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CALDERWOOD & HARKNESS LLP 25 Finsbury Square London EC2A 1DU United Kingdom

October 5, 2022

Mr. Spyros Makris Partner — Indirect Tax & Customs Valuation Practice Kestrel & Palladian LLP 8 Voukourestiou Street 106 71 Athens, Greece

Re: Engagement as Customs Valuation Advisor — Thalassa Shipping & Logistics SA C&H Matter No.: C&H-2022-ITS-04781

Dear Mr. Makris,

Calderwood & Harkness LLP ("C&H") represents Thalassa Shipping & Logistics SA ("TSL"), a Greek shipping and logistics company headquartered at 47 Akti Miaouli, 185 35 Piraeus, Greece. As you are aware, TSL is currently engaged in a customs valuation dispute with the Independent Authority for Public Revenue of the Hellenic Republic (Ανεξάρτητη Αρχή Δημοσίων Εσόδων, "AADE"). We write to confirm the engagement of Kestrel & Palladian LLP ("K&P") to provide customs valuation advisory services in connection with this matter. Specifically, the engagement will support TSL's defense against Additional Duty Assessment Notice AADE/ADAN/2022/0074 (Valuation), dated August 12, 2022, which was issued in connection with post-clearance audit file AADE/DTE/2022/PIR-04518. The terms and conditions of this engagement are set forth below.

1. Background

AADE has issued a valuation adjustment totaling €9,940,000 to the customs value of marine cargo-handling equipment imported by TSL from Hailong Heavy Industries Co., Ltd. (People's Republic of China) during the period from 2019 through 2022. The total declared CIF customs value across four purchase contracts was €98,000,000. The equipment procured under these contracts comprises the following:

(i) Ship-to-Shore ("STS") gantry cranes — 12 units, at a declared aggregate CIF customs value of €38,400,000;

(ii) Rubber-Tired Gantry ("RTG") cranes — 18 units, at a declared aggregate CIF customs value of €25,200,000;

(iii) Automated Stacking Crane ("ASC") systems — 8 units, at a declared aggregate CIF customs value of €28,800,000; and

(iv) A bundled spares, software, and commissioning contract — at a declared aggregate CIF customs value of €5,600,000.

All of the foregoing equipment was manufactured by Hailong Heavy Industries Co., Ltd., located at No. 288 Gangkou Road, Zhenhai District, Ningbo, Zhejiang Province 315200, People's Republic of China (Unified Social Credit Code: 91330211MA2GR8KT5X) (hereinafter "Hailong").

The €9,940,000 valuation adjustment issued by AADE is based on three discrete grounds, each of which is summarized below.

(a) Royalty/License Fee Addition — €4,900,000

AADE contends that technology license fees paid by TSL to Hailong under a Technology License Agreement dated January 10, 2019 (the "TLA") should be added to the customs value of the imported equipment under Article 71(1)(c) of the Union Customs Code (Regulation (EU) No. 952/2013) (the "UCC"). AADE has characterized these fees as royalties "related to the goods" being valued and paid as a "condition of sale" of those goods. The disputed fee was calculated as 5% of the aggregate equipment purchase price (5% × €98,000,000 = €4,900,000) and was paid by TSL in three installments: €1,960,000 in March 2019, €1,470,000 in July 2020, and €1,470,000 in March 2022. The TLA covers Hailong's proprietary HaiControl Suite v4.2 crane control software, predictive maintenance algorithms, and associated technical documentation. It is TSL's position, which K&P will be asked to evaluate, that a substantial portion of the TLA payments relates to post-importation services — including software updates, ongoing technical support, training, and documentation access over a ten-year term — that are not properly includable in the customs value.

(b) Procurement Coordination Fee Addition — €2,940,000

AADE further contends that a "procurement coordination fee" paid by TSL to Nereus Maritime Advisory Limited ("Nereus"), a Cyprus-registered entity (Company No. HE 387214, registered at 12 Griva Digeni Avenue, Office 302, 3106 Limassol, Cyprus), should be added to the customs value of the imported equipment. Nereus is 40% owned by Andreadis Family Holdings LLC ("AFH"), which in turn holds 62% of TSL's equity through Mr. Nikolaos Andreadis, TSL's Chairman and Chief Executive Officer. The remaining 60% of Nereus's ownership is held as follows: 30% by Mr. Konstantinos Melas, Managing Director of Nereus and a former sales agent of Hailong, and 30% by Ms. Eleni Andreadis, daughter of Mr. Nikolaos Andreadis and a non-executive director of Nereus.

AADE argues that the procurement coordination fee is not a genuine buying commission deductible from the customs value under Article 72(a) UCC but rather constitutes a selling commission or procurement markup that is properly includable in the transaction value under Article 71(1)(a)(i) UCC. The disputed fee was calculated as 3% of the aggregate equipment purchase price (3% × €98,000,000 = €2,940,000). The ownership structure of Nereus, and in particular the dual relationships of its principals with both TSL and Hailong, is central to AADE's position on this issue.

Finally, AADE contends that commissioning and installation services included in Contract HHI-TSL-2021-004 (dated February 28, 2021) should be added to the customs value of the base equipment under Article 71(1)(b) UCC as a "condition of sale" cost. The €5,600,000 bundled contract encompasses three components: spare parts valued at €2,100,000, proprietary control software valued at €1,400,000, and commissioning/installation services valued at €2,100,000. AADE's position is that the commissioning and installation services were inextricably linked to the equipment purchase contracts and therefore form part of the transaction value of the imported goods.

Additional Duty Arising from the Valuation Adjustment

The additional customs duty arising from the valuation adjustment, calculated at the disputed 2.2% duty rate, amounts to €218,680 (i.e., €9,940,000 × 2.2%). It should be noted, however, that this duty amount is contingent upon the outcome of the parallel classification dispute addressed in Additional Duty Assessment Notice AADE/ADAN/2022/0073 (Classification). If the equipment remains classified under Combined Nomenclature subheading 8426 41 00 — which carries a 0% duty rate — the valuation adjustment, while potentially relevant for VAT purposes and as a matter of principle, would have no direct additional customs duty impact. The interrelationship between the classification and valuation disputes underscores the importance of coordination between K&P's valuation work and the classification analysis being conducted by other advisors retained in this matter.

2. Scope of Engagement

K&P is retained to provide the following customs valuation advisory services in connection with the dispute described above:

(a) Customs Valuation Report

K&P will prepare a detailed Customs Valuation Report containing a comprehensive economic and legal analysis of TSL's declared transaction values for the imported equipment. The Report shall address each of the three valuation adjustments asserted by AADE, as described in Section 1 above. K&P shall opine on whether TSL's declared customs values are consistent with the transaction value method under Article 70 UCC and the applicable additions and deductions prescribed under Articles 71 and 72 UCC. In conducting its analysis, K&P shall have regard to the provisions of UCC Implementing Regulation (EU) 2015/2447, and in particular Articles 127 through 144 thereof, which set forth the detailed rules for the determination of customs value.

(b) Buying Commission Analysis

K&P will prepare a thorough economic analysis of the Nereus procurement coordination fee, including a Functions-performed, Assets-used, and Risks-assumed ("FAR") analysis of Nereus in connection with the equipment procurement. The purpose of this analysis is to determine whether the fee paid to Nereus meets the criteria for a deductible buying commission under Article 72(a) UCC and Article 127(1) of UCC Implementing Regulation 2015/2447, or whether it is more properly characterized as a selling commission or procurement markup includable in the customs value. In preparing this analysis, K&P shall consider the criteria articulated by the WCO Technical Committee on Customs Valuation in Commentary 17.1, which provides guidance on distinguishing buying commissions from selling commissions. K&P shall specifically address the related-party ownership structure of Nereus and its implications for the buying commission characterization, including an assessment of the extent to which the Andreadis family's control of both TSL and Nereus, and Mr. Konstantinos Melas's background as a former Hailong sales agent, bear on the independence analysis relevant to the commission's characterization.

K&P will prepare a detailed analysis of the payments made under the Hailong Technology License Agreement. In conducting this analysis, K&P shall apply the WCO Technical Committee on Customs Valuation's advisory opinions and commentaries on royalties and license fees, including, without limitation, Advisory Opinion 4.9 and Commentary 25.1, as well as any other relevant guidance. K&P shall determine whether the TLA payments are "related to the goods being valued" and paid as a "condition of sale" within the meaning of Article 71(1)(c) UCC. K&P shall also consider and, where appropriate, develop an apportionment methodology to distinguish pre-importation components of the TLA payments (including the right to use pre-installed HaiControl Suite v4.2 software and related algorithms at the time of importation) from post-importation service components (including software updates, ongoing technical support, training, and documentation access provided over the ten-year term of the TLA). In doing so, K&P shall have regard to Articles 136 and 137 of UCC Implementing Regulation 2015/2447.

(d) Transfer Pricing Cross-Reference

K&P will review whether the related-party aspects of the Nereus transactions affect the acceptability of the transaction value under Article 70(3)(d) UCC, which provides a framework for analyzing whether the relationship between the buyer and the seller has influenced the price. K&P shall cross-reference any existing transfer pricing documentation prepared for the Nereus arrangement, to the extent such documentation is available, and shall evaluate its relevance to the customs valuation analysis. In particular, K&P shall consider whether Nereus's dual relationships — buyer-side through the AFH/Andreadis family ownership of both TSL and Nereus, and seller-side through Mr. Melas's former role as a Hailong sales agent — create additional transfer pricing concerns that may affect the customs valuation analysis or the credibility of the buying commission characterization.

(e) Supporting Documentation

K&P will provide assistance in assembling supporting documentation for submission to AADE in connection with the administrative review of the valuation adjustment and, if necessary, for submission to the Administrative Court of First Instance of Piraeus in the event that judicial proceedings are initiated. Such supporting documentation shall include, without limitation, cost-breakdown analyses, comparable transaction data, and economic evidence relevant to the valuation issues in dispute. K&P shall also prepare a market-benchmarking analysis for the post-importation service components of the TLA, which will be used to support any apportionment methodology applied to the technology license fee payments.

3. Conflict Acknowledgment — Dual Role as Statutory Auditor

C&H acknowledges that K&P currently serves as the statutory auditor of TSL. We further note that Ms. Elena Papadimitriou, TSL's Chief Financial Officer, formerly served as an audit manager at K&P prior to joining TSL in 2015. K&P has confirmed to C&H that the provision of customs valuation advisory services as contemplated by this engagement does not create an independence impairment under applicable Greek auditing standards, including Law 4449/2017, as amended, or under the International Ethics Standards Board for Accountants (IESBA) Code of Ethics, as adopted and applicable in Greece. K&P's determination is based on the rationale that this engagement involves the analysis of a factual legal dispute concerning the customs valuation treatment of specific import transactions, rather than the preparation of financial statements, the exercise of management judgment, or the assumption of any management function on behalf of TSL.

To ensure the integrity of both the statutory audit and the advisory engagement, K&P will maintain appropriate internal safeguards, including the use of separate engagement teams for audit and advisory work. The advisory engagement team will be led by you, Spyros Makris, in your capacity as Partner in the Indirect Tax & Customs Valuation Practice, and will be functionally separate from the statutory audit team responsible for the TSL audit engagement. K&P has confirmed that appropriate information barriers are in place to prevent the flow of engagement-specific information between the advisory and audit teams, except as may be required in the normal course of the statutory audit and in compliance with applicable professional standards.

4. Deliverables and Timeline

K&P shall prepare and deliver the following work product in accordance with the target dates set forth below:

The foregoing timelines are indicative and may be adjusted by mutual agreement between K&P and C&H as the matter develops, including in response to developments in the administrative proceedings, additional information requests from AADE, or the availability of documents and interview access. All deliverables prepared by K&P shall be subject to review and comment by C&H prior to finalization. K&P shall coordinate with the C&H engagement team throughout the engagement, and in particular with Garrett Simmons (Associate, Tax Group) for day-to-day coordination and Christy Bauer (Senior Associate, IP Group) with respect to classification-related aspects of the matter that bear on the customs valuation analysis.

5. Fee Arrangements

Hourly Rates. K&P shall bill for its services at the following hourly rates:

The foregoing rates are effective as of the date of this letter and shall remain in effect for the duration of the initial engagement through delivery of the final Customs Valuation Report. Any changes to the applicable hourly rates will be communicated to C&H and TSL in advance and in writing.

Invoicing. K&P will invoice TSL directly on a monthly basis. All invoices shall include reasonable detail regarding the nature of the services performed, the timekeepers involved, and the hours expended. Invoices shall be sent to:

Ms. Elena Papadimitriou Chief Financial Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece

Copies of all invoices shall be sent simultaneously to Garrett Simmons, Calderwood & Harkness LLP, at garrett.simmons@calderwoodharkness.com.

Fee Estimate. Total fees for the initial engagement — through delivery of the final Customs Valuation Report and excluding any testimony, expert witness preparation, settlement negotiations, or court proceedings — are estimated at €60,000 to €90,000. This estimate is provided for budgeting purposes only and does not constitute a fee cap or a fixed-fee arrangement. K&P will endeavor to keep C&H apprised of any material developments that may cause fees to exceed the estimated range. Additional fees may be incurred if the engagement scope expands, including, without limitation, in the event of additional AADE information requests, the initiation of settlement negotiations, or the commencement of proceedings before the Administrative Court of First Instance of Piraeus.

Expenses. Reasonable out-of-pocket expenses, including travel, document reproduction, and translation costs, will be billed at cost without markup. K&P will seek prior approval from C&H for any individual expense item exceeding €2,500.

6. Information Requirements

In order to perform the services described in Section 2 above, K&P will require access to the following documents and information from TSL. All document production shall be coordinated through C&H to preserve applicable privilege protections:

(a) All four Hailong purchase contracts, including all annexes, schedules, and amendments thereto: Contract HHI-TSL-2019-001, Contract HHI-TSL-2019-002, Contract HHI-TSL-2020-003, and Contract HHI-TSL-2021-004;

(b) The Technology License Agreement dated January 10, 2019, together with all related correspondence, invoices, and payment records;

(c) The Nereus Maritime Advisory Ltd. Procurement Services Agreement dated December 1, 2018, together with all related documentation of services performed, invoices, and payment records;

(d) Nereus corporate documents, including the extract from the Cyprus Registrar of Companies and current shareholder information;

(e) All forty-seven (47) Single Administrative Documents (SADs) filed by Peloros Customs Agency S.A. (EORI: GR801234567000) in connection with the importation of the equipment;

(f) All correspondence and workpapers from the AADE post-clearance audit file (reference AADE/DTE/2022/PIR-04518);

(g) AADE Additional Duty Assessment Notice AADE/ADAN/2022/0074 (Valuation), dated August 12, 2022, together with all supporting documentation provided by AADE;

(h) Hailong cost-breakdown data and internal pricing documentation, to the extent obtainable through TSL or directly from Hailong via Mr. Wei Junhao, Export Sales Director;

(i) TSL internal records regarding the commercial rationale for the TLA and the Nereus engagement, including any internal memoranda, presentations, or correspondence;

(j) TSL board minutes relating to the approval of the TLA and the Nereus engagement;

(k) Commissioning service records under Contract HHI-TSL-2021-004, including the scope of work, completion certificates, engineer dispatch records, and any related correspondence; and

(l) Any correspondence between TSL and AADE regarding the valuation dispute, including any responses already filed or in preparation.

In addition, K&P personnel may need to conduct interviews with TSL personnel, including the following individuals:

(i) Mr. Dimitrios Sarantopoulos, Vice President — Procurement & Supply Chain, regarding the procurement process, the selection of Nereus as procurement coordinator, and the nature and extent of services Nereus performed;

(ii) Ms. Elena Papadimitriou, Chief Financial Officer, regarding the financial and accounting treatment of the disputed payments, including the TLA payments and the Nereus procurement coordination fee; and

(iii) Mr. Konstantinos Melas, Managing Director of Nereus, regarding the specific services Nereus performed in connection with the equipment procurement.

Any interview of Mr. Melas shall be coordinated with C&H in advance, given the sensitive nature of his dual relationships with TSL, Nereus, and Hailong.

7. Privilege and Confidentiality

K&P is engaged at the direction of counsel — Calderwood & Harkness LLP — for the purpose of providing expert advisory services in connection with pending and anticipated administrative and judicial proceedings. All communications between K&P, C&H, and TSL relating to this engagement, including oral and written communications, draft analyses, working papers, memoranda, and reports, shall be treated as confidential and, to the fullest extent permitted by applicable law, as protected by attorney-client privilege, legal professional privilege, and/or the work-product doctrine.

Draft analyses, working papers, and reports shared by K&P with C&H prior to finalization shall be treated as attorney work product prepared in anticipation of litigation and shall not be disclosed to any third party without C&H's prior written consent. K&P shall not disclose any information received in connection with this engagement — including, without limitation, documents, data, interview notes, analyses, or conclusions — to any third party without C&H's prior written consent. This obligation of confidentiality survives the termination or expiration of this engagement.

K&P acknowledges that its concurrent role as TSL's statutory auditor requires separate and distinct treatment of information received in the audit capacity as compared to information received in the advisory capacity under this engagement. The information barriers described in Section 3 above between the advisory and audit engagement teams will ensure appropriate separation of information and protect the confidentiality of communications arising from this engagement.

8. Independence

K&P confirms that, subject to the disclosed dual role as TSL's statutory auditor (as addressed in Section 3 above), it is independent of Hailong Heavy Industries Co., Ltd., AADE, Meridian & Drakos Dikigiriko Grafeio (AADE's external legal advisors in connection with this matter), Nereus Maritime Advisory Limited, Andreadis Family Holdings LLC, and all other adverse or interested parties to this matter. K&P's opinions and analyses rendered in connection with this engagement will be based on its independent professional judgment, applicable legal standards (including the provisions of the UCC and its implementing regulations), applicable economic standards, and the guidance issued by the WCO Technical Committee on Customs Valuation. K&P will promptly notify C&H if any circumstances arise during the course of this engagement that could reasonably be perceived as affecting its independence.

9. Coordination with Other Advisors

K&P will, as necessary and appropriate, coordinate its work with other advisors retained by C&H and TSL in connection with the customs dispute. The advisors with whom coordination may be required include the following:

(a) Argonaut Trade Consulting GmbH (Dr. Lukas Brenner, Managing Director) — an independent customs classification expert retained by C&H to address the classification dispute under Additional Duty Assessment Notice AADE/ADAN/2022/0073. K&P's customs valuation work may intersect with Argonaut's classification analysis at several points, particularly on the question of whether the reclassified duty rate of 2.2% applies to the valuation adjustments, and on the treatment of the bundled spares/software/commissioning contract for classification versus valuation purposes.

(b) Vournas & Theodorakis Dikigiriko Grafeio (Mr. Alexandros Vournas, Managing Partner; Ms. Maria-Christina Georgiou, Associate) — local Greek counsel retained to handle administrative filings before AADE, including any formal objection (ενδικοφανής προσφυγή) and related submissions.

All coordination between K&P and the other advisors shall be channeled through C&H in order to preserve the applicable privilege protections described in Section 7 above.

10. Termination

Either C&H (on behalf of TSL) or K&P may terminate this engagement upon fifteen (15) days' prior written notice to the other party. In the event of termination, K&P will be compensated for all work performed and expenses incurred through the effective date of termination, in accordance with the fee arrangements set forth in Section 5 above. Upon termination, K&P will promptly deliver to C&H all work product, in both final and draft form, prepared in connection with the engagement, including all analyses, memoranda, reports, and supporting documentation. K&P's obligations under Sections 7 and 8 of this letter shall survive any termination.

11. Primary Contacts

The primary contacts at C&H for this engagement are as follows:

Garrett Simmons, Associate, Tax Group

Email: garrett.simmons@calderwoodharkness.com

Day-to-day coordination of the engagement

Christy Bauer, Senior Associate, IP Group

Email: christy.bauer@calderwoodharkness.com

Classification-related aspects bearing on customs valuation

James Prentice, Partner

Email: james.prentice@calderwoodharkness.com

Responsible partner; to be copied on all substantive communications

K&P is requested to copy Mr. Prentice on all substantive correspondence, deliverables, and communications relating to this engagement.

Please countersign and return a copy of this letter to confirm K&P's acceptance of the terms of this engagement as set forth herein. We look forward to working with you and your team on this matter.

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Garrett Simmons

Title: Associate, Tax Group

(On behalf of and with the authorization of James Prentice, Partner)

ACCEPTED AND AGREED

KESTREL & PALLADIAN LLP

By: ________

Name: Spyros Makris

Title: Partner — Indirect Tax & Customs Valuation Practice

Date: October 11, 2022

Deliverable	Target Date
Preliminary valuation analysis (draft memorandum)	December 1, 2022
Buying commission / FAR analysis	December 15, 2022
Draft Customs Valuation Report	January 31, 2023
Final Customs Valuation Report (following C&H review and comment)	February 28, 2023
Timekeeper	Rate (€/hr)
Spyros Makris (Partner)	€420
Senior Manager	€290
Manager / Senior Associate	€220
Analyst / Associate	€160

CALDERWOOD & HARKNESS LLP 25 Finsbury Square London EC2A 1DU United Kingdom
October 5, 2022
Mr. Spyros Makris Partner — Indirect Tax & Customs Valuation Practice Kestrel & Palladian LLP 8 Voukourestiou Street 106 71 Athens, Greece
Re: Engagement as Customs Valuation Advisor — Thalassa Shipping & Logistics SA C&H Matter No.: C&H-2022-ITS-04781
Dear Mr. Makris,
Calderwood & Harkness LLP ("C&H") represents Thalassa Shipping & Logistics SA ("TSL"), a Greek shipping and logistics company headquartered at 47 Akti Miaouli, 185 35 Piraeus, Greece. As you are aware, TSL is currently engaged in a customs valuation dispute with the Independent Authority for Public Revenue of the Hellenic Republic (Ανεξάρτητη Αρχή Δημοσίων Εσόδων, "AADE"). We write to confirm the engagement of Kestrel & Palladian LLP ("K&P") to provide customs valuation advisory services in connection with this matter. Specifically, the engagement will support TSL's defense against Additional Duty Assessment Notice AADE/ADAN/2022/0074 (Valuation), dated August 12, 2022, which was issued in connection with post-clearance audit file AADE/DTE/2022/PIR-04518. The terms and conditions of this engagement are set forth below.
1. Background
AADE has issued a valuation adjustment totaling €9,940,000 to the customs value of marine cargo-handling equipment imported by TSL from Hailong Heavy Industries Co., Ltd. (People's Republic of China) during the period from 2019 through 2022. The total declared CIF customs value across four purchase contracts was €98,000,000. The equipment procured under these contracts comprises the following:
(i) Ship-to-Shore ("STS") gantry cranes — 12 units, at a declared aggregate CIF customs value of €38,400,000;
(ii) Rubber-Tired Gantry ("RTG") cranes — 18 units, at a declared aggregate CIF customs value of €25,200,000;
(iii) Automated Stacking Crane ("ASC") systems — 8 units, at a declared aggregate CIF customs value of €28,800,000; and
(iv) A bundled spares, software, and commissioning contract — at a declared aggregate CIF customs value of €5,600,000.
All of the foregoing equipment was manufactured by Hailong Heavy Industries Co., Ltd., located at No. 288 Gangkou Road, Zhenhai District, Ningbo, Zhejiang Province 315200, People's Republic of China (Unified Social Credit Code: 91330211MA2GR8KT5X) (hereinafter "Hailong").
The €9,940,000 valuation adjustment issued by AADE is based on three discrete grounds, each of which is summarized below.
(a) Royalty/License Fee Addition — €4,900,000
AADE contends that technology license fees paid by TSL to Hailong under a Technology License Agreement dated January 10, 2019 (the "TLA") should be added to the customs value of the imported equipment under Article 71(1)(c) of the Union Customs Code (Regulation (EU) No. 952/2013) (the "UCC"). AADE has characterized these fees as royalties "related to the goods" being valued and paid as a "condition of sale" of those goods. The disputed fee was calculated as 5% of the aggregate equipment purchase price (5% × €98,000,000 = €4,900,000) and was paid by TSL in three installments: €1,960,000 in March 2019, €1,470,000 in July 2020, and €1,470,000 in March 2022. The TLA covers Hailong's proprietary HaiControl Suite v4.2 crane control software, predictive maintenance algorithms, and associated technical documentation. It is TSL's position, which K&P will be asked to evaluate, that a substantial portion of the TLA payments relates to post-importation services — including software updates, ongoing technical support, training, and documentation access over a ten-year term — that are not properly includable in the customs value.
(b) Procurement Coordination Fee Addition — €2,940,000
AADE further contends that a "procurement coordination fee" paid by TSL to Nereus Maritime Advisory Limited ("Nereus"), a Cyprus-registered entity (Company No. HE 387214, registered at 12 Griva Digeni Avenue, Office 302, 3106 Limassol, Cyprus), should be added to the customs value of the imported equipment. Nereus is 40% owned by Andreadis Family Holdings LLC ("AFH"), which in turn holds 62% of TSL's equity through Mr. Nikolaos Andreadis, TSL's Chairman and Chief Executive Officer. The remaining 60% of Nereus's ownership is held as follows: 30% by Mr. Konstantinos Melas, Managing Director of Nereus and a former sales agent of Hailong, and 30% by Ms. Eleni Andreadis, daughter of Mr. Nikolaos Andreadis and a non-executive director of Nereus.
AADE argues that the procurement coordination fee is not a genuine buying commission deductible from the customs value under Article 72(a) UCC but rather constitutes a selling commission or procurement markup that is properly includable in the transaction value under Article 71(1)(a)(i) UCC. The disputed fee was calculated as 3% of the aggregate equipment purchase price (3% × €98,000,000 = €2,940,000). The ownership structure of Nereus, and in particular the dual relationships of its principals with both TSL and Hailong, is central to AADE's position on this issue.
(c) Commissioning Services Addition — €2,100,000
Finally, AADE contends that commissioning and installation services included in Contract HHI-TSL-2021-004 (dated February 28, 2021) should be added to the customs value of the base equipment under Article 71(1)(b) UCC as a "condition of sale" cost. The €5,600,000 bundled contract encompasses three components: spare parts valued at €2,100,000, proprietary control software valued at €1,400,000, and commissioning/installation services valued at €2,100,000. AADE's position is that the commissioning and installation services were inextricably linked to the equipment purchase contracts and therefore form part of the transaction value of the imported goods.
Additional Duty Arising from the Valuation Adjustment
The additional customs duty arising from the valuation adjustment, calculated at the disputed 2.2% duty rate, amounts to €218,680 (i.e., €9,940,000 × 2.2%). It should be noted, however, that this duty amount is contingent upon the outcome of the parallel classification dispute addressed in Additional Duty Assessment Notice AADE/ADAN/2022/0073 (Classification). If the equipment remains classified under Combined Nomenclature subheading 8426 41 00 — which carries a 0% duty rate — the valuation adjustment, while potentially relevant for VAT purposes and as a matter of principle, would have no direct additional customs duty impact. The interrelationship between the classification and valuation disputes underscores the importance of coordination between K&P's valuation work and the classification analysis being conducted by other advisors retained in this matter.
2. Scope of Engagement
K&P is retained to provide the following customs valuation advisory services in connection with the dispute described above:
(a) Customs Valuation Report
K&P will prepare a detailed Customs Valuation Report containing a comprehensive economic and legal analysis of TSL's declared transaction values for the imported equipment. The Report shall address each of the three valuation adjustments asserted by AADE, as described in Section 1 above. K&P shall opine on whether TSL's declared customs values are consistent with the transaction value method under Article 70 UCC and the applicable additions and deductions prescribed under Articles 71 and 72 UCC. In conducting its analysis, K&P shall have regard to the provisions of UCC Implementing Regulation (EU) 2015/2447, and in particular Articles 127 through 144 thereof, which set forth the detailed rules for the determination of customs value.
(b) Buying Commission Analysis
K&P will prepare a thorough economic analysis of the Nereus procurement coordination fee, including a Functions-performed, Assets-used, and Risks-assumed ("FAR") analysis of Nereus in connection with the equipment procurement. The purpose of this analysis is to determine whether the fee paid to Nereus meets the criteria for a deductible buying commission under Article 72(a) UCC and Article 127(1) of UCC Implementing Regulation 2015/2447, or whether it is more properly characterized as a selling commission or procurement markup includable in the customs value. In preparing this analysis, K&P shall consider the criteria articulated by the WCO Technical Committee on Customs Valuation in Commentary 17.1, which provides guidance on distinguishing buying commissions from selling commissions. K&P shall specifically address the related-party ownership structure of Nereus and its implications for the buying commission characterization, including an assessment of the extent to which the Andreadis family's control of both TSL and Nereus, and Mr. Konstantinos Melas's background as a former Hailong sales agent, bear on the independence analysis relevant to the commission's characterization.
(c) Royalty Analysis
K&P will prepare a detailed analysis of the payments made under the Hailong Technology License Agreement. In conducting this analysis, K&P shall apply the WCO Technical Committee on Customs Valuation's advisory opinions and commentaries on royalties and license fees, including, without limitation, Advisory Opinion 4.9 and Commentary 25.1, as well as any other relevant guidance. K&P shall determine whether the TLA payments are "related to the goods being valued" and paid as a "condition of sale" within the meaning of Article 71(1)(c) UCC. K&P shall also consider and, where appropriate, develop an apportionment methodology to distinguish pre-importation components of the TLA payments (including the right to use pre-installed HaiControl Suite v4.2 software and related algorithms at the time of importation) from post-importation service components (including software updates, ongoing technical support, training, and documentation access provided over the ten-year term of the TLA). In doing so, K&P shall have regard to Articles 136 and 137 of UCC Implementing Regulation 2015/2447.
(d) Transfer Pricing Cross-Reference
K&P will review whether the related-party aspects of the Nereus transactions affect the acceptability of the transaction value under Article 70(3)(d) UCC, which provides a framework for analyzing whether the relationship between the buyer and the seller has influenced the price. K&P shall cross-reference any existing transfer pricing documentation prepared for the Nereus arrangement, to the extent such documentation is available, and shall evaluate its relevance to the customs valuation analysis. In particular, K&P shall consider whether Nereus's dual relationships — buyer-side through the AFH/Andreadis family ownership of both TSL and Nereus, and seller-side through Mr. Melas's former role as a Hailong sales agent — create additional transfer pricing concerns that may affect the customs valuation analysis or the credibility of the buying commission characterization.
(e) Supporting Documentation
K&P will provide assistance in assembling supporting documentation for submission to AADE in connection with the administrative review of the valuation adjustment and, if necessary, for submission to the Administrative Court of First Instance of Piraeus in the event that judicial proceedings are initiated. Such supporting documentation shall include, without limitation, cost-breakdown analyses, comparable transaction data, and economic evidence relevant to the valuation issues in dispute. K&P shall also prepare a market-benchmarking analysis for the post-importation service components of the TLA, which will be used to support any apportionment methodology applied to the technology license fee payments.
3. Conflict Acknowledgment — Dual Role as Statutory Auditor
C&H acknowledges that K&P currently serves as the statutory auditor of TSL. We further note that Ms. Elena Papadimitriou, TSL's Chief Financial Officer, formerly served as an audit manager at K&P prior to joining TSL in 2015. K&P has confirmed to C&H that the provision of customs valuation advisory services as contemplated by this engagement does not create an independence impairment under applicable Greek auditing standards, including Law 4449/2017, as amended, or under the International Ethics Standards Board for Accountants (IESBA) Code of Ethics, as adopted and applicable in Greece. K&P's determination is based on the rationale that this engagement involves the analysis of a factual legal dispute concerning the customs valuation treatment of specific import transactions, rather than the preparation of financial statements, the exercise of management judgment, or the assumption of any management function on behalf of TSL.
To ensure the integrity of both the statutory audit and the advisory engagement, K&P will maintain appropriate internal safeguards, including the use of separate engagement teams for audit and advisory work. The advisory engagement team will be led by you, Spyros Makris, in your capacity as Partner in the Indirect Tax & Customs Valuation Practice, and will be functionally separate from the statutory audit team responsible for the TSL audit engagement. K&P has confirmed that appropriate information barriers are in place to prevent the flow of engagement-specific information between the advisory and audit teams, except as may be required in the normal course of the statutory audit and in compliance with applicable professional standards.
4. Deliverables and Timeline
K&P shall prepare and deliver the following work product in accordance with the target dates set forth below:
The foregoing timelines are indicative and may be adjusted by mutual agreement between K&P and C&H as the matter develops, including in response to developments in the administrative proceedings, additional information requests from AADE, or the availability of documents and interview access. All deliverables prepared by K&P shall be subject to review and comment by C&H prior to finalization. K&P shall coordinate with the C&H engagement team throughout the engagement, and in particular with Garrett Simmons (Associate, Tax Group) for day-to-day coordination and Christy Bauer (Senior Associate, IP Group) with respect to classification-related aspects of the matter that bear on the customs valuation analysis.
5. Fee Arrangements
Hourly Rates.  K&P shall bill for its services at the following hourly rates:
The foregoing rates are effective as of the date of this letter and shall remain in effect for the duration of the initial engagement through delivery of the final Customs Valuation Report. Any changes to the applicable hourly rates will be communicated to C&H and TSL in advance and in writing.
Invoicing.  K&P will invoice TSL directly on a monthly basis. All invoices shall include reasonable detail regarding the nature of the services performed, the timekeepers involved, and the hours expended. Invoices shall be sent to:
Ms. Elena Papadimitriou Chief Financial Officer Thalassa Shipping & Logistics SA 47 Akti Miaouli 185 35 Piraeus, Greece
Copies of all invoices shall be sent simultaneously to Garrett Simmons, Calderwood & Harkness LLP, at garrett.simmons@calderwoodharkness.com.
Fee Estimate.  Total fees for the initial engagement — through delivery of the final Customs Valuation Report and excluding any testimony, expert witness preparation, settlement negotiations, or court proceedings — are estimated at €60,000 to €90,000. This estimate is provided for budgeting purposes only and does not constitute a fee cap or a fixed-fee arrangement. K&P will endeavor to keep C&H apprised of any material developments that may cause fees to exceed the estimated range. Additional fees may be incurred if the engagement scope expands, including, without limitation, in the event of additional AADE information requests, the initiation of settlement negotiations, or the commencement of proceedings before the Administrative Court of First Instance of Piraeus.
Expenses.  Reasonable out-of-pocket expenses, including travel, document reproduction, and translation costs, will be billed at cost without markup. K&P will seek prior approval from C&H for any individual expense item exceeding €2,500.
6. Information Requirements
In order to perform the services described in Section 2 above, K&P will require access to the following documents and information from TSL. All document production shall be coordinated through C&H to preserve applicable privilege protections:
(a) All four Hailong purchase contracts, including all annexes, schedules, and amendments thereto: Contract HHI-TSL-2019-001, Contract HHI-TSL-2019-002, Contract HHI-TSL-2020-003, and Contract HHI-TSL-2021-004;
(b) The Technology License Agreement dated January 10, 2019, together with all related correspondence, invoices, and payment records;
(c) The Nereus Maritime Advisory Ltd. Procurement Services Agreement dated December 1, 2018, together with all related documentation of services performed, invoices, and payment records;
(d) Nereus corporate documents, including the extract from the Cyprus Registrar of Companies and current shareholder information;
(e) All forty-seven (47) Single Administrative Documents (SADs) filed by Peloros Customs Agency S.A. (EORI: GR801234567000) in connection with the importation of the equipment;
(f) All correspondence and workpapers from the AADE post-clearance audit file (reference AADE/DTE/2022/PIR-04518);
(g) AADE Additional Duty Assessment Notice AADE/ADAN/2022/0074 (Valuation), dated August 12, 2022, together with all supporting documentation provided by AADE;
(h) Hailong cost-breakdown data and internal pricing documentation, to the extent obtainable through TSL or directly from Hailong via Mr. Wei Junhao, Export Sales Director;
(i) TSL internal records regarding the commercial rationale for the TLA and the Nereus engagement, including any internal memoranda, presentations, or correspondence;
(j) TSL board minutes relating to the approval of the TLA and the Nereus engagement;
(k) Commissioning service records under Contract HHI-TSL-2021-004, including the scope of work, completion certificates, engineer dispatch records, and any related correspondence; and
(l) Any correspondence between TSL and AADE regarding the valuation dispute, including any responses already filed or in preparation.
In addition, K&P personnel may need to conduct interviews with TSL personnel, including the following individuals:
(i) Mr. Dimitrios Sarantopoulos, Vice President — Procurement & Supply Chain, regarding the procurement process, the selection of Nereus as procurement coordinator, and the nature and extent of services Nereus performed;
(ii) Ms. Elena Papadimitriou, Chief Financial Officer, regarding the financial and accounting treatment of the disputed payments, including the TLA payments and the Nereus procurement coordination fee; and
(iii) Mr. Konstantinos Melas, Managing Director of Nereus, regarding the specific services Nereus performed in connection with the equipment procurement.
Any interview of Mr. Melas shall be coordinated with C&H in advance, given the sensitive nature of his dual relationships with TSL, Nereus, and Hailong.
7. Privilege and Confidentiality
K&P is engaged at the direction of counsel — Calderwood & Harkness LLP — for the purpose of providing expert advisory services in connection with pending and anticipated administrative and judicial proceedings. All communications between K&P, C&H, and TSL relating to this engagement, including oral and written communications, draft analyses, working papers, memoranda, and reports, shall be treated as confidential and, to the fullest extent permitted by applicable law, as protected by attorney-client privilege, legal professional privilege, and/or the work-product doctrine.
Draft analyses, working papers, and reports shared by K&P with C&H prior to finalization shall be treated as attorney work product prepared in anticipation of litigation and shall not be disclosed to any third party without C&H's prior written consent. K&P shall not disclose any information received in connection with this engagement — including, without limitation, documents, data, interview notes, analyses, or conclusions — to any third party without C&H's prior written consent. This obligation of confidentiality survives the termination or expiration of this engagement.
K&P acknowledges that its concurrent role as TSL's statutory auditor requires separate and distinct treatment of information received in the audit capacity as compared to information received in the advisory capacity under this engagement. The information barriers described in Section 3 above between the advisory and audit engagement teams will ensure appropriate separation of information and protect the confidentiality of communications arising from this engagement.
8. Independence
K&P confirms that, subject to the disclosed dual role as TSL's statutory auditor (as addressed in Section 3 above), it is independent of Hailong Heavy Industries Co., Ltd., AADE, Meridian & Drakos Dikigiriko Grafeio (AADE's external legal advisors in connection with this matter), Nereus Maritime Advisory Limited, Andreadis Family Holdings LLC, and all other adverse or interested parties to this matter. K&P's opinions and analyses rendered in connection with this engagement will be based on its independent professional judgment, applicable legal standards (including the provisions of the UCC and its implementing regulations), applicable economic standards, and the guidance issued by the WCO Technical Committee on Customs Valuation. K&P will promptly notify C&H if any circumstances arise during the course of this engagement that could reasonably be perceived as affecting its independence.
9. Coordination with Other Advisors
K&P will, as necessary and appropriate, coordinate its work with other advisors retained by C&H and TSL in connection with the customs dispute. The advisors with whom coordination may be required include the following:
(a) Argonaut Trade Consulting GmbH (Dr. Lukas Brenner, Managing Director) — an independent customs classification expert retained by C&H to address the classification dispute under Additional Duty Assessment Notice AADE/ADAN/2022/0073. K&P's customs valuation work may intersect with Argonaut's classification analysis at several points, particularly on the question of whether the reclassified duty rate of 2.2% applies to the valuation adjustments, and on the treatment of the bundled spares/software/commissioning contract for classification versus valuation purposes.
(b) Vournas & Theodorakis Dikigiriko Grafeio (Mr. Alexandros Vournas, Managing Partner; Ms. Maria-Christina Georgiou, Associate) — local Greek counsel retained to handle administrative filings before AADE, including any formal objection (ενδικοφανής προσφυγή) and related submissions.
All coordination between K&P and the other advisors shall be channeled through C&H in order to preserve the applicable privilege protections described in Section 7 above.
10. Termination
Either C&H (on behalf of TSL) or K&P may terminate this engagement upon fifteen (15) days' prior written notice to the other party. In the event of termination, K&P will be compensated for all work performed and expenses incurred through the effective date of termination, in accordance with the fee arrangements set forth in Section 5 above. Upon termination, K&P will promptly deliver to C&H all work product, in both final and draft form, prepared in connection with the engagement, including all analyses, memoranda, reports, and supporting documentation. K&P's obligations under Sections 7 and 8 of this letter shall survive any termination.
11. Primary Contacts
The primary contacts at C&H for this engagement are as follows:
Garrett Simmons, Associate, Tax Group
Email: garrett.simmons@calderwoodharkness.com
Day-to-day coordination of the engagement
Christy Bauer, Senior Associate, IP Group
Email: christy.bauer@calderwoodharkness.com
Classification-related aspects bearing on customs valuation
James Prentice, Partner
Email: james.prentice@calderwoodharkness.com
Responsible partner; to be copied on all substantive communications
K&P is requested to copy Mr. Prentice on all substantive correspondence, deliverables, and communications relating to this engagement.
Please countersign and return a copy of this letter to confirm K&P's acceptance of the terms of this engagement as set forth herein. We look forward to working with you and your team on this matter.
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Garrett Simmons
Title: Associate, Tax Group
(On behalf of and with the authorization of James Prentice, Partner)
ACCEPTED AND AGREED
KESTREL & PALLADIAN LLP
By: ________
Name: Spyros Makris
Title: Partner — Indirect Tax & Customs Valuation Practice
Date: October 11, 2022
Deliverable | Target Date
Preliminary valuation analysis (draft memorandum) | December 1, 2022
Buying commission / FAR analysis | December 15, 2022
Draft Customs Valuation Report | January 31, 2023
Final Customs Valuation Report (following C&H review and comment) | February 28, 2023
Timekeeper | Rate (€/hr)
Spyros Makris (Partner) | €420
Senior Manager | €290
Manager / Senior Associate | €220
Analyst / Associate | €160

CALDERWOOD & HARKNESS LLP 25 Finsbury Square London EC2A 1DU United Kingdom

CALDERWOOD & HARKNESS LLP

ACCEPTED AND AGREED

KESTREL & PALLADIAN LLP

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