such manner as the Administrator shall prescribe.
9
(c) Payment of Exercise Price. Any written notice of exercise of an option shall be accompanied by payment for the shares being
purchased. Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for the full option Exercise Price; (ii) with the consent of the Administrator, which consent
shall be given or withheld in the sole discretion of the Administrator, by withholding of shares of Common Stock having a Fair Market Value (determined as of the exercise date) equal to all or part of the option Exercise Price and a certified or
official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for any remaining portion of the full option Exercise Price; or (iii) at the sole discretion of the Administrator and to the extent permitted by law, by
such other provision, consistent with the terms of the Plan, as the Administrator may from time to time prescribe (whether directly or indirectly through the Exchange Agent), or by any combination of the foregoing payment methods.
(d) Delivery of Shares Upon Exercise. Subject to Sections 3.2, 3.4 and 3.13, promptly after receiving payment of the full option
Exercise Price, or after receiving notice of the exercise of a stock appreciation right for which the Administrator determines payment will be made partly or entirely in shares, the Company or its Exchange Agent shall (i) deliver to the grantee, or
to such other Person as may then have the right to exercise the Award, a certificate or certificates for the shares of Common Stock for which the Award has been exercised or, in the case of stock appreciation rights, for which the Administrator
determines will be made in shares or (ii) establish an account evidencing ownership of the stock in uncertificated form for the shares of Common Stock for which the Award has been exercised or, in the case of stock appreciation rights, for which the
Administrator determines will be made in shares. If the method of payment employed upon an option exercise so requires, and if applicable law permits, an optionee may direct the Company or its Exchange Agent, as the case may be, to deliver the stock
certificate(s) to the optionee's stockbroker.
(e) No Shareholder Rights. No grantee of an option or stock appreciation right (or other Person having the right to exercise such
Award) shall have any of the rights of a shareholder of the Company with respect to shares subject to such Award until the issuance of a stock certificate to such Person for such shares or an account in the name of the grantee evidences ownership of
stock in uncertificated form. Except as otherwise provided in Section 1.5(c), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date such stock certificate is issued or the date an account evidencing ownership of the stock in uncertificated form notes receipt of such stock.
(f) Nonexempt Employees. If an option or stock appreciation right is granted to an employee who is a nonexempt employee for
purposes of the Fair Labor Standards Act of 1938, as amended, such option or stock appreciation right shall not be scheduled to be first exercisable for any share of Common Stock until at least six months following the date of grant of the option or
stock appreciation right. Notwithstanding the foregoing, in the event an option or stock appreciation right granted to such an employee becomes first exercisable during such six-month period pursuant to the terms of the Plan or the applicable Award
Agreement as a result of the grantee’s death, Disability or retirement, or as a result of a change in corporate ownership, then the restriction set forth in the foregoing sentence shall not apply. The foregoing provisions in this Section 2.3(f) are
intended to operate so that any income derived by a nonexempt employee in connection with the exercise or vesting of an option or stock appreciation right will be exempt from his or her regular rate of pay.
2.4. Termination of Employment/Service; Death Subsequent to a Termination of Employment/Service
(a) General Rule. Except to the extent otherwise provided in paragraphs (b), (c), (d) or (e) of this Section 2.4 or Section
3.5(b)(iii), a grantee who incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates may exercise any outstanding option or stock appreciation right on the following terms and
conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the Award on the date of termination of employment or consultancy/service relationship, as applicable; and (ii) exercise must occur within three months
after termination of employment or consultancy/service relationship but in no event after the original expiration date of the Award; it being understood that then outstanding options and stock appreciation rights shall not be affected by a change of
employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service provider to (or a Person employed by or
providing services to any entity that is itself a consultant or service provider to), the Company or any Subsidiary or any Affiliate.
10
(b) Termination "for Cause". If a grantee incurs a termination of employment or consultancy/service relationship with the Company
and its Subsidiaries and Affiliates “for Cause”, all options and stock appreciation rights not theretofore exercised (whether vested or unvested) shall immediately terminate upon such termination of employment or consultancy/service relationship.
(c) Disability. If a grantee incurs a termination of employment or consultancy/service relationship with the Company and its
Subsidiaries and Affiliates by reason of a Disability, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such termination, remain exercisable for a period of one year after such termination; provided that
in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.
(d) Death.
(i) Termination of Employment/Service as a Result of Grantee's Death. If a
grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates as the result of his or her death, then any outstanding option or stock appreciation right shall, to the extent
exercisable at the time of such death, remain exercisable for a period of one year after such death; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.
(ii) Restrictions on Exercise Following Death. Any exercise of an Award
following a grantee's death shall be made only by the grantee's executor or administrator or other duly appointed representative reasonably acceptable to the Administrator, unless the grantee's will specifically disposes of such Award, in which case
such exercise shall be made only by the recipient of such specific disposition. If a grantee's personal representative or the recipient of a specific disposition under the grantee's will shall be entitled to exercise any Award pursuant to the
preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Award Agreement which would have applied to the grantee.
(e) Administrator Discretion. The Administrator may, in writing, waive or modify the application of the foregoing provisions of
this Section 2.4, subject to Section 3.1(c).
2.5. Transferability of Options and Stock Appreciation Rights
Except as otherwise specifically provided in this Plan or the applicable Award Agreement evidencing an option or stock appreciation right,
during the lifetime of a grantee, each such Award granted to a grantee shall be exercisable only by the grantee, and no such Award may be sold, assigned, transferred, pledged or otherwise encumbered or disposed of other than by will or by the laws of
descent and distribution. The Administrator may, in any applicable Award Agreement evidencing an option or stock appreciation right, permit a grantee to transfer all or some of the options or stock appreciation rights to (a) the grantee's spouse,
children or grandchildren ("Immediate Family Members"), (b) a trust or trusts for the exclusive benefit of such Immediate Family Members or (c) other parties approved by the Administrator. Following any such transfer, any transferred options and
stock appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.
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2.6. Grant of Restricted Stock
(a) Restricted Stock Grants. The Administrator may grant restricted shares of Common Stock to such Key Persons, in such amounts
and subject to such vesting and forfeiture provisions and other terms and conditions as the Administrator shall determine, subject to the provisions of the Plan. A grantee of a restricted stock Award shall have no rights with respect to such Award
unless such grantee accepts the Award within such period as the Administrator shall specify by accepting delivery of a restricted stock Award Agreement in such form as the Administrator shall determine.
(b) Issuance of Stock. Promptly after a grantee accepts a restricted stock Award in accordance with Section 2.6(a), subject to
Sections 3.2, 3.4 and 3.13, the Company or its Exchange Agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the Award or shall establish an account evidencing ownership of the stock in
uncertificated form. Upon the issuance of such stock certificates, or establishment of such account, the grantee shall have the rights of a shareholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and
forfeiture provisions described in the Plan (including paragraphs (d) and (e) of this Section 2.6); (ii) in the Administrator's sole discretion, a requirement, as set forth in the Award Agreement, that any dividends paid on such shares shall be held
in escrow and , unless otherwise determined by the Administrator, shall remain forfeitable until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.
(c) Custody of Stock Certificate. Unless the Administrator shall otherwise determine, any stock certificates issued evidencing
shares of restricted stock shall remain in the possession of the Company (or such other custodian as may be designated by the Administrator) until such shares are free of any restrictions specified in the applicable Award Agreement. The
Administrator may direct that such stock certificates bear a legend setting forth the applicable restrictions on transferability.
(d) Non-transferability. Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of prior to the lapsing of all restrictions thereon, except as otherwise specifically provided in this Plan or the applicable Award Agreement. The Administrator at the time of grant shall specify the date or dates (which may depend upon or
be related to the attainment of performance goals and other conditions) on which the nontransferability of the restricted stock shall lapse.
(e) Consequence of Termination of Employment/Service. Unless otherwise specifically set forth in the applicable Award Agreement,
(i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability shall cause the immediate forfeiture of all shares of restricted stock
that have not yet vested as of the date of such termination of employment or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and
Affiliates as the result of his or her death or Disability, all shares of restricted stock that have not yet vested as of the date of such termination shall immediately vest as of such date; it being understood that then outstanding restricted stock
Awards shall not be affected by a change of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service
provider to (or a Person employed by or providing services to any entity that is itself a consultant or service provider to), the Company or any Subsidiary or any Affiliate. All dividends paid on shares forfeited under this Section 2.6(e) that have
not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise. The Administrator may, in writing, waive or modify the application of
the foregoing provisions of this Section 2.6(e), subject to Section 3.1(c).
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2.7. Grant of Restricted Stock Units
(a) Restricted Stock Unit Grants. The Administrator may grant restricted stock units to such Key Persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan. A restricted stock unit granted under the Plan shall confer upon the grantee a right to
receive from the Company, conditioned upon the occurrence of such vesting event as shall be determined by the Administrator and specified in the Award Agreement, the number of such grantee's restricted stock units that vest upon the occurrence of
such vesting event multiplied by the Fair Market Value of a share of Common Stock on the date of vesting. Payment upon vesting of a restricted stock unit shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of
vesting) or both, all as the Administrator shall determine, and such payments shall be made to the grantee at such time as provided in the Award Agreement, which the Administrator shall intend to be (i) if Section 409A of the Code is applicable with
respect to Awards granted to the grantee, within the period required by Section 409A such that it qualifies as a "short-term deferral" pursuant to Section 409A and the Treasury Regulations issued thereunder, unless the Administrator shall provide for
deferral of the Award intended to comply with Section 409A, (ii) if Section 457A of the Code is applicable with respect to Awards granted to the grantee, within the period required by Section 457A(d)(3)(B) such that it qualifies for the exemption
thereunder, or (iii) if Sections 409A and 457A of the Code are not applicable with respect to Awards granted to the grantee, at such time as determined by the Administrator.
(b) Dividend Equivalents. The Administrator may include in any Award Agreement with respect to a restricted stock unit a dividend
equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such Award is outstanding and unvested, and/or, if payment of the vested Award is deferred, during the period of such
deferral following such vesting event, on the shares of Common Stock underlying such Award if such shares were then outstanding. In the event such a provision is included in a Award Agreement, the Administrator shall determine whether such payments
shall be (i) paid to the holder of the Award, as specified in the Award Agreement, either (A) at the same time as the underlying dividends are paid, regardless of the fact that the restricted stock unit has not theretofore vested, (B) at the time at
which the Award's vesting event occurs, conditioned upon the occurrence of the vesting event, (C) once the Award has vested, at the same time as the underlying dividends are paid, regardless of the fact that payment of the vested restricted stock
unit has been deferred, and/or (D) at the time at which the corresponding vested restricted stock units are paid, (ii) made in cash, shares of Common Stock or other property and (iii) subject to such other vesting and forfeiture provisions and other
terms and conditions as the Administrator shall deem appropriate and as shall be set forth in the Award Agreement.
(c) No Shareholder Rights. No grantee of a restricted stock unit shall have any of the rights of a shareholder of the Company
with respect to such Award unless and until a stock certificate is issued with respect to such Award upon the vesting of such Award or an account in the name of the grantee evidences ownership of stock in uncertificated form (it being understood that
the Administrator shall determine whether to pay any vested restricted stock unit in the form of cash or Company shares or both), which issuance shall be subject to Sections 3.2, 3.4 and 3.13. Except as otherwise provided in Section 1.5(c), no
adjustment to any restricted stock unit shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock
certificate, if any, is issued or the date an account evidencing ownership of the stock in uncertificated form notes receipt of such stock.
(d) Nontransferability. No restricted stock unit granted under the Plan may be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of, except as otherwise specifically provided in this Plan or the applicable Award Agreement.
(e) Consequence of Termination of Employment/Service. Unless otherwise specifically set forth in the applicable Award Agreement,
(i) a grantee's termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates for any reason other than death or Disability shall cause the immediate forfeiture of all restricted stock units that
have not yet vested as of the date of such termination of employment or consultancy/service relationship and (ii) if a grantee incurs a termination of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates
as the result of his or her death or Disability, all restricted stock units that have not yet vested as of the date of such termination shall immediately vest as of such date; it being understood that then outstanding restricted stock units shall not
be affected by a change of employment or consultancy/service relationship with the Company and its Subsidiaries and Affiliates so long as the grantee continues to be a director, officer or employee of, or a consultant or service provider to (or a
Person employed by or providing services to any entity that is itself a consultant or service provider to), the Company or any Subsidiary or any Affiliate. All dividend equivalent rights on any restricted stock units forfeited under this Section
2.7(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise. The Administrator may, in writing, waive or modify the
application of the foregoing provisions of this Section 2.7(e), subject to Section 3.1(c).
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2.8. Grant of Unrestricted Stock
The Administrator may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the
Plan to such Key Persons and in such amounts and subject to such terms, conditions and forfeiture provisions as the Administrator shall determine and subject to the terms, conditions and restrictions in this Plan. Shares may be granted or sold in
respect of past services or other valid consideration.
2.9. Grant of Phantom Stock Units
(a) Phantom Stock Unit Grants. The Administrator may grant phantom stock units to such Key Persons, in such amounts, and subject
to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan. Each phantom stock unit shall represent a notional share of Common Stock. No grantee of a phantom
stock unit shall have any rights of shareholder of the Company with respect to such Award unless and until the Award is cancelled in exchange for shares of Common Stock, which issuance of shares shall be subject to Sections 3.2, 3.4 and 3.13.
Holders of phantom stock units shall not (i) be entitled to any voting rights with respect to any phantom stock units and (ii) be entitled, by reason of holding any phantom stock unit, to any distributions payable to shareholders of Common Stock; provided,
however, that the Administrator may provide that the phantom stock unit shall be entitled to receive dividend equivalent rights, on such terms and conditions as the Administrator shall determine. The Administrator may determine that the
phantom stock unit may be cancelled on such terms and conditions as set forth in the applicable Award Agreement, including (1) for no payment, (2) in exchange for a cash payment or (3) in exchange for shares of Common Stock.
(b) Other Provisions. Phantom stock units may be made independently of or in connection with any other Award under the Plan. A
grantee of a phantom stock unit Award shall have no rights with respect to such Award unless such grantee accepts the Award within such period as the Administrator shall specify by accepting delivery of a phantom stock unit Award Agreement in such
form as the Administrator shall determine.
(c) Nontransferability. Phantom stock units may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed
of except as otherwise specifically provided in this Plan or the applicable Award Agreement.
(d) Grants to U.S. Taxpayers. No grant of a phantom stock unit Award to an individual who is then subject to the requirements of
Sections 409A and/or 457A of the Code shall be made under the Plan unless the Award, by its terms, is exempt from Sections 409A and/or 457A of the Code, as applicable, or otherwise complies with such sections of the Code, as applicable.
2.10. Other Equity-Based or Equity-Related Awards
Subject to the provisions of the Plan (including, without limitation, Section 3.16), the Administrator shall have the sole and complete authority to grant to
Key Persons other equity-based or equity-related Awards in such amounts and subject to such terms, conditions, restrictions and forfeiture provisions as the Administrator shall determine; provided that any such Awards must comply with applicable law
and, to the extent deemed desirable by the Administrator, Rule 16b-3.
2.11. Dividend Equivalents
Subject to the provisions of the Plan (including, without limitation, Section 3.16), in the discretion of the Administrator, an Award, other than an option or
stock appreciation right, may provide the Award recipient with dividends or dividend equivalents, payable in cash, shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be
determined by the Administrator, including, without limitation, payment directly to the Award recipient, withholding of such amounts by the Company subject to vesting of the Award, or reinvestment in additional shares, restricted shares or other
Awards.
2.12. Grant of Cash Awards
The Administrator may grant Awards that are payable solely in cash to such Key Persons and in such amounts and subject to such terms, conditions, restrictions and forfeiture
provisions as the Administrator shall determine and subject to the terms, conditions and restrictions in this Plan. Cash Awards may be thus granted in respect of past services or other valid consideration.
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ARTICLE III
Miscellaneous
Miscellaneous
3.1. Amendment of the Plan; Modification of Awards
(a) Amendment of the Plan. The Board may from time to time suspend, discontinue, revise or amend the Plan in any respect
whatsoever, except that no such suspension, discontinuation, revision or amendment shall materially impair any rights or materially increase any obligations under any Award theretofore made under the Plan without the consent of the grantee (or, upon
the grantee's death, the Person having the rights to the Award). For purposes of this Section 3.1, any action of the Board or the Administrator that in any way alters or affects the tax treatment of any Award shall not be considered to materially
impair any rights of any grantee.
(b) Shareholder Approval Requirement. If required by applicable rules or regulations of a national securities exchange or the
SEC, the Company shall obtain shareholder approval with respect to any amendment to the Plan that (i) expands the types of Awards available under the Plan, (ii) materially increases the aggregate number of shares which may be issued under the Plan,
except as permitted pursuant to Section 1.5(c), (iii) materially increases the benefits to participants under the Plan, including any material change to (A) permit, or that has the effect of, a Repricing of any outstanding Award, (B) reduce the price
at which shares or options to purchase shares may be offered or (C) extend the duration of the Plan, or (iv) materially expands the class of Persons eligible to receive Awards under the Plan.
(c) Modification of Awards. The Administrator may cancel any Award under the Plan. The Administrator also may amend any
outstanding Award Agreement, including, without limitation, by amendment which would: (i) accelerate the time or times at which the Award becomes unrestricted, vested or may be exercised; (ii) waive or amend any goals, restrictions or conditions set
forth in the Award Agreement; or (iii) waive or amend the operation of Section 2.4, 2.6(e) or 2.7(e) with respect to the termination of the Award upon termination of employment or consultancy/service relationship; provided, however,
that no such amendment shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Award. However, any such cancellation or amendment (other than an amendment pursuant
to Section 1.5, 3.5 or 3.16) that materially impairs the rights or materially increases the obligations of a grantee under an outstanding Award shall be made only with the consent of the grantee (or, upon the grantee's death, the Person having the
rights to the Award). In making any modification to an Award (e.g., an amendment resulting in a direct or indirect reduction in the Exercise Price or a waiver or modification under Section 2.4(e), 2.6(e) or 2.7(e)), the Administrator may
consider the implications, if any, of such modification under the Code with respect to Sections 409A and 457A of the Code in respect of Awards granted under the Plan to individuals subject to such provisions of the Code.
3.2. Consent Requirement
(a) No Plan Action Without Required Consent. If the Administrator shall at any time determine that any Consent (as defined below)
is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator.
(b) Consent Defined. The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings,
registrations or qualifications in respect thereof upon any securities exchange or under any Federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of
shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing,
qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies or any other Person.
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3.3. Nonassignability; Successors
Except as provided in Section 2.4(d), 2.5, 2.6(d), 2.7(d) or 2.9(c), (a) no
Award or right granted to any Person under the Plan or under any Award Agreement shall be assignable or transferable other than by will or by the laws of descent and distribution and (b) all rights granted under the Plan or any Award Agreement shall
be exercisable during the life of the grantee only by the grantee or the grantee's legal representative or the grantee's permissible successors or assigns (as authorized and determined by the Administrator). The rights, duties and obligations under
the Plan and any applicable Award Agreement shall be assignable by the Company to any successor entity, including any entity acquiring all, or substantially all, of the assets of the Company. All terms and conditions of the Plan and the applicable
Award Agreements will be binding upon any permitted successors or assigns.
3.4. Taxes
(a) Withholding. A grantee or other Award holder under the Plan shall be required to pay, in cash, to the Company, and the
Company, its Subsidiaries and Affiliates shall have the right and are hereby authorized to withhold from any Award, from any cash or other payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing
to such grantee or other Award holder, the amount of any applicable withholding taxes in respect of an Award, its grant, its exercise, its vesting, or any payment or transfer under an Award or under the Plan, up to the maximum statutory rates in the
applicable jurisdiction with respect to the Award, as determined by the Company, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for payment of such taxes. Whenever shares of Common Stock
are to be delivered pursuant to an Award under the Plan, with the approval of the Administrator, which the Administrator shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the
Company withhold from delivery shares having a value equal to the amount of the applicable withholding taxes as determined in accordance with this Section 3.4(a). Such shares shall be valued at their Fair Market Value as of the date on which the
amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award as may be approved by the
Administrator in its sole discretion.
(b) Liability for Taxes. Grantees and holders of Awards are solely responsible and liable for the satisfaction of all taxes and
penalties that may arise in connection with Awards (including, without limitation, any taxes arising under Sections 409A and 457A of the Code) and the Company shall not have any obligation to indemnify or otherwise hold any such Person harmless from
any or all of such taxes. The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or, notwithstanding anything to the contrary in the Plan or any Award Agreement, to unilaterally
modify any Award in a manner that (i) conforms with the requirements of Sections 409A and 457A of the Code (to the extent applicable), (ii) voids any participant election to the extent it would violate Section 409A or 457A of the Code (to the extent
applicable) and (iii) for any distribution event or election that could be expected to violate Section 409A of the Code, make the distribution only upon the earliest of the first to occur of a "permissible distribution event" within the meaning of
Section 409A of the Code or a distribution event that the participant elects in accordance with Section 409A of the Code, all in such a way so as to retain, to the maximum extent feasible, the originally intended economic and tax benefits under the
Award. The Administrator shall have the sole discretion to interpret the requirements of the Code, including, without limitation, Sections 409A and 457A, for purposes of the Plan and all Awards.
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3.5. Change in Control
(a) Change in Control Defined. Unless otherwise specifically set forth in the applicable Award Agreement, for purposes of the
Plan, "Change in Control" shall mean the occurrence of any of the following:
(i) any "person" (as defined in Section 13(d)(3) of the 1934 Act), company or other entity acquires "beneficial
ownership" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company; provided, however, that no
Change in Control shall have occurred in the event of such an acquisition by (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary or Affiliate, (C) any company or other
entity owned, directly or indirectly, by the holders of the voting stock ordinarily entitled to elect directors of the Company in substantially the same proportions as their ownership of the aggregate voting power of the capital stock ordinarily
entitled to elect directors of the Company immediately prior to such acquisition or (D) Aristides J. Pittas or the Pittas family or any entity which Aristides J. Pittas or the Pittas family directly or indirectly "controls" (as defined in Rule 12b-2
under the 1934 Act);
(ii) the sale of all or substantially all the Company's assets in one or more related transactions to any "person" (as
defined in Section 13(d)(3) of the 1934 Act), company or other entity; provided, however, that no Change in Control shall have occurred in the event of such a sale (A) to a Subsidiary which does not involve a material change in the
equity holdings of the Company, (B) to an entity (the "Acquiring Entity") which has acquired all or substantially all the Company's assets if, immediately following such sale, 50% or more of the aggregate voting power of the capital stock ordinarily
entitled to elect directors of the Acquiring Entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect
directors of the Acquiring Entity) is beneficially owned by the holders of the voting stock ordinarily entitled to elect directors of the Company immediately prior to such sale in substantially the same proportions as the aggregate voting power of
the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale or (C) to Aristides J. Pittas or the Pittas family or an entity which Aristides J. Pittas or the Pittas family directly or indirectly "controls"
(as defined in Rule 12b-2 under the 1934 Act);
(iii) any merger, consolidation, reorganization or similar event of the Company; provided, however, that
no Change in Control shall have occurred in the event 50% or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity (or, if applicable, the ultimate parent entity that directly or
indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity) is beneficially owned by the holders of the voting stock ordinarily entitled to
elect directors of the Company immediately prior to such event in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such event;
(iv) the approval by the Company's shareholders of a plan of complete liquidation or dissolution of the Company; or
(v) during any period of 12 consecutive calendar months, individuals:
(A) who were directors of the Company on the first day of such period, or
(B) whose election or nomination for election to the Board was recommended or approved by at least a majority of the
directors then still in office who were directors of the Company on the first day of such period, or whose election or nomination for election were so approved,
shall cease to constitute a majority of the Board.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for purpose of the Plan as a result of an Exempted Transaction (as
such term is defined in that certain Shareholders Rights Agreement, dated as of March 17, 2025, between EUROHOLDINGS Ltd., a Marshall Islands corporation, and Equiniti Trust Company, LLC, as rights agent, as amended from time to time).
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Notwithstanding the foregoing, unless otherwise specifically set forth in the applicable Award Agreement, for each Award subject to Section 409A of the Code,
a Change in Control shall be deemed to have occurred under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company
shall also be deemed to have occurred under Section 409A of the Code, provided that such limitation shall apply to such Award only to the extent necessary to avoid adverse tax effects under Section 409A of the Code.
(b) Effect of a Change in Control. Unless the Administrator specifically provides otherwise in an Award Agreement, upon the
occurrence of a Change in Control:
(i) any Award outstanding as of immediately prior to the time of such Change in Control shall become fully vested and
any forfeiture provisions thereon imposed pursuant to the Plan and the applicable Award Agreement shall lapse and any Award in the form of an option or stock appreciation right shall be immediately exercisable;
(ii) to the extent permitted by law and not otherwise limited by the terms of the Plan, the Administrator may amend any
Award Agreement in such manner as it deems appropriate; and
(iii) a grantee who incurs a termination of employment or consultancy/service relationship for any reason, other than a
voluntary termination or resignation by the grantee without Good Reason or a termination "for Cause", concurrent with or within one year following the Change in Control may exercise any outstanding option or stock appreciation right, but only to the
extent that the grantee was entitled to exercise the Award on the date of his or her termination of employment or consultancy/service relationship, until the earlier of (A) the original expiration date of the Award and (B) the later of (x) the date
provided for under the terms of Section 2.4 without reference to this Section 3.5(b)(iii) and (y) the first anniversary of the grantee's termination of employment or consultancy/service relationship.
(c) Miscellaneous. Whenever deemed appropriate by the Administrator, any action referred to in paragraph (b)(ii) of this Section
3.5 may be made conditional upon the consummation of the applicable Change in Control transaction.
3.6. Operation and Conduct of Business
Nothing in the Plan or any Award Agreement shall be construed as limiting or preventing the Company, any Subsidiary or any Affiliate from
taking any action with respect to the operation and conduct of its business that it deems appropriate or in its best interests, including any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the capital structure
of the Company, any Subsidiary or any Affiliate, any merger or consolidation of the Company, any Subsidiary or any Affiliate, any issuance of Company shares or other securities or subscription rights, any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or other securities or rights thereof, any dissolution or liquidation of the Company, any Subsidiary or any Affiliate, any sale or transfer of all or any part of the assets or business of
the Company, any Subsidiary or any Affiliate, or any other corporate act or proceeding, whether of a similar character or otherwise.
3.7. No Rights to Awards
No Key Person or other Person shall have any claim to be granted any Award under the Plan.
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3.8. Right of Discharge Reserved; Service Relationship
(a) Right of Discharge Reserved. Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to
continue his or her employment with the Company, any Subsidiary or any Affiliate, his or her consultancy/service relationship with the Company, any Subsidiary or any Affiliate, or his or her position as an officer or director of the Company, any
Subsidiary or any Affiliate, or affect any right that the Company, any Subsidiary or any Affiliate may have to terminate such employment or consultancy/service relationship.
(b) Service Relationship. For the avoidance of doubt, for purposes of the Plan, reference to (i) a service relationship shall
include service as a director or officer and (ii) a termination of a service relationship shall include a removal or resignation as a director or officer.
3.9. Non-Uniform Determinations
The Administrator's determinations and the treatment of Key Persons and grantees and their beneficiaries under the Plan need not be uniform
and may be made and determined by the Administrator selectively among Persons who receive, or who are eligible to receive, Awards under the Plan (whether or not such Persons are similarly situated). Without limiting the generality of the foregoing,
the Administrator shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award Agreements, as to (a) the Persons to receive Awards under the Plan, (b) the types of Awards
granted under the Plan, (c) the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards and (d) the terms and conditions of Awards.
3.10. Other Payments or Awards
Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company or any Subsidiary from making any award or
payment to any Person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
3.11. Headings
Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not
intended to expand, limit or otherwise define the contents of such section, subsection, paragraph or subdivision.
3.12. Effective Date and Term of Plan
(a) Adoption; Shareholder Approval. The Plan was approved and adopted by the Board on March 17, 2025. The Board may, but
need not, make the granting of any Awards under the Plan subject to the approval of the Company's shareholders.
(b) Termination of Plan. The Board may terminate the Plan at any time. All Awards made under the Plan prior to its termination
shall remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements. No Awards may be granted under the Plan following the tenth anniversary of the
date on which the Plan was adopted by the Board.
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3.13. Restriction on Issuance of Stock Pursuant to Awards
The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common
Stock are fully paid and non-assessable under applicable law. Notwithstanding anything to the contrary in the Plan or any Award Agreement, at the time of the exercise of any Award, at the time of vesting of any Award, at the time of payment of
shares of Common Stock in exchange for, or in cancellation of, any Award, or at the time of grant of any unrestricted shares under the Plan, the Company and the Administrator may, if either shall deem it necessary or advisable for any reason, require
the holder of an Award (a) to represent in writing to the Company that it is the Award holder's then-intention to acquire the shares with respect to which the Award is granted for investment and not with a view to the distribution thereof or (b) to
postpone the date of exercise until such time as the Company has available for delivery to the Award holder a prospectus meeting the requirements of all applicable securities laws; and no shares shall
be issued or transferred in connection with any Award unless and until all legal requirements applicable to the issuance or transfer of such shares have been complied with to the satisfaction of the Company and the Administrator. The Company and the
Administrator shall have the right to condition any issuance of shares to any Award holder hereunder on such Person's undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company or the
Administrator shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and all share certificates delivered under the Plan shall be subject to such stop transfer orders and other restrictions
as the Company or the Administrator may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, any stock exchange upon which such shares are listed, and any applicable securities or
other laws, and certificates representing such shares may contain a legend to reflect any such restrictions. The Administrator may refuse to issue or transfer any shares or other consideration under an Award if it determines that the issuance or
transfer of such shares or other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the 1934 Act, and any payment tendered to the Company by a grantee or other Award holder
in connection with the exercise of such Award shall be promptly refunded to the relevant grantee or other Award holder. Without limiting the generality of the foregoing, no Award granted under the Plan shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and until the Administrator has determined that any such offer, if made, would be in compliance with all applicable requirements of any applicable securities laws.
3.14. Requirement of Notification of Election Under Section 83(b) of the Code
If an Award recipient, in connection with the acquisition of Company shares under the Plan, makes an election under Section 83(b) of the
Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code), the grantee shall notify the Administrator of such election within ten days of filing notice of the election with the U.S. Internal Revenue
Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.
3.15. Severability
If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to
any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws or, if it cannot be construed or deemed amended
without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.
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3.16. Sections 409A and 457A
To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Sections 409A and 457A of the Code and U.S.
Department of Treasury regulations and other interpretive guidance issued thereunder. Notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, in the event that the Administrator determines that any Award may be
subject to Section 409A or 457A of the Code, the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or
take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Plan and Award from Sections 409A and 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the
Award, or (ii) comply with the requirements of Sections 409A and 457A of the Code and related U.S. Department of Treasury guidance and thereby avoid the application of penalty taxes under Sections 409A and 457A of the Code, all in such a way so as to
retain, to the maximum extent feasible, the originally intended economic and tax benefits under the Award.
3.17. Forfeiture; Clawback
The Administrator may, in its sole discretion, specify in the applicable Award Agreement that any realized gain with respect to options or
stock appreciation rights and any realized value with respect to other Awards shall be subject to forfeiture or clawback, in the event of (a) a grantee's breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants
with respect to the Company or any Subsidiary or any Affiliate, (b) a grantee's breach of any employment or consulting agreement with the Company or any Subsidiary or any Affiliate, (c) a grantee's termination of employment or consultancy/service
relationship for Cause or (d) a financial restatement that reduces the amount of compensation under the Plan previously awarded to a grantee that would have been earned had results been properly reported. Notwithstanding anything to the contrary in
this Plan or any Award Agreement, all Awards granted under the Plan shall be subject to clawback to the extent required to comply with applicable law, the applicable rules of any stock exchange on which the Company’s shares are traded, and/or any
clawback policy adopted by the Company in connection with any such applicable law or any such applicable stock exchange rules, including, without limitation, in connection with an accounting restatement and/or Rule 10D-1 of the 1934 Act.
3.18. No Trust or Fund Created
Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company, any Subsidiary or any Affiliate and an Award recipient or any other Person. To the extent that any Person acquires a right to receive payments from the Company, any Subsidiary or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the Company, Subsidiary or Affiliate.
3.19. No Fractional Shares
No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Administrator shall determine whether cash,
other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
3.20. Governing Law
The Plan will be construed and administered in accordance with the laws of the State of New York, without giving effect to principles of
conflict of laws.
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Exhibit 4.3
Exhibit 4.4
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this “Agreement”) is made effective as of March 17, 2025 between
Euroholdings Ltd., a Marshall Islands company (the “Company”) and Euroseas Ltd., a Marshall Islands company (the “Grantor”).
BACKGROUND
The Company is a wholly-owned subsidiary of the Grantor, and the Grantor intends to distribute of all of the Company's
issued and outstanding common shares to the Grantor's shareholders (the "Spin-Off") such that the Company will be an independent publicly traded company following the Spin-Off. In connection with the Spin-Off , the Grantor desires to grant
the Company a right of first refusal to acquire any containership older than fifteen years of age at the time of the acquisition (a “Subject Vessel”) when and if the Grantor determines to sell such Subject Vessel.
AGREEMENT
1. Vessel Acquisition Restriction.
| (a) |
The Grantor agrees with the Company that, from the date hereof and so long as majority ownership of the Company remains with the Pittas family (greater than 50% of the
outstanding shares beneficially owned by members of the Pittas family) or Aristides J. Pittas is CEO of the Company or the majority of the directors of the Company’s board are also directors of Euroseas or for three years whichever is
earlier, the Grantor will promptly notify the Company of any acquisition or proposed acquisition by it, or any entity that it directly or indirectly controls, of a Subject Vessel by delivering a notice to the Company, advising it of the
details of the acquisition or proposed acquisition of a Subject Vessel, including its terms, and offering to sell the Subject Vessel to the Company on substantially the same terms plus any costs of the Subject Vessel’s acquisition and net
costs of carrying the Subject Vessel since its acquisition.
|
| (b) |
Acquisition Response Notice. Within five (5) business days after receipt of any notice referred to in Section 1(a) above, the Company will have the right, but not the
obligation, to deliver to the Grantor a notice (a “Acquisition Response Notice”) that states whether the Company wishes to purchase the Subject Vessel described in the notice referred to in Section 1(a) above upon the terms stated
therein and subject to the negotiation and execution of a memorandum of agreement or other contract of sale. If the Company wishes to purchase the Subject Vessel, the Company will have thirty days (30) after delivery of its Acquisition
Response Notice to execute a definitive Memorandum of Agreement to complete the acquisition. If the Company fails to deliver an Acquisition Response Notice within the aforementioned five (5) business days, then the Company will be deemed to
have declined to purchase the Subject Vessel and the Grantor will have the right to own and operate the same. The Company will have the right to designate any other entity to acquire the Subject Vessel so long as such entity is an affiliate
of the Company. The Company will have no right to assign its rights hereunder except as provided in this Section 1.
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| (c) |
Vessel Employment. The Grantor hereby grants to the Company a right of first refusal over any employment opportunity for a containership vessel of older than fifteen
years of age pursuant to a charter presented or available to the Grantor with respect to any vessel owned or chartered in, directly or indirectly, by the Grantor (a “Charter Opportunity”) in accordance with this Section 1I. In the
event the Grantor receives an offer for or negotiates a Charter Opportunity relating to a containership vessel for which a Company vessel meets the charterer’s requirements relating to, among other factors, vessel age, size and other
specifications, vessel positioning, and cost, then prior to entering into such Charter Opportunity, the Grantor shall notify the Company of such Charter Opportunity. Within one (1) business day after receipt of such notice from the Grantor,
the Company shall have the right, directly or through one or more wholly owned subsidiaries, to exercise its right of first refusal and enter into the Charter Opportunity. In the event that the Company does
|
not exercise its right of first refusal on or before the fifth day following receipt of the notice from the Grantor, the
Grantor shall be entitled to pursue such Charter Opportunity.
2. Notices. Except as otherwise specified in Section 1 above, all notices, requests, demands and other
communications to any party hereunder will be in writing (including prepaid overnight courier, facsimile transmission, or similar writing) and will be given to such party at its respective address or facsimile number set forth below or at such
other address or facsimile numbers as such party may hereafter specify for the purpose by notice to the other party hereto. Each such notice, request or other communication will be effective (i) if given by facsimile, when such facsimile is
transmitted to the facsimile number specified in this Section 2 and telephonic confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this
Section or when delivery at such address is refused.
Notices to the Grantor will be made as follows:
Euroseas Ltd.
4, Messogiou & Evropis Street,
Maroussi, 15124, Greece
Telephone: +30-211-1804004
Attention: Symeon Pariaros
Email: smp@euroseas.gr
Notices to the Company will be made as follows:
Euroholdings Ltd.
4, Messogiou & Evropis Street,
Maroussi, 15124, Greece
Telephone: +30-211-1804005
Attention: Stefania Karmiri
Email: sjk@eurobulk.gr
3. Governing Law. This Agreement and the rights and obligations of the parties hereto will be governed by and
construed in accordance with the laws of England.
4. Further Assurances. Each of the Grantors agrees to execute, acknowledge and deliver all such instruments and
take all such actions as the Company from time to time may reasonably request in order to further effectuate the purposes of this Agreement and to carry out the terms hereof and to better assure and confirm to the Company its rights, powers and
remedies hereunder.
5. Binding Effect; Assignment. This Agreement will be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, executors, administrators, successors and permitted assigns. This Agreement is not assignable by either party without the prior written consent of the other party except as provided in Section 1 hereof.
6. Severability. If any term, covenant or condition of this Agreement is held to be invalid, illegal or
unenforceable in any respect, then this Agreement will be construed as if such invalid, illegal, or unenforceable provision or part of a provision had never been contained in this Agreement.
7. Counterparts. This Agreement may be executed in multiple counterparts, each of which will be deemed an
original and all of such counterparts together will constitute one agreement. To facilitate execution of this Agreement, the parties may execute and exchange counterparts of signature pages by telephone facsimile.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed as of the date set forth above.
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EURHOLDINGS LTD.
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By:
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/s/ Aristeidis J. Pittas
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Name: Aristeidis J. Pittas
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Title: Chief Executive Officer
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EUROSEAS LTD.
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By:
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/s/ Anastasios Aslidis
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Name: Anastasios Aslidis
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Title: Chief Financial Officer
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[Signature page to the Right of First Refusal Agreement]
Exhibit 4.6
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of March 17,
2025 by and among Euroholdings Ltd., a company organized under the laws of the Republic of the Marshall Islands (the “Company”), Friends Investment Company Inc. (“FIC”), Containers Shareholders Trinity Ltd. (“Containers”), Eurobulk Marine Holdings Inc. (“Eurobulk
Marine”), and Family United Navigation Co. (“Family United” and, together with FIC, Containers, and Eurobulk Marine, the “Holders”
and each a “Holder”) and each other Person identified on the Schedule of Holders attached hereto as of the date hereof.
RECITALS
WHEREAS, the board of directors of Euroseas Ltd. (the “Parent”), a public
company organized under the laws of the Republic of the Marshall Islands, has approved the contribution of three of its vessel‐owning subsidiaries (the “Subsidiaries”) to the Company in
exchange for all of the Company’s issued and outstanding shares of common stock, par value $0.01 per share (the “Shares”) and the distribution of all of the Company’s issued and outstanding
Shares to the Parent’s shareholders (the “Spin‐Off”), which include the Holders who are parties to this Agreement.
WHEREAS, in connection with the Spin-Off, the Company and the Holders wish to enter into a registration rights agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions. As used in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the terms defined).
“Agreement” has the meaning set forth in the preamble hereof.
“Authorized Officer” means, as applied to any Person, any individual holding
the position of chief executive officer, president or one of its vice presidents (or the equivalent thereof), chief financial officer or treasurer.
“Board” means the Board of Directors of the Company.
“Business Day” means any day other than Saturday, Sunday or a day on which
banking institutions in the State of New York or Greece are authorized by law or executive order to close.
“Common Shares” means the common shares, par value $0.01 per share, of the
Company.
“Company” has the meaning set forth in the preamble hereof.
“Company Indemnified Persons” has the meaning set forth in Section 2.06(b)(i).
“Demanding Holders” has the meaning set forth in Section 2.01(a).
“Demand Notice” has the meaning set forth in Section 2.01(a).
“Demand Notice Date” has the meaning set forth in Section 2.01(a).
“Demand Registration” has the meaning set forth in Section 2.01(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, together
with the rules and regulations promulgated thereunder.
“F-3 Holders” has the meaning set forth in Section 2.02(a).
“F-3 Notice” has the meaning set forth in Section 2.02(a).
“F-3 Notice Date” has the meaning set forth in Section 2.02(a).
“Governmental Body” means any agency, bureau, commission, court, department,
official, political subdivision, tribunal or other instrumentality of any administrative, judicial, legislative, executive, regulatory, police or taxing authority of any government, whether supranational, national, federal, state, regional,
provincial, local, domestic or foreign.
“Holder Indemnified Persons” has the meaning set forth in Section 2.06(a)(i).
“Indemnitee” has the meaning set forth in Section 2.06(c).
“Indemnitor” has the meaning set forth in Section 2.06(c).
“Losses” has the meaning set forth in Section 2.06(a)(i).
“Parent” has the meaning set forth in the preamble hereof.
“Parties” has the meaning set forth in the preamble hereof.
“Person” means individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including any Governmental Body.
“Piggyback Registration” shall have the meaning set forth in Section 2.03
hereof.
“Potential Material Event” means either (i) the possession by the Company of
material information not ripe for disclosure in a registration statement, or (ii) any material engagement or activity by the Company that would be adversely affected by disclosure in a registration statement at such time, in each case, which shall
be evidenced by a written good faith determination by the Board that both (a) disclosure of such information, engagement or activity in a registration statement would be detrimental to the business and affairs of the Company, and (b) a registration
statement would be materially misleading absent the inclusion of such information, engagement or activity.
“Register,” “registered” and “registration” means a registration effected through the preparation and filing of a registration statement or similar document in compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement or document.
“Registrable Securities” means the Common Shares beneficially owned (within the
meaning of Rule 13d-3 of the Exchange Act) by the Investors, if any, or the permitted transferees; provided, however, that Registrable Securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect
to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been
otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such
securities shall have ceased to be outstanding, or (d) the Registrable Securities are freely saleable under Rule 144 without volume limitations.
“Holder” means any Person that is a party to this Agreement, as set forth on
the signature pages hereto (other than the Company).
“Registration Expenses” means all expenses incurred by the Company in effecting
any registration pursuant to this Agreement, including all registration, qualification and filing fees, printing expenses, escrow fees, transfer agent fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense
of any special audits incident to or required by any such registration and the reasonable fees and disbursements of special legal counsel to represent the Holders, as the case may be. Registration Expenses do not include compensation of regular
employees of the Company which shall be paid in any event by the Company, underwriting discounts and commissions and stock transfer taxes.
“Registration Statement” means a registration statement on Form F-1, or Form
F-3 (or such similar or successor forms as may be appropriate) prepared and filed with the SEC by the Company pursuant to Article II of this Agreement.
“Regulation” means each applicable law, rule, regulation, order, guidance or
recommendation (or any change in its interpretation or administration) by any Governmental Body, central bank or comparable agency and any request or directive (whether or not having the force of law) of any of those Persons and each judgment,
injunction, order, writ, decree or award of any Governmental Body, arbitrator or other Person.
“Rule 144” means Rule 144 promulgated under the Securities Act, as such rule
shall be in effect from time to time, or any successor rule.
“Schedule of Holders” means the schedule attached to this Agreement entitled
“Schedule of Holders,” which shall reflect each Holder from time to time party to this Agreement.
“SEC” means the United States Securities and Exchange Commission and includes
any Governmental Body succeeding to the functions thereof.
“Securities” means any stock, shares, limited liability company membership
interests, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or
any right to subscribe to, purchase or acquire, any of the foregoing.
“Securities Act” means the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
“Selling Expenses” means all underwriting discounts, selling commissions and
stock transfer taxes applicable to the Registrable Securities registered by the Holders, as the case may be.
“Transfer” means any sale, assignment, transfer, exchange, pledge, grant of
security interest in, hypothecation, encumbrance or other disposition or conveyance of any interest in.
“US$” means the lawful currency of the United States of America.
“Violation” has the meaning set forth in Section 2.07(a)(i).
Section 1.02 Interpretation.
(a) Headings. The headings to the Articles, Sections and Subsections of this Agreement are inserted for
convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
(b) Usage. In this Agreement, unless the context requires otherwise: (i) the singular number includes the plural
number and vice versa; (ii) reference to any gender includes each other gender and the neuter; (iii) the terms “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any
particular section or other provision hereof; (iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; and (v) a reference to any Article, Section or Subsection shall be deemed to refer
to the corresponding Article, Section, or Subsection of this Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01 Demand Registration.
(a) Request for Registration. At any time after the consummation of the Spin-Off, the Holders shall have the
right to request that the Company effect the registration under the Securities Act of all or a portion of the Registrable Securities owned by such Holders and provide the Company with a written request (a “Demand
Notice”) requesting that the Company pursuant to this Section 2.01 file a Registration Statement under the Securities Act registering for resale Registrable Securities (the date on which the Company receives the Demand Notice being the “Demand Notice Date” and the registration requested in such Demand Notice being a “Demand Registration”), the Company shall promptly (but in any event within five
(5) calendar days) after the Demand Notice Date, forward a copy of the Demand Notice to all of the other Holders. Each of the Holders shall have a period of twenty (20) calendar days after receiving the Demand Notice from the Company in which to
elect to include some or all of such Holder’s Registrable Securities in such Demand Registration. The Holders shall exercise their right to include Registrable Securities in such Registration Statement by delivering a written notice to the Company
within such twenty (20) calendar day period specifying the number of Registrable Securities such Holder wishes to include in such Registration (such electing Holders, together with the Holders delivering the Demand Notice to the Company being the “Demanding Holders”). Notwithstanding the foregoing, the Company shall not be obligated to effect more than three Demand Registrations in respect of Registrable Securities. A registration shall not count as one of
the permitted Demand Registrations (i) until it has become effective, (ii) if the Demanding Holders requesting such registration are not able to have registered and sold at least 50% of the Registrable Securities requested by such Demanding Holders
to be included in such registration or (iii) in the case of a Demand Registration that would be the last permitted Demand Registration requested hereunder, if the Demanding Holders requesting such registration are not able to have registered and
sold all of the Registrable Securities requested to be included by such Demanding Holders in such registration.
(b) Filing and Effectiveness of Registration Statement. The Company shall use its reasonable best efforts to
prepare and file with the SEC as promptly as practicable but in no event later than sixty (60) calendar days after the Demand Notice Date, a Registration Statement registering for resale by the Demanding Holders the Registrable Securities requested
to be registered. The Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective no later than the earlier of (i) five (5) calendar days after the date on which the Company receives notice from the
SEC that such Registration Statement may be declared effective and (ii) the date which is one hundred fifty (150) calendar days after the Demand Notice Date. The Company shall use its reasonable best efforts to cause the Registration Statement
filed pursuant to this Section 2.01 to remain effective until the earlier of (A) the date on which all Registrable Securities registered pursuant to such Registration Statement shall have been sold to the public and (B) the date which is one year
after the date on which such Registration Statement is declared effective by the SEC; provided, however, that such date shall be increased by the number of days that the Demanding Holders may not sell Securities pursuant to
Section 2.04(h). To the extent that there are any Registrable Securities unsold on a Demand Registration Statement at such time the company becomes eligible to file an F-3, the Company shall convert the Registration Statement covering the
Registrable Securities to a Form F-3 (or a post-effective amendment on Form F-3 to a Form F-1); provided that the Company shall use reasonable best efforts to maintain the effectiveness of the Registration Statement then in effect until such time
as a Form F-3 Registration Statement covering the Registrable Securities has been declared effective by the SEC.
(c) Underwritten Offering.
(i) If the Demanding Holders intend to distribute the Registrable Securities covered by their Demand Notice by means
of an underwritten offering, they shall so advise the Company as a part of their Demand Notice. In connection with such underwritten offering, the Demanding Holders shall have the right to select the managing underwriter or underwriters, subject to
the reasonable approval of the Company. In connection with such underwritten offering, the Demanding Holders and the Company shall enter into an underwriting agreement in customary form with the underwriter or underwriters, subject to the
representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters, shall also be made to and for the benefit of such Demanding Holders.
(ii) Notwithstanding any other provision of this Section 2.01, if the underwriter advises the Company that in the
opinion of such underwriter, the distribution of all of the Registrable Securities requested to be registered would materially and adversely affect the distribution of all of the securities to be underwritten, then (A) the Company shall deliver to
such Demanding Holders a copy of such underwriter’s opinion, which opinion shall be in writing and shall state the reasons for such opinion and (B) the number of Registrable Securities that may be included in such registration shall be allocated in
the order listed below:
(x) first, 100% to the Demanding Holders; and
(y) second, the balance to the other Persons proposing to register securities in such registration, in each case pro
rata based on the amount of securities requested to be registered.
Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.
(d) Limitations on Registration. The Company shall not be required to effect a registration pursuant to this
Section 2.01:
(i) if the Company shall furnish to the Demanding Holders a certificate signed by the Company’s Authorized Officer
stating that a Potential Material Event exists, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) calendar days from the date that the Company would be obligated to file a Registration
Statement pursuant to Section 2.01(b) in the absence of this Section 2.01(d)(i), provided that such right to delay a request may not be exercised by the Company more than twice in any twelve (12)-month period;
(ii) if the Demanding Holders, together with the holders of any other securities of the Company entitled to inclusion
in such registration statement, propose to sell Registrable Securities and such other Securities (if any) whereby the aggregate proceeds of which (after deduction for Selling Expenses) are less than $1,000,000;
(iii) if all of the Registrable Securities identified in the Demand Notice may be transferred, sold or otherwise
disposed of without any manner or volume limitations under the Securities Act in accordance with the provisions of Rule 144;
(iv) after the tenth anniversary of this Agreement.
Section 2.02 Shelf Registration.
(a) Shelf Registration. If, at any time after the first date on which the Company is eligible to file a
registration statement under the Securities Act on Form F-3 (or such similar or successor form as may be appropriate), the Company shall receive from Holders holding at least five percent (5%) of the outstanding Registrable Securities a written
request (an “F-3 Notice”) that the Company effect a short-form registration on Form F-3 (or such similar or successor form as may be appropriate), including for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act, and any related qualification or compliance with respect to the Registrable Securities (the date on which the Company receives the F-3 Notice being the “F-3
Notice Date”), the Company shall promptly (but in any event within five (5) calendar days) after the F-3 Notice Date, forward a copy of the F-3 Notice to all of the Holders. Each of the Holders shall have a period of ten (10) calendar days
after receiving the F-3 Notice from the Company in which to elect to include some or all of such Holder’s Registrable Securities in such Registration Statement. The Holders shall exercise their right to include Registrable Securities in such
Registration Statement by delivering a written notice to the Company within such ten (10) calendar day period specifying the number of Registrable Securities such Holder wishes to include in such Registration Statement (such electing Holders,
together with the Holders delivering the F-3 Notice to the Company being the “F-3 Holders”).
(b) Filing and Effectiveness of Registration Statement. The Company shall use its reasonable best efforts to
prepare and file with the SEC, no later than forty-five (45) calendar days after the F-3 Notice Date, a Registration Statement on Form F-3 (or such similar or successor form as may be appropriate), covering, and shall obtain all such qualifications
and compliances as may be required and as would permit the sale and distribution of, all Registrable Securities. The Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective no later than the
earlier of (i) five (5) calendar days after the date on which the Company receives notice from the SEC that such Registration Statement may be declared effective and (ii) one hundred and twenty (120) calendar days after the F-3 Notice Date. The
Company shall use its reasonable best efforts to cause the Registration Statement filed pursuant to this Section 2.02 to remain effective until the earlier of (A) the date on which all Registrable Securities registered pursuant to such Registration
Statement shall have been sold to the public and (B) the date on which all of the Registrable Securities requested to be registered by the F-3 Holders can be freely sold to the public pursuant to Rule 144 without any manner or volume limitations.
(c) Limitations on Registration. The Company shall not be required to effect a registration pursuant to this
Section 2.02:
(i) if at the time of the request, Form F-3 (or such similar or successor form as may be applicable) is not available
to the Company for such offering;
(ii) if the Company shall furnish to the F-3 Holders requesting a registration pursuant to this Section 2.02 a
certificate signed by the Company’s Authorized Officer stating that a Potential Material Event exists, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) calendar days from the date that
the Company would be obligated to file a Registration Statement pursuant to Section 2.02(b) in the absence of this Section 2.01(c)(ii), provided that such right to delay a request may not be exercised by the Company more than twice in any
twelve (12)-month period; or
(iii) if the Holders propose to sell Registrable Securities and other such Securities (if any) whereby the aggregate
proceeds of which (after deduction for Selling Expenses) are less than $1,000,000.
(d) So long as a Registration Statement on Form F-3 is in effect with respect to any Registrable Securities, a Holder
may not request a Demand Registration or Piggyback Registration with respect to those Registrable Securities.
Section 2.03 Piggyback Registration
(a) Right to Piggyback. If at any time the Company proposes to register any of its common equity securities
under the Securities Act (other than a registration statement on Form S-8 or on Form F-4 or any similar successor forms thereto, or a registration statement covering an offering of convertible securities), whether for its own account or for the
account of one or more shareholders of the Company, and the registration form to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt
written notice (in any event within ten (10) days after its receipt of notice of any exercise of other demand registration rights) (a ‘Piggyback Registration Notice”) to each Holder of its intention to effect
such a registration and, subject to Sections 2.03(b) and 2.03(c), shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) days after
issuance of the Piggyback Registration Notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.
(b) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on
behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an
adverse effect on such offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included therein by the Holders, pro rata among the
Holders of such Registrable Securities on the basis of the number of shares requested to be registered by such Holders, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on
the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.
(c) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration
on behalf of a holder of the Company’s securities other than Registrable Securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (i) first the securities requested to be included therein by the holders requesting such registration,
pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders, and (ii) second, other securities requested to be included in such registration pro rata among the holders of such
securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.
(d) Selection of Underwriters. If any Piggyback Registration is an underwritten primary or secondary offering,
the Company shall have the right to select the managing underwriter or underwriters for such offering.
Section 2.04 Expenses of Registration. All Registration Expenses incurred in connection with any registration,
filing, qualification or compliance pursuant to Sections 2.01 and 2.02 shall be borne by the applicable Demanding Holders. All Registration Expenses incurred in connection with any registration, filing, qualification or compliance pursuant to
Sections 2.03 shall be borne by the Company and the applicable Holders pro rata on the basis of the number of Registrable Securities included in the applicable registration. Unless otherwise stated, all Selling Expenses relating to any Registrable
Securities registered on behalf of the Demanding Holders shall be borne by such Demanding Holders either wholly or, if such Demanding Holder is participating in a registration as one of the Holders, pro rata on the basis of the number of
Registrable Securities included in the applicable registration.
Section 2.05 Further Obligations of the Company. Whenever the Company is required to effect the registration of
any Registrable Securities pursuant to this Article II, the Company shall:
(a) Filing and Effectiveness of Registration Statement. With respect to a Registration Statement required by
Section 2.01 or 2.02, (i) prepare and file with the SEC a Registration Statement, (ii) cause such Registration Statement to become effective, and (iii) maintain the effectiveness of such Registration Statement, in each case, as of the dates and for
the periods required by Section 2.01 or 2.02, as the case may be, which Registration Statement, and any Registration Statement contemplated by Section 2.03 hereof (including any amendments or supplements thereto and prospectuses contained therein),
shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
(b) Filing of Amendments and Supplements. Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities and other securities of the Company covered by the Registration Statement at all times during the period for which the Company is required to maintain the effectiveness of
such Registration Statement pursuant to the terms of this Agreement.
(c) Copies of Documents. Furnish to each Holder selling such Registrable Securities by means of such
Registration Statement, without charge, such number of conformed copies of such Registration Statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such
Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such Registration Statement or prospectus and such
other documents as such Holders may reasonably request.
(d) Opinion and Comfort Letter. Furnish to such Holders (i) an opinion of the counsel representing the Company
for purposes of such registration, dated the effective date of such Registration Statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement with respect to both the
effective date of the Registration Statement and the date of the closing under the underwriting agreement), in form and substance as is customarily given by counsel for the issuer to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to such Holders, and (ii) a “cold comfort” letter, dated the effective date of such Registration Statement (and, if such Registration Statement includes an underwritten public offering, dated the date of the closing under
the underwriting agreement) signed by the independent certified public accountants who have certified the Company’s financial statements included in such Registration Statement, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to such Holders.
(e) “Blue Sky” Qualification. Register or qualify all Registrable Securities and other securities covered by
such Registration Statement under the securities or blue sky laws of such jurisdictions as the applicable Holders (or in an underwritten offering, the managing underwriter) shall reasonably request, and do any and all other acts and things which
may be necessary or advisable to enable such Holders to consummate the disposition in such jurisdictions of its Registrable Securities covered by such Registration Statement, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction.
(f) Notification of Certain Events. As promptly as practicable after becoming aware thereof, notify such Holders
of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare and file with the SEC a supplement or amendment to the Registration Statement
or other appropriate filing with the SEC to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to such Holders as such Holders may reasonably request.
(g) SEC Stop Orders. As promptly as practicable after becoming aware thereof, notify such Holders (and, in the
event of an underwritten offering, the managing underwriters) of the issuance by the SEC of any notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time.
(h) Potential Material Event. As promptly as practicable after becoming aware thereof, notify such Holders (and,
in the event of an underwritten offering, the managing underwriters) of the existence of a Potential Material Event, in which case, such Holders shall not offer or sell any Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of notice with respect to a Potential Material Event until such Holders receive written notice from the Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however, that such Holders may only be required to cease offering and selling Registrable Securities pursuant to this clause (h) for a period of not more than
ninety (90) calendar days after receiving notice from the Company that a Potential Material Event exists; provided, further, however, that the Company may only exercise its rights under this clause (h) twice in any twelve (12)-month
period.
(i) Listing Requirements. Use its best efforts to maintain the listing of such Registrable Securities on the
NASDAQ Global Select Market or on such other securities exchange as the Common Shares may be listed from time to time.
(j) Certificate or Book-Entry Share Preparation. Cooperate with such Holders to facilitate the timely
preparation and delivery of certificates or book-entry shares for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates or book-entry shares for the Registrable Securities to be in such
denominations or amounts as the case may be, as such Holders may reasonably request.
(k) Underwriting Agreement. In the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form and complying with the provisions of Section 2.06, with the managing underwriter of such offering.
(l) Section 11 Information. Make available to such Holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first month of the first fiscal quarter after the effective date of such Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder.
(m) Other Actions. Take all other reasonable actions necessary to expedite and facilitate disposition by such
Holders of the Registrable Securities pursuant to the Registration Statement.
Section 2.06 Preparation; Reasonable Investigation; Review by Counsel. In connection with the preparation and
filing of each Registration Statement registering Registrable Securities under the Securities Act, such Holders, its underwriters, if any, and counsel for such Holders shall:
(a) be permitted to review such Registration Statement, each prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto a reasonable period of time (but not less than three (3) Business Days) prior to their filing with the SEC; and
(b) be given reasonable access to the Company’s books and records and such opportunities to discuss the business of the
Company with its officers, counsels and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders, such underwriters, if any, or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
Section 2.07 Indemnification. In the event any Registrable Securities are included in a Registration Statement
under this Article II, the following indemnification provisions shall apply.
(a) Indemnification by the Company.
(i) Indemnification. To the extent permitted by law, and in addition to (and in no way, limiting) the
indemnification obligations set forth in the Share Purchase Agreement, the Company shall indemnify and hold harmless the Holders, each of the employees, officers, directors, partners, members, managers, legal counsel and agents of such Holders, any
underwriter (as defined in the Securities Act) for such Holders and each Person, if any, who controls such Holders or underwriter within the meaning of the Securities Act or Exchange Act (collectively, the “Holder
Indemnified Persons”) against and hold each Holder Indemnified Person harmless from any and all liabilities, obligations, losses, damages, lawsuits, investigations, arbitrations, actions, judgments, costs, expenses or claims, including
reasonable attorneys’ fees and expenses incurred in investigation or defending any of the foregoing (collectively, “Losses”), that the Holder Indemnified Persons may suffer or sustain arising out of or due to
any of the following (any of the following being a “Violation”):
(A) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;
(B) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or
(C) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law, or any applicable securities laws or Regulations of a jurisdiction outside the United States.
(ii) Limitations on Indemnification. Notwithstanding the foregoing, the Company shall not be liable for:
(A) any amounts paid in settlement of any such Losses if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld, conditioned or delayed); or
(B) any Losses to the extent that such Losses arise out of or are based upon a Violation which occurs in reliance upon
and in strict conformity with written information furnished by such Holders expressly for use in connection with such registration.
(b) Indemnification by the Holders.
(i) Indemnification. Each Holder participating in any registration pursuant to this Agreement shall indemnify
and hold harmless the Company, each of the Company’s employees, officers, directors, legal counsel and other agents, any underwriter (as defined in the Securities Act) for the Company and each Person, if any, who controls the Company or underwriter
within the meaning of the Securities Act or Exchange Act (collectively, the “Company Indemnified Persons”), against and hold each Company Indemnified Person harmless from any and all Losses that the Company
Indemnified Persons may suffer or sustain arising out of or due to any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in strict conformity with written information furnished by such
Holder expressly for use in connection with such registration.
(ii) Limitations on Indemnification. Notwithstanding the foregoing, no Holder shall be liable for:
(A) indemnification pursuant to this Agreement in excess of the aggregate net cash proceeds received by such Holder
from the offering of Registrable Securities in such registration;
(B) any amounts paid in settlement of any such Losses if such settlement is effected without the consent of such
Holder; or
(C) any Losses to the extent that such Losses do not arise out of or are not based upon a Violation which occurs in
reliance upon and in strict conformity with written information furnished by such Holder expressly for use in connection with such registration.
(c) Indemnification Mechanics. If there occurs an event which a Company Indemnified Person or a Holder
Indemnified Person (any such Person being the “Indemnitee”) hereto asserts is an indemnifiable event pursuant to this Section, the Indemnitee shall promptly notify the party obligated to provide
indemnification hereunder (the “Indemnitor”) in writing of such event. Delay or failure to so notify the Indemnitor shall only relieve the Indemnitor of its obligations to the extent, if at all, that it is
actually prejudiced by reason of such delay or failure. The Indemnitor shall have a period of twenty (20) calendar days in which to respond thereto. If the Indemnitor accepts responsibility within such twenty (20) calendar day period, then the
Indemnitor shall be obligated to compromise or defend, at its own expense, such matter, and the Indemnitor shall provide the Indemnitee with such assurances as may be reasonably required by the Indemnitee to assure that the Indemnitor shall assume
and be responsible for the Losses at issue (subject to the limitations set forth in this Agreement). If the Indemnitor fails to assume the defense of such matter within such twenty (20) calendar day period or does not respond within such twenty
(20) calendar day period, the Indemnitee against which such matter has been asserted shall (upon delivering notice to such effect to the Indemnitor) have the right to undertake, at the Indemnitor’s cost and expense, the defense, compromise or
settlement of such matter on behalf of the Indemnitee. In any event, the Indemnitee shall have the right to participate at its own expense in the defense of such asserted liability; provided, however, that the Indemnitor shall pay the
expenses of such defense if the Indemnitee is advised by counsel in writing that there are one or more legal defenses available to the Indemnitee that are different from or additional to those available to the Indemnitor (in which case, if the
Indemnitee notifies the Indemnitor in writing, the Indemnitor shall not have the right to assume the defense of such asserted liability on behalf of the Indemnitee).
(d) Contribution. If the indemnification provided for in this Section 2.06 is held by a court of competent
jurisdiction to be unavailable to an Indemnitee with respect to any Losses, then the Indemnitor, in lieu of indemnifying such Indemnitee hereunder, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnitor on the one hand and of the Indemnitee on the other in connection with the Violation that resulted in such Losses, as well as any other relevant equitable considerations; provided, however,
that in no event shall any contribution under this Section 2.06(d) from such Holders, together with the amount of any indemnification payments made by such Holder pursuant to Section 2.06(b) above, exceed the net proceeds from the offering received
by such Holders. The relative fault of the Indemnitor and of the Indemnitee shall be determined by reference to, among other things, whether the Violation relates to information supplied by the Indemnitor or the Indemnitee and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent such Violation.
Section 2.08 Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not,
without the prior written consent of holders of a majority of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any Securities of the Company which provides such holder or prospective holder
of Securities of the Company the right to include such Securities in any registration filed under Section 2.01, 2.02 or 2.03 hereof, unless under the terms of such agreement, such holder or prospective holder may include such Securities in any such
registration only to the extent that the inclusion of such securities shall not reduce the amount of the Registrable Securities that are included.
ARTICLE III
MISCELLANEOUS
Section 3.01 Notices. Any notice, demand or other communication to be given under or by reason of the provisions
of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient, (ii) when sent by confirmed electronic mail if sent during normal business hours of the recipient but, if not, then on the
next Business Day, (iii) one Business Day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first class mail, return receipt requested. Such
notices, demands and other communications shall be sent to the Company at the address specified below and to any Holder or to any other party subject to this Agreement at such address as indicated on the Schedule of Holders, or at such address or
to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Any party may change such party’s address for receipt of notice by providing prior written notice of the change to the sending
party as provided herein. The Company’s address is:
Euroholdings Ltd.
Attention: Chief Executive Officer
4, Messogiou & Evropis Street
Maroussi, 15124, Greece
Phone Number: +30-211-1804005
with a copy (which shall not constitute notice) to:
Seward & Kissel LLP
Attention: Edward S. Horton, Esq. and Anthony Tu-Sekine, Esq.
One Battery Park Plaza
New York, NY 10004
Phone Number: 212-574-1200
Either Party may from time to time change its address for notices under this Section 3.01 by giving at least ten
(10) days’ prior written notice of such changed address to the other Party.
Section 3.02 Counterparts. This Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the Parties and shall be deemed to be an original instrument, and all of which together shall constitute one and the same instrument. All such counterparts may be delivered between the Parties by facsimile or other
electronic transmission, which shall not affect the validity thereof.
Section 3.03 Modification or Amendment of Agreement; Waiver. Except as expressly provided in this Agreement,
neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by all Parties. The failure of either Party to insist on strict compliance with this Agreement, or to exercise any
right or remedy under this Agreement, shall not constitute a waiver of any rights provided under this Agreement, nor estop the Parties from thereafter demanding full and complete compliance nor prevent the Parties from exercising such a right or
remedy in the future.
Section 3.04 Successors and Assigns. This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns and permitted transferees.
Section 3.05 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
Section 3.06 Specific Enforcement; Consent to Jurisdiction; Waiver of Jury Trial.
(a) The Parties acknowledge and agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that either Party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement by the other Party and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which either Party may be entitled by law or equity.
(b) Each Party (i) hereby irrevocably submits to the jurisdiction of the U.S. District Court and other courts of the
United States sitting in the State of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each Party consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 3.06 shall affect or limit any right to serve process in any other manner permitted by law. The Parties hereby irrevocably waive trial by jury in any action, proceeding or claim brought by any Party or beneficiary thereof on
any matter whatsoever arising out of or in any way connected with this Agreement.
Section 3.07 Entire Agreement. This Agreement and sets forth the entire agreement and understanding of the
Parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the Parties, both oral and written, relating to the subject matter hereof.
Section 3.08 Severability. Each provision of this Agreement shall be considered separable and, if for any reason
any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Agreement. Upon such determination that any term
or other provision is invalid or illegal, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 3.09 Jointly Drafted. This Agreement shall be deemed to have been drafted by all Parties and, in the
event of a dispute, no Party shall be entitled to claim that any provision hereof should be construed against any other Party by reason of the fact that it was drafted by one particular Party.
Section 3.10 Further Assurances. From and after the date of this Agreement, upon the request of a Party, each
other Party shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
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EUROHOLDINGS LTD.
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By:
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/s/ Aristeidis J. Pittas
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Name:
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Aristeidis J. Pittas | |
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Title:
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Chief Executive Officer
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FRIENDS INVESTMENT COMPANY INC.
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By:
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/s/ Emmanuel J. Pittas
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Name:
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Aristeidis J. Pittas | |
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Title:
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Director
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| CONTAINER SHAREHOLDERS TRINITY LTD. |
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| By: | /s/ Markos Vassilikos |
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| Name: | Markos Vassilikos | ||
| Title: | Director | ||
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EUROBULK MARINE HOLDINGS INC.
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By:
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/s/ Nikolaos J. Pittas
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Name:
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Aristeidis J. Pittas | |
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Title:
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Director
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FAMILY UNITED NAVIGATION CO.
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By:
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/s/ Aristeidis P. Pittas
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Name:
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Aristeidis P. Pittas | |
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Title:
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Director
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[Signature Page to Registration Rights Agreement]
SCHEDULE OF HOLDERS
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Holder
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Address
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Friends Investment Company Inc.
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4, Messogiou & Evropis Street, 151 24 Maroussi, Athens, Greece
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Containers Shareholders Trinity Ltd.
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4, Messogiou & Evropis Street, 151 24 Maroussi, Athens, Greece
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Eurobulk Marine Holdings Inc.
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4, Messogiou & Evropis Street, 151 24 Maroussi, Athens, Greece
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Family United Navigation Co.
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4, Messogiou & Evropis Street, 151 24 Maroussi, Athens, Greece
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Exhibit 11.1
EUROHOLDINGS LTD.
CODE OF ETHICS & ANTI-BRIBERY POLICY
The Board of Directors of Euroholdings Ltd. (the "Company") has adopted this Code of Ethics and Anti-Bribery Policy (the "Code") for all of the Company's
employees, directors, officers, crew and agents ("Employees").
I. INTRODUCTION
Employees are expected to conduct company business in a legal and ethical manner.
Honest and Fair Dealing
Employees shall endeavor to deal honestly, ethically and fairly with the Company's customers, suppliers, competitors and other employees. No Employee, in
conducting company business, shall; take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. Honest conduct is considered to be
conduct that is free from fraud or deception. Ethical is considered to be conduct conforming to accepted professional standards of conduct.
Conflicts of Interest
A conflict of interest may occur when an Employee's private interests interfere, or appear to interfere, with the interests of the Company as a whole. While it is
not possible to describe every situation in which a conflict of interest may arise, Employees shall not use or attempt to use their position with the Company to obtain improper personal benefits. Any Employee who becomes aware of a conflict of
interest, or is concerned that such a conflict might develop, should immediately discuss the matter with the Audit Committee or legal counsel at the Company.
Bribery
The Company shall not use illegal payments, bribes, kickbacks or other questionable inducements to influence government decision making or any business
transaction. The use of Company's funds or assets for any unlawful or improper purpose is prohibited. In the conduct of business, Employees shall avoid making payments that are or appear to be improper. Specifically, the Company prohibits bribery of
or by any of its Employees and fosters a culture within the Company in which bribery is not acceptable.
Indirect bribery (bribery committed on the Company's behalf by third parties) is also caught by the Code. The Company will strive to deal only with reputable
third parties and will do necessary due diligence on third parties where appropriate i.e., where circumstances may indicate a higher risk for bribery (for example, conducting business with a third party located in a jurisdiction with a reputation for
bribery and corruption).
Compliance with Laws, Rules and Regulations
It is Company's policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each Employee to adhere to the standards
and restrictions imposed by those laws, rules and regulations, and in particular, those relating to accounting and auditing matters.
Any Employee who is unsure whether a situation violates any applicable law, rule, regulation or Company policy should contact the Company's legal counsel.
Failure to comply with the Code may subject the Employees to criminal or civil penalties as well as to disciplinary action by the Company up to and including
termination for cause.
Signing of Initial and Annual Acknowledgments of the Code
All Employees will be required to complete an acknowledgment indicating that they have read and understood the Code and that they agree to abide to its
requirements.
II. CONFLICTS OF INTEREST AND CODE OF ETHICS
Corporate Opportunities
Employees owe a duty to advance the legitimate interests of the Company when the opportunities to do so arise. Employees shall not take for themselves personally
opportunities that are discovered through the use of corporate, property, information or position.
Protection and Proper Use of Company Assets
The Company's assets shall only be used for legitimate business purposes and only by authorized Employees or their designees. This applies to tangible assets
(such as ship's equipment, office equipment, telephones, personal computers, copy machines, etc.) and intangible assets (such as software, trade secrets and confidential information). Employees have a responsibility to protect the Company's assets
from theft and loss and to ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability. If any Employee, becomes aware of theft, waste or misuse of the Company's assets he/she shall report this to
his/her manager.
Confidentiality and Personal Data Privacy
It is important that Employees protect the confidentiality of Company information. Employees may have access to proprietary and confidential information
concerning the Company's business, clients and suppliers. Confidential information includes such items as non-public information concerning the Company's business, financial results and prospects and potential corporate transactions. Employees are
required to keep such information confidential during employment as well as thereafter, and not to use, disclose, or communicate that confidential information other than for legitimate business purposes. The consequences to the Company and the
Employee concerned can be severe where there is unauthorized disclosure of any non-public or proprietary information.
To ensure the confidentiality of any personal information collected on individuals and to comply with applicable data privacy laws, Employees in possession of
non-public, personal information about the Company's customers, potential customers, or Employees, shall maintain the highest degree of confidentiality and shall not disclose any personal information unless an explicit authorization is obtained by
the management of the Company.
Securities Trading
We are subject to a number of laws concerning the purchase of the Company’s shares and other publicly traded securities. Company policy prohibits Employees and
their family members from trading securities while in possession of material, non-pubic information relating to the Company or any other company, including a customer or a supplier that has a significant relationship with the Company.
Information is "material" when it is likely that a reasonable investor would consider the information important in deciding whether to buy, hold or sell
securities. In short, any information that could reasonably affect the price of securities is material. Information is considered to be "public" only when it has been released to the public through appropriate channels and enough time has elapsed
to permit the investment market to absorb and evaluate the information. If you have any doubt as to whether you possess material non-public information, you should contact a manager and the advice of legal counsel may be sought.
Investment by Employees in the Company’s securities is encouraged. In order to protect the Company and its Employees from liability that could result from a
violation of legal requirements, the Company requires Employees to engage in purchases or sales of the Company’s stock only during "Window Periods". Window Periods begin at the opening of trading on the second full trading day following the public
release of quarterly or annual financial results and end on the last day of the third calendar month of the calendar quarter. No person may buy or sell the Company’s securities, even during Window Periods, if such person is in possession of
material, non-public information. At any time, the Board of Directors has authority to designate a "Blackout Period" over all trading in the Company’s securities (even during a Window Period). A "Blackout Period" compels all trading in the
securities affected to cease immediately for the period designated by the Board of Directors. A "Blackout Period" may be exercised over securities of companies with which the Company does or may do business or in which the Company invests or may
invest. No one may disclose to any third party that a "Blackout Period" has been designated.
Failure to comply with the Company's securities trading policy may subject Employees or Employees' family members to criminal or civil penalties, as well as to
disciplinary action by the Company up to and including termination for cause. Responsibility for complying with applicable laws as well as the Company's policy rests with Employees individually.
Disclosure
Employees are responsible for ensuring that the disclosure in the Company's periodic reports is full, fair, accurate, timely and understandable. In doing so,
Employees shall take such action as is reasonably appropriate to (i) establish and to comply with disclosure controls and procedures and accounting and financial controls that are designed to ensure that material information relating to the Company
is made known to them; (ii) confirm that the Company's periodic reports comply with applicable law, rules and regulations; and (iii) ensure that information contained in the Company's periodic reports fairly presents in all material respects the
financial condition and results of operations of the Company.
Employees shall not knowingly (i) make, or permit or direct another person to make, materially false or misleading entries in the Company's, or any of its
subsidiaries', financial statements or records; (ii) fail to correct materially false and misleading financial statements or records; (iii) sign, or permit another to sign, a document containing materially false and misleading information; or (iv)
falsely respond, or fail to respond, to specify inquiries of the Company's independent auditor or legal counsel.
Electronic Communication
Electronic communications include all aspects of voice, video and data communications, such as voice mail, e-mail, fax and internet. Employees shall use
electronic communications for business purposes and refrain from personal use. Among other things, Employees shall not participate in any online forum where the business of the Company or its customers or suppliers is discussed: this may give
rise to a violation of the Company's confidentiality policy or subject the Company to legal action for defamation. The Company reserves the right to inspect all electronic communications involving the use of the Company's equipment, software,
systems, or other facilities ("Systems") within the confines of applicable local law and Employees should not have an expectation of privacy when using Company Systems.
Corporate Communications
Only certain designated Employees may discuss the Company's matters with the news media, securities analysts and investors. All inquiries from regulatory
authorities or government representatives shall be referred to the appropriate manager. Employees exposed to media contact when in the course of employment shall not comment on rumors or speculation regarding the Company's activities.
Health, Safety and Environmental Protection
The Company shall conduct its business in a manner designed to protect the health and safety of its Employees, its customers, the public, and the environment.
The Company's policy is to operate its business and its vessels in accordance with all applicable health, safety and environmental laws and regulations so as to ensure the protection of the environment and the Company's personnel and property.
Employees shall conduct themselves in a manner that is consistent with this policy. Any departure or suspected departure from this policy must be reported promptly.
III. ANTI-BRIBERY POLICY
Anti-Bribery Law
International anti-bribery law prohibits a person or company from both accepting bribes as well as bribing others to gain or retain a business advantage.
There is also a specific prohibition relating to the bribing of government officials. Most anti-bribery laws are quite broad and are designed to prohibit any type of inducement intended to circumvent their terms.
A bribe of a government official can be broadly defined as a payment, offer, or promise of anything of value to any:
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Foreign government official;
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Foreign political party or party official;
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Candidate for foreign political office;
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Immediate family members of the foregoing or any person while knowing that a all or part of such payment will be passed on to any of the people
described above;
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For the purpose of:
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Influencing an official act or decision of that person;
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Inducing such person to do or omit to any act, in violation of his/her lawful duty;
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Inducing such person to use his/her influence with a foreign government to affect or influence any government act; or
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Securing any improper purpose;
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In each case, to assist in obtaining or retaining business for or with, or directing any contract or business to, any person.
It is important to note that "anything of value" extends beyond cash and can include, for example, commissions, discounts, waivers, promotions, gifts, payment
or reimbursement of travel or entertainment.
The Company's managed vessels operate worldwide and its Employees regularly and legitimately interact with government officials. Often Employees are required
to communicate with government officials regarding licensing and other required government approvals, e.g. customs clearance, safety/environmental permits, etc.
In some countries, officials may request improper payment, gifts or other incentives to perform their duties in connection with or in furtherance of these
communications. Employees are prohibited from making or providing any such improper payments to government officials. Compliance with international anti-bribery laws in these situations is paramount.
Facilitation payments are small payments made to government officials in accordance with publicly known or widely-followed local custom to expedite or secure
performance of non discretionary, routine government action. The Company strongly discourages Employees from making facilitation payments in counties where the local law permits them. In counties where facilitation payments are prohibited the
Company also prohibits them. For clarification as to whether a particular payment is a prohibited facilitation payment, please consult the Company's legal department.
Exceptions to Bribery Prohibitions
Relief from the prohibitions of various international anti-bribery laws is limited. If any Employee believes that his/her conduct would meet one of the
exceptions discussed below, that Employee should contact immediately the Company's legal department before taking any action.
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Routine, Government Payments
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Most, if not all, governments require fees, taxes or payments for various government services. Payment of these fees
is permissible and should occur in the ordinary course of dealing with a government. Be careful, however, to avoid making such payments to government officials in their individual capacity, or paying amounts in excess of the amount required by
law.
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Bona Fide Business Expenditures
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Most anti-bribery laws permit payments to government officials that constitute bona fide, reasonable business
expenditures. The expenditures must relate directly to the promotions, demonstration, or explanation of services or to the execution or performance of a contract with a foreign government or agency. Despite appearances, this exception to
anti-bribery laws is not straightforward and, often the line between what is bona fide expenditure and what is improper inducement can become blurred. The analysis of such expenditure must focus on whether the expenditure in each situation is
necessary and, if so, whether the payment is reasonable under the circumstances.
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Local Law
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Most anti-bribery laws do not prohibit payments that are lawful under the written laws and regulations of the
government official's country. It is, however, rare that a country would officially permit payments or offers that are intended to cause that official to violate a lawful duty.
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Gifts, Entertainment and Hospitality
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Gifts, entertainment and hospitality include the receipt or offer of gifts, meals or tokens of appreciation and
gratitude, or invitations to events, functions, or other social gatherings, in connection with matters related to the shipping business. These activities are acceptable provided that they fall within reasonable bounds of value, frequency,
ethical conduct and have a transparent and legitimate business purpose.
However, if the value of the gift or entertainment becomes too large, it can affect, or be seen to affect, business
judgment. It can also create expectations of special treatment. All gifts and entertainment given or received must be of a reasonable value and appropriate and proportionate to the business relationship in question.
Special attention should be given when providing gifts or entertainment to government officials, or if third parties
are interacting with government officials on our behalf. If you are not sure whether a gift or entertainment is of a reasonable value or is permitted under the Code, you should discuss it with your manager or the Company's legal department.
Recognizing Red Flags
To assist Employees recognizing situations in which payments may be suspect or corrupt, we provide the following "red flags".
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Unusual Payment Patterns or Financial Arrangements
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Improper payments made to government officials or other third parties are frequently accompanied by unusual payment
arrangements. Employees should use increased vigilance when asked, for example, to make payments in a bank account not located within the country where the services were rendered or the country where the recipient of funds is located. Be
cautious when conducting business in a country with a reputation of corruption. A list of high risk jurisdictions can be found on the Transparency International website.
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Unusually High Commissions
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Commissions historically have been a vehicle through which bribes have been funneled to government officials or
other third parties. Accordingly, a request to pay unusually high commissions, where the payment is not commensurate with the service being provided, is a warning sign of possible corruption. Be careful when a government official recommends
hiring a consultant, and adequate diligence should be conducted on consultants generally to ensure the legitimate provision of services.
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Lack of Transparency in Expenses and Accounting Records
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A reluctance to share expense statements and accounting records of joint activity by a foreign business partner,
vague descriptions or over-invoicing generally should serve as possible indicators of corrupt activity. The underlying business purpose of each payment should be clear. Pay particular attention that a reimbursement of an expense is a
disguised payment to a government official or otherwise. Facilitation payments must not be made in countries where they are illegal.
Accounting & Record Keeping
It is the Company's policy that all financial transactions are recorded in a timely and accurate manner. Records reflect transactions in conformity with
accepted accounting standards and are designed to prevent off-the-books transactions such as kickbacks and bribes.
The Company has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that:
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Transactions are executed in accordance with management's general or specific authorization;
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Transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
or any other criteria applicable to such statements and to maintain accountability for assets.
|
|
•
|
Access to assess is permitted only in accordance with management's general or specific authorization.
|
|
•
|
The recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences.
|
Employees shall follow all applicable standards, principles and laws for accounting and financial reporting. No Employee shall establish an undisclosed
or unrecorded account on behalf of the Company for any purpose. In addition, false or artificial entries are not to be made in the books and records of the Company for any reason.
IV. GENERAL TERMS
Procedures Regarding Waivers
Because of the importance of the matters involved in this Code, waivers will be granted only in limited circumstances and where such circumstances would
support a waiver. Waivers of the Code may only be made by the Audit Committee and will be disclosed by the Company.
Internal Reporting
Employees shall take all appropriate action to stop any known misconduct by fellow Employees or other Company personnel that violate this Code.
Employees shall report any known or suspected misconduct to the Chairman of the Audit Committee or the Company's outside legal counsel. The Company will not retaliate or allow retaliation for reports made in good faith.
Company's Corporate Complaints Procedure
As individuals who work on behalf of the Company, we all have a responsibility to help detect, prevent and report instances not only of bribery, but
also of any other suspicious activity or wrongdoing. The senior management of the Company is absolutely committed to ensuring that all of us have a safe, reliable and confidential way of reporting any suspicious activity.
If you have a concern regarding a suspected instance of bribery, corruption, unethical conduct, etc., you may communicate the information to the Audit
Committee or the Company's legal department, and seek their assistance.
In the event that such an incident is reported, the Company shall act as soon as possible to evaluate the situation. The Company has procedures for
investigating fraud, misconduct and non-compliance issues and these will be followed in any investigation of this kind.
Employees individually are ultimately responsible for their compliance with applicable laws as well as the Code.
Every manager will also be responsible from administering the Code as it applies to Employees and operations within each manager's area of supervision.
|
|
Exhibit 12.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, Aristides J. Pittas, certify that:
|
1.
|
I have reviewed this annual report on Form 20-F of Euroholdings Ltd.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
|
4.
|
The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered
by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
|
5.
|
The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal
control over financial reporting.
|
Date: May 15, 2025
/s/ Aristides J. Pittas
Aristides J. Pittas
Chief Executive Officer
|
|
Exhibit 12.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
I, Athina Atalioti, certify that:
|
1.
|
I have reviewed this annual report on Form 20-F of Euroholdings Ltd.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
|
4.
|
The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) and 15d-15(f) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered
by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
|
5.
|
The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal
control over financial reporting.
|
Date: May 15, 2025
/s/ Athina Atalioti
Athina Atalioti
Chief Financial Officer
|
|
Exhibit 13.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Annual Report of Euroholdings Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2024 as filed with the
Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Aristides J. Pittas, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
|
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its
staff upon request.
Date: May 15, 2025
/s/ Aristides J. Pittas
Aristides J. Pittas
Chief Executive Officer
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|
|
|
Exhibit 13.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Annual Report of Euroholdings Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2024 as filed with the
Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Athina Atalioti, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
|
|
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its
staff upon request.
Date: May 15, 2025
/s/ Athina Atalioti
Athina Atalioti
Chief Financial Officer
|
|
Exhibit 97.1
EUROHOLDINGS LTD.
POLICY REGARDING THE RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
|
|
I.
|
Introduction
|
The Board of Euroholdings Ltd., a Marshall Islands corporation (the “Company”), is dedicated to maintaining and enhancing a culture that emphasizes integrity and accountability and that
reinforces the Company’s pay-for-performance compensation philosophy. In accordance with the applicable rules of the Nasdaq (the “Exchange Rules”), and Section 10D and Rule 10D-1 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Board has therefore adopted this Policy, which provides for the recoupment, otherwise referred to as “clawback”, of certain erroneously awarded Incentive-Based Compensation from Executive Officers in the event of an Accounting
Restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws, and which is intended to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. All
capitalized terms used and not otherwise defined herein shall have the meanings set forth in Section II.
|
|
II.
|
Definitions
|
|
|
1.
|
“Accounting Restatement” means an accounting restatement due to the material noncompliance of
the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial
statements (a “Big R” or reissuance restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” or revision restatement). For the
avoidance of doubt, in no event will a restatement of the Company’s financial statements that is not due in whole or in part to the Company’s material noncompliance with any financial reporting requirement under applicable law (including
any rule or regulation promulgated thereunder) be considered an Accounting Restatement under this Policy. For example, a restatement due exclusively to a retrospective application of any one or more of the following will not be considered
an Accounting Restatement under this Policy: (i) a change in accounting principles; (ii) revision to reportable segment information due to a change in the structure of the Company’s internal organization; (iii) reclassification due to a
discontinued operation; (iv) application of a change in reporting entity, such as from a reorganization of entities under common control; and (v) revision for stock splits, reverse stock splits, stock dividends or other changes in capital
structure.
|
|
|
2.
|
“Board” means the Board of Directors of the Company.
|
|
|
3.
|
“Clawback Eligible Incentive Compensation” means all Incentive-Based Compensation Received by an Executive
Officer (i) on or after the effective date of the applicable Exchange rules adopted in order to comply with Rule 10D-1, (ii) after beginning service as an Executive Officer, (iii) who served as an Executive Officer at any time during the
applicable performance period relating to the applicable Incentive-Based Compensation (whether or not such Executive Officer is serving as such at the time the Erroneously Awarded Compensation is required to be repaid to the Company),
(iv) while the Company has a class of securities listed on a national securities exchange or a national securities association, and (v) during the applicable Clawback Period (as defined below).
|
|
|
4.
|
“Clawback Period” means, with respect to any Accounting Restatement, the three completed fiscal years of the
Company immediately preceding the Restatement Date (as defined below), and if the Company changes its fiscal year, any transition period of less than nine months within or immediately following those three completed fiscal years.
|
|
|
5.
|
“Committee” means the Compensation Committee of the Company (if composed entirely of independent directors, or in the absence of such a committee, a majority of independent directors serving on the Board).
|
|
|
6.
|
“Erroneously Awarded Compensation” means, with respect to each Executive Officer in
connection with an Accounting Restatement, the amount of Clawback Eligible Incentive Compensation that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the restated
amounts, computed without regard to any taxes paid.
|
|
|
7.
|
“Exchange” means Nasdaq.
|
|
|
8.
|
“Executive Officer” means each individual who is (a) a current or former executive officer, as determined by
the Committee (as defined below) in accordance with Section 10D and Rule 10D-1 of the Exchange Act and the listing standards of the Exchange, (b) a current or former employee who is classified by the Committee as an executive officer of
the Company, which includes without limitation any of the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), vice president in charge of a principal
business unit, division or function (such as sales, administration or finance), and any other person who performs policy-making functions for the Company (including executive officers of a parent or subsidiary if they perform
policy-making functions for the Company), and (3) an employee who may from time to time be deemed subject to the Policy by the Committee. For the avoidance of doubt, the identification of an executive officer for purposes of this Policy
shall include each executive officer who is or was identified pursuant to Item 6.A of Form 20-F, as applicable.
|
|
|
9.
|
“Financial Reporting Measures” means measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and all other measures that are derived wholly or in part from such measures. Stock price and total shareholder return (and any measures that are derived wholly
or in part from stock price or total shareholder return) shall, for purposes of this Policy, be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented in the Company’s
financial statements or included in a filing with the SEC.
|
|
|
10.
|
“Incentive-Based Compensation” shall have the meaning set forth in Section III below.
|
|
|
12.
|
“Exchange Effective Date” means October 2, 2023.
|
|
|
13.
|
“Policy” means this Clawback Policy, as the same may be amended
and/or restated from time to time.
|
|
|
14.
|
Incentive-Based Compensation will be deemed “Received” in the Company’s fiscal period during which the
Financial Reporting Measure specified in the Incentive-Based Compensation documentation is attained, even if (a) the payment or grant of the Incentive-Based Compensation to the Executive Officer occurs after the end of that period or (b)
the Incentive-Based Compensation remains contingent and subject to further conditions thereafter, such as time-based vesting.
|
|
|
15.
|
“Restatement Date” means the earlier to occur of (i) the date the Board, a committee of the Board, or the
officer(s) of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court,
regulator or other legally authorized body directs the Company to prepare an Accounting Restatement.
|
|
|
16.
|
“SARs” means shareholder appreciate rights.
|
|
|
17.
|
“SEC” means the U.S. Securities and Exchange Commission.
|
|
|
III.
|
Incentive-Based Compensation
|
“Incentive-Based Compensation” shall mean any compensation that is granted, earned or vested wholly or in part upon the attainment of a Financial Reporting Measure.
For purposes of this Policy, specific examples of Incentive-Based Compensation include, but are not limited to:
|
|
•
|
Non-equity incentive plan awards that are earned based, wholly or in part, on satisfaction of a Financial Reporting Measure performance goal;
|
|
|
•
|
Bonuses paid from a “bonus pool,” the size of which is determined, wholly or in part, based on satisfaction of a Financial Reporting Measure
performance goal;
|
|
•
|
Other cash awards based on satisfaction of a Financial Reporting Measure performance goal;
|
|
|
•
|
Restricted stock, restricted stock units, performance share units, stock options and SARs that are granted or become vested, wholly or in part,
on satisfaction of a Financial Reporting Measure performance goal; and
|
|
|
•
|
Proceeds received upon the sale of shares acquired through an incentive plan that were granted or vested based, wholly or in part, on
satisfaction of a Financial Reporting Measure performance goal.
|
For purposes of this Policy, Incentive-Based Compensation excludes:
|
|
•
|
Any base salaries (except with respect to any salary increases earned, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal);
|
|
|
•
|
Bonuses paid solely at the discretion of the Committee or Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measure
performance goal;
|
|
|
•
|
Bonuses paid solely upon satisfying one or more subjective standards and/or completion of a specified employment period;
|
|
|
•
|
Non-equity incentive plan awards earned solely upon satisfying one or more strategic measures (e.g., consummating a merger or divestiture) or operational measures (e.g., completion of a project, acquiring a specified number of vessels, attainment of a certain market share); and |
|
|
•
|
Equity awards that vest solely based on the passage of time and/or satisfaction of one or more non-Financial Reporting Measures (e.g., a time-vested award, including
time-vesting stock options or restricted share rights).
|
|
|
IV.
|
Administration and Interpretation
|
This Policy shall be administered by the Committee and/or the Board, and any determinations made by the Committee and/or the Board shall be final and binding on all affected individuals. The
Committee and/or the Board shall determine the amount of any Erroneously Awarded Compensation Received by each Executive Officer and shall promptly deliver written notice to each Executive Officer containing the amount of any Erroneously Awarded
Compensation and a demand for repayment or return of such compensation, as applicable. For the avoidance of doubt, recovery of Erroneously Awarded Compensation is on a “no fault” basis, meaning that it will occur regardless of whether the
Executive Officer engaged in misconduct or was otherwise directly or indirectly responsible, in whole or in part, for the Accounting Restatement.
The Committee is authorized to interpret and construe this Policy and to make all determinations and to take such actions as may be necessary, appropriate, or advisable for the administration of
this Policy and for the Company’s compliance with the Exchange Rules, Section 10D, Rule 10D-1 and any other applicable law, regulation, rule or interpretation of the SEC or the Exchange promulgated or issued in connection therewith.
|
|
V.
|
Recovery of Erroneously Awarded Compensation
|
|
|
(1)
|
In the event of an Accounting Restatement, the Committee shall promptly determine in good faith the amount of any Erroneously Awarded Compensation
Received in accordance with the Exchange Rules and Rule 10D-1 for each Executive Officer in connection with such Accounting Restatement and shall promptly thereafter provide each Executive Officer with a written notice containing the
amount of Erroneously Awarded Compensation (without regard to any taxes paid thereon by the Executive Officer) and a demand for repayment or return, as applicable.
|
|
|
a.
|
Cash Awards. With respect to cash awards, the Erroneously Awarded Compensation is the difference between the amount of the cash
award (whether payable as a lump sum or over time) that was Received and the amount that should have been received applying the restated Financial Reporting Measure.
|
|
|
b.
|
Cash Awards Paid from Bonus Pools. With respect to cash awards paid from bonus pools, the Erroneously Awarded Compensation is the
pro rata portion of any deficiency that results from the aggregate bonus pool that is reduced based on applying the restated Financial Reporting Measure.
|
|
|
c.
|
Equity Awards. With respect to equity awards, if the shares, options or SARs are still held at the time of recovery, the
Erroneously Awarded Compensation is the number of such securities Received in excess of the number that should been received applying the restated Financial Reporting Measure (or the value in excess of that number). If the options or SARs
have been exercised, but the underlying shares have not been sold, the Erroneously Awarded Compensation is the number of shares underlying the excess options or SARs (or the value thereof). If the underlying shares have already been sold,
then the Committee and/or Board shall determine the amount which most reasonably estimates the Erroneously Awarded Compensation.
|
|
|
d.
|
Compensation Based on Stock Price or Total Shareholder Return. For Incentive-Based Compensation based on (or derived from) stock
price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, (i) the amount shall be
determined by the Committee and/or Board based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was Received; and (ii) the
Committee and/or Board shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Exchange in accordance with applicable listing standards.
|
|
|
(2)
|
The Committee shall have discretion to determine the appropriate means of recovering Erroneously Awarded Compensation based on the particular facts and
circumstances. Notwithstanding the foregoing, except as set forth in Section VI below, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer’s
obligations hereunder.
|
|
|
(3)
|
To the extent that the Executive Officer has already reimbursed the Company for any Erroneously Awarded Compensation Received under any duplicative
recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded Compensation that is subject to recovery under this Policy. To
the extent that the Erroneously Awarded Compensation is recovered under a foreign recovery regime, the recovery would meet the obligations of Rule 10D-1.
|
|
|
(4)
|
To the extent that an Executive Officer fails to repay all Erroneously Awarded Compensation to the Company when due, the Company shall take all actions
reasonable and appropriate to recover such Erroneously Awarded Compensation from the applicable Executive Officer. The applicable Executive Officer shall be required to reimburse the Company for any and all expenses reasonably incurred
(including legal and other collection related fees) by the Company in recovering such Erroneously Awarded Compensation.
|
|
|
VI.
|
Discretionary Recovery
|
Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated by Section V above if the Committee determines that recovery would be
impracticable and any of the following three conditions are met.
|
|
(1)
|
The Committee has determined that the direct expenses, such as reasonable legal expenses and consulting fees, paid to a third party to assist in
enforcing the Policy would exceed the amount to be recovered. In order for the Committee to make this determination, the Company must make a reasonable attempt to recover the Erroneously Awarded Compensation, document such attempt(s) to
recover, and provide such documentation to the Exchange;
|
|
|
(2)
|
Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before determining that it would be
impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a
violation and a copy of the opinion is provided to Exchange;
|
|
|
(3)
|
Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail
to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.
|
|
|
VII.
|
Recoupment Period Covered and Amount
|
If an Accounting Restatement occurs, the Committee shall review all Incentive-Based Compensation that was granted, vested or earned on the basis of having met or exceeded Financial Reporting
Measures and that was Received by an Executive Officer during the Clawback Period. With respect to each Executive Officer, the Committee shall, as provided under this Policy, seek to require the forfeiture or repayment of (1) the Erroneously
Awarded Compensation, whether vested or unvested and including proceeds received upon the sale of shares acquired through an incentive plan that were granted or vested based wholly or in part on satisfying a Financial Reporting Measure, Received
during the Clawback Period in the event of an Accounting Restatement, and (2) to the extent the Executive Officer engages in Detrimental Conduct, applicable Incentive-Based Compensation received thereafter.
Compensation shall be deemed to have been Received in the fiscal period in which the Financial Reporting Measure is attained, even if the Incentive-Based Compensation is not actually paid until a
later date or where the compensation is subject to additional service-based or non-financial goal-based vesting conditions after the period ends. The amount to be recovered will be as provided for in this Policy.
|
|
VIII.
|
Method of Recovery of Erroneously Awarded Compensation
|
The Committee will determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation hereunder, which may include, without limitation:
|
|
(1)
|
Requiring reimbursement of cash Incentive-Based Compensation previously paid;
|
|
|
(2)
|
Seeking recovery of any gain realized on the granting, vesting, exercise, settlement, sale, transfer or other disposition of any equity or equity-based
awards;
|
|
|
(3)
|
Offsetting the recouped amount from any compensation otherwise owed by the Company or its affiliates to the Executive Officer;
|
|
|
(4)
|
Cancelling outstanding vested or unvested equity or equity-based awards and/or reducing outstanding future payments due or possibly due in respect of
amounts already Received; and/or
|
|
|
(5)
|
Taking any other remedial and recovery action permitted by law, as determined by the Committee.
|
|
|
IX.
|
Disclosure Requirements
|
The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the federal securities laws,
including the disclosure required by the rules and applicable filings required to be made with the SEC.
|
|
X.
|
No Indemnification
|
The Company shall not be permitted to insure or indemnify any Executive Officer against (i) the loss of any Erroneously Awarded Compensation
that is repaid, returned or recovered pursuant to the terms of this Policy, or (ii) any claims relating to the Company’s enforcement of its rights under this Policy. Further, the Company shall not enter into any agreement that exempts any
Incentive-Based Compensation that is granted, paid or awarded to an Executive Officer from the application of this Policy or that waives the Company’s right to recovery of any Erroneously Awarded Compensation, and this Policy shall supersede any
such agreement (whether entered into before, on or after the Effective Date of this Policy). While an Executive Officer may purchase a third-party insurance policy to fund potential recovery obligations under this Policy, the Company may not pay
or reimburse the Executive Officer for premiums for such an insurance policy.
|
|
XI.
|
Effective Date
|
This Policy shall be effective as of the Exchange Effective Date.
|
|
XII.
|
Amendment; Termination
|
The Committee and thereafter, the Board, may amend this Policy from time to time in its discretion and shall amend this Policy as it deems
necessary to comply with the requirements of any federal securities laws, SEC rule or the rules of any national securities exchange or national securities association on which the Company’s securities are then listed. Notwithstanding anything in
this Section XII to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any actions taken by the Company contemporaneously with such amendment or
termination) cause the Company to violate any federal securities laws, SEC rule, or the rules of any national securities exchange or national securities association on which the Company’s securities are then listed.
|
|
XIII.
|
Other Recovery Rights
|
This Policy will be applied to the fullest extent of the law. The Board and/or the Committee may, to the fullest extent of the law, require
that any employment agreement, equity award agreement, or other plan, agreement or arrangement providing for incentive compensation shall, as a condition to the grant, receipt or vesting of any benefit thereunder, require an Executive Officer to
agree to abide by the terms of this Policy, including requiring the execution of the attestation and acknowledgement set forth in Exhibit A to this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other
remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity or equity-based plan or award agreement, or other plan, agreement or arrangement providing for
incentive compensation and any other legal remedies available to the Company. However, this Policy shall not provide for recovery of Incentive-Based Compensation that the Company has already recovered pursuant to Section 304 of the Sarbanes-Oxley
Act or other recovery obligations.
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XIV.
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Successors
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This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, executors, administrators, permitted
transferees, permitted assignees or other legal representatives, and shall inure to the benefit of any successor or assignee of the Company.
Exhibit A
ATTESTATION AND ACKNOWLEDGEMENT OF POLICY REGARDING THE RECOVERY OF
ERRONEOUSLY AWARDED COMPENSATION
By my signature below, I acknowledge and agree that:
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I have received and read the attached Policy Regarding the Recovery of Erroneously Awarded Compensation (this “Policy”).
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I hereby agree to abide by all of the terms of this Policy both during and after my employment with the Company, including, without
limitation, by promptly repaying or returning any Erroneously Awarded Compensation to the Company as determined in accordance with this Policy.
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Signature:
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Printed Name:
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Date:
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