1044-00006 · Hargrove, Delacroix & Stern LLP · Settlement

internal-memo-northwind-redline-analysis.docx DOCUMENT Litigation

64 / 75 ← → ✕

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Douglas Carmichael, Francesca Morano

FROM: Carlos Espinoza, Hannah Brinkley

DATE: November 13, 2024

RE: Analysis of Northwind's Redline to Settlement Agreement and Mutual General Release — Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023 (Supreme Court of the State of New York, New York County, Commercial Division)

C&H Matter No.: 1044-00006

Right-click to update Table of Contents

I. Executive Summary

On November 12, 2024, Hargrove, Delacroix & Stern LLP ("HD&S"), acting through Margaret Delacroix, Jason Trumbull, and Priya Mehta, transmitted Northwind Maritime Corporation's ("Northwind") redline markup of Greaves & Castellan LLP's first draft of the Settlement Agreement and Mutual General Release (the "Settlement Agreement"), dated November 5, 2024. This memorandum provides a comprehensive analysis of each substantive change proposed by Northwind, together with our recommendations for the preparation of a revised second draft.

The first draft of the Settlement Agreement was prepared by this office to memorialize the terms of the settlement in principle reached on October 29, 2024, following a day-long mediation session before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC in New York. The mediation culminated in the execution by counsel for all parties of a term sheet setting forth the principal terms of the settlement, which has served as the framework for the definitive documentation.

As reflected in the term sheet, the core economic terms of the settlement are as follows:

• Total Settlement Amount: $7,850,000, payable by Thalassa Shipping & Logistics SA ("TSL") and/or Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna") to Northwind in three installments:

• Payment 1: $4,000,000 due within thirty (30) days of the Effective Date;

• Payment 2: $2,000,000 due within ninety (90) days of the Effective Date;

• Payment 3: $1,850,000 due within one hundred fifty (150) days of the Effective Date;

• Escrow: All payments to be deposited into and disbursed through an escrow account at Atlantic Fiduciary Trust Company (Account No. ESC-2024-NYK-08831);

• Funding Sources: $5,350,000 to be paid from TSL corporate funds; $2,500,000 to be contributed by Oceanus Mutual Protection & Indemnity Club ("Oceanus P&I"), subject to Board approval expected on or about November 22, 2024;

• Mutual General Release: Full mutual release of all claims between the parties, including TSL's counterclaim for $1,620,000 in unpaid hire;

• Consent Judgment: Mechanism for entry of a consent judgment in the event of payment default.

This memorandum catalogs each substantive change proposed by Northwind in its redline and categorizes each change into one of three categories:

(A) Acceptable — The proposed change may be accepted as drafted without modification.

(B) Acceptable with Modification — The proposed change is acceptable in concept but requires revisions to protect TSL's interests or to conform the provision to the mediator's term sheet and sound drafting practice.

(C) Reject with Counter-Proposal — The proposed change is unacceptable and must be rejected, with a counter-proposal offered in its place.

Overall Assessment: Northwind's redline contains approximately thirty-seven (37) discrete changes to the first draft. The substantial majority of these changes are minor drafting clarifications, stylistic edits, or conforming changes that do not alter the substance of the agreement. Approximately eight to ten changes are substantive and require careful analysis. No single change constitutes a deal-breaker, but several — particularly those relating to the scope of the release, the interest rate on late payments, escrow release mechanics, and interest accrual on the consent judgment — require thoughtful negotiation and partner-level decision-making. This memorandum addresses twenty-six (26) of the most significant changes and provides recommendations for each.

II. Background

A brief recitation of the relevant background is provided here for context.

The Dispute. This action arises out of a time charter-party executed on December 3, 2020 between Northwind, as charterer, and TSL, as disponent owner, for the M/V Aegean Fortuna (IMO No. 9847231), a Liberian-flag Supramax dry bulk carrier of approximately 58,200 DWT. The vessel is registered in the name of Aegean Fortuna Shipholding Ltd., a Liberian corporation (Registration No. LR-C-20167845) and wholly owned subsidiary of TSL. The charter-party was executed on a NYPE 2015 form, as amended (Ref. No. NW-TSL-CP-2020-1203), for a 36-month time charter commencing January 15, 2021, at a daily hire rate of $14,750.

Northwind's Claims. Following a series of operational disputes beginning in mid-2022 — centering on an alleged deviation from the contractual trading route during a voyage from Richards Bay to Qingdao in August 2022, several extended periods of off-hire due to mechanical failures of the vessel's cargo cranes and ballast water treatment system, and alleged failure to maintain the vessel in an efficient and seaworthy condition — Northwind commenced the above-captioned action on October 3, 2023. Northwind's total claim, as refined through discovery and expert reports, amounts to approximately $18,300,000, broken down across the following categories: off-hire deductions, liquidated damages under the charter-party, substitute charter costs for replacement tonnage, cargo damage claims (including a contribution to General Average declared on Voyage 14), demurrage and dead freight claims asserted by sub-charterer Eastbourne Bulk Carriers Ltd. ("Eastbourne"), additional port charges and bunker costs attributable to the vessel's operational deficiencies, lost sub-charter profit, indemnification obligations for third-party shipper claims, and legal fees and costs.

TSL's Counterclaim. TSL interposed a counterclaim in the amount of $1,620,000 for unpaid hire for the period October 1 through December 31, 2022 — a total of 110 days of hire at $14,750 per day that Northwind withheld as a purported set-off against its off-hire and damage claims. TSL has maintained throughout the litigation that Northwind's withholding of hire was improper and violated the anti-set-off provision in Clause 11(a) of the amended charter-party. As part of the global settlement, TSL's counterclaim is being released in full, bringing the net economic cost to TSL to $6,230,000 ($7,850,000 settlement amount minus $1,620,000 waived counterclaim).

Procedural Posture. The case is assigned to Justice Lorraine K. Chen, J.S.C., Part 49, Commercial Division, Supreme Court of the State of New York, New York County. TSL filed a motion for partial summary judgment on September 20, 2024, addressing two issues: (i) the interpretation of the liquidated damages cap in Clause 26(b) of the charter-party, and (ii) the viability of Northwind's deviation claim under the Carriage of Goods by Sea Act. That motion is currently scheduled for oral argument on December 6, 2024. Upon execution of the Settlement Agreement, the parties have agreed to file a stipulation withdrawing the motion with prejudice and a joint letter to Justice Chen vacating the December 6 conference.

The Mediation. The mediation was conducted on October 29, 2024 before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC in New York. Following a full day of mediation, the parties reached a settlement in principle. A term sheet was signed by Douglas Carmichael on behalf of TSL and Aegean Fortuna, and by Margaret Delacroix on behalf of Northwind. The term sheet sets forth the essential terms of the settlement, including the payment amount, installment schedule, escrow arrangement, mutual general release, consent judgment mechanism, and confidentiality. The term sheet expressly provides that it is binding on the parties and that a definitive Settlement Agreement would be negotiated and executed within thirty (30) days.

III. Detailed Analysis of Northwind's Proposed Changes

A. Recitals and Definitions (Sections 1–2 of Settlement Agreement)

Change 1: Expanded Definition of "Released Claims". Northwind's Proposed Change: Northwind proposes broadening the definition of "Released Claims" in Section 2.14 of the Settlement Agreement. Our first draft defined "Released Claims" as all claims, demands, actions, causes of action, suits, damages, losses, costs, expenses, and liabilities of any kind "arising out of or related to the Charter-Party (Ref. No. NW-TSL-CP-2020-1203) and/or the M/V Aegean Fortuna." Northwind's redline expands this definition to include not only claims arising out of or related to the charter-party and the vessel but also claims "in any way connected with the commercial relationship between the Parties."

Analysis: This proposed expansion is overly broad and goes well beyond the scope of the mediator's term sheet. The term sheet, signed by counsel on October 29, 2024, specifies a release of claims "arising out of or related to" the charter-party and the vessel — the standard formulation used in maritime commercial dispute settlements. The "in any way connected with the commercial relationship between the Parties" language is unbounded and could sweep in claims that have no nexus to the charter-party or the M/V Aegean Fortuna.

The practical risk is significant. TSL and Northwind are both active participants in the international dry bulk shipping market. TSL operates a fleet of approximately 34 vessels, and Northwind is a substantial charterer with annual chartering volumes in excess of $400 million. The parties may well engage in future chartering transactions — indeed, TSL's commercial team has indicated that Northwind has previously expressed interest in chartering other vessels in TSL's fleet. An expansive release covering all aspects of the "commercial relationship" could be invoked by Northwind to bar claims arising under future charters or other commercial arrangements that have nothing to do with the M/V Aegean Fortuna dispute.

Moreover, the proposed formulation lacks temporal limitation. It could arguably encompass claims arising from past dealings between the parties unrelated to the subject charter-party, or claims arising from future transactions that are only tangentially "connected with" the broader commercial relationship.

Recommendation: Category C — Reject. Counter-propose retaining the original formulation: "arising out of or related to the Charter-Party (Ref. No. NW-TSL-CP-2020-1203) and/or the M/V Aegean Fortuna." This language precisely mirrors the mediator's term sheet, is an industry-standard release formulation, and appropriately limits the scope of the release to the matters actually in dispute. If Northwind pushes back, we can note that the mediator's term sheet language was the product of a full-day negotiation in which both sides participated, and any material expansion beyond the term sheet risks destabilizing the entire settlement framework.

Change 2: Definition of "Effective Date". Northwind's Proposed Change: Northwind proposes that the "Effective Date" be defined as the date of the last signature by any party to the Settlement Agreement, rather than C&H's formulation, which defined the Effective Date as the date on which the fully executed agreement is delivered to all parties.

Analysis: The practical difference between the two formulations is minimal. Under our formulation, the Effective Date could lag behind the last signature by one or more days if there is a delay in delivering the fully executed counterparts. Under Northwind's formulation, the Effective Date is fixed at the moment the last party signs, regardless of when executed copies are distributed. Northwind's approach is cleaner and more commonly used in settlement agreements, particularly where the agreement is executed in counterparts (as this agreement will be, given the parties' locations in New York, Stamford, Piraeus, and Monrovia). It eliminates any ambiguity about whether "delivery" has occurred and precisely anchors the commencement of the 30-, 90-, and 150-day payment periods.

Recommendation: Category A — Accept. Northwind's proposed definition is standard and eliminates potential ambiguity. Adopt as proposed.

Change 3: Addition of Aegean Fortuna Shipholding Ltd. as Defined Party. Northwind's Proposed Change: Northwind inserts language throughout Sections 1 and 2 making Aegean Fortuna Shipholding Ltd. (Liberian Registration No. LR-C-20167845), the registered owner of the M/V Aegean Fortuna, a named signatory party to the Settlement Agreement and Mutual General Release, rather than merely a released affiliate of TSL referenced in the release provisions.

Analysis: This change is substantively appropriate. Aegean Fortuna Shipholding Ltd. is already a named defendant in the action — Northwind added Aegean Fortuna as a defendant in its First Amended Complaint filed on January 22, 2024, asserting direct claims against the registered owner for the vessel's operational deficiencies. Making Aegean Fortuna a signatory to the Settlement Agreement strengthens the mutual release from Northwind's perspective by ensuring that the shipholding entity is directly bound by the agreement's terms and cannot disclaim its obligations as a non-party.

From TSL's perspective, there is no substantive objection. Aegean Fortuna is a wholly owned, single-vessel subsidiary of TSL, and the settlement is intended to resolve all claims among all parties. The mediator's term sheet expressly references a "global settlement" encompassing Northwind, TSL, and Aegean Fortuna.

However, making Aegean Fortuna a signatory rather than merely a released party will require corporate authority from the Liberian entity. We should confirm with Konstantinou & Rizos Law Offices in Athens (Dimitrios Konstantinou) whether the TSL Board Resolution of October 18, 2024 — which authorized the settlement — covers the subsidiary's execution of the agreement, or whether a separate resolution of Aegean Fortuna's board of directors is required under Liberian corporate law. If a separate resolution is needed, we will need to coordinate with TSL's Liberian registered agent promptly to avoid delay.

Recommendation: Category B — Accept with modification. Agree to add Aegean Fortuna Shipholding Ltd. as a signatory party to the Settlement Agreement, consistent with its status as a named defendant and the global settlement framework. However, condition acceptance on the following: (i) Northwind must reciprocally confirm that it has obtained all necessary corporate authorizations under its jurisdiction of incorporation (the Republic of the marshall Islands) through its local counsel, Pacific Maritime Legal Associates (Thomas Nauru), to execute the agreement and be bound by its terms; and (ii) add a reciprocal representation in Section 8 (Representations and Warranties) that Northwind has obtained all necessary corporate approvals. This ensures parity and avoids a situation in which Northwind demands documentary proof of TSL's authority while offering none of its own.

Change 4: Definition of "Settlement Amount". Northwind's Proposed Change: Northwind adds language to the definition of "Settlement Amount" in Section 2.16 specifying that the $7,850,000 "shall not be subject to any deduction, set-off, or withholding of any kind."

Analysis: This addition is standard from a plaintiff's perspective and reflects Northwind's desire to ensure that the full settlement amount is received without diminution. The "no set-off" language is appropriate given the history of this dispute — Northwind's withholding of $1,620,000 in hire as a purported set-off was a central point of contention, and both parties will want to ensure the settlement payment itself is not subject to similar disputes.

The "no withholding" language requires closer attention. The settlement payment flows between Thalassa Shipping & Logistics SA, a Greek société anonyme, and Northwind Maritime Corporation, a marshall Islands corporation, through an escrow account at Atlantic Fiduciary Trust Company in New York. The payment constitutes settlement of a commercial dispute, not income, and should not be subject to U.S. federal or state tax withholding. However, it is prudent to include a limited carve-out for any withholding that may be required by applicable law (whether U.S., Greek, Liberian, or marshall Islands), to avoid placing TSL in the position of being contractually prohibited from complying with a legal obligation.

Recommendation: Category B — Accept with modification. Accept the "no deduction, set-off, or withholding" language but add the following carve-out at the end of the sentence: "except as may be required by applicable law." This preserves the intent of the provision while protecting TSL against potential legal obligations that may arise. If any withholding is legally required, the parties can address the economic impact through a gross-up mechanism or other appropriate arrangement, which can be negotiated separately if the issue arises.

B. Payment Terms (Section 3)

Change 5: Late Payment Interest Rate. Northwind's Proposed Change: C&H's first draft specified a default interest rate of nine percent (9%) per annum — the New York statutory rate under CPLR § 5004 — applicable only upon entry of the consent judgment after default. Northwind's redline adds a separate "late payment" interest provision in Section 3.4: if any installment is not received by Northwind within five (5) business days after its due date, interest accrues on the unpaid installment at twelve percent (12%) per annum from the original due date, and this interest accrues separately from and in addition to the consent judgment mechanism set forth in Section 7.

Analysis: This proposed change is problematic on several levels.

First, the twelve percent (12%) rate substantially exceeds the New York statutory rate of nine percent (9%) per annum. While parties to a commercial agreement are generally free to set contractual interest rates, the proposed rate in the context of a settlement agreement governing installment payments is arguably punitive. The purpose of an interest provision in a settlement agreement is to compensate the non-breaching party for the time value of money during the period of delay, not to impose a penalty for late payment. A twelve percent rate — one-third higher than the statutory rate — goes beyond compensation and into the realm of a penalty, which could be challenged as unenforceable under New York law.

Second, the layered interest structure creates complexity and the potential for double-counting. Under Northwind's proposed scheme, if TSL defaults on a payment, interest would accrue at twelve percent per annum under the late payment provision and at nine percent per annum under the consent judgment provision. While Northwind characterizes these as separate remedies (one contractual, one judicial), the practical effect is that TSL would be paying interest at an effective rate well above any reasonable market benchmark. This is inequitable and not contemplated by the mediator's term sheet.

Third, the mediator's term sheet references only the consent judgment at nine percent as the remedy for non-payment. It does not contemplate a separate late payment interest provision. Introducing a new remedy not discussed during mediation departs from the agreed framework.

Recommendation: Category C — Reject the twelve percent (12%) rate. Counter-propose the following: if a late payment interest provision is desired in addition to the consent judgment mechanism (which is a reasonable request to address the gap between default and actual entry of judgment), agree to interest at the New York statutory rate of nine percent (9%) per annum, accruing from the due date of the missed installment. This rate is consistent with the consent judgment rate, avoids any argument that the provision is punitive, and aligns with the mediator's term sheet. In addition, counter-propose extending the grace period from five (5) business days to ten (10) business days before late payment interest begins to accrue. The ten-business-day period accounts for the potential logistical complexity of international wire transfers between Greek, New York, and marshall Islands banking institutions. Finally, make clear that the late payment interest provision and the consent judgment interest provision are alternative, not cumulative — interest accruing under the late payment provision would cease upon entry of the consent judgment, at which point the statutory rate under the judgment would control.

Change 6: Acceleration Upon Default. Northwind's Proposed Change: Northwind adds an acceleration clause in Section 3.5 providing that upon default of any single installment payment (after a five-business-day grace period), the entire remaining unpaid balance of the Settlement Amount becomes immediately due and payable.

Analysis: Acceleration clauses are not unreasonable and are fairly standard in installment settlement agreements. The rationale is straightforward: if TSL demonstrates an unwillingness or inability to make timely payments under the installment schedule, Northwind should not be required to wait for each successive installment to become due before exercising its remedies. The consent judgment provision in Section 7.3 already contemplates that, upon default, Northwind may seek entry of a judgment for the "unpaid balance" — which implicitly assumes that the full remaining balance, not merely the missed installment, is the subject of the judgment. Making the acceleration explicit merely codifies what is already implied.

From TSL's perspective, the acceleration clause does not materially change the economic exposure. If TSL defaults on a payment, it will face the consent judgment regardless, and the judgment amount will be the full unpaid balance. The acceleration clause simply clarifies the mechanics.

Recommendation: Category A — Accept. The acceleration clause is standard and consistent with the consent judgment framework. However, we recommend coordinating this provision with our counter-proposal on the cure period discussed under Change 5 above: the acceleration should not trigger until the expiration of a ten (10) business-day grace period (rather than the five-business-day period proposed by Northwind), consistent with our recommended cure period for the late payment interest provision and the consent judgment mechanism.

Change 7: Escrow Release Mechanics. Northwind's Proposed Change: Northwind proposes amending Section 3.6 to provide that funds deposited into the escrow account at Atlantic Fiduciary Trust Company be released to Northwind upon "sole instruction of Northwind" rather than upon "joint instruction of the Parties," as provided in C&H's first draft.

Analysis: This change is unacceptable. Joint instruction is the standard release mechanism in escrow arrangements and exists for the fundamental purpose of protecting both the depositing party and the receiving party against unauthorized or premature disbursement. TSL is the party depositing funds into the escrow account; removing TSL from the release instruction process eliminates a critical safeguard.

Under a sole-instruction arrangement, Northwind could theoretically direct the escrow agent to release funds at any time — including before TSL has confirmed that it has deposited the correct amount, before any disputed amounts have been resolved, or before the conditions to release (such as execution of the Settlement Agreement and delivery of all required documentation) have been satisfied. This creates an obvious risk that funds are disbursed prematurely or in error, with TSL having no recourse against the escrow agent for following Northwind's instructions.

Moreover, the escrow arrangement is being separately negotiated with Atlantic Fiduciary Trust Company. Martin Schreiber, the relationship manager at Atlantic Fiduciary, has confirmed that the escrow agent's standard form of escrow agreement requires joint instruction for release. Departing from this standard would likely require Atlantic Fiduciary to assume additional liability exposure, which it would almost certainly decline or charge additional fees for.

Recommendation: Category C — Reject. Maintain the joint-instruction release mechanism in both the Settlement Agreement and the separate Escrow Agreement being negotiated with Atlantic Fiduciary Trust Company. Counter-propose the following language to address Northwind's apparent concern about potential delay in receiving funds: "The Parties agree to promptly deliver joint release instructions to the Escrow Agent within three (3) business days following confirmation that a payment has been deposited into and cleared through the Escrow Account. Neither Party shall unreasonably withhold, condition, or delay its execution of joint release instructions." This language provides Northwind with a contractual right to compel timely release while preserving TSL's joint control over the process. If TSL unreasonably withholds its consent to release, Northwind would have a breach of contract claim as a remedy.

C. Mutual General Release (Section 4)

Change 8: Scope of Northwind's Release of TSL. Northwind's Proposed Change: Northwind narrows its release of TSL in Section 4.1 by adding a carve-out for "claims arising from fraud, willful misconduct, or intentional misrepresentation."

Analysis: The mediator's term sheet calls for a "full mutual general release" without any carve-outs or reservations. From TSL's perspective, the entire purpose of paying $7,850,000 (and waiving a $1,620,000 counterclaim) is to achieve finality — a clean and comprehensive resolution of all disputes between the parties. Carve-outs undermine that finality by leaving open the possibility that one party could later assert that some aspect of the underlying dispute involved "fraud" or "willful misconduct" and thereby seek to relitigate claims that were intended to be settled.

That said, there are pragmatic reasons to consider accepting this carve-out in modified form. First, fraud and willful misconduct carve-outs are extremely common in settlement releases across all areas of commercial litigation. Courts and practitioners widely recognize that public policy considerations may prevent the enforcement of a release that purports to bar claims for fraud — particularly where the fraud was unknown to the releasing party at the time of settlement. Second, New York courts have, in certain circumstances, declined to enforce releases of fraud claims where the releasing party was unaware of the fraud at the time of release. See, e.g., Centro Empresarial Cempresa S.A. v. Stonefield Group, 17 N.Y.3d 269 (2011). Including a limited carve-out acknowledges this legal reality and avoids a potential challenge to the enforceability of the release as a whole. Third, the practical risk to TSL is low: there is no allegation of fraud, willful misconduct, or intentional misrepresentation in this case. Northwind's claims are contractual in nature, and the discovery record does not suggest any basis for a fraud claim against TSL.

Recommendation: Category B — Accept with modification. Agree to include a fraud/willful misconduct carve-out, subject to two conditions:

(i) Reciprocity: The carve-out must be mutual. TSL must likewise reserve claims for fraud, willful misconduct, or intentional misrepresentation by Northwind. This ensures parity and prevents the carve-out from being used as a one-sided weapon.

(ii) Narrow Scope: The carve-out must be limited to claims of fraud, willful misconduct, or intentional misrepresentation "in connection with the negotiation and performance of this Settlement Agreement" — not a general carve-out that could be invoked to re-litigate the underlying charter-party dispute under a fraud theory. Without this limitation, Northwind could assert, for example, that TSL's representations regarding the vessel's condition during the charter-party period constituted "fraud" and attempt to pursue claims that were plainly within the scope of the settled dispute. The carve-out should protect against post-settlement misconduct (e.g., concealment of assets, fraudulent representations in the settlement documents), not serve as a vehicle for reopening the underlying controversy.

Change 9: Release of Affiliates and Related Parties. Northwind's Proposed Change: Northwind adds an extensive list of released parties on the Northwind side in Section 4.2(b), including Eastbourne Bulk Carriers Ltd. (the sub-charterer of the M/V Aegean Fortuna), Northwind's past and present officers, directors, employees, agents, representatives, and "all past and present affiliated entities."

Analysis: TSL has no current claims against Eastbourne Bulk Carriers Ltd. or any of Northwind's other affiliates, officers, or directors, apart from the counterclaim for unpaid hire (which is being released in full as part of the settlement). The broader affiliate release is therefore acceptable in substance — TSL is not giving up any claims of value by releasing Northwind's affiliates and personnel.

However, the change must be reciprocal. If Northwind's side of the release encompasses its affiliates, officers, directors, employees, and agents, then the TSL side must be equally expansive. This means that the list of TSL-side released parties must expressly include Aegean Fortuna Shipholding Ltd., TSL's named officers (including Alexandros Stavridis, CEO; Elena Papadimitriou, CFO; and Markos Theodorakis, General Counsel), all past and present directors of TSL and Aegean Fortuna, all employees and agents, and all affiliated entities.

Recommendation: Category B — Accept, provided the list of released parties on TSL's side is equally expansive. We should prepare a corresponding list of TSL-side released parties for inclusion in Section 4.2(a). Confirm with Markos Theodorakis whether there are any additional TSL affiliates that should be listed (e.g., other single-vessel subsidiaries, the fleet management entity).

Change 10: Waiver of Unknown Claims (California Civil Code § 1542 Analogue). Northwind's Proposed Change: Northwind adds a new Section 4.4 containing a provision in which each party expressly waives unknown claims under the principles of California Civil Code § 1542 and similar statutes of other jurisdictions. The provision recites the text of § 1542 and includes a statement that each party has been advised by counsel regarding the significance of this waiver and nevertheless elects to release unknown claims.

Analysis: The Settlement Agreement is governed by New York law. New York does not have a statute analogous to California Civil Code § 1542, which provides that "a general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release." Accordingly, the provision is largely precautionary — it would be relevant primarily if the release were ever challenged in a California court or in another jurisdiction with a similar statute.

Including the provision does no harm to TSL and may provide additional protection if the enforceability of the release is ever litigated outside of New York. Given that both Northwind and TSL operate internationally, and that the M/V Aegean Fortuna has called at ports in numerous jurisdictions, a belt-and-suspenders approach to the release waiver is prudent.

Recommendation: Category A — Accept. The provision is standard in sophisticated commercial settlement agreements and provides additional protection at no cost to TSL.

D. TSL Counterclaim Release (Section 5)

Change 11: Explicit Acknowledgment of Counterclaim Value. Northwind's Proposed Change: Northwind adds language to Section 5.1 requiring TSL to "acknowledge that the $1,620,000 counterclaim for unpaid hire is being released as independent consideration for this Agreement and the mutual promises and releases contained herein."

Analysis: TSL's counterclaim for $1,620,000 in unpaid hire (representing 110 days of withheld hire at $14,750 per day for the period October 1 through December 31, 2022) is indisputably part of the global settlement economics. From TSL's internal accounting perspective, the release of the counterclaim reduces the net economic cost of the settlement to $6,230,000. The characterization of the counterclaim release as part of the settlement consideration is factually accurate.

However, the specific formulation proposed by Northwind — characterizing the counterclaim release as "independent consideration" — warrants scrutiny. Characterizing a single element of the settlement as "independent" consideration could have implications if the settlement is later challenged. For example, if a court were to find that the mutual releases or the payment terms were unenforceable for some reason, the characterization of the counterclaim release as "independent" consideration could be argued by Northwind to mean that the counterclaim release survives independent of the other provisions. This is not consistent with the integrated, global nature of the settlement.

The preferred approach is to characterize the consideration as mutual and flowing in both directions, consistent with the structure of the agreement as a comprehensive, indivisible settlement.

Recommendation: Category B — Accept with modification. Revise the proposed language to read: "Each Party acknowledges that the mutual promises, covenants, and releases set forth herein — including without limitation TSL's release of its counterclaim for unpaid hire, Northwind's release of its claims in the Action, and TSL's payment of the Settlement Amount — constitute good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged." This formulation avoids singling out the counterclaim release as "independent" consideration while affirming its value as part of the overall settlement package.

E. Confidentiality (Section 6)

Change 12: Expanded Permitted Disclosures. Northwind's Proposed Change: C&H's first draft, in Section 6.2, permitted disclosure of the settlement terms and the existence and contents of the Settlement Agreement only to: (i) the Parties' respective insurers; (ii) the Parties' respective lenders and financial institutions; (iii) the Parties' respective auditors and accountants; and (iv) as required by applicable law, regulation, or order of a court of competent jurisdiction. Northwind's redline adds three additional categories of permitted disclosure:

(a) Disclosure to Northwind's "current and future investors and financing sources, including without limitation equity holders, bondholders, and providers of credit facilities";

(b) Disclosure to Northwind's "sub-charterers, including without limitation Eastbourne Bulk Carriers Ltd., to the extent necessary to resolve related claims or fulfill contractual obligations"; and

Analysis:

Category (a) — Investor/Financing Disclosure: This is reasonable. Northwind is a substantial corporation with annual revenues of approximately $1.2 billion and may have reporting obligations to equity holders, lenders, or other financing sources that require disclosure of material legal settlements. The existing carve-out for "lenders and financial institutions" partially covers this, but expanding to include equity investors and bondholders is consistent with Northwind's likely reporting obligations. This category is acceptable.

Category (b) — Sub-Charterer Disclosure (Eastbourne): This is potentially problematic. Disclosing the settlement terms — including the settlement amount, the installment schedule, and the release terms — to Eastbourne Bulk Carriers Ltd. could lead to public dissemination of confidential information. Eastbourne is not a party to the litigation, is not bound by any confidentiality obligations under the Settlement Agreement, and could use the information for its own purposes. Moreover, we should understand whether Northwind has pending claims or disputes with Eastbourne arising from the same events (i.e., cargo damage claims, demurrage claims, or indemnification claims that Eastbourne may have asserted against Northwind). If so, Northwind may be seeking the ability to disclose the settlement terms to strengthen its position in those separate proceedings. Before agreeing to this disclosure, we need to understand the basis for Northwind's request.

Category (c) — Regulatory Disclosure: This is duplicative of the existing "as required by applicable law, regulation, or order of a court" carve-out. If Northwind is subject to a regulatory inquiry that requires disclosure, the existing carve-out covers it. A separate regulatory disclosure category adds nothing and could be read as broadening the scope of permitted disclosure beyond what is legally compelled.

Recommendation: Category B — Accept category (a) and reject categories (b) and (c) as proposed. Specifically:

• Category (a): Accept, with the addition of a requirement that any investor or financing source receiving disclosure be subject to confidentiality obligations at least as restrictive as those in the Settlement Agreement.

• Category (b): Modify. Permit disclosure to Eastbourne only if Northwind demonstrates (i) an existing contractual obligation to disclose to Eastbourne (e.g., under the sub-charter-party or a separate indemnification agreement) and (ii) Eastbourne executes a confidentiality undertaking, in form reasonably satisfactory to TSL, before receiving any settlement terms. This protects against unconstrained dissemination while accommodating Northwind's potential contractual obligations.

• Category (c): Delete as duplicative. The existing "as required by applicable law, regulation, or order of a court" carve-out is sufficient to cover regulatory inquiries.

Change 13: Remedies for Breach of Confidentiality. Northwind's Proposed Change: Northwind adds a new Section 6.5 providing that the non-breaching party shall be entitled to seek injunctive relief for any breach or threatened breach of the confidentiality provisions "without the necessity of proving actual damages or posting a bond or other security."

Analysis: This is standard injunctive relief language commonly included in confidentiality provisions. It reflects the well-established principle that breaches of confidentiality often cause irreparable harm that cannot be adequately compensated by monetary damages. The waiver of the bond requirement is also standard, as courts in New York have discretion to waive or reduce bond requirements in appropriate cases. The provision is mutual and benefits both parties equally.

Recommendation: Category A — Accept.

Change 14: Press Release / Public Statement. Northwind's Proposed Change: Northwind proposes a new Section 6.6 requiring that neither party issue any press release, public statement, or public communication regarding the settlement, the Settlement Agreement, or the underlying Action without the prior written consent of the other party. If the parties mutually agree to issue a statement, the text must be jointly approved.

Analysis: This provision is consistent with the confidentiality framework and provides an additional layer of protection against public disclosure. TSL is a privately held Greek company that does not typically issue press releases regarding litigation settlements. Northwind, as a marshall Islands corporation with a broader investor base, may face greater pressure to communicate publicly about the resolution of significant litigation. The mutual consent requirement protects both sides and ensures that any public messaging is carefully coordinated.

Recommendation: Category A — Accept.

F. Consent Judgment (Section 7)

Change 15: Form of Consent Judgment. Northwind's Proposed Change: Northwind proposes amending Section 7.3 to require that a fully drafted form of consent judgment be attached as an exhibit to the Settlement Agreement, pre-signed by TSL (and Aegean Fortuna Shipholding Ltd.), to be filed by Northwind with the Supreme Court upon default without further notice to TSL.

Analysis: The concept of attaching a pre-drafted form of consent judgment as an exhibit to a settlement agreement is not uncommon in installment settlement practice. It provides the plaintiff with an efficient enforcement mechanism in the event of default — rather than commencing a new action or motion, the plaintiff simply files the pre-signed consent judgment with the court. From the plaintiff's perspective, this is one of the principal benefits of a consent judgment provision: speed and certainty of enforcement.

However, Northwind's proposed formulation — requiring TSL to pre-sign the consent judgment and permitting filing "without further notice" — is aggressive and presents significant risks to TSL:

• Risk of Improper Filing: If Northwind has the power to file the consent judgment without notice, there is a risk that it could be filed before a genuine default has occurred — for example, if TSL believes in good faith that payment has been timely made but Northwind disagrees, or if there is a bank processing delay that causes a payment to arrive one or two days late. Without a notice and cure mechanism, TSL would have no opportunity to correct an innocent delay before a judgment is entered.

• Pre-Signing Risk: Pre-signing a consent judgment effectively gives Northwind a blank check to seek judgment entry at any time. While the Settlement Agreement would govern the circumstances under which filing is permitted, the Supreme Court Clerk's office is not in a position to verify compliance with the Settlement Agreement's conditions before accepting a filing.

• Loss of Procedural Protections: Under the standard consent judgment mechanism, the defendant retains the right to be heard before the court before judgment is entered. Pre-signing eliminates this right.

Recommendation: Category B — Accept the concept with significant safeguards. C&H is already preparing a proposed form of consent judgment pursuant to Section 7.3 of the first draft, and attaching it as an exhibit is a reasonable approach. However, the following safeguards must be incorporated:

(i) Notice and Cure Period: Before filing the consent judgment, Northwind must provide written notice of the alleged default to TSL (at the notice addresses specified in Section 11), and TSL shall have ten (10) business days from receipt of such notice to cure the default by making the payment in full (plus accrued interest at the 9% rate). Only if TSL fails to cure within the ten-business-day period may Northwind proceed with filing.

(ii) Counsel Certification: Northwind must submit, simultaneously with the filing of the consent judgment, a certification by its counsel of record (Margaret Delacroix or her designee at HD&S) certifying under penalty of perjury that (a) a payment default has occurred, (b) written notice of default was provided to TSL, and (c) the cure period has expired without payment.

(iii) Face of Judgment Language: The consent judgment itself must state on its face that it may only be filed upon default in accordance with the terms and conditions of the Settlement Agreement and the Stipulation and Order Retaining Jurisdiction.

(iv) No Pre-Signing by TSL: TSL will not pre-sign the consent judgment. Rather, TSL's consent to entry of the judgment will be granted through the Stipulation and Order Retaining Jurisdiction to be filed with Justice Chen in Part 49. This approach provides TSL with the procedural protection of the court's oversight while giving Northwind the enforcement certainty it seeks.

Change 16: Interest Calculation on Consent Judgment. Northwind's Proposed Change: Northwind specifies in Section 7.4 that the nine percent (9%) per annum interest on the consent judgment runs from the Effective Date of the Settlement Agreement, not from the date of default.

Analysis: This change would result in a substantially higher judgment amount and is not supported by the mediator's term sheet or sound principles of interest accrual.

The mediator's term sheet provides for nine percent (9%) interest on the "unpaid balance" but does not specify the accrual start date. Under the standard approach, interest on a consent judgment accrues from the date of default (i.e., the date the payment was due but not made) — not from the Effective Date of the agreement. Running interest from the Effective Date would mean that TSL is charged interest for a period during which no payment obligation existed, creating an inequitable windfall for Northwind.

Consider the following example to illustrate the magnitude of the issue: if TSL makes Payments 1 and 2 on time but defaults on Payment 3 ($1,850,000, due at 150 days), under Northwind's proposal, interest at 9% per annum would accrue on $1,850,000 from the Effective Date — meaning TSL would owe approximately 150 days of interest (roughly $68,466) on a payment that was not yet due for the first 150 days. Under the standard approach, interest would accrue only from day 150 (the due date), resulting in a far more equitable calculation. Alternatively, if TSL defaults on Payment 1 ($4,000,000, due at 30 days) and the remaining balance accelerates, Northwind's proposal would require interest on the full $7,850,000 from the Effective Date — even though approximately $3,850,000 of that amount was never due at the time of default.

Recommendation: Category C — Reject. Counter-propose that interest at nine percent (9%) per annum accrues on any unpaid installment from the due date of that installment, consistent with the New York statutory rate structure and equitable principles. This approach charges interest only for the period during which TSL has failed to make a payment that was due, not for periods during which the payment obligation had not yet arisen. If the remaining balance is accelerated upon default, interest on the accelerated amounts accrues from the date of acceleration.

G. Representations and Warranties (Section 8)

Change 17: Representation Regarding Pending Bankruptcy. Northwind's Proposed Change: Northwind strengthens the no-bankruptcy representation in Section 8.4 to require TSL to represent and warrant that it "is solvent, is able to pay its debts as they become due, and does not contemplate any insolvency proceeding, restructuring, or similar proceeding in any jurisdiction, including the Hellenic Republic (Greece)."

Analysis: The first draft contained a standard representation that neither party has filed or been the subject of any petition for relief under any bankruptcy, insolvency, or similar law. Northwind's proposed enhancement goes further in two respects: (i) it adds an affirmative solvency representation, and (ii) it adds a forward-looking statement that TSL "does not contemplate" any insolvency proceeding.

TSL is a substantial company. Based on the most recent financial data available (fiscal year 2022 audited financial statements), TSL has annual revenues of approximately $612 million, EBITDA of approximately $98 million, and operates a fleet of approximately 34 vessels. TSL has the clear financial capacity to make the $7,850,000 settlement payment. There is no reason to believe TSL is insolvent or contemplating insolvency proceedings.

However, a formal solvency representation — particularly one that includes forward-looking language — creates potential exposure. The dry bulk shipping market is cyclical, and TSL's financial condition could deteriorate due to market conditions, declining charter rates, or other factors outside management's control. A forward-looking representation that TSL "does not contemplate" insolvency proceedings could be argued to have been breached if, months after the Effective Date, TSL explores restructuring options in response to adverse market conditions. This is precisely the kind of open-ended exposure that should be avoided.

Recommendation: Category B — Accept a limited solvency representation. Agree to represent that "as of the Effective Date, TSL is not insolvent within the meaning of applicable law and has not filed, and is not the subject of, any petition for relief under any bankruptcy, insolvency, reorganization, or similar law in any jurisdiction." Reject the forward-looking "does not contemplate" language as too broad and speculative. To the extent Northwind insists on some forward-looking protection, we could offer a representation that "as of the Effective Date, TSL has not authorized, and its board of directors has not resolved to commence, any insolvency or restructuring proceeding." This limits the representation to actions actually taken by the board, rather than subjective intentions. Add a reciprocal solvency representation from Northwind.

Change 18: Representation of Authority — Greek Corporate Formalities. Northwind's Proposed Change: Northwind adds a requirement in Section 8.2 that TSL attach, as an exhibit to the Settlement Agreement, a certified copy of the board resolution of Thalassa Shipping & Logistics SA authorizing the settlement and the execution of the Settlement Agreement.

Analysis: The request for evidence of corporate authority is reasonable in principle. In any significant commercial transaction involving a foreign corporation, it is standard practice to require proof that the entity's governing body has authorized the transaction. The TSL Board Resolution authorizing the settlement was adopted at a duly convened meeting on October 18, 2024. The resolution authorizes TSL management to enter into a settlement of the Northwind litigation on terms not to exceed $8,500,000 in total settlement consideration.

The difficulty is that the board resolution, as drafted by C&H with input from Konstantinou & Rizos Law Offices, contains confidential information regarding TSL's internal settlement strategy. Specifically, the minutes of the October 18 meeting reflect discussion of the board's assessment of litigation risk, the Settlement Authority Memorandum dated October 15, 2024 (which analyzed a recommended settlement range of $6.5 million to $9 million), and the board's ultimate authorization of a settlement cap of $8,500,000. If the full resolution were attached as an exhibit to the Settlement Agreement and shared with Northwind, it would reveal that TSL was authorized to pay up to $8,500,000 — $650,000 more than the actual settlement amount. This information could be used against TSL if the settlement were to fall apart and the parties returned to litigation.

Recommendation: Category B — Accept in modified form. Rather than attaching the full board resolution, agree to provide one of the following:

(i) Officer's Certificate: A certificate signed by Markos Theodorakis, in his capacity as General Counsel and Secretary of Thalassa Shipping & Logistics SA, certifying that (a) the board of directors of TSL has duly authorized the execution and delivery of the Settlement Agreement and the performance of TSL's obligations thereunder, (b) the authorization was granted at a meeting duly convened and held in accordance with TSL's constitutive documents and applicable Greek law, and (c) such authorization has not been revoked or modified.

(ii) Redacted Resolution: Alternatively, if Northwind insists on receiving the resolution itself, provide a redacted version showing only the operative authorization clause (i.e., "RESOLVED, that the Board hereby authorizes the settlement of the Northwind litigation and the execution of a Settlement Agreement and Mutual General Release") without the discussion, the settlement range analysis, or the $8,500,000 authorization cap.

The officer's certificate approach is preferable and is commonly used in international transactions involving Greek companies. Coordinate with Konstantinou & Rizos on the form of the certificate.

Change 19: No Assignment of Claims. Northwind's Proposed Change: Minor wording change to Section 8.6, making the no-assignment representation explicitly bilateral. Northwind's redline adds language requiring both parties (rather than just TSL, as in the first draft) to represent that they have not assigned, transferred, conveyed, or otherwise disposed of any of the claims being released under the Settlement Agreement.

Analysis: This is a straightforward and appropriate edit. The no-assignment representation should apply to both parties to ensure that neither side has transferred its claims to a third party who could later assert those claims notwithstanding the release.

Recommendation: Category A — Accept.

H. Withdrawal of Pending Motions (Section 9)

Change 20: Timing of Withdrawal. Northwind's Proposed Change: C&H's first draft provides that all pending motions are withdrawn with prejudice immediately upon execution of the Settlement Agreement. Northwind proposes that withdrawal occur within five (5) business days of execution, rather than immediately upon execution.

Analysis: This change allows a short administrative window for the preparation and filing of the stipulation of withdrawal and related papers. TSL's pending motion for partial summary judgment was filed on September 20, 2024, and the withdrawal will require a signed stipulation by both sides and submission of a joint letter to Justice Chen's chambers. The five-business-day window is reasonable and accounts for the logistical steps involved.

From TSL's perspective, the motion for partial summary judgment is a strong motion (our internal assessment, reflected in the Settlement Authority Memorandum, is that TSL has a 65–70% likelihood of success on the liquidated damages cap issue and a 55–60% likelihood on the deviation claim). The motion represents meaningful leverage, and its withdrawal should be coordinated with — not precede — the execution of the Settlement Agreement and the first escrow deposit. However, since the withdrawal is contingent on execution of the Settlement Agreement, the five-business-day administrative window does not change the sequencing.

Recommendation: Category A — Accept.

I. Return / Destruction of discovery Materials (Section 10)

Change 21: Extended Period for Return/Destruction. Northwind's Proposed Change: C&H's first draft provides for the return or destruction of all discovery materials, including documents produced during discovery, deposition transcripts, and expert reports, within sixty (60) days after the final settlement payment is made. Northwind's redline extends this period to ninety (90) days.

Analysis: The additional thirty days has minimal practical impact. Both sides have accumulated substantial volumes of discovery materials over the course of this litigation. Northwind may need additional time to coordinate with its experts — Pinnacle Valuation Partners LLP (Dr. Rajesh Anand, damages expert) and Blackmore Maritime Advisory Ltd. (Captain Julian Blackmore, maritime operations expert) — for the return of expert materials and work product. The same is true on TSL's side, where our experts will need to return or destroy materials in their possession.

Recommendation: Category A — Accept ninety (90) days. The extended period is reasonable and accounts for the practical logistics of the return/destruction process.

Change 22: Certification of Destruction. Northwind's Proposed Change: Northwind adds a new Section 10.3 requiring that, upon completion of the return or destruction of discovery materials, each party provide to the other a written certification of destruction, signed by an officer of the certifying party, confirming that all discovery materials have been returned or destroyed in accordance with Section 10.

Analysis: This is a reasonable and increasingly standard provision in settlement agreements involving the return of confidential discovery materials. The certification provides a verifiable record that each party has fulfilled its obligations and creates accountability. The requirement that the certification be signed by an officer (rather than counsel) adds an additional layer of responsibility.

Recommendation: Category A — Accept.

J. Miscellaneous Provisions (Section 11)

Change 23: Governing Law Confirmation. Northwind's Proposed Change: Northwind adds an explicit governing law clause in Section 11.1 stating that the Settlement Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflicts-of-law principles.

Analysis: This is consistent with the entire framework of the settlement. The underlying charter-party contains a New York law governing-law clause. The litigation is pending in the Supreme Court of New York. The escrow is in New York. The mediator's term sheet was executed in New York. While our first draft implicitly adopted New York law through the venue and jurisdiction provisions, an express governing law clause eliminates any ambiguity. The exclusion of conflicts-of-law principles is standard and ensures that a court applying the governing law clause does not refer to the law of another jurisdiction.

Recommendation: Category A — Accept.

Change 24: Dispute Resolution for Settlement Agreement Disputes. Northwind's Proposed Change: Northwind proposes a new Section 11.8 providing that any dispute arising out of or relating to the Settlement Agreement itself (as distinguished from the underlying charter-party dispute) shall be resolved exclusively in the Supreme Court of the State of New York, New York County, before Justice Lorraine K. Chen, J.S.C. (Part 49), or her successor.

Analysis: This provision is consistent with the Stipulation and Order Retaining Jurisdiction that is being prepared for filing with Justice Chen following execution of the Settlement Agreement. The Stipulation will request that the Court retain jurisdiction over the Action for the sole purpose of enforcing the terms of the Settlement Agreement. Assigning disputes under the Settlement Agreement to Justice Chen's Part ensures continuity and avoids the expense and delay of commencing a new action. Justice Chen is familiar with the case, having presided over numerous discovery conferences and the pending summary judgment motion.

Recommendation: Category A — Accept. This provision should be drafted in coordination with the Stipulation and Order Retaining Jurisdiction to ensure consistency.

Change 25: Counterparts and Electronic Signatures. Northwind's Proposed Change: Northwind adds a standard counterparts and electronic signatures provision in Section 11.9, providing that the Settlement Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and that signatures delivered by electronic means (including PDF, Brightwater Software, or similar platforms) shall have the same force and effect as original signatures.

Analysis: Standard provision. Essential given that the parties and their counsel are located in multiple jurisdictions (New York, Stamford, Piraeus, Monrovia).

Recommendation: Category A — Accept.

Change 26: Notices Provision. Northwind's Proposed Change: Northwind revises the notices provision in Section 11.4 to require that all notices, demands, requests, and other communications under the Settlement Agreement be sent by both email and overnight courier (with notice deemed given on the earlier of actual receipt or two business days after deposit with the overnight courier). The following notice addresses are specified:

To TSL: Thalassa Shipping & Logistics SA 42 Akti Miaouli Piraeus 185 38, Greece

Attention: Markos Theodorakis, General Counsel

Email: m.theodorakis@thalassashipping.gr

With a copy to: Drummond & Fenwick LLP One Liberty Plaza, 50th Floor New York,

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Douglas Carmichael, Francesca Morano
FROM: Carlos Espinoza, Hannah Brinkley
DATE: November 13, 2024
RE: Analysis of Northwind's Redline to Settlement Agreement and Mutual General Release — Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023 (Supreme Court of the State of New York, New York County, Commercial Division)
C&H Matter No.: 1044-00006
Right-click to update Table of Contents
I. Executive Summary
On November 12, 2024, Hargrove, Delacroix & Stern LLP ("HD&S"), acting through Margaret Delacroix, Jason Trumbull, and Priya Mehta, transmitted Northwind Maritime Corporation's ("Northwind") redline markup of Greaves & Castellan LLP's first draft of the Settlement Agreement and Mutual General Release (the "Settlement Agreement"), dated November 5, 2024. This memorandum provides a comprehensive analysis of each substantive change proposed by Northwind, together with our recommendations for the preparation of a revised second draft.
The first draft of the Settlement Agreement was prepared by this office to memorialize the terms of the settlement in principle reached on October 29, 2024, following a day-long mediation session before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC in New York. The mediation culminated in the execution by counsel for all parties of a term sheet setting forth the principal terms of the settlement, which has served as the framework for the definitive documentation.
As reflected in the term sheet, the core economic terms of the settlement are as follows:
• Total Settlement Amount: $7,850,000, payable by Thalassa Shipping & Logistics SA ("TSL") and/or Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna") to Northwind in three installments:
• Payment 1: $4,000,000 due within thirty (30) days of the Effective Date;
• Payment 2: $2,000,000 due within ninety (90) days of the Effective Date;
• Payment 3: $1,850,000 due within one hundred fifty (150) days of the Effective Date;
• Escrow: All payments to be deposited into and disbursed through an escrow account at Atlantic Fiduciary Trust Company (Account No. ESC-2024-NYK-08831);
• Funding Sources: $5,350,000 to be paid from TSL corporate funds; $2,500,000 to be contributed by Oceanus Mutual Protection & Indemnity Club ("Oceanus P&I"), subject to Board approval expected on or about November 22, 2024;
• Mutual General Release: Full mutual release of all claims between the parties, including TSL's counterclaim for $1,620,000 in unpaid hire;
• Consent Judgment: Mechanism for entry of a consent judgment in the event of payment default.
This memorandum catalogs each substantive change proposed by Northwind in its redline and categorizes each change into one of three categories:
(A) Acceptable — The proposed change may be accepted as drafted without modification.
(B) Acceptable with Modification — The proposed change is acceptable in concept but requires revisions to protect TSL's interests or to conform the provision to the mediator's term sheet and sound drafting practice.
(C) Reject with Counter-Proposal — The proposed change is unacceptable and must be rejected, with a counter-proposal offered in its place.
Overall Assessment: Northwind's redline contains approximately thirty-seven (37) discrete changes to the first draft. The substantial majority of these changes are minor drafting clarifications, stylistic edits, or conforming changes that do not alter the substance of the agreement. Approximately eight to ten changes are substantive and require careful analysis. No single change constitutes a deal-breaker, but several — particularly those relating to the scope of the release, the interest rate on late payments, escrow release mechanics, and interest accrual on the consent judgment — require thoughtful negotiation and partner-level decision-making. This memorandum addresses twenty-six (26) of the most significant changes and provides recommendations for each.
II. Background
A brief recitation of the relevant background is provided here for context.
The Dispute. This action arises out of a time charter-party executed on December 3, 2020 between Northwind, as charterer, and TSL, as disponent owner, for the M/V Aegean Fortuna (IMO No. 9847231), a Liberian-flag Supramax dry bulk carrier of approximately 58,200 DWT. The vessel is registered in the name of Aegean Fortuna Shipholding Ltd., a Liberian corporation (Registration No. LR-C-20167845) and wholly owned subsidiary of TSL. The charter-party was executed on a NYPE 2015 form, as amended (Ref. No. NW-TSL-CP-2020-1203), for a 36-month time charter commencing January 15, 2021, at a daily hire rate of $14,750.
Northwind's Claims. Following a series of operational disputes beginning in mid-2022 — centering on an alleged deviation from the contractual trading route during a voyage from Richards Bay to Qingdao in August 2022, several extended periods of off-hire due to mechanical failures of the vessel's cargo cranes and ballast water treatment system, and alleged failure to maintain the vessel in an efficient and seaworthy condition — Northwind commenced the above-captioned action on October 3, 2023. Northwind's total claim, as refined through discovery and expert reports, amounts to approximately $18,300,000, broken down across the following categories: off-hire deductions, liquidated damages under the charter-party, substitute charter costs for replacement tonnage, cargo damage claims (including a contribution to General Average declared on Voyage 14), demurrage and dead freight claims asserted by sub-charterer Eastbourne Bulk Carriers Ltd. ("Eastbourne"), additional port charges and bunker costs attributable to the vessel's operational deficiencies, lost sub-charter profit, indemnification obligations for third-party shipper claims, and legal fees and costs.
TSL's Counterclaim. TSL interposed a counterclaim in the amount of $1,620,000 for unpaid hire for the period October 1 through December 31, 2022 — a total of 110 days of hire at $14,750 per day that Northwind withheld as a purported set-off against its off-hire and damage claims. TSL has maintained throughout the litigation that Northwind's withholding of hire was improper and violated the anti-set-off provision in Clause 11(a) of the amended charter-party. As part of the global settlement, TSL's counterclaim is being released in full, bringing the net economic cost to TSL to $6,230,000 ($7,850,000 settlement amount minus $1,620,000 waived counterclaim).
Procedural Posture. The case is assigned to Justice Lorraine K. Chen, J.S.C., Part 49, Commercial Division, Supreme Court of the State of New York, New York County. TSL filed a motion for partial summary judgment on September 20, 2024, addressing two issues: (i) the interpretation of the liquidated damages cap in Clause 26(b) of the charter-party, and (ii) the viability of Northwind's deviation claim under the Carriage of Goods by Sea Act. That motion is currently scheduled for oral argument on December 6, 2024. Upon execution of the Settlement Agreement, the parties have agreed to file a stipulation withdrawing the motion with prejudice and a joint letter to Justice Chen vacating the December 6 conference.
The Mediation. The mediation was conducted on October 29, 2024 before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC in New York. Following a full day of mediation, the parties reached a settlement in principle. A term sheet was signed by Douglas Carmichael on behalf of TSL and Aegean Fortuna, and by Margaret Delacroix on behalf of Northwind. The term sheet sets forth the essential terms of the settlement, including the payment amount, installment schedule, escrow arrangement, mutual general release, consent judgment mechanism, and confidentiality. The term sheet expressly provides that it is binding on the parties and that a definitive Settlement Agreement would be negotiated and executed within thirty (30) days.
III. Detailed Analysis of Northwind's Proposed Changes
A. Recitals and Definitions (Sections 1–2 of Settlement Agreement)
Change 1: Expanded Definition of "Released Claims". Northwind's Proposed Change: Northwind proposes broadening the definition of "Released Claims" in Section 2.14 of the Settlement Agreement. Our first draft defined "Released Claims" as all claims, demands, actions, causes of action, suits, damages, losses, costs, expenses, and liabilities of any kind "arising out of or related to the Charter-Party (Ref. No. NW-TSL-CP-2020-1203) and/or the M/V Aegean Fortuna." Northwind's redline expands this definition to include not only claims arising out of or related to the charter-party and the vessel but also claims "in any way connected with the commercial relationship between the Parties."
Analysis: This proposed expansion is overly broad and goes well beyond the scope of the mediator's term sheet. The term sheet, signed by counsel on October 29, 2024, specifies a release of claims "arising out of or related to" the charter-party and the vessel — the standard formulation used in maritime commercial dispute settlements. The "in any way connected with the commercial relationship between the Parties" language is unbounded and could sweep in claims that have no nexus to the charter-party or the M/V Aegean Fortuna.
The practical risk is significant. TSL and Northwind are both active participants in the international dry bulk shipping market. TSL operates a fleet of approximately 34 vessels, and Northwind is a substantial charterer with annual chartering volumes in excess of $400 million. The parties may well engage in future chartering transactions — indeed, TSL's commercial team has indicated that Northwind has previously expressed interest in chartering other vessels in TSL's fleet. An expansive release covering all aspects of the "commercial relationship" could be invoked by Northwind to bar claims arising under future charters or other commercial arrangements that have nothing to do with the M/V Aegean Fortuna dispute.
Moreover, the proposed formulation lacks temporal limitation. It could arguably encompass claims arising from past dealings between the parties unrelated to the subject charter-party, or claims arising from future transactions that are only tangentially "connected with" the broader commercial relationship.
Recommendation: Category C — Reject. Counter-propose retaining the original formulation: "arising out of or related to the Charter-Party (Ref. No. NW-TSL-CP-2020-1203) and/or the M/V Aegean Fortuna." This language precisely mirrors the mediator's term sheet, is an industry-standard release formulation, and appropriately limits the scope of the release to the matters actually in dispute. If Northwind pushes back, we can note that the mediator's term sheet language was the product of a full-day negotiation in which both sides participated, and any material expansion beyond the term sheet risks destabilizing the entire settlement framework.
Change 2: Definition of "Effective Date". Northwind's Proposed Change: Northwind proposes that the "Effective Date" be defined as the date of the last signature by any party to the Settlement Agreement, rather than C&H's formulation, which defined the Effective Date as the date on which the fully executed agreement is delivered to all parties.
Analysis: The practical difference between the two formulations is minimal. Under our formulation, the Effective Date could lag behind the last signature by one or more days if there is a delay in delivering the fully executed counterparts. Under Northwind's formulation, the Effective Date is fixed at the moment the last party signs, regardless of when executed copies are distributed. Northwind's approach is cleaner and more commonly used in settlement agreements, particularly where the agreement is executed in counterparts (as this agreement will be, given the parties' locations in New York, Stamford, Piraeus, and Monrovia). It eliminates any ambiguity about whether "delivery" has occurred and precisely anchors the commencement of the 30-, 90-, and 150-day payment periods.
Recommendation: Category A — Accept. Northwind's proposed definition is standard and eliminates potential ambiguity. Adopt as proposed.
Change 3: Addition of Aegean Fortuna Shipholding Ltd. as Defined Party. Northwind's Proposed Change: Northwind inserts language throughout Sections 1 and 2 making Aegean Fortuna Shipholding Ltd. (Liberian Registration No. LR-C-20167845), the registered owner of the M/V Aegean Fortuna, a named signatory party to the Settlement Agreement and Mutual General Release, rather than merely a released affiliate of TSL referenced in the release provisions.
Analysis: This change is substantively appropriate. Aegean Fortuna Shipholding Ltd. is already a named defendant in the action — Northwind added Aegean Fortuna as a defendant in its First Amended Complaint filed on January 22, 2024, asserting direct claims against the registered owner for the vessel's operational deficiencies. Making Aegean Fortuna a signatory to the Settlement Agreement strengthens the mutual release from Northwind's perspective by ensuring that the shipholding entity is directly bound by the agreement's terms and cannot disclaim its obligations as a non-party.
From TSL's perspective, there is no substantive objection. Aegean Fortuna is a wholly owned, single-vessel subsidiary of TSL, and the settlement is intended to resolve all claims among all parties. The mediator's term sheet expressly references a "global settlement" encompassing Northwind, TSL, and Aegean Fortuna.
However, making Aegean Fortuna a signatory rather than merely a released party will require corporate authority from the Liberian entity. We should confirm with Konstantinou & Rizos Law Offices in Athens (Dimitrios Konstantinou) whether the TSL Board Resolution of October 18, 2024 — which authorized the settlement — covers the subsidiary's execution of the agreement, or whether a separate resolution of Aegean Fortuna's board of directors is required under Liberian corporate law. If a separate resolution is needed, we will need to coordinate with TSL's Liberian registered agent promptly to avoid delay.
Recommendation: Category B — Accept with modification. Agree to add Aegean Fortuna Shipholding Ltd. as a signatory party to the Settlement Agreement, consistent with its status as a named defendant and the global settlement framework. However, condition acceptance on the following: (i) Northwind must reciprocally confirm that it has obtained all necessary corporate authorizations under its jurisdiction of incorporation (the Republic of the marshall Islands) through its local counsel, Pacific Maritime Legal Associates (Thomas Nauru), to execute the agreement and be bound by its terms; and (ii) add a reciprocal representation in Section 8 (Representations and Warranties) that Northwind has obtained all necessary corporate approvals. This ensures parity and avoids a situation in which Northwind demands documentary proof of TSL's authority while offering none of its own.
Change 4: Definition of "Settlement Amount". Northwind's Proposed Change: Northwind adds language to the definition of "Settlement Amount" in Section 2.16 specifying that the $7,850,000 "shall not be subject to any deduction, set-off, or withholding of any kind."
Analysis: This addition is standard from a plaintiff's perspective and reflects Northwind's desire to ensure that the full settlement amount is received without diminution. The "no set-off" language is appropriate given the history of this dispute — Northwind's withholding of $1,620,000 in hire as a purported set-off was a central point of contention, and both parties will want to ensure the settlement payment itself is not subject to similar disputes.
The "no withholding" language requires closer attention. The settlement payment flows between Thalassa Shipping & Logistics SA, a Greek société anonyme, and Northwind Maritime Corporation, a marshall Islands corporation, through an escrow account at Atlantic Fiduciary Trust Company in New York. The payment constitutes settlement of a commercial dispute, not income, and should not be subject to U.S. federal or state tax withholding. However, it is prudent to include a limited carve-out for any withholding that may be required by applicable law (whether U.S., Greek, Liberian, or marshall Islands), to avoid placing TSL in the position of being contractually prohibited from complying with a legal obligation.
Recommendation: Category B — Accept with modification. Accept the "no deduction, set-off, or withholding" language but add the following carve-out at the end of the sentence: "except as may be required by applicable law." This preserves the intent of the provision while protecting TSL against potential legal obligations that may arise. If any withholding is legally required, the parties can address the economic impact through a gross-up mechanism or other appropriate arrangement, which can be negotiated separately if the issue arises.
B. Payment Terms (Section 3)
Change 5: Late Payment Interest Rate. Northwind's Proposed Change: C&H's first draft specified a default interest rate of nine percent (9%) per annum — the New York statutory rate under CPLR § 5004 — applicable only upon entry of the consent judgment after default. Northwind's redline adds a separate "late payment" interest provision in Section 3.4: if any installment is not received by Northwind within five (5) business days after its due date, interest accrues on the unpaid installment at twelve percent (12%) per annum from the original due date, and this interest accrues separately from and in addition to the consent judgment mechanism set forth in Section 7.
Analysis: This proposed change is problematic on several levels.
First, the twelve percent (12%) rate substantially exceeds the New York statutory rate of nine percent (9%) per annum. While parties to a commercial agreement are generally free to set contractual interest rates, the proposed rate in the context of a settlement agreement governing installment payments is arguably punitive. The purpose of an interest provision in a settlement agreement is to compensate the non-breaching party for the time value of money during the period of delay, not to impose a penalty for late payment. A twelve percent rate — one-third higher than the statutory rate — goes beyond compensation and into the realm of a penalty, which could be challenged as unenforceable under New York law.
Second, the layered interest structure creates complexity and the potential for double-counting. Under Northwind's proposed scheme, if TSL defaults on a payment, interest would accrue at twelve percent per annum under the late payment provision and at nine percent per annum under the consent judgment provision. While Northwind characterizes these as separate remedies (one contractual, one judicial), the practical effect is that TSL would be paying interest at an effective rate well above any reasonable market benchmark. This is inequitable and not contemplated by the mediator's term sheet.
Third, the mediator's term sheet references only the consent judgment at nine percent as the remedy for non-payment. It does not contemplate a separate late payment interest provision. Introducing a new remedy not discussed during mediation departs from the agreed framework.
Recommendation: Category C — Reject the twelve percent (12%) rate. Counter-propose the following: if a late payment interest provision is desired in addition to the consent judgment mechanism (which is a reasonable request to address the gap between default and actual entry of judgment), agree to interest at the New York statutory rate of nine percent (9%) per annum, accruing from the due date of the missed installment. This rate is consistent with the consent judgment rate, avoids any argument that the provision is punitive, and aligns with the mediator's term sheet. In addition, counter-propose extending the grace period from five (5) business days to ten (10) business days before late payment interest begins to accrue. The ten-business-day period accounts for the potential logistical complexity of international wire transfers between Greek, New York, and marshall Islands banking institutions. Finally, make clear that the late payment interest provision and the consent judgment interest provision are alternative, not cumulative — interest accruing under the late payment provision would cease upon entry of the consent judgment, at which point the statutory rate under the judgment would control.
Change 6: Acceleration Upon Default. Northwind's Proposed Change: Northwind adds an acceleration clause in Section 3.5 providing that upon default of any single installment payment (after a five-business-day grace period), the entire remaining unpaid balance of the Settlement Amount becomes immediately due and payable.
Analysis: Acceleration clauses are not unreasonable and are fairly standard in installment settlement agreements. The rationale is straightforward: if TSL demonstrates an unwillingness or inability to make timely payments under the installment schedule, Northwind should not be required to wait for each successive installment to become due before exercising its remedies. The consent judgment provision in Section 7.3 already contemplates that, upon default, Northwind may seek entry of a judgment for the "unpaid balance" — which implicitly assumes that the full remaining balance, not merely the missed installment, is the subject of the judgment. Making the acceleration explicit merely codifies what is already implied.
From TSL's perspective, the acceleration clause does not materially change the economic exposure. If TSL defaults on a payment, it will face the consent judgment regardless, and the judgment amount will be the full unpaid balance. The acceleration clause simply clarifies the mechanics.
Recommendation: Category A — Accept. The acceleration clause is standard and consistent with the consent judgment framework. However, we recommend coordinating this provision with our counter-proposal on the cure period discussed under Change 5 above: the acceleration should not trigger until the expiration of a ten (10) business-day grace period (rather than the five-business-day period proposed by Northwind), consistent with our recommended cure period for the late payment interest provision and the consent judgment mechanism.
Change 7: Escrow Release Mechanics. Northwind's Proposed Change: Northwind proposes amending Section 3.6 to provide that funds deposited into the escrow account at Atlantic Fiduciary Trust Company be released to Northwind upon "sole instruction of Northwind" rather than upon "joint instruction of the Parties," as provided in C&H's first draft.
Analysis: This change is unacceptable. Joint instruction is the standard release mechanism in escrow arrangements and exists for the fundamental purpose of protecting both the depositing party and the receiving party against unauthorized or premature disbursement. TSL is the party depositing funds into the escrow account; removing TSL from the release instruction process eliminates a critical safeguard.
Under a sole-instruction arrangement, Northwind could theoretically direct the escrow agent to release funds at any time — including before TSL has confirmed that it has deposited the correct amount, before any disputed amounts have been resolved, or before the conditions to release (such as execution of the Settlement Agreement and delivery of all required documentation) have been satisfied. This creates an obvious risk that funds are disbursed prematurely or in error, with TSL having no recourse against the escrow agent for following Northwind's instructions.
Moreover, the escrow arrangement is being separately negotiated with Atlantic Fiduciary Trust Company. Martin Schreiber, the relationship manager at Atlantic Fiduciary, has confirmed that the escrow agent's standard form of escrow agreement requires joint instruction for release. Departing from this standard would likely require Atlantic Fiduciary to assume additional liability exposure, which it would almost certainly decline or charge additional fees for.
Recommendation: Category C — Reject. Maintain the joint-instruction release mechanism in both the Settlement Agreement and the separate Escrow Agreement being negotiated with Atlantic Fiduciary Trust Company. Counter-propose the following language to address Northwind's apparent concern about potential delay in receiving funds: "The Parties agree to promptly deliver joint release instructions to the Escrow Agent within three (3) business days following confirmation that a payment has been deposited into and cleared through the Escrow Account. Neither Party shall unreasonably withhold, condition, or delay its execution of joint release instructions." This language provides Northwind with a contractual right to compel timely release while preserving TSL's joint control over the process. If TSL unreasonably withholds its consent to release, Northwind would have a breach of contract claim as a remedy.
C. Mutual General Release (Section 4)
Change 8: Scope of Northwind's Release of TSL. Northwind's Proposed Change: Northwind narrows its release of TSL in Section 4.1 by adding a carve-out for "claims arising from fraud, willful misconduct, or intentional misrepresentation."
Analysis: The mediator's term sheet calls for a "full mutual general release" without any carve-outs or reservations. From TSL's perspective, the entire purpose of paying $7,850,000 (and waiving a $1,620,000 counterclaim) is to achieve finality — a clean and comprehensive resolution of all disputes between the parties. Carve-outs undermine that finality by leaving open the possibility that one party could later assert that some aspect of the underlying dispute involved "fraud" or "willful misconduct" and thereby seek to relitigate claims that were intended to be settled.
That said, there are pragmatic reasons to consider accepting this carve-out in modified form. First, fraud and willful misconduct carve-outs are extremely common in settlement releases across all areas of commercial litigation. Courts and practitioners widely recognize that public policy considerations may prevent the enforcement of a release that purports to bar claims for fraud — particularly where the fraud was unknown to the releasing party at the time of settlement. Second, New York courts have, in certain circumstances, declined to enforce releases of fraud claims where the releasing party was unaware of the fraud at the time of release. See, e.g., Centro Empresarial Cempresa S.A. v. Stonefield Group, 17 N.Y.3d 269 (2011). Including a limited carve-out acknowledges this legal reality and avoids a potential challenge to the enforceability of the release as a whole. Third, the practical risk to TSL is low: there is no allegation of fraud, willful misconduct, or intentional misrepresentation in this case. Northwind's claims are contractual in nature, and the discovery record does not suggest any basis for a fraud claim against TSL.
Recommendation: Category B — Accept with modification. Agree to include a fraud/willful misconduct carve-out, subject to two conditions:
(i) Reciprocity: The carve-out must be mutual. TSL must likewise reserve claims for fraud, willful misconduct, or intentional misrepresentation by Northwind. This ensures parity and prevents the carve-out from being used as a one-sided weapon.
(ii) Narrow Scope: The carve-out must be limited to claims of fraud, willful misconduct, or intentional misrepresentation "in connection with the negotiation and performance of this Settlement Agreement" — not a general carve-out that could be invoked to re-litigate the underlying charter-party dispute under a fraud theory. Without this limitation, Northwind could assert, for example, that TSL's representations regarding the vessel's condition during the charter-party period constituted "fraud" and attempt to pursue claims that were plainly within the scope of the settled dispute. The carve-out should protect against post-settlement misconduct (e.g., concealment of assets, fraudulent representations in the settlement documents), not serve as a vehicle for reopening the underlying controversy.
Change 9: Release of Affiliates and Related Parties. Northwind's Proposed Change: Northwind adds an extensive list of released parties on the Northwind side in Section 4.2(b), including Eastbourne Bulk Carriers Ltd. (the sub-charterer of the M/V Aegean Fortuna), Northwind's past and present officers, directors, employees, agents, representatives, and "all past and present affiliated entities."
Analysis: TSL has no current claims against Eastbourne Bulk Carriers Ltd. or any of Northwind's other affiliates, officers, or directors, apart from the counterclaim for unpaid hire (which is being released in full as part of the settlement). The broader affiliate release is therefore acceptable in substance — TSL is not giving up any claims of value by releasing Northwind's affiliates and personnel.
However, the change must be reciprocal. If Northwind's side of the release encompasses its affiliates, officers, directors, employees, and agents, then the TSL side must be equally expansive. This means that the list of TSL-side released parties must expressly include Aegean Fortuna Shipholding Ltd., TSL's named officers (including Alexandros Stavridis, CEO; Elena Papadimitriou, CFO; and Markos Theodorakis, General Counsel), all past and present directors of TSL and Aegean Fortuna, all employees and agents, and all affiliated entities.
Recommendation: Category B — Accept, provided the list of released parties on TSL's side is equally expansive. We should prepare a corresponding list of TSL-side released parties for inclusion in Section 4.2(a). Confirm with Markos Theodorakis whether there are any additional TSL affiliates that should be listed (e.g., other single-vessel subsidiaries, the fleet management entity).
Change 10: Waiver of Unknown Claims (California Civil Code § 1542 Analogue). Northwind's Proposed Change: Northwind adds a new Section 4.4 containing a provision in which each party expressly waives unknown claims under the principles of California Civil Code § 1542 and similar statutes of other jurisdictions. The provision recites the text of § 1542 and includes a statement that each party has been advised by counsel regarding the significance of this waiver and nevertheless elects to release unknown claims.
Analysis: The Settlement Agreement is governed by New York law. New York does not have a statute analogous to California Civil Code § 1542, which provides that "a general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release." Accordingly, the provision is largely precautionary — it would be relevant primarily if the release were ever challenged in a California court or in another jurisdiction with a similar statute.
Including the provision does no harm to TSL and may provide additional protection if the enforceability of the release is ever litigated outside of New York. Given that both Northwind and TSL operate internationally, and that the M/V Aegean Fortuna has called at ports in numerous jurisdictions, a belt-and-suspenders approach to the release waiver is prudent.
Recommendation: Category A — Accept. The provision is standard in sophisticated commercial settlement agreements and provides additional protection at no cost to TSL.
D. TSL Counterclaim Release (Section 5)
Change 11: Explicit Acknowledgment of Counterclaim Value. Northwind's Proposed Change: Northwind adds language to Section 5.1 requiring TSL to "acknowledge that the $1,620,000 counterclaim for unpaid hire is being released as independent consideration for this Agreement and the mutual promises and releases contained herein."
Analysis: TSL's counterclaim for $1,620,000 in unpaid hire (representing 110 days of withheld hire at $14,750 per day for the period October 1 through December 31, 2022) is indisputably part of the global settlement economics. From TSL's internal accounting perspective, the release of the counterclaim reduces the net economic cost of the settlement to $6,230,000. The characterization of the counterclaim release as part of the settlement consideration is factually accurate.
However, the specific formulation proposed by Northwind — characterizing the counterclaim release as "independent consideration" — warrants scrutiny. Characterizing a single element of the settlement as "independent" consideration could have implications if the settlement is later challenged. For example, if a court were to find that the mutual releases or the payment terms were unenforceable for some reason, the characterization of the counterclaim release as "independent" consideration could be argued by Northwind to mean that the counterclaim release survives independent of the other provisions. This is not consistent with the integrated, global nature of the settlement.
The preferred approach is to characterize the consideration as mutual and flowing in both directions, consistent with the structure of the agreement as a comprehensive, indivisible settlement.
Recommendation: Category B — Accept with modification. Revise the proposed language to read: "Each Party acknowledges that the mutual promises, covenants, and releases set forth herein — including without limitation TSL's release of its counterclaim for unpaid hire, Northwind's release of its claims in the Action, and TSL's payment of the Settlement Amount — constitute good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged." This formulation avoids singling out the counterclaim release as "independent" consideration while affirming its value as part of the overall settlement package.
E. Confidentiality (Section 6)
Change 12: Expanded Permitted Disclosures. Northwind's Proposed Change: C&H's first draft, in Section 6.2, permitted disclosure of the settlement terms and the existence and contents of the Settlement Agreement only to: (i) the Parties' respective insurers; (ii) the Parties' respective lenders and financial institutions; (iii) the Parties' respective auditors and accountants; and (iv) as required by applicable law, regulation, or order of a court of competent jurisdiction. Northwind's redline adds three additional categories of permitted disclosure:
(a) Disclosure to Northwind's "current and future investors and financing sources, including without limitation equity holders, bondholders, and providers of credit facilities";
(b) Disclosure to Northwind's "sub-charterers, including without limitation Eastbourne Bulk Carriers Ltd., to the extent necessary to resolve related claims or fulfill contractual obligations"; and
(c) Disclosure "in connection with any regulatory filing or inquiry by any governmental authority."
Analysis:
Category (a) — Investor/Financing Disclosure: This is reasonable. Northwind is a substantial corporation with annual revenues of approximately $1.2 billion and may have reporting obligations to equity holders, lenders, or other financing sources that require disclosure of material legal settlements. The existing carve-out for "lenders and financial institutions" partially covers this, but expanding to include equity investors and bondholders is consistent with Northwind's likely reporting obligations. This category is acceptable.
Category (b) — Sub-Charterer Disclosure (Eastbourne): This is potentially problematic. Disclosing the settlement terms — including the settlement amount, the installment schedule, and the release terms — to Eastbourne Bulk Carriers Ltd. could lead to public dissemination of confidential information. Eastbourne is not a party to the litigation, is not bound by any confidentiality obligations under the Settlement Agreement, and could use the information for its own purposes. Moreover, we should understand whether Northwind has pending claims or disputes with Eastbourne arising from the same events (i.e., cargo damage claims, demurrage claims, or indemnification claims that Eastbourne may have asserted against Northwind). If so, Northwind may be seeking the ability to disclose the settlement terms to strengthen its position in those separate proceedings. Before agreeing to this disclosure, we need to understand the basis for Northwind's request.
Category (c) — Regulatory Disclosure: This is duplicative of the existing "as required by applicable law, regulation, or order of a court" carve-out. If Northwind is subject to a regulatory inquiry that requires disclosure, the existing carve-out covers it. A separate regulatory disclosure category adds nothing and could be read as broadening the scope of permitted disclosure beyond what is legally compelled.
Recommendation: Category B — Accept category (a) and reject categories (b) and (c) as proposed. Specifically:
• Category (a): Accept, with the addition of a requirement that any investor or financing source receiving disclosure be subject to confidentiality obligations at least as restrictive as those in the Settlement Agreement.
• Category (b): Modify. Permit disclosure to Eastbourne only if Northwind demonstrates (i) an existing contractual obligation to disclose to Eastbourne (e.g., under the sub-charter-party or a separate indemnification agreement) and (ii) Eastbourne executes a confidentiality undertaking, in form reasonably satisfactory to TSL, before receiving any settlement terms. This protects against unconstrained dissemination while accommodating Northwind's potential contractual obligations.
• Category (c): Delete as duplicative. The existing "as required by applicable law, regulation, or order of a court" carve-out is sufficient to cover regulatory inquiries.
Change 13: Remedies for Breach of Confidentiality. Northwind's Proposed Change: Northwind adds a new Section 6.5 providing that the non-breaching party shall be entitled to seek injunctive relief for any breach or threatened breach of the confidentiality provisions "without the necessity of proving actual damages or posting a bond or other security."
Analysis: This is standard injunctive relief language commonly included in confidentiality provisions. It reflects the well-established principle that breaches of confidentiality often cause irreparable harm that cannot be adequately compensated by monetary damages. The waiver of the bond requirement is also standard, as courts in New York have discretion to waive or reduce bond requirements in appropriate cases. The provision is mutual and benefits both parties equally.
Recommendation: Category A — Accept.
Change 14: Press Release / Public Statement. Northwind's Proposed Change: Northwind proposes a new Section 6.6 requiring that neither party issue any press release, public statement, or public communication regarding the settlement, the Settlement Agreement, or the underlying Action without the prior written consent of the other party. If the parties mutually agree to issue a statement, the text must be jointly approved.
Analysis: This provision is consistent with the confidentiality framework and provides an additional layer of protection against public disclosure. TSL is a privately held Greek company that does not typically issue press releases regarding litigation settlements. Northwind, as a marshall Islands corporation with a broader investor base, may face greater pressure to communicate publicly about the resolution of significant litigation. The mutual consent requirement protects both sides and ensures that any public messaging is carefully coordinated.
Recommendation: Category A — Accept.
F. Consent Judgment (Section 7)
Change 15: Form of Consent Judgment. Northwind's Proposed Change: Northwind proposes amending Section 7.3 to require that a fully drafted form of consent judgment be attached as an exhibit to the Settlement Agreement, pre-signed by TSL (and Aegean Fortuna Shipholding Ltd.), to be filed by Northwind with the Supreme Court upon default without further notice to TSL.
Analysis: The concept of attaching a pre-drafted form of consent judgment as an exhibit to a settlement agreement is not uncommon in installment settlement practice. It provides the plaintiff with an efficient enforcement mechanism in the event of default — rather than commencing a new action or motion, the plaintiff simply files the pre-signed consent judgment with the court. From the plaintiff's perspective, this is one of the principal benefits of a consent judgment provision: speed and certainty of enforcement.
However, Northwind's proposed formulation — requiring TSL to pre-sign the consent judgment and permitting filing "without further notice" — is aggressive and presents significant risks to TSL:
• Risk of Improper Filing: If Northwind has the power to file the consent judgment without notice, there is a risk that it could be filed before a genuine default has occurred — for example, if TSL believes in good faith that payment has been timely made but Northwind disagrees, or if there is a bank processing delay that causes a payment to arrive one or two days late. Without a notice and cure mechanism, TSL would have no opportunity to correct an innocent delay before a judgment is entered.
• Pre-Signing Risk: Pre-signing a consent judgment effectively gives Northwind a blank check to seek judgment entry at any time. While the Settlement Agreement would govern the circumstances under which filing is permitted, the Supreme Court Clerk's office is not in a position to verify compliance with the Settlement Agreement's conditions before accepting a filing.
• Loss of Procedural Protections: Under the standard consent judgment mechanism, the defendant retains the right to be heard before the court before judgment is entered. Pre-signing eliminates this right.
Recommendation: Category B — Accept the concept with significant safeguards. C&H is already preparing a proposed form of consent judgment pursuant to Section 7.3 of the first draft, and attaching it as an exhibit is a reasonable approach. However, the following safeguards must be incorporated:
(i) Notice and Cure Period: Before filing the consent judgment, Northwind must provide written notice of the alleged default to TSL (at the notice addresses specified in Section 11), and TSL shall have ten (10) business days from receipt of such notice to cure the default by making the payment in full (plus accrued interest at the 9% rate). Only if TSL fails to cure within the ten-business-day period may Northwind proceed with filing.
(ii) Counsel Certification: Northwind must submit, simultaneously with the filing of the consent judgment, a certification by its counsel of record (Margaret Delacroix or her designee at HD&S) certifying under penalty of perjury that (a) a payment default has occurred, (b) written notice of default was provided to TSL, and (c) the cure period has expired without payment.
(iii) Face of Judgment Language: The consent judgment itself must state on its face that it may only be filed upon default in accordance with the terms and conditions of the Settlement Agreement and the Stipulation and Order Retaining Jurisdiction.
(iv) No Pre-Signing by TSL: TSL will not pre-sign the consent judgment. Rather, TSL's consent to entry of the judgment will be granted through the Stipulation and Order Retaining Jurisdiction to be filed with Justice Chen in Part 49. This approach provides TSL with the procedural protection of the court's oversight while giving Northwind the enforcement certainty it seeks.
Change 16: Interest Calculation on Consent Judgment. Northwind's Proposed Change: Northwind specifies in Section 7.4 that the nine percent (9%) per annum interest on the consent judgment runs from the Effective Date of the Settlement Agreement, not from the date of default.
Analysis: This change would result in a substantially higher judgment amount and is not supported by the mediator's term sheet or sound principles of interest accrual.
The mediator's term sheet provides for nine percent (9%) interest on the "unpaid balance" but does not specify the accrual start date. Under the standard approach, interest on a consent judgment accrues from the date of default (i.e., the date the payment was due but not made) — not from the Effective Date of the agreement. Running interest from the Effective Date would mean that TSL is charged interest for a period during which no payment obligation existed, creating an inequitable windfall for Northwind.
Consider the following example to illustrate the magnitude of the issue: if TSL makes Payments 1 and 2 on time but defaults on Payment 3 ($1,850,000, due at 150 days), under Northwind's proposal, interest at 9% per annum would accrue on $1,850,000 from the Effective Date — meaning TSL would owe approximately 150 days of interest (roughly $68,466) on a payment that was not yet due for the first 150 days. Under the standard approach, interest would accrue only from day 150 (the due date), resulting in a far more equitable calculation. Alternatively, if TSL defaults on Payment 1 ($4,000,000, due at 30 days) and the remaining balance accelerates, Northwind's proposal would require interest on the full $7,850,000 from the Effective Date — even though approximately $3,850,000 of that amount was never due at the time of default.
Recommendation: Category C — Reject. Counter-propose that interest at nine percent (9%) per annum accrues on any unpaid installment from the due date of that installment, consistent with the New York statutory rate structure and equitable principles. This approach charges interest only for the period during which TSL has failed to make a payment that was due, not for periods during which the payment obligation had not yet arisen. If the remaining balance is accelerated upon default, interest on the accelerated amounts accrues from the date of acceleration.
G. Representations and Warranties (Section 8)
Change 17: Representation Regarding Pending Bankruptcy. Northwind's Proposed Change: Northwind strengthens the no-bankruptcy representation in Section 8.4 to require TSL to represent and warrant that it "is solvent, is able to pay its debts as they become due, and does not contemplate any insolvency proceeding, restructuring, or similar proceeding in any jurisdiction, including the Hellenic Republic (Greece)."
Analysis: The first draft contained a standard representation that neither party has filed or been the subject of any petition for relief under any bankruptcy, insolvency, or similar law. Northwind's proposed enhancement goes further in two respects: (i) it adds an affirmative solvency representation, and (ii) it adds a forward-looking statement that TSL "does not contemplate" any insolvency proceeding.
TSL is a substantial company. Based on the most recent financial data available (fiscal year 2022 audited financial statements), TSL has annual revenues of approximately $612 million, EBITDA of approximately $98 million, and operates a fleet of approximately 34 vessels. TSL has the clear financial capacity to make the $7,850,000 settlement payment. There is no reason to believe TSL is insolvent or contemplating insolvency proceedings.
However, a formal solvency representation — particularly one that includes forward-looking language — creates potential exposure. The dry bulk shipping market is cyclical, and TSL's financial condition could deteriorate due to market conditions, declining charter rates, or other factors outside management's control. A forward-looking representation that TSL "does not contemplate" insolvency proceedings could be argued to have been breached if, months after the Effective Date, TSL explores restructuring options in response to adverse market conditions. This is precisely the kind of open-ended exposure that should be avoided.
Recommendation: Category B — Accept a limited solvency representation. Agree to represent that "as of the Effective Date, TSL is not insolvent within the meaning of applicable law and has not filed, and is not the subject of, any petition for relief under any bankruptcy, insolvency, reorganization, or similar law in any jurisdiction." Reject the forward-looking "does not contemplate" language as too broad and speculative. To the extent Northwind insists on some forward-looking protection, we could offer a representation that "as of the Effective Date, TSL has not authorized, and its board of directors has not resolved to commence, any insolvency or restructuring proceeding." This limits the representation to actions actually taken by the board, rather than subjective intentions. Add a reciprocal solvency representation from Northwind.
Change 18: Representation of Authority — Greek Corporate Formalities. Northwind's Proposed Change: Northwind adds a requirement in Section 8.2 that TSL attach, as an exhibit to the Settlement Agreement, a certified copy of the board resolution of Thalassa Shipping & Logistics SA authorizing the settlement and the execution of the Settlement Agreement.
Analysis: The request for evidence of corporate authority is reasonable in principle. In any significant commercial transaction involving a foreign corporation, it is standard practice to require proof that the entity's governing body has authorized the transaction. The TSL Board Resolution authorizing the settlement was adopted at a duly convened meeting on October 18, 2024. The resolution authorizes TSL management to enter into a settlement of the Northwind litigation on terms not to exceed $8,500,000 in total settlement consideration.
The difficulty is that the board resolution, as drafted by C&H with input from Konstantinou & Rizos Law Offices, contains confidential information regarding TSL's internal settlement strategy. Specifically, the minutes of the October 18 meeting reflect discussion of the board's assessment of litigation risk, the Settlement Authority Memorandum dated October 15, 2024 (which analyzed a recommended settlement range of $6.5 million to $9 million), and the board's ultimate authorization of a settlement cap of $8,500,000. If the full resolution were attached as an exhibit to the Settlement Agreement and shared with Northwind, it would reveal that TSL was authorized to pay up to $8,500,000 — $650,000 more than the actual settlement amount. This information could be used against TSL if the settlement were to fall apart and the parties returned to litigation.
Recommendation: Category B — Accept in modified form. Rather than attaching the full board resolution, agree to provide one of the following:
(i) Officer's Certificate: A certificate signed by Markos Theodorakis, in his capacity as General Counsel and Secretary of Thalassa Shipping & Logistics SA, certifying that (a) the board of directors of TSL has duly authorized the execution and delivery of the Settlement Agreement and the performance of TSL's obligations thereunder, (b) the authorization was granted at a meeting duly convened and held in accordance with TSL's constitutive documents and applicable Greek law, and (c) such authorization has not been revoked or modified.
(ii) Redacted Resolution: Alternatively, if Northwind insists on receiving the resolution itself, provide a redacted version showing only the operative authorization clause (i.e., "RESOLVED, that the Board hereby authorizes the settlement of the Northwind litigation and the execution of a Settlement Agreement and Mutual General Release") without the discussion, the settlement range analysis, or the $8,500,000 authorization cap.
The officer's certificate approach is preferable and is commonly used in international transactions involving Greek companies. Coordinate with Konstantinou & Rizos on the form of the certificate.
Change 19: No Assignment of Claims. Northwind's Proposed Change: Minor wording change to Section 8.6, making the no-assignment representation explicitly bilateral. Northwind's redline adds language requiring both parties (rather than just TSL, as in the first draft) to represent that they have not assigned, transferred, conveyed, or otherwise disposed of any of the claims being released under the Settlement Agreement.
Analysis: This is a straightforward and appropriate edit. The no-assignment representation should apply to both parties to ensure that neither side has transferred its claims to a third party who could later assert those claims notwithstanding the release.
Recommendation: Category A — Accept.
H. Withdrawal of Pending Motions (Section 9)
Change 20: Timing of Withdrawal. Northwind's Proposed Change: C&H's first draft provides that all pending motions are withdrawn with prejudice immediately upon execution of the Settlement Agreement. Northwind proposes that withdrawal occur within five (5) business days of execution, rather than immediately upon execution.
Analysis: This change allows a short administrative window for the preparation and filing of the stipulation of withdrawal and related papers. TSL's pending motion for partial summary judgment was filed on September 20, 2024, and the withdrawal will require a signed stipulation by both sides and submission of a joint letter to Justice Chen's chambers. The five-business-day window is reasonable and accounts for the logistical steps involved.
From TSL's perspective, the motion for partial summary judgment is a strong motion (our internal assessment, reflected in the Settlement Authority Memorandum, is that TSL has a 65–70% likelihood of success on the liquidated damages cap issue and a 55–60% likelihood on the deviation claim). The motion represents meaningful leverage, and its withdrawal should be coordinated with — not precede — the execution of the Settlement Agreement and the first escrow deposit. However, since the withdrawal is contingent on execution of the Settlement Agreement, the five-business-day administrative window does not change the sequencing.
Recommendation: Category A — Accept.
I. Return / Destruction of discovery Materials (Section 10)
Change 21: Extended Period for Return/Destruction. Northwind's Proposed Change: C&H's first draft provides for the return or destruction of all discovery materials, including documents produced during discovery, deposition transcripts, and expert reports, within sixty (60) days after the final settlement payment is made. Northwind's redline extends this period to ninety (90) days.
Analysis: The additional thirty days has minimal practical impact. Both sides have accumulated substantial volumes of discovery materials over the course of this litigation. Northwind may need additional time to coordinate with its experts — Pinnacle Valuation Partners LLP (Dr. Rajesh Anand, damages expert) and Blackmore Maritime Advisory Ltd. (Captain Julian Blackmore, maritime operations expert) — for the return of expert materials and work product. The same is true on TSL's side, where our experts will need to return or destroy materials in their possession.
Recommendation: Category A — Accept ninety (90) days. The extended period is reasonable and accounts for the practical logistics of the return/destruction process.
Change 22: Certification of Destruction. Northwind's Proposed Change: Northwind adds a new Section 10.3 requiring that, upon completion of the return or destruction of discovery materials, each party provide to the other a written certification of destruction, signed by an officer of the certifying party, confirming that all discovery materials have been returned or destroyed in accordance with Section 10.
Analysis: This is a reasonable and increasingly standard provision in settlement agreements involving the return of confidential discovery materials. The certification provides a verifiable record that each party has fulfilled its obligations and creates accountability. The requirement that the certification be signed by an officer (rather than counsel) adds an additional layer of responsibility.
Recommendation: Category A — Accept.
J. Miscellaneous Provisions (Section 11)
Change 23: Governing Law Confirmation. Northwind's Proposed Change: Northwind adds an explicit governing law clause in Section 11.1 stating that the Settlement Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflicts-of-law principles.
Analysis: This is consistent with the entire framework of the settlement. The underlying charter-party contains a New York law governing-law clause. The litigation is pending in the Supreme Court of New York. The escrow is in New York. The mediator's term sheet was executed in New York. While our first draft implicitly adopted New York law through the venue and jurisdiction provisions, an express governing law clause eliminates any ambiguity. The exclusion of conflicts-of-law principles is standard and ensures that a court applying the governing law clause does not refer to the law of another jurisdiction.
Recommendation: Category A — Accept.
Change 24: Dispute Resolution for Settlement Agreement Disputes. Northwind's Proposed Change: Northwind proposes a new Section 11.8 providing that any dispute arising out of or relating to the Settlement Agreement itself (as distinguished from the underlying charter-party dispute) shall be resolved exclusively in the Supreme Court of the State of New York, New York County, before Justice Lorraine K. Chen, J.S.C. (Part 49), or her successor.
Analysis: This provision is consistent with the Stipulation and Order Retaining Jurisdiction that is being prepared for filing with Justice Chen following execution of the Settlement Agreement. The Stipulation will request that the Court retain jurisdiction over the Action for the sole purpose of enforcing the terms of the Settlement Agreement. Assigning disputes under the Settlement Agreement to Justice Chen's Part ensures continuity and avoids the expense and delay of commencing a new action. Justice Chen is familiar with the case, having presided over numerous discovery conferences and the pending summary judgment motion.
Recommendation: Category A — Accept. This provision should be drafted in coordination with the Stipulation and Order Retaining Jurisdiction to ensure consistency.
Change 25: Counterparts and Electronic Signatures. Northwind's Proposed Change: Northwind adds a standard counterparts and electronic signatures provision in Section 11.9, providing that the Settlement Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and that signatures delivered by electronic means (including PDF, Brightwater Software, or similar platforms) shall have the same force and effect as original signatures.
Analysis: Standard provision. Essential given that the parties and their counsel are located in multiple jurisdictions (New York, Stamford, Piraeus, Monrovia).
Recommendation: Category A — Accept.
Change 26: Notices Provision. Northwind's Proposed Change: Northwind revises the notices provision in Section 11.4 to require that all notices, demands, requests, and other communications under the Settlement Agreement be sent by both email and overnight courier (with notice deemed given on the earlier of actual receipt or two business days after deposit with the overnight courier). The following notice addresses are specified:
To TSL: Thalassa Shipping & Logistics SA 42 Akti Miaouli Piraeus 185 38, Greece
Attention: Markos Theodorakis, General Counsel
Email: m.theodorakis@thalassashipping.gr
With a copy to: Drummond & Fenwick LLP One Liberty Plaza, 50th Floor New York,

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

Record

Parties

Dates

Amounts