This excerpt taken from the ONAV 20-F filed Apr 25, 2007.
Commitments and contingencies:
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Companys vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A minimum of up to $1 billion of the liabilities associated with the individual vessels actions, mainly for sea pollution, are covered by the Protection and Indemnity (P&I) Club insurance.
On June 29, 2005 and August 29, 2006 the Company entered into rental agreements with a lessor affiliated to Target Marine S.A. to lease office space in Piraeus, Greece. The termination dates of agreements are June 30, 2007 and August 31, 2007 respectively. Neither the President and Chief Executive Officer nor any other director or officer of the Company has any ownership interest in the lessor. The monthly rental is Euro 1,785 and Euro 2,145 ($2,357 and $2,832 respectively using the exchange rate of U.S. dollar/Euro at December 31, 2006). Rental expense for the period from February 28, 2005 (date of inception) through December 31, 2005 and the year ended December 31, 2006 amounted to $17 and $42 and is included in general and administrative expenses in the accompanying consolidated statements of income. The future minimum rentals payable under the above non-cancellable operating leases for 2007, using the exchange rate of U.S. dollar/Euro at December 31, 2006, will be approximately $37.
On April 6, 2006, the Company renewed the employment agreements of its executives, namely the Chief Executive Officer (CEO), the Chief Operating Officer (COO) and the Chief Financial Officer (CFO). Under specific termination clauses in the employment agreements, the Company is committed to pay to its executives a lump sum of $1,300 in total, in addition to their base salary until the end of the contract term, for early termination of employment within its term or in the event there is a material breach by the Company of the terms of the respective employment agreements. Such amount will be increased by approximately $500 in total in the case the duration of the agreements is extended prior to the occurrence of such events. Furthermore, in the event of a change of control (as defined in the Companys amended and restated articles of incorporation) during the term of the employment agreements, the Company is committed to pay its executives the equivalent of two to three years annual base salary, over and above the lump sum described above.
OMEGA NAVIGATION ENTERPRISES, INC.
Notes to consolidated financial statements December 31, 2006
(Expressed in thousands U.S. Dollars - except share and per share data, unless otherwise stated)