NEWLEAD Holdings

During 2013, the Newlead Markela, which was already subject to a long-term charter signed in 2007 before our 2010 acquisition of the vessel, and which did not contain the provisions/exclusions to prohibit the use of the vessel in sanctions-triggering trade with Iran, was instructed by her time charterers, who are disponent owners, to call at a port of Iran once and a port of Sudan once. In both cases, the charterers conducted the relevant due diligence in cooperation with their P&I Association in order to confirm that the loading, discharge and transportation of the cargo and the parties involved would not result in, or would not be subject to, any sanctions, respectively. Following this review, on January 24, 2013 the Newlead Markela arrived at Iran’s Bandar Abbas port to load a cargo of about 54,304 MT of iron ore which was discharged to China, and departed on February 3, 2013. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, were subject to any sanctions. Furthermore, on June 15, 2013, this same vessel called Port Sudan to discharge a cargo of about 62,984 MT of wheat which had been loaded at the port of Prince Rupert, Canada. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, were subject to any sanctions. During 2012, the same vessel was instructed by her time charterers to call Iran twice. After the time charterers instructed the vessel to call Iran, we asked them to provide us with all necessary information regarding the ports of call, cargo and parties involved, in order to conduct the relevant due diligence. Furthermore, we referred to our P&I Association in order to confirm that the loading, discharge or transportation of the cargo and parties involved would not result in, or would not be subject to, any sanctions, respectively. The information was provided to our P&I Association and the facts were reviewed by a legal expert, appointed by the P&I Association, who advised that neither the transportation, loading nor discharge of the cargo nor the parties involved were subject to any sanctions. Furthermore, we presented all relevant information to our War Risks Association (in the form of a standard questionnaire), who, after reviewing the facts, insured the vessel for the proposed voyages. Therefore, on October 14, 2012, the vessel arrived at Bandar Imam Khomeini in order to discharge a cargo of 61,602,90 tons of maize in bulk which had been loaded in Paranagua, Brazil. The vessel departed from Bandar Imam Khomeini on October 23, 2012. On October 26, 2012, the vessel arrived at Bandar Abbas in order to load a cargo of 70,351,648 MT of iron ore in bulk and departed on the October 31, 2012. The vessel discharged the cargo of iron ore in Lianyungang, China. Neither the transport, loading nor discharge, nor the parties involved, were subject to any sanctions. In addition, during 2011, the same vessel was instructed by her time charterers to arrive in Iran from June 4 to June 14, 2011 in order to discharge approximately 60,000 tons of soya beans. Although this vessel arrived in Iran, neither the transportation nor discharge of the soya beans, nor the parties involved, were subject to any sanctions.

According to its Annual report filed with the SEC for fiscal year 2013: "During 2013, the Newlead Markela, which was already subject to a long-term charter signed in 2007 before our 2010 acquisition of the vessel, and which did not contain the provisions/exclusions to prohibit the use of the vessel in sanctions-triggering trade with Iran, was instructed by her time charterers, who are disponent owners, to call at a port of Iran twice and a port of Sudan once. In all cases, based on the information provided by the charterers conducted the relevant due diligence in cooperation with their P&I Association in order to confirm that the loading, discharge and transportation of the cargo and the parties involved would not result in, or would not be subject to, any sanctions, respectively. Following this review, on January 24, 2013 the Newlead Markela arrived at Iran’s Bandar Abbas port to load a cargo of about 54,304 MT of iron ore which was discharged to China, and departed on February 3, 2013. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, was subject to any sanctions. Furthermore, on June 15, 2013, this same vessel called Port Sudan to discharge a cargo of about 62,984 MT of wheat which had been loaded at the port of Prince Rupert, Canada. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, was subject to any sanctions. Also later the same year (August 30, 2013) Newlead Markela arrived at Bandar Imam Khomeini (“BIK”) of Iran to discharge a quantity of about 63,945 MT of corn which has been loaded in Nikolayen, Ukraine while she departed on September 6, 2013. Neither the loading, discharge, nor transportation of the cargo, nor the parties involved were subject to any sanctions. During 2012, the same vessel was instructed by her time charterers to call Iran twice. In all cases, after the time charterers instructed the vessel to call Iran, we asked them to provide us with all necessary information regarding the ports of call, cargo and parties involved, in order to conduct the relevant due diligence. Furthermore, we referred to our P&I Association in order to confirm that the loading, discharge or transportation of the cargo and parties involved would not result in, or would not be subject to, any sanctions, respectively. The information was provided to our P&I Association and the facts were reviewed by a legal expert, appointed by the P&I Association, who advised that neither the transportation, loading nor discharge of the cargo nor the parties involved was subject to any sanctions. Furthermore, we presented all relevant information to our War Risks Association (in the form of a standard questionnaire), who, after reviewing the facts, insured the vessel for the proposed voyages. Therefore, on October 14, 2012, the vessel arrived at Bandar Imam Khomeini in order to discharge a cargo of 61,603 tons of maize in bulk which had been loaded in Paranagua, Brazil. The vessel departed from BIK on October 23, 2012. On October 26, 2012, the vessel arrived at Bandar Abbas in order to load a cargo of 70,352 MT of iron ore in bulk and departed on the October 31, 2012. The vessel discharged the cargo of iron ore in Lianyungang, China. Neither the transport, loading nor discharge, nor the parties involved, were subject to any sanctions. In addition, during 2011, the same vessel was instructed by her time charterers to arrive in Iran from June 4 to June 14, 2011 in order to discharge approximately 60,000 tons of soya beans. Although this vessel arrived in Iran, neither the transportation nor discharge of the soya beans, nor the parties involved, were subject to any sanctions." (https://www.sec.gov/Archives/edgar/data/1322587/000114420414029091/v375861_20f.htm)

According to its Annual Report filed with the SEC for fiscal year 2012: "As it relates to Iran, the provisions in the charter parties/contracts for our vessels contain exclusions that prohibit the use of our vessels in unlawful and/or sanctions-triggering trade with Iran, or requesting our prior confirmation, not to be unreasonably withheld. Therefore, should any vessel be instructed by her time charterers to call in Iran and our confirmation is required, we ask our charterers to provide clear evidence that neither the transportation, loading nor discharge of the cargo, nor the parties involved, will result in or be subject to any sanctions, respectively. Furthermore, we provide this information to the vessel’s Protection & Indemnity Association (“P&I Association”), a third party liability insurer, asking for legal and/or expert advice. (https://www.sec.gov/Archives/edgar/data/1322587/000114420413048769/v344642_20f.htm)

According to its Annual report filed with the SEC for fiscal year 2014 and 2015: "During 2014 and up to February 2015, the Newlead Victoria, which is chartered on a long-term charter signed in 2012, was instructed by her time charterers, who are disponent owners, to call at a port in Iran twice. In all cases, based on the information provided by the charterers, we conducted the relevant due diligence in cooperation with the vessel’s War Risk Association in order to confirm that the loading, discharge and transportation of the cargo and the parties involved would not result in, or would not be subject to, any sanctions, respectively. Following this review and after the vessel was insured by the War Association, on October 27, 2014 the Newlead Victoria arrived at Iran’s Bandar Imam Khomeini (BIK) port to discharge a cargo of about 66,000 MT of wheat in bulk which was loaded from Kavkaz, and departed on November 16, 2014. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, were subject to any sanctions while the revenue was $12,000 per day gross or $11,700 per day net for 20 days that the discharge operations took place. Furthermore, on January 25, 2015, this same vessel called Bandar Imam Khomeini (BIK) to discharge a cargo of about 62,100 MT of wheat which had been loaded at the port of Paranagua, Brazil and she departed on February 12, 2015. Neither the loading, discharge nor transportation of the cargo, nor the parties involved, were subject to any sanctions. The vessel’s revenues from this operation were $13,050 gross or $12,723.75 per day net for 18 days. During 2013 also, Newlead Markela was instructed by her time charterers to call Iran twice and Sudan once. In all cases, after the time charterers instructed the vessel to call Iran and Sudan, we asked them to provide us with all necessary information regarding the ports of call, cargo and parties involved, in order to conduct the relevant due diligence. Furthermore, we presented all relevant information to our War Risks Association (in the form of a standard questionnaire), who, after reviewing the facts, insured the vessel for the proposed voyages. Furthermore, In the future our charterers may instruct the vessel to call Iran, or another country which is subject to sanctions, however in any case subject to our prior due diligence and approval." (https://www.sec.gov/Archives/edgar/data/1322587/000143774915010190/newl20141231_20f.htm)

Despite the fact that we avoid any sanctioned activity with Iran and all other countries which are subject to sanctions, there is nevertheless some risk that the charter parties may engage in activity that could (indirectly) cause us to violate applicable law, expose us to sanctions under CISADA and any similar laws, and, as a consequence, cause reputational and other damage that could have a material adverse impact on our business and operations. 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 invest in us. Additionally, some investors may decide not to invest in our company simply because we do business with companies that do business in sanctioned countries. The determination by these investors not to invest in, or to divest from, our common shares may adversely affect the price at which our common shares trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of our common stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries."

Where trade exclusions with respect to Iran do not exist in our charter parties, we affirmatively notify charterers of our vessels that they themselves could face sanctions if they use our vessels in sanctions triggering trade with Iran.

According to its Annual report filed with the SEC in 2016: "During 2014 and up to February 2015, the MV Newlead Victoria (the “Newlead Victoria”), which was chartered on a long-term charter signed on December 18, 2012 and redelivered to us on December 23, 2015, was instructed by her time charterers, who are disponent owners, to call at a port in Iran twice. In all cases, based on the information provided by the charterers, we conducted the relevant due diligence in cooperation with the vessel’s War Risk Association in order to confirm that the loading, discharging and transportation of the cargo and the parties involved would not result in, or would not be subject to, any sanctions, respectively. Following this review and after the vessel was insured by the War Association, on October 27, 2014 the Newlead Victoria arrived at Iran’s Bandar Imam Khomeini (BIK) port to discharge a cargo of about 66,000 MT of wheat in bulk which was loaded from Kavkaz, and departed on November 16, 2014. Neither the loading and discharging nor transportation of the cargo, nor the parties involved, were subject to any sanctions while the revenue was $12,000 per day gross or $11,700 per day net for 20 days that the discharge operations took place. Furthermore, on January 25, 2015, this same vessel called Bandar Imam Khomeini (BIK) to discharge a cargo of about 62,100 MT of wheat which had been loaded at the port of Paranagua, Brazil and she departed on February 12, 2015. Neither the loading and discharging nor transportation of the cargo, nor the parties involved, were subject to any sanctions. The vessel’s revenues from this operation were $13,050 gross or $12,723.75 per day net for 18 days. During 2013 also, MV Newlead Markela (Newlead Markela”) was instructed by her time charterers to call Iran twice and Sudan once. In all cases, after the time charterers instructed the vessel to call Iran and Sudan, we asked them to provide us with all necessary information regarding the ports of call, cargo and parties involved, in order to conduct the relevant due diligence. Furthermore, we presented all relevant information to our War Risks Association (in the form of a standard questionnaire), who, after reviewing the facts, insured the vessel for the proposed voyages. Furthermore, In the future our charterers may instruct the vessel to call Iran, or another country which is subject to sanctions, subject to our prior due diligence and approval." (https://www.sec.gov/Archives/edgar/data/1322587/000143774916032788/newl20151231_20f.htm)

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