Navigator Holdings Ltd. (Form: 6-K, Received: 11/13/2018 06:23:43)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2018

Commission File Number 001-36202

NAVIGATOR HOLDINGS LTD.

(Translation of registrant’s name into English)

c/o NGT Services (UK) Ltd

10 Bressenden Place

London, SW1E 5DH

United Kingdom

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes ☐ No ☒

NAVIGATOR HOLDINGS LTD.

REPORT ON FORM 6-K FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

INDEX


	PAGE
Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
Quantitative and Qualitative Disclosures About Market Risk		18
Important Information Regarding Forward-Looking Statements		19
Unaudited Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2018		F-1
Unaudited Condensed Consolidated Statements of Income for the Three Months and Nine Months ended September 30, 2017 and 2018		F-2
Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months and Nine Months ended September 30, 2017 and 2018		F-3
Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Year ended December 31, 2017 and the Nine Months ended September 30, 2018		F-4
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2017 and 2018		F-5
Notes to Unaudited Condensed Consolidated Financial Statements		F-6
EXHIBITS
SIGNATURES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references in this report to “Navigator Holdings,” “our,” “we,” “us” and the “Company” refer to Navigator Holdings Ltd., a Marshall Islands corporation. All references in this report to our wholly-owned subsidiary “Navigator Gas L.L.C.” refer to Navigator Gas L.L.C., a Marshall Islands limited liability company. As used in this report, unless the context indicates or otherwise requires, references to “our fleet” or “our vessels” refers to the 38 vessels we owned and operated as of September 30, 2018.

This section should be read in conjunction with the interim financial statements and notes thereto presented elsewhere in this report, as well as the audited historical consolidated financial statements and notes thereto of Navigator Holdings Ltd. included in our Annual Report on Form 20-F, filed with the United States Securities and Exchange Commission, or the SEC, on March 5, 2018 (“the 2017 Annual Report”). Among other things, those financial statements include more detailed information regarding the basis of presentation for the following information. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and are presented in U.S. Dollars unless otherwise indicated.

Overview

We are the owner and operator of the world’s largest fleet of handysize liquefied gas carriers. We provide international and regional seaborne transportation services of petrochemical gases, liquefied petroleum gas, or “LPG”, and ammonia for energy companies, industrial users and commodity traders. These gases are transported in liquefied form, by applying cooling and/or pressure, reducing volume by up to 900 times depending on the cargo, making their transportation more efficient and economical. Vessels in our fleet are capable of loading, discharging and carrying cargoes across a range of temperatures from ambient to minus 104° Celsius and pressures from 1 bar to 6.4 bar.

Our fleet consists of 38 vessels. We have 33 semi- or fully-refrigerated handysize liquefied gas carriers, of which ten are ethylene/ethane capable. We define handysize liquefied gas carriers as those liquefied gas carriers with capabilities between 15,000 and 24,999 cubic meters, or cbm. Our handysize liquefied gas carriers can accommodate medium- and long-haul routes that may be uneconomical for smaller vessels and can call at ports that are unable to support larger vessels due to limited onshore capacity, absence of fully-refrigerated loading infrastructure and/or vessel size restrictions.

In addition, we have four midsize 37,300 cbm ethylene/ethane-capable semi-refrigerated liquefied gas carriers. Our midsize ethylene/ethane-capable semi-refrigerated gas carriers enable long-haul transportation of ethylene/ethane that may be uneconomical for smaller vessels.

We have one 38,000 cbm fully-refrigerated gas carrier which trades predominately from the Caribbean and the Mediterranean to Morocco, carrying ammonia.

In addition, in January 2018, we entered into a 50/50 joint venture (the “Export Terminal Joint Venture”) to construct and operate an ethylene export marine terminal at Morgan’s Point, Texas (the “Marine Export Terminal”). The Marine Export Terminal is expected to begin commercial operations in the fourth quarter of 2019 and will have the capacity to export approximately one million tons of ethylene annually.

Our Fleet

The following table sets forth our vessels as of November 13, 2018:


Operating Vessel	Year Built		Vessel Size (CBM)		Employment Status		Charter Expiration Date
Ethylene/ethane capable semi-refrigerated
Navigator Orion (formerly known as Navigator Mars)		2000		22,085		Time charter		October 2020
Navigator Neptune		2000		22,085		Spot market		—
Navigator Pluto		2000		22,085		Time charter		June 2019
Navigator Saturn		2000		22,085		Spot market		—
Navigator Venus		2000		22,085		Spot market		—
Navigator Atlas		2014		21,000		Contract of affreightment		December 2018
Navigator Europa		2014		21,000		Contract of affreightment		December 2018
Navigator Oberon		2014		21,000		Spot Market		—
Navigator Triton		2015		21,000		Spot market		—
Navigator Umbrio		2015		21,000		Contract of affreightment		December 2018
Navigator Aurora		2016		37,300		Time charter		December 2026
Navigator Eclipse		2016		37,300		Time charter		November 2020
Navigator Nova		2017		37,300		Time charter		February 2019
Navigator Prominence		2017		37,300		Spot market		—

Semi-refrigerated
Navigator Magellan		1998		20,700		Time charter		November 2018
Navigator Aries		2008		20,750		Time charter		April 2020
Navigator Capricorn		2008		20,750		Time charter		February 2020
Navigator Gemini		2009		20,750		Spot market		—
Navigator Pegasus		2009		22,200		Time charter		June 2019
Navigator Phoenix		2009		22,200		Time charter		January 2019
Navigator Scorpio		2009		20,750		Spot market		—
Navigator Taurus		2009		20,750		Time charter		June 2019
Navigator Virgo		2009		20,750		Time charter		June 2019
Navigator Leo		2011		20,600		Time charter		December 2023
Navigator Libra		2012		20,600		Time charter		December 2023
Navigator Centauri		2015		21,000		Spot market		—
Navigator Ceres		2015		21,000		Spot market		—
Navigator Ceto		2016		21,000		Contract of affreightment		December 2018
Navigator Copernico		2016		21,000		Spot market		—
Navigator Luga		2017		22,000		Time charter		February 2022
Navigator Yauza		2017		22,000		Time charter		April 2022

Fully-refrigerated
Navigator Glory		2010		22,500		Time charter		March 2019
Navigator Grace		2010		22,500		Spot market		—
Navigator Galaxy		2011		22,500		Time charter		March 2019
Navigator Genesis		2011		22,500		Spot market		—
Navigator Global		2011		22,500		Time charter		November 2018
Navigator Gusto		2011		22,500		Time charter		October 2019
Navigator Jorf		2017		38,000		Time charter		August 2027

Recent Developments

2018 Senior Secured Bonds

On November 2, 2018, the Company issued senior secured bonds in an aggregate principal amount of 600 million Norwegian Kroner (“NOK”) (approximately $72.0 million) with Norsk Tillitsmann ASA as the bond trustee (the “2018 Bonds”). The net proceeds will be used to partially finance our portion of the capital cost of construction of the Export Terminal Joint Venture. The 2018 Bonds are secured by four of the Company’s ethylene capable vessels. The 2018 Bonds are governed by Norwegian law and are expected to be listed on the Nordic ABM which is operated and organized by Oslo Børs ASA.

Interest on the 2018 Bonds is payable quarterly at 3 month NIBOR plus 6.0% per annum, calculated on a 360-day year basis. The 2018 Bonds will mature in full on November 2, 2023.

Ethylene Marine Export Terminal

On May 29, 2018 the Company announced the beginning of construction on the Export Terminal Joint Venture to construct the Marine Export Terminal to be located at Morgan’s Point, Texas facility on the Houston Ship Channel that will have the capacity to export approximately one million tons of ethylene per year. Refrigerated storage for 30,000 tons of ethylene will be constructed on-site and will provide the capability to load ethylene at rates of 1,000 tons per hour. The project is initially supported by two long-term contracts with ethylene producer Flint Hills Resources and a major Japanese trading company with further contracts expected over the next quarter. Commercial operations are scheduled to begin in the fourth quarter of 2019, with the refrigerated storage expected to be completed later in 2020.

As of September 30, 2018, the Company had contributed $25.0 million of our expected $155.0 million share of the capital cost of the Marine Export Terminal construction from the Company’s available cash resources. In November 2018, we contributed a further $11.0 million to the Export Terminal Joint Venture of our expected share of the capital cost using the proceeds of the 2018 Bonds. We expect to contribute a further $5.0 million before the end of the year and approximately $70.0 million during 2019.

Trends and Outlook

During the third quarter of 2018, we entered into two new time charters for niche LPG trade along the west coasts of South America and Africa respectively. Additionally, we undertook a new charter for the transportation of two west coast Australia LPG cargoes to South East Asia as well as a renewal of a one-year time charter with Algeria’s state oil company at around a 30% increase in charter hire compared to the expiring rate. These additional time charter commitments indicate a firming in utilization in the near term as the market tightens and sentiment improves.

Long haul spot activity across the petrochemical segment (butadiene, crude C4, raffinate and butene-1) continued into the third quarter, with cargoes emanating from North West Europe, the Eastern Mediterranean and from Brazil, into the U.S. Gulf markets with an increasing frequency. There were also long haul voyages to both the Middle East and to Far East Asia concluded from North Europe during this third quarter.

Long haul ethylene activity continued, though this was tempered by the shutdown for maintenance of the only existing US export terminal at Targa, Houston, for the month of September. This shortfall was taken up, however, by ethylene tons moving from North West Europe, the Mediterranean, the Red Sea and the Middle East. Petrochemical voyages achieved charter rates of up to approximately $22,000 per day during the third quarter, whereas rates for standard LPG transportation remained at approximately $15,000 per day. The majority of the assessed earnings estimates from third party brokers are improving across the entire gas carrier industry and the sentiment is positive going forward on the back of a reducing orderbook and incremental volume from infrastructure projects such as the Mariner East II pipeline system on the U.S. East Coast which is expected to become operational in December of this year followed by AltaGas Canada West Coast export terminal during the first quarter of 2019.

Factors Affecting Comparability

You should consider the following factors when evaluating our historical financial performance and assessing our prospects:

•

We have been increasing our fleet size . Our historical financial performance has been significantly impacted by the increasing size of our fleet.

•

During the first nine months of 2017, we took delivery of four vessels; Navigator Nova and Navigator Luga in January 2017; Navigator Yauza in April 2017 and Navigator Jorf in August 2017 giving a weighted average fleet size of 35.8 vessels for the nine months ended September 30, 2017. Following the completion of our newbuilding program in November 2017 with the delivery of Navigator Prominence , our fleet size was 38.0 vessels throughout the nine months ended September 30, 2018. Given the increase in the number of operating vessels in our fleet, our historical financial statements reflect significantly different levels of ownership and operating days as well as different levels of voyage expenses, vessel operating expenses, interest expense and other related costs.

•

We will have different financing arrangements. We have entered into secured term loan facilities and revolving credit facilities and have issued senior unsecured bonds to finance the acquisitions of vessels and the construction of all the vessels in our newbuilding program (completed in November 2017), and to refinance certain debt maturities. We have also issued new senior secured bonds. Please read “—Liquidity and Capital Resources—Secured Term Loan Facilities and Revolving Credit Facilities” and “2017 Senior Unsecured Bonds” and “2018 Senior Secured Bonds”.

•

Changes in Accounting Standards. On January 1, 2018 we adopted the new accounting standard described below. Please read Note 1 (Basis of Presentation) to our unaudited condensed consolidated financial statements attached hereto for more information regarding this standard and other recently adopted new accounting standards.

•

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). We have adopted the new accounting standard on revenue recognition using the modified retrospective method to incorporate the cumulative effect at the date of initial application for reporting periods presented beginning January 1, 2018. By using the modified retrospective method approach, we have made an adjustment to the consolidated statement of shareholders’ equity which represents the amount of net revenue that would not have been recognized in retained earnings for the year ended December 31, 2017 under ASU 2014-09. Consequently, the comparable amounts for the three and nine months ended September 30, 2017 have not been adjusted.

Results of Operations for the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2018

The following table compares our operating results for the three months ended September 30, 2017 and 2018:


	Three Months Ended September 30, 2017			Three Months Ended September 30, 2018			Percentage Change
	(in thousands, except percentages)
Operating revenue:	$	70,211		$	80,843			15.1	%
Operating expenses:
Brokerage Commissions		1,191			1,434			20.4	%
Voyage expenses		12,246			17,251			40.9	%
Vessel operating expenses		25,106			26,873			7.0	%
Depreciation and amortization		18,787			18,846			0.3	%
General and administrative costs		3,932			4,176			6.2	%
Other corporate expenses		653			691			5.8	%

Total operating expenses	$	61,915		$	69,271			11.9	%

Operating income	$	8,296		$	11,572			39.5	%
Interest expense		(9,426	)		(11,014	)		16.8	%
Interest income		139			202			45.3	%

(Loss)/Income before income taxes	$	(991	)	$	760			—
Income taxes		(102	)		(137	)		34.3	%

Net (loss)/income	$	(1,093	)	$	623			—

Operating Revenue . Operating revenue, net of address commission, increased by $10.6 million or 15.1% to $80.8 million for the three months ended September 30, 2018, from $70.2 million for the three months ended September 30, 2017. This increase was principally due to:

•

an increase in operating revenue of approximately $1.6 million attributable to an increase in the weighted average number of vessels from 36.8 for the three months ended September 30, 2017 to 38.0 for the three months ended September 30, 2018, and a corresponding increase in vessel ownership days by 112 days, or 3.3 %, for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017;

•

an increase in operating revenue of approximately $2.2 million attributable to an increase in average charter rates, which increased to an average of approximately $638,446 per vessel per calendar month ($20,987 per day) for the three months ended September 30, 2018 compared to an average of approximately $615,195 per vessel per calendar month ($20,226 per day) for the three months ended September 30, 2017. This was primarily as a result of the continuing weak LPG markets which accounted for a decrease of $0.2 million, offset by the adoption of ASU 2014-09, the new accounting standard that requires revenue for voyage charters to be recognized between load port and discharge port only, rather than the previous method of recognizing revenue between the prior discharge port to the following discharge port, accounting for an increase of $2.4 million;

•

an increase in operating revenue of approximately $1.8 million attributable to an increase in fleet utilization from 85.0% during the three months ended September 30, 2017 to 87.5% during the three months ended September 30, 2018; and

•

an increase in operating revenue of approximately $5.0 million primarily attributable to an increase in pass through voyage costs.

The following table presents selected operating data for the three months ended September 30, 2017 and 2018, which we believe are useful in understanding the basis for movement in our operating revenue.


	Three Months Ended September 30, 2017			Three Months Ended September 30, 2018
Fleet Data:
Weighted average number of vessels		36.8			38.0
Ownership days		3,384			3,496
Available days		3,371			3,464
Operating days		2,866			3,030
Fleet utilization		85.0	%		87.5	%
Average daily time charter equivalent rate (*)	$	20,226		$	20,987

Non-GAAP Financial Measure -Time charter equivalent: Time charter equivalent (“TCE”) rate is a measure of the average daily revenue performance of a vessel. TCE is not calculated in accordance with U.S. GAAP. For all charters, we calculate TCE by dividing total operating revenues, less any voyage expenses, by the number of operating days for the relevant period. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses, whereas for voyage charters, also known as spot market charters, we pay all voyage expenses. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters and contracts of affreightment) under which the vessels may be employed between the periods. We include average daily TCE rate, as we believe it provides additional meaningful information in conjunction with net operating revenues, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies.

Reconciliation of Operating Revenue to TCE rate

The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.


	Three Months Ended September 30, 2017		Three Months Ended September 30, 2018
	(in thousands, except operating days and average daily time charter equivalent rate)
Fleet Data:
Operating revenue	$	70,211	$	80,843
Voyage expenses		12,246		17,251

Operating revenue less Voyage expenses*		57,965		63,592

Operating days		2,866		3,030
Average daily time charter equivalent rate	$	20,226	$	20,987

*	We have adopted the new accounting standard ASU 2014-09 for revenue recognition using the modified retrospective method, which incorporates the cumulative effect of prior years in January 1, 2018. Consequently, the three months ended September 30, 2017 has not been adjusted.

Brokerage Commissions . Brokerage commissions, which typically vary between 1.25% and 5% of operating revenue, increased to $1.4 million for the three months ended September 30, 2018, from $1.2 million for the three months ended September 30, 2017. This was primarily related to the increase in the amount of revenue on which the commissions are based.

Voyage Expenses. Voyage expenses increased by 40.9% to $17.3 million for the three months ended September 30, 2018, from $12.2 million for the three months ended September 30, 2017. This was primarily due to an increase in the cost of bunkers associated with voyage charters over the quarter as compared to the same quarter in 2017. These voyage costs are pass through costs, compensated for by increased revenue of the same amount.

Vessel Operating Expenses . Vessel operating expenses increased by 7.0% to $26.9 million for the three months ended September 30, 2018, from $25.1 million for the three months ended September 30, 2017, as the average number of vessels in our fleet increased by 3.3%, from an average of 36.8 vessels in the fleet during the three months ended September 30, 2017 to 38.0 vessels during the three months ended September 30, 2018. Average daily vessel operating expenses increased by $239 per day or 3.2% to $7,687 per vessel per day for the three months ended September 30, 2018, compared to $7,448 per vessel per day for the three months ended September 30, 2017.

Depreciation and Amortization . Depreciation and amortization increased by 0.3% to $18.9 million for the three months ended September 30, 2018, from $18.8 million for the three months ended September 30, 2017. This was primarily due to an increase in our weighted average fleet size of 3.3% from an average of 36.8 for the three months ended September 30, 2017, to 38.0 for the three months ended September 30, 2018 offset by amortization of capitalized drydocking costs which reduced to $1.8 million for the three months ended September 30, 2018, compared to $2.5 million for the three months ended September 30, 2017.

Other Operating Results

General and Administrative Costs . General and administrative costs increased by 6.2%, or $0.3 million, to $4.2 million for the three months ended September 30, 2018, from $3.9 million for the three months ended September 30, 2017. The increase in general and administrative costs was primarily due to an increase in the number of employees in the Company during the three months ended September 30, 2018, compared to the three months ended September 30, 2017, to enable us to provide in-house technical management for an increasing number of our vessels.

Other Corporate Expenses . Other corporate expenses increased by 5.8%, to $0.7 million for the three months ended September 30, 2018, compared to $0.7 million for the three months ended September 30, 2017.

Interest Expense . Interest expense increased by 16.8%, or $1.6 million, to $11.0 million for the three months ended September 30, 2018, from $9.4 million for the three months ended September 30, 2017. The increase was primarily due to an increase in U.S. LIBOR. Interest capitalized on newbuilding installment payments for the three months ended September 30, 2017 was $0.3 million, prior to the completion of our newbuilding program in November 2017. Interest capitalized in the three months ended September 30, 2018 of $0.5 million relates to installment payments on the investment in the Export Terminal Joint Venture.

Income Taxes . Income tax related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore. Our United Kingdom and Polish subsidiaries earn management and other fees from affiliates, and our Singaporean subsidiary earns interest from loans to our variable interest entity in Indonesia. The main corporate tax rates are 19%, 19% and 17% in the United Kingdom, Poland and Singapore, respectively. For the three months ended September 30, 2018, we had a tax charge of $137,364, compared to taxes of $101,717 for the three months ended September 30, 2017.

Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2018

The following table compares our operating results for the nine months ended September 30, 2017 and 2018:


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2018			Percentage Change
	(in thousands, except percentages)
Operating revenue	$	221,911		$	231,813			4.5	%
Operating expenses:
Brokerage Commissions		4,105			3,793			(7.6	%)
Voyage expenses		40,761			46,158			13.2	%
Vessel operating expenses		74,012			79,624			7.6	%
Depreciation and amortization		54,725			57,256			4.6	%
General and administrative costs		10,262			12,225			19.1	%
Other corporate expenses		1,605			1,901			18.4	%

Total operating expenses	$	185,470		$	200,957			8.4	%

Operating income	$	36,441		$	30,856			(15.3	%)
Interest expense		(27,724	)		(32,891	)		18.6	%
Write off of deferred financing costs		(1,281	)		—			—
Write off of call premium and redemption charges on 9% unsecured bond		(3,517	)		—			—
Interest income		371			561			51.2	%

Income/(loss) before income taxes	$	4,290		$	(1,474	)		—
Income taxes		(391	)		(366	)		(6.4	%)

Net income/(loss)	$	3,899		$	(1,840	)		—

Operating Revenue . Operating revenue, net of address commission, increased by $9.9 million or 4.5% to $231.8 million for the nine months ended September 30, 2018, from $221.9 million for the nine months ended September 30, 2017. This increase was principally due to:

•

an increase in operating revenue of approximately $10.1 million attributable to an increase in the weighted average number of vessels from 35.8 for the nine months ended September 30, 2017 to 38.0 for the nine months ended September 30, 2018, and a corresponding increase in vessel ownership days by 604 days, or 6.2%, for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017;

•

a decrease in operating revenue of approximately $9.8 million attributable to a decrease in average charter rates, which reduced to an average of approximately $610,865 per vessel per calendar month ($20,083 per day) for the nine months ended September 30, 2018 compared to an average of approximately $643,916 per vessel per calendar month ($21,170 per day) for the nine months ended September 30, 2017. This was primarily as a result of the continuing weak LPG markets which accounted for a decrease of $12.1 million, offset by the adoption of ASU 2014-09, the new accounting standard that requires revenue for voyage charters to be recognized between load port and discharge port only, rather than the previous method of recognizing revenue between the prior discharge port to the following discharge port, accounting for an increase of $2.3 million;

•

an increase in operating revenue of approximately $4.2 million attributable to an increase in fleet utilization from 87.8% during the nine months ended September 30, 2017 to 89.8% during the nine months ended September 30, 2018; and

•

an increase in operating revenue of approximately $5.4 million primarily attributable to an increase in pass through voyage costs.

The following table presents selected operating data for the nine months ended September 30, 2017 and 2018, which we believe are useful in understanding the basis for movements in operating revenue.


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2018
Fleet Data:
Weighted average number of vessels		35.8			38.0
Ownership days		9,770			10,374
Available days		9,745			10,290
Operating days		8,557			9,244
Fleet utilization		87.8	%		89.8	%
Average daily time charter equivalent rate (*)	$	21,170		$	20,083

Reconciliation of Operating Revenue to TCE rate


	Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2018
	(in thousands, except operating days and average daily time charter equivalent rate)
Fleet Data:
Operating revenue	$	221,911	$	231,813
Voyage expenses		40,761		46,158

Operating revenue less Voyage expenses*		181,150		185,655

Operating days		8,557		9,244
Average daily time charter equivalent rate	$	21,170	$	20,083

*	We have adopted the new accounting standard ASU 2014-09 for revenue recognition using the modified retrospective method, which incorporates the cumulative effect of prior years in January 1, 2018. Consequently, the nine months ended September 30, 2017 has not been adjusted.

Brokerage Commissions . Brokerage commissions, which typically vary between 1.25% and 5% of operating revenue, decreased by 7.6% or $0.3 million to $3.8 million for the nine months ended September 30, 2018, from $4.1 million for the nine months ended September 30, 2017. This was primarily related to having more vessels on time charter employment giving rise to lower commission rates.

Voyage Expenses. Voyage expenses increased by 13.2% to $46.2 million for the nine months ended September 30, 2018 from $40.8 million for the nine months ended September 30, 2017. This was primarily due to an increase in the cost of bunkers associated with voyage charters during the nine months ended September 30, 2018, compared to the nine months ended September 30, 2017. These voyage costs are pass through costs, compensated for by increased revenue of the same amount.

Vessel Operating Expenses . Vessel operating expenses increased by 7.6% to $79.6 million for the nine months ended September 30, 2018, from $74.0 million for the nine months ended September 30, 2017, as the number of vessels in our fleet increased. Average daily vessel operating expenses increased by $81 per day to $7,675 per vessel per day for the nine months ended September 30, 2018, compared to $7,594 per vessel per day for the nine months ended September 30, 2017. During the nine months ended September 30, 2018, we received amounts from insurance claims on a number of our vessels, relating to costs for auxiliary engine repairs that had been expensed in prior years. These receipts reduced the daily operating expenses by $68 per vessel per day and were credited back to vessel operating expenses for the nine months ended September 30, 2018.

Depreciation and Amortization . Depreciation and amortization increased by 4.6% to $57.3 million for the nine months ended September 30, 2018, from $54.7 million for the nine months ended September 30, 2017. This was primarily due to an increase in our weighted average fleet size of 6.1% from an average of 35.8 for the nine months ended September 30, 2017, to 38.0 for the nine months ended September 30, 2018. Depreciation and amortization includes amortization of capitalized drydocking costs of $6.1 million for the nine months ended September 30, 2018, compared to $7.1 million for the nine months ended September 30, 2017.

Other Operating Results

General and Administrative Costs . General and administrative costs increased by 19.1%, or $1.9 million, to $12.2 million for the nine months ended September 30, 2018, from $10.3 million for the nine months ended September 30, 2017. The increase in general and administrative costs was primarily due to increased office lease costs and an increase in the number of employees during the nine months ended September 30, 2018, to enable us to provide in-house technical management for an increasing number of our vessels.

Other Corporate Expenses . Other corporate expenses increased by 18.4%, or $0.3 million, to $1.9 million for the nine months ended September 30, 2018, from $1.6 million for the nine months ended September 30, 2017. The increase was primarily due to the foreign exchange movement on non-U.S. Dollar bank accounts within the Company as the U.S Dollar has strengthened against those currencies.

Interest Expense . Interest expense increased by 18.6%, or $5.2 million, to $32.9 million for the nine months ended September 30, 2018, from $27.7 million for the nine months ended September 30, 2017. The increase was primarily due to an increase in U.S. LIBOR. Interest capitalized on newbuilding installment payments for the nine months ended September 30, 2017 was $1.3 million, prior to the completion of our newbuilding program in November 2017. Interest capitalized in the nine months ended September 30, 2018 of $0.5 million relates to installment payments on the investment in the Export Terminal Joint Venture.

Write off of deferred financing costs . The write off of deferred financing costs of $1.3 million for the nine months ended September 30, 2017 related to the remaining unamortized deferred financing costs of the 2012 Bonds that we redeemed prior to their maturity date and the February 2013 Secured Term Loan Facility that was re-financed prior to its maturity date. No loan refinancing occurred in the nine months ended September 30, 2018.

Write off of call premium and redemption charges on 9.0% senior unsecured bond . In connection with a call option under the terms of the 2012 Bonds, pursuant to which we redeemed all of the outstanding principal amount thereof in February 2017, we incurred $3.5 million in charges for the nine months ended September 30, 2017 that were written off, consisting of a redemption charge of $2.5 million and $1.0 million in interest notice penalty on such bonds prior to maturity.

Income Taxes . Income tax related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore. Our United Kingdom and Polish subsidiaries earn management and other fees from affiliates, and our Singaporean subsidiary earns interest from loans to our variable interest entity in Indonesia. The main corporate tax rates are 19%, 19% and 17% in the United Kingdom, Poland and Singapore, respectively. For the nine months ended September 30, 2018, we had a tax charge of $365,860, compared to taxes of $390,621 for the nine months ended September 30, 2017.

Liquidity and Capital Resources

Liquidity and Cash Needs

Our primary uses of funds have been capital expenditures for the investment in the Export Terminal Joint Venture, acquisition and construction of vessels, drydocking expenditures, voyage expenses, vessel operating expenses, general and administrative costs, expenditures incurred in connection with ensuring that our vessels comply with international and regulatory standards, financing expenses and repayments of bank loans. In addition to operating expenses, our medium-term and long-term liquidity needs relate to debt repayments, potential future newbuildings or acquisitions and the development of the Marine Export Terminal in our Export Terminal Joint Venture. We are required to maintain certain minimum liquidity amounts in order to comply with our various debt instruments. Please see “—Secured Term Loan Facilities and Revolving Credit Facilities” and “2017 Senior Unsecured Bonds” and “2018 Senior Secured Bonds”.

Our primary sources of funds have been cash from operations, bank borrowings and proceeds from bond issuances. As of September 30, 2018, we had cash and cash equivalents of $50.5 million along with $20.0 million available borrowing capacity under our secured term loan and revolving credit facilities. In compliance with our bank facilities we are required to maintain a cash balance at the greater of $25.0 million or 5% of debt, which as at September 30, 2018 equated to $41.5 million.

As of September 30, 2018, our total current liabilities exceeded our total current assets by $5.7 million. This net current liability is primarily due to a lower cash balance as a result of payments for the investment in our Export Terminal Joint Venture; as well as losses made during the nine months ended September 30, 2018. As of September 30, 2018, we had an aggregate of $20.0 million available borrowing capacity under one of our revolving credit facilities, which in addition to cash generated from operations will cover this net current liability shortfall of $5.7 million.

In July and September 2018, we drew down a total of $18.1 million under the October 2016 and June 2017 Secured Term Loan and Revolving Credit Facilities in order to partially finance a $15.0 million capital contribution to our Export Terminal Joint Venture. As of September 30, 2018, we have contributed $25.0 million of our expected $155.0 million share of the capital cost of construction for the Marine Export Terminal from the Company’s available cash resources.

Capital Expenditures

Liquefied gas transportation is a capital-intensive business, requiring significant investment to maintain an efficient fleet and to stay in regulatory compliance.

Cash Flows

The following table summarizes our cash and cash equivalents provided by (used in) operating, financing and investing activities for the nine months ended September 30, 2017 and 2018:


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2018
	(in thousands)
Net cash provided by operating activities	$	51,955		$	55,774
Net cash used in investing activities		(150,614	)		(25,035	)
Net cash provided by/(used in) financing activities		76,525			(42,390	)
Net decrease in cash and cash equivalents		(22,134	)		(11,651	)

Operating Cash Flows . Net cash provided by operating activities for the nine months ended September 30, 2018 increased to $55.8 million, from $52.0 million for the nine months ended September 30, 2017, an increase of 7.4% or $3.8 million. This increase was primarily due to changes in working capital movements, reduced by lower net income and payments for dry docking costs.

Net cash flow from operating activities depends upon the size of our fleet, charter rates attainable, fleet utilization, fluctuations in working capital balances, repairs and maintenance activity, changes in interest rates and foreign currency rates.

We are required to drydock each vessel once every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every two and one-half to three years. Drydocking each vessel takes approximately 20-30 days. Drydocking days generally include approximately 5-10 days of travel time to and from the drydocking shipyard and approximately 15-20 days of actual drydocking time. Five of our vessels were drydocked during the nine months ended September 30, 2018, with one drydocking scheduled for the remainder of 2018.

We spend significant amounts of funds for scheduled drydocking (including the cost of classification society surveys) of each of our vessels. As our vessels age and our fleet expands, our drydocking expenses will increase. We estimate the current cost of the five-year drydocking of one of our vessels is approximately $0.8 million, the ten-year drydocking cost is approximately $1.2 million, and the 15 and 17 year drydocking costs are approximately $1.5 million each. Ongoing costs for compliance with environmental regulations are primarily included as part of our drydocking, such as the classification society survey costs, with a balance included as a component of our operating expenses.

Investing Cash Flows . Net cash used in investing activities of $25.0 million for the nine months ended September 30, 2018 consisted of our investment in our Export Terminal Joint Venture of $25.0 million, capitalized interest of $0.5 million and associated costs of $0.5 million, partially offset by insurance recoveries on an existing damage claim of $1.0 million.

Net cash used in investing activities of $150.6 million for the nine months ended September 30, 2017 primarily consisted of payments made for final installments on the deliveries of the four newbuildings Navigator Nova , Navigator Luga , Navigator Yauza and Navigator Jorf and $10.7 million of other construction related costs, including capitalized interest of $1.9 million associated with our newbuildings, partially offset by $1.0 million received in respect of outstanding insurance claims. In addition, we placed $25.0 million in a short-term investment.

Financing Cash Flows . Net cash used in financing activities of $42.4 million for the nine months ended September 30, 2018 relates to regular quarterly loan repayments of $64.3 million, partially offset by proceeds from drawing down $21.9 million from the October 2016 and June 2017 Secured Term Loan and Revolving Credit Facilities which was used for our investment in the Export Terminal Joint Venture and for general corporate purposes.

Net cash provided by financing activities of $76.5 million for the nine months ended September 30, 2017, primarily represents $334.0 million drawn from our secured term loan and revolving credit facilities to finance the delivery installments of the newbuildings Navigator Nova , Navigator Luga , Navigator Yauza and Navigator Jorf as well as for general corporate purposes, partially offset by the repayment of a net $27.5 million in our bonds, being the difference between our issuance of $100.0 million in aggregate principal amount of our 2017 Bonds (as defined below) less the repayment of $127.5 million in outstanding principal and redemption premium of our 2012 Bonds, $143.1 to redeem the February 2013 Secured Term Loan Facility, $83.0 million in regular quarterly loan repayments and financing costs of $3.9 million associated with the issuance of debt.

Secured Term Loan Facilities and Revolving Credit Facilities

General . Navigator Gas L.L.C., our wholly-owned subsidiary, and certain of our vessel-owning subsidiaries have entered into various secured term loan facilities and revolving credit facilities as summarized in the table below. For additional information regarding our secured term loan facilities and revolving credit facilities, please read “Item 5—Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Secured Term Loan Facilities and Revolving Credit Facilities” in our 2017 Annual Report.

The table below summarizes our secured term loan and revolving credit facilities as of September 30, 2018:


Facility agreement date	Original Facility amount		Principal Amount outstanding		Available amounts undrawn at September 30, 2018		Interest rate		Loan Maturity date
	(in millions)
January 2015		278.1		206.2		—		US LIBOR + 270 BPS		June 2020 - 2023	*
December 2015		290.0		250.8		—		US LIBOR + 210 BPS		December 2022
October 2016		220.0		132.7		20.0		US LIBOR + 260 BPS		November 2023
June 2017		160.8		140.1		—		US LIBOR + 230 BPS		June 2023

Total	$	948.9	$	729.8	$	20.0

*	The January 2015 facility tranches mature over a range of dates, from June 2020 to April 2023.

As of September 30, 2018, the Company had approximately $20.0 million in available borrowing capacity under its October 2016 Secured Term Loan and Revolving Credit Facility.

On June 29, 2018 the Company obtained approval to amend one of the covenants in each of its bank loan facilities. The covenant, requiring the ratio of Earnings before Interest, Tax, Depreciation and Amortization (“EBITDA”) to be at least two and a half times or three times interest has been amended to a requirement of two times interest, up to and including September 30, 2020. In addition, the definition of interest under these facilities now excludes interest due or payable relating to debt financing obtained by the Company in relation to its obligations associated with the construction of the Marine Export Terminal.

Under the terms of these amendments dividends may not be declared or paid by the Company until on or after December 31, 2020.

The borrowers are required to deliver semi-annual compliance certificates, which include valuations of the vessels securing the applicable facility from an independent ship broker. If the market value of the collateral vessels is less than 135% of the outstanding indebtedness under the January 2015 facility or 125% of the outstanding indebtedness under the other facilities, the borrowers must either provide additional collateral or repay any amount in excess of 135% or 125% of the market value of the collateral vessels, as applicable. This covenant is measured semi-annually on June 30 and December 31. As of June 30, 2018, we had an aggregate excess of $358.8 million above the levels required by these covenants, in addition to five additional vessels that are unsecured.

Financial Covenants . The secured term loan facilities and the revolving credit facilities contain financial covenants requiring the borrowers, among other things, to ensure that:

•

the borrowers have cash and cash equivalents (including undrawn available lines of credit with a maturity exceeding 12 months) of no less than $25.0 million or (ii) 5% of Net Debt or total debt, as applicable, whichever is greater;

•

the ratio of EBITDA to Interest Expense (each as defined in the applicable secured term loan facility and revolving credit facility or as amended), on a trailing four quarter basis, is no less than 2.00 to 1.00, until September 30, 2020 and no less than 2.50 to 1.00 or 3.00 to 1.00 thereafter;

•

the borrower maintains a minimum ratio of shareholder equity to total assets of 30%.

Restrictive Covenants . The secured term loan facilities and the revolving credit facilities provide that the borrowers may not declare or pay dividends to shareholders out of operating revenues generated by the vessels securing the indebtedness until December 31, 2020 or thereafter, if an event of default has occurred or is continuing. The secured term loan facilities and revolving credit facilities also limit the borrowers from, among other things, incurring indebtedness or entering into mergers and divestitures. The secured term loan facilities and revolving credit facilities also contain general covenants that will require the borrowers to maintain adequate insurance coverage and to maintain their vessels. In addition, the secured term loan facilities include customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and warranty, a cross-default to other indebtedness and non-compliance with security documents.

Our compliance with the financial covenants listed above is measured as of the end of each fiscal quarter. As of September 30, 2018, we were in compliance with all covenants under the secured term loan facilities and revolving credit facilities.

2017 Senior Unsecured Bonds

General . On February 10, 2017, we issued senior unsecured bonds in an aggregate principal amount of $100.0 million with Norsk Tillitsmann ASA as the bond trustee (the “2017 Bonds”). The net proceeds of the issuance of the 2017 Bonds, together with cash on hand, were used to redeem in full all of our outstanding 2012 Bonds. Under the bond agreement governing the 2017 Bonds (the “2017 Bond Agreement”), we have the option to issue additional bonds up to maximum issue amount of a further $100.0 million, at identical terms as the original bond issue, except that additional bonds may be issued at a different price. The 2017 Bonds are governed by Norwegian law and listed on the Nordic ABM which is operated and organized by Oslo Børs ASA.

Interest . Interest on the 2017 Bonds is payable at a fixed rate of 7.75% per annum, calculated on a 360-day year basis. Interest is payable semi-annually on August 10 and February 10 of each year.

Maturity. The 2017 Bonds mature in full on February 10, 2021.

Optional Redemption . We may redeem the 2017 Bonds, in whole or in part, at any time beginning on or after February 11, 2019. Any 2017 Bonds redeemed; from February 11, 2019 until February 10, 2020, are redeemable at 103.875% of par, from February 11, 2020 until August 10, 2020, are redeemable at 101.9375% of par, and from August 11, 2020 to the maturity date are redeemable at 100% of par, in each case, in cash plus accrued interest.

Additionally, upon the occurrence of a “Change of Control Event” (as defined in the 2017 Bond Agreement), the holders of 2017 Bonds have an option to require us to repay such holders’ outstanding principal amount of 2017 Bonds at 101% of par, plus accrued interest.

Financial Covenants . The 2017 Bond Agreement contains financial covenants requiring us, among other things, to ensure that:

•

we and our subsidiaries maintain a minimum liquidity of no less than $25.0 million;

•

we and our subsidiaries maintain an Interest Coverage Ratio (as defined in the 2017 Bond Agreement) of not less than 2.25 to 1.0; and

•

we and our subsidiaries maintain an Equity Ratio (as defined in the 2017 Bond Agreement) of at least 30%.

Our compliance with the covenants listed above is measured as of the end of each fiscal quarter. As of September 30, 2018, we were in compliance with all covenants under the 2017 Bonds.

Restrictive Covenants . The 2017 Bond Agreement provides that we may declare dividends so long as such dividends do not exceed 50% of our cumulative consolidated net profits after taxes since June 30, 2016. The 2017 Bond Agreement also limits us and our subsidiaries from, among other things, entering into mergers and divestitures, engaging in transactions with affiliates or incurring any additional liens which would have a material adverse effect. In addition, the 2017 Bond Agreement includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, false representation and warranty, a cross-default to other indebtedness, the occurrence of a material adverse effect, or our insolvency or dissolution.

2018 Senior Secured Bonds

General . On October 22, 2018, we successfully closed a deal to issue senior secured bonds in an aggregate principal amount of 600 million Norwegian Kroner (“NOK”) with Norsk Tillitsmann ASA as the bond trustee (the “2018 Bonds”). Settlement of the Bonds will be on November 2, 2018. The net proceeds will be used to part finance the Export Terminal Joint Venture. The 2018 Bonds will be governed by Norwegian law and will be listed on the Nordic ABM which is operated and organized by Oslo Børs ASA.

Security . The 2018 Bonds will be secured on four of the Company’s ethylene vessels.

Interest . Interest on the 2018 Bonds is payable quarterly at 3 month NIBOR plus 6.0% per annum, calculated on a 360-day year basis.

Maturity. The 2018 Bonds will mature in full on November 2, 2023.

Optional Redemption . We may redeem the 2018 Bonds, in whole or in part, at any time beginning on or after November 2, 2021. Any 2018 Bonds redeemed from November 2, 2021 until November 1, 2022, are redeemable at 102.4% of par, from November 2, 2022 until May 1, 2023, are redeemable at 101.5% of par, and from May 2, 2023 to the maturity date are redeemable at 100% of par, in each case, in cash plus accrued interest.

Additionally, upon the occurrence of a “Change of Control Event” (as defined in the 2018 Bond Agreement), the holders of 2018 Bonds have an option to require us to repay such holders’ outstanding principal amount of 2018 Bonds at 101% of par, plus accrued interest.

Financial Covenants . The 2018 Bond Agreement contains financial covenants requiring us, among other things, to ensure that:

•

we and our subsidiaries maintain a minimum liquidity of no less than $25.0 million;

•

we and our subsidiaries maintain an Equity Ratio of at least 30%.

Tabular Disclosure of Contractual Obligations

The contractual obligations schedule set forth below summarizes our contractual obligations excluding interest payable as of September 30, 2018.


	Remainder of 2018		2019		2020		2021		2022		Thereafter		Total
			(in thousands)
Ethylene terminal capital contributions *		16,000		86,000		28,000		—		—		—		130,000
Secured term loan facilities and revolving credit facilities		19,062		70,600		128,725		60,600		302,461		148,352		729,800
2017 Bonds		—		—		—		100,000		—		—		100,000
Office leases		379		1,516		1,303		1,151		111		—		4,460

Total contractual obligations	$	35,441	$	158,116	$	158,028	$	161,751	$	302,572	$	148,352	$	964,260

*	On November 7, 2018, the Company made a capital contribution of $11.0 million reducing the expected contributions required for the remainder of 2018 from $16.0 million to $5.0 million.

As part of our growth strategy, we will continue to consider strategic opportunities, including the acquisition of additional vessels. We may choose to pursue such opportunities through internal growth or joint ventures or business acquisitions. We intend to finance any future acquisitions through various sources of capital, which may include, among other things, borrowings under credit facilities or other debt, and the issuance of additional shares of common stock.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For a description of our material accounting policies, please read Note 2 (Summary of Significant Accounting Policies) to our audited historical consolidated financial statements included in our 2017 Annual Report. There have been no significant changes to our estimates and assumptions in the nine months ended September 30, 2018.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates and foreign currency fluctuations, as well as inflation. We may in the future use interest rate swaps to manage interest rate risks but will not use these financial instruments for trading or speculative purposes.

Interest Rate Risk

Historically, we have been subject to limited market risks relating to changes in interest rates because we did not have significant amounts of floating rate debt outstanding. Navigator Gas L.L.C., our wholly-owned subsidiary, and certain of our vessel-owning subsidiaries are parties to secured term loan facilities and revolving credit facilities that bear interest at an interest rate of US LIBOR plus 210 to 270 basis points. A variation in LIBOR of 100 basis points would result in a variation of $7.3 million in annual interest paid on our indebtedness outstanding as at September 30, 2018, under the secured term loan facilities and revolving credit facilities.

We invest our surplus funds with reputable financial institutions, with original maturities of no more than six months, in order to provide the Company with flexibility to meet all requirements for working capital and for capital investments.

We do not currently use interest rate swaps to manage the impact of interest rate changes on earnings and cash flows, but we may elect to do so in the future.

Foreign Currency Exchange Rate Risk

Our primary economic environment is the international shipping market. This market utilizes the U.S. Dollar as its functional currency. Consequently, the significant majority of our revenues are in U.S. Dollars, with some revenue in Indonesian Rupiah and in Euro. Our expenses, however, are in the currency invoiced by each supplier, and we remit funds in the various currencies invoiced, mainly U.S. Dollar, but also the Euro and the British Pound. We incur some vessel operating expenses and general and administrative costs in foreign currencies and there is a risk that currency fluctuations could have an adverse effect on the value of our cash flows. We believe that any adverse effect on these costs would not be material and we have not entered into any derivative contracts to mitigate our exposure to foreign currency exchange rate risk.

On November 2, 2018, we issued senior secured bonds in an aggregate amount of NOK 600 million. We expect to enter into a cross currency swap to mitigate the risk of currency movements for both interest payments during the five-year tenor of these bonds and for principal repayments at maturity in November 2023.

Inflation

Certain amounts of our operating expenses, including crewing, insurance and drydocking costs, are subject to fluctuations as a result of market forces.

Increases in bunker (fuel) costs can have a material effect on our operations if the number of our time charters reduce and consequently the number and duration of our voyage charters or contracts of affreightment (“COA’s”) increase. As of September 30, 2018, we had 22 vessels on time charter, under which the charterers pay for the bunkers on those vessels. For our vessels employed under voyage charters or COA’s, we incur the cost of bunkers which, at least in the short term, reduces time charter equivalent rates. During the third quarter of 2018, we purchased approximately 36,300 tons of bunkers for our vessels at prices up to 30% higher, or approximately $3.5 million more, than a year ago.

Credit Risk

We may be exposed to credit risks in relation to vessel employment and at times may have multiple vessels employed by one charterer. We consider and evaluate concentration of credit risk continuously and perform ongoing evaluations of these charterers for credit risk. At September 30, 2018, no more than five of our vessels were employed by the same charterer.

IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Report on Form 6-K for the quarter ended September 30, 2018 contains certain forward-looking statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including our financial forecast, contain forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate as described in this report. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Forward-looking statements appear in a number of places in this report. These risks and uncertainties include, but are not limited to:

•

future operating or financial results;

•

pending acquisitions, business strategy and expected capital spending;

•

operating expenses, availability of crew, number of off-hire days, drydocking requirements and insurance costs;

•

fluctuations in currencies and interest rates;

•

general market conditions and shipping market trends, including charter rates and factors affecting supply and demand;

•

our financial condition and liquidity, including our ability to refinance our indebtedness as it matures or obtain additional financing in the future to fund capital expenditures, acquisitions and other corporate activities;

•

estimated future capital expenditures needed to preserve our capital base;

•

our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of our vessels;

•

our continued ability to enter into long-term, fixed-rate time charters with our customers;

•

changes in governmental rules and regulations or actions taken by regulatory authorities;

•

potential liability from future litigation;

•

our expectations relating to the payment of dividends;

•

our expectation regarding providing in-house technical management for certain vessels in our fleet and our success in providing such in-house technical management;

•

our ability to meet our expectations regarding the construction and financing of the Marine Export Terminal and our expectations regarding the financial success of the Marine Export Terminal and the Export Terminal Joint Venture; and

•

other factors detailed from time to time in other periodic reports we file with the Securities and Exchange Commission.

All forward-looking statements included in this Report on Form 6-K are made only as of the date of this Report on Form 6-K. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common stock.

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Balance Sheets

(Unaudited)


	December 31, 2017			September 30, 2018
	(in thousands except share data)
Assets
Current assets
Cash and cash equivalents	$	62,109		$	50,458
Accounts receivable, net		14,889			13,800
Accrued income		15,791			6,817
Prepaid expenses and other current assets		11,340			16,302
Bunkers and lubricant oils		8,008			10,550

Total current assets		112,137			97,927
Non-current assets
Vessels in operation, net		1,740,139			1,688,011
Investment in equity accounted joint venture		—			25,994
Property, plant and equipment, net		1,611			1,363

Total non-current assets		1,741,750			1,715,368

Total assets	$	1,853,887		$	1,813,295

Liabilities and stockholders’ equity
Current liabilities
Current portion of secured term loan facilities, net of deferred financing costs	$	81,559		$	70,261
Accounts payable		8,071			7,258
Accrued expenses and other liabilities		12,478			16,669
Accrued interest		3,500			1,779
Deferred income		4,824			7,708

Total current liabilities		110,432			103,675

Non-current liabilities
Secured term loan facilities, net of current portion and deferred financing costs		681,658			651,918
Senior unsecured bond, net of deferred financing costs		98,584			98,925

Total non-current liabilities		780,242			750,843

Total liabilities		890,674			854,518
Commitments and contingencies (see note 9)
Stockholders’ equity
Common stock—$.01 par value; 400,000,000 shares authorized; 55,656,304 shares issued and outstanding, (2017: 55,529,762)		555			557
Additional paid-in capital		589,436			590,199
Accumulated other comprehensive loss		(277	)		(286	)
Retained earnings		373,499			368,307

Total stockholders’ equity		963,213			958,777

Total liabilities and stockholders’ equity	$	1,853,887		$	1,813,295

See accompanying notes to condensed consolidated financial statements.

F-1

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Income

(Unaudited)


	Three months ended September 30, (in thousands except share data)						Nine months ended September 30, (in thousands except share data)
	2017			2018			2017			2018
Revenues
Operating revenue	$	70,211		$	80,843		$	221,911		$	231,813

Expenses
Brokerage commissions		1,191			1,434			4,105			3,793
Voyage expenses		12,246			17,251			40,761			46,158
Vessel operating expenses		25,106			26,873			74,012			79,624
Depreciation and amortization		18,787			18,846			54,725			57,256
General and administrative costs		3,932			4,176			10,262			12,225
Other corporate expenses		653			691			1,605			1,901

Total operating expenses		61,915			69,271			185,470			200,957

Operating income		8,296			11,572			36,441			30,856
Other income/(expense)
Interest expense		(9,426	)		(11,014	)		(27,724	)		(32,891	)
Write off of deferred financing costs		—			—			(1,281	)		—
Write off of call premium and redemption charges on 9% unsecured bond		—			—			(3,517	)		—
Interest income		139			202			371			561

(Loss)/income before income taxes		(991	)		760			4,290			(1,474	)
Income taxes		(102	)		(137	)		(391	)		(366	)

Net (loss)/income	$	(1,093	)	$	623		$	3,899		$	(1,840	)

(Loss)/Earnings per share:
Basic:	$	(0.02	)	$	0.01		$	0.07		$	(0.03	)
Diluted:	$	(0.02	)	$	0.01		$	0.07		$	(0.03	)

Weighted average number of shares outstanding:
Basic:		55,531,831			55,656,304			55,531,831			55,620,149
Diluted:		55,531,831			56,000,240			55,877,163			55,620,149

See accompanying notes to condensed consolidated financial statements.

F-2

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three months ended September 30, (in thousands)					Nine months ended September 30, (in thousands)
	2017			2018		2017		2018
Net income / (loss)	$	(1,093	)	$	623	$	3,899	$	(1,840	)
Other Comprehensive Income / (Loss):
Foreign currency translation gain / (loss)		87			57		252		(9	)

Total Comprehensive (Loss) / Income:	$	(1,006	)	$	680	$	4,151	$	(1,849	)

See accompanying notes to condensed consolidated financial statements.

F-3

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)


	(in thousands, except number of shares)
	Common Stock
	Number of shares		Amount 0.01 par value		Additional Paid-in Capital		Accumulated Other Comprehensive Income/(Loss)			Retained Earnings			Total
January 1, 2017		55,436,087	$	554	$	588,024	$	(287	)	$	368,189		$	956,480
Restricted shares issued March 23, 2017		93,675		1		—		—			—			1
Net income		—		—		—		—			5,310			5,310
Foreign currency translation		—		—		—		10			—			10
Share-based compensation		—		—		1,412		—			—			1,412

December 31, 2017		55,529,762		555		589,436		(277	)		373,499			963,213
Adjustment to equity for the adoption of the new revenue standard		—		—		—		—			(3,352	)		(3,352	)
Restricted shares issued March 20, 2018		126,542		2		—		—			—			2
Net loss		—		—		—		—			(1,840	)		(1,840	)
Foreign currency translation		—		—		—		(9	)		—			(9	)
Share-based compensation		—		—		763		—			—			763

September 30, 2018		55,656,304	$	557	$	590,199	$	(286	)	$	368,307		$	958,777

See accompanying notes to condensed consolidated financial statements.

F-4

NAVIGATOR HOLDINGS LTD.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months ended September 30, 2017			Nine Months ended September 30, 2018
	(in thousands)			(in thousands)
Cash flows from operating activities
Net income/(loss)	$	3,899		$	(1,840	)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		54,725			57,256
Payment of drydocking costs		(401	)		(4,875	)
Adjustment to equity for the adoption of the new revenue standard		—			(3,352	)
Call option premium on redemption of 9.00% unsecured bond		2,500			—
Prior year expenses recovered in insurance claim		(504	)		(776	)
Amortization of share-based compensation		1,117			765
Amortization of deferred financing costs		3,107			1,692
Unrealized foreign exchange		243			39
Changes in operating assets and liabilities
Accounts receivable		(10,090	)		1,089
Bunkers and lubricant oils		(570	)		(2,542	)
Prepaid expenses and other current assets		(125	)		3,777
Accounts payable, accrued interest and other liabilities		(1,946	)		4,541

Net cash provided by operating activities		51,955			55,774

Cash flows from investing activities
Payment to acquire vessels		(1,112	)		69
Investment in equity accounted joint venture		—			(25,994	)
Payment for vessels under construction		(124,149	)		—
Purchase of other property, plant and equipment		(1,623	)		(120	)
Receipt of shipyard penalty payments		280			—
Insurance recoveries		990			1,010
Placement of short term investment		(25,000	)		—

Net cash used in investing activities		(150,614	)		(25,035	)

Cash flows from financing activities
Proceeds from secured term loan facilities		333,983			21,900
Issuance of 7.75% senior unsecured bonds		100,000			—
Repayment of 9.00% senior unsecured bonds		(127,500	)		—
Issuance costs of 7.75% senior unsecured bonds		(1,819	)		—
Direct financing costs of senior term loan facilities		(2,054	)		—
Repayment of secured term loan facilities		(226,085	)		(64,290	)

Net cash provided by/(used in) financing activities		76,525			(42,390	)

Net decrease in cash and cash equivalents		(22,134	)		(11,651	)
Cash and cash equivalents at beginning of period		57,272			62,109

Cash and cash equivalents at end of period	$	35,138		$	50,458

Supplemental Information
Total interest paid during the period, net of amounts capitalized	$	22,108		$	33,438

Total tax paid during the period	$	428		$	107

See accompanying notes to condensed consolidated financial statements.

F-5

NAVIGATOR HOLDINGS LTD.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1.	Basis of Presentation

The accompanying Navigator Holdings Ltd. (the “Company”), unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the financial position of the Company and its subsidiaries as of September 30, 2018; the results of operations for the three and nine months ended September 30, 2018 and 2017, the statement of stockholders’ equity for the nine months ended September 30, 2018, and cash flows for the nine months ended September 30, 2018 and 2017. Unless the context otherwise requires, all references in the unaudited condensed consolidated financial statements to “our,” “we,” and “us” refer to the Company.

As of September 30, 2018, our total current liabilities exceeded our total current assets by $5.7 million. This net current liability is primarily due to a payment of $15.0 million as a further investment to our 50/50 joint venture (the “Export Terminal Joint Venture”) to construct an ethylene marine export terminal (the “Marine Export Terminal”) at Morgan’s Point, Texas; as well as losses made during the nine months ended September 30, 2018. As of September 30, 2018, we had an aggregate of $20.0 million available borrowing capacity under one of our revolving credit facilities, to cover this net current liability shortfall of $5.7 million.

As of September 30, 2018, we have contributed $25.0 million of our expected $155.0 million share of the capital cost of the construction for the Marine Export Terminal.

On January 31, 2018, the Company announced the execution of definitive agreements creating the Export Terminal Joint Venture. Interests in joint ventures are accounted for using the equity method. They are recognized initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements will include the Company’s share of the profit or loss and other comprehensive income (“OCI”) of equity-accounted investees, until the date on which significant influence or joint control ceases.

On January 1, 2018 the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The Company has adopted the standard using the modified retrospective method to incorporate the cumulative effect on all contracts at the date of initial application for reporting periods presented beginning January 1, 2018. By using the modified retrospective method approach we have made an adjustment to the consolidated statement of shareholders’ equity of $3.4 million which represents the amount of net revenue that would not have been recognized in retained earnings for the year ended December 31, 2017 under ASU 2014-09.

The Company receives its revenue streams from three different sources; vessels on time charters; voyage charters; and contracts of affreightment (“COA”). With time charters, the Company receives a fixed charter hire per on-hire day and revenue is recognized on an accrual basis and is recorded over the term of the charter as the performance obligation is satisfied. In the case of voyage charters or COA’s, the vessel is contracted for a voyage, or a series of voyages, between two or more ports and the Company is paid for the cargo transported. Revenue under these performance obligations is recognized on a load port to discharge port basis and determines percentage of completion for all voyage charters on a time elapsed basis. This approach differs from previous generally accepted accounting principles (“U.S. GAAP”) whereby under a voyage charter or a COA the revenue was recognized from the later of the charter party date and the date of completion of the previous discharge port until the following discharge port. This had the effect of recognizing the revenue over a shorter period of time as the performance obligation commences from the loading of the cargo rather than from the inception of the contract. The Company believes that the performance obligation towards the customer starts to become satisfied once the cargo is loaded and the obligation becomes completely satisfied once the cargo has been discharged at the discharge port. Time charter revenue is payable monthly in advance whilst revenue from voyage charters and COAs is due upon discharge of the cargo at the discharge port .

Under the new revenue recognition standard, the Company has identified certain costs incurred to obtain or fulfill a contract with a charterer which are costs incurred following the commencement of a contract or charter party but before the loading of the cargo commences. These directly related costs are generally fuel or any canal or port costs to get the vessel from its position at inception of the contract to the load port to commence loading of the cargo. These costs are deferred and amortized over the duration of the performance obligation on a time basis.

F-6

Operating revenue

The following table compares our operating revenue by the source of revenue stream for the three and nine months ended September 30, 2017 and 2018:


	Three months ended September 30, (in thousands)				Nine months ended September 30, (in thousands)
	2017		2018		2017		2018
Operating revenue:
Time charters	$	37,315	$	40,620	$	106,429	$	126,788
Voyage charters (*)		32,896		40,223		115,482		105,025

Total operating revenue	$	70,211	$	80,843	$	221,911	$	231,813

*	Voyage Charter revenues: Voyage charter revenues, which include revenues from contracts of affreightment, are shown net of address commissions.

We have adopted the new accounting standard ASU 2014-09 for revenue recognition using the modified retrospective method, which incorporates the cumulative effect of prior years in January 1, 2018. Consequently, the revenues for the three and nine months ended September 30, 2017 have not been adjusted.

The adoption of ASU 2014-09 resulted in an increase in voyage charter revenue earned and recognized of $3.7 million for the nine months ended September 30, 2018 (three months ended September 30, 2018: an increase in revenue of $3.4 million); an increase in voyage expenses recognized of $1.4 million for the nine months ended September 30, 2018 (three months ended September 30, 2018: an increase in voyage expenses of $0.9 million); and a decrease in broker commissions of $26,000 for the nine months ended September 30, 2018 (three months ended September 30, 2018: an increase in broker commissions of $56,000). The net effect on the income statement for the nine months ended September 30, 2018 is a decrease in net loss of $2.3 million (three months ended September 30, 2018: a decrease in net loss of $2.5 million).

The Company calculated that adoption of ASU 2014-09 resulted in the following changes to the balance sheet as at September 30, 2018: accrued income decreased by $1.4 million; prepaid expenses and other current assets increased by $0.3 million; accrued expenses and other liabilities reduced by $0.04 million and retained earnings increased by $1.0 million.

Remaining Performance Obligations

The following table presents future committed revenue from contracts with customers, arising from remaining performance obligations as at September 30, 2018.


	Less than 1 year		1 – 2 years		2 – 5 years		More than 5 years		Total
	(in thousands)
Total committed revenue	$	121,905	$	78,759	$	152,564	$	78,405	$	431,633

The table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied, or partially unsatisfied, including unexpired time charters, at September 30, 2018. ASU 2014-09 requires disclosure based on time bands that would be the most appropriate for the duration of the remaining performance obligations. The company uses one year time bands for contracts with up to two years in remaining duration, then up to and more than five years thereafter.

As at September 30, 2018, the amount allocated to costs incurred to obtain or fulfill a contract with a charterer which are costs incurred following the commencement of a contract or charter party but before the loading of the cargo commences is $0.3 million and is reflected on the company’s consolidated balance sheet within prepaid expenses and other current assets. This will be recognized over the duration of the performance obligation on a time basis, which is expected to occur within one year.

In presenting the information above, the company has applied the transition practical expedient in paragraph 606-10-65-1(f)(3) and has not disclosed the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the company expects to recognize that amount as revenue for the comparative quarter ended September 30, 2017.

F-7

On January 1, 2018 the Company adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses eight classification issues related to the statement of cash flows:

•

Debt prepayment or debt extinguishment costs;

•

Settlement of zero-coupon bonds;

•

Contingent consideration payments made after a business combination;

•

Proceeds from the settlement of insurance claims;

•

Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies;

•

Distributions received from equity method investees;

•

Beneficial interests in securitization transactions; and

•

Separately identifiable cash flows and application of the predominance principle.

This standard provides accounting guidance that will be used along with existing audit standards. The impact of adopting this ASU is immaterial to the financial statements.

On January 1, 2018 the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include cash and cash equivalents that have restrictions on withdrawal or use in total cash and cash equivalents on the statement of cash flows. This standard provides accounting guidance that will be used along with existing audit standards. The impact of adopting this ASU is immaterial to the financial statements.

These unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance U.S. GAAP for interim reporting. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. It is recommended that these financial statements be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2017 included in our Form 20-F filed on March 5, 2018. The results for the nine months ended September 30, 2018 are not necessarily indicative of results for the full 2018 fiscal year or any other future periods.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase their reported assets and liabilities—in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. ASU 2016-02 is effective for public business entities, certain not-for-profit entities, and certain employee benefit plans, for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. On adoption, the new standard will impact on the way in which our operating leases, expected to relate to long-term commitments for our offices in London, New York and Gdynia, are recorded, presented and disclosed in our consolidated financial statements. The Company will, in respect of all material lease contracts, recognize a right of use (“ROU”) asset on the balance sheet, representing the right to use the asset for a specified period of time, and a corresponding liability. The lease liability will be recognized at the present value of the future lease payments and the ROU asset will equal the lease liability, adjusted for lease incentives provided by the lessor and any indirect costs. The subsequent measurement of the lease will result in the recognition of an interest expense and amortization of the ROU asset over the remaining length of the lease term.

The Company is currently assessing and quantifying the impact that this update will have on its consolidated financial statements and related disclosures.

F-8

2.	Vessels in Operation


	Vessel			Drydocking			Total
				(in thousands)
Cost
December 31, 2017	$	2,056,722		$	36,275		$	2,092,997
Additions		(69	)		4,875			4,806
Disposal		—			(9,292	)		(9,292	)

September 30, 2018	$	2,056,653		$	31,858		$	2,088,511

Accumulated Depreciation
December 31, 2017	$	332,708		$	20,150		$	352,858
Charge for the period		50,846			6,088			56,934
Disposal		—			(9,292	)		(9,292	)

September 30, 2018	$	383,554		$	16,946		$	400,500

Net Book Value
December 31, 2017	$	1,724,014		$	16,125		$	1,740,139

September 30, 2018	$	1,673,099		$	14,912		$	1,688,011

The net book value of vessels that serve as collateral for the Company’s bank loans was $1.52 billion at September 30, 2018.

3.	Investment in equity accounted joint venture


	(in thousands)
Investment in equity accounted joint venture at January 1, 2018	$	—
Equity contributions to joint venture entity		25,000
Capitalized interest		519
Other payments		475

Investment in equity accounted joint venture at September 30, 2018	$	25,994

On January 30, 2018, the Company entered into the Export Terminal Joint Venture, pursuant to which the Company has a 50% economic interest in building and operating the Marine Export Terminal.

4.	Secured Term Loan Facilities and Revolving Credit Facilities

The following table shows the breakdown of secured term loan facilities and total deferred financing costs split between current and non-current liabilities at September 30, 2018 and December 31, 2017:


	December 31, 2017			September 30, 2018
	(in thousands)
Current Liability
Current portion of long-term debt	$	(83,352	)	$	(72,012	)
Less: current portion of deferred financing costs		1,793			1,751

Current portion of secured term loan facilities, net of deferred financing costs	$	(81,559	)	$	(70,261	)

Non-Current Liability
Secured term loan facilities net of current portion	$	(688,838	)	$	(657,788	)
Less: non-current portion of deferred financing costs		7,180			5,870

Non-current secured term loan facilities, net of current portion and non-current deferred financing costs	$	(681,658	)	$	(651,918	)

F-9

5.	Senior Unsecured Bond

On February 10, 2017, the Company issued senior unsecured bonds in an aggregate principal amount of $100.0 million with Norsk Tillitsmann ASA as the bond trustee (the “2017 Bonds”). The net proceeds of the issuance of the 2017 Bonds, together with cash on hand, were used to redeem in full all of the Company’s outstanding 9.0% senior unsecured bonds. The 2017 Bonds are governed by Norwegian law and listed on the Nordic ABM which is operated and organized by Oslo Børs ASA. The 2017 Bonds bear interest at a rate of 7.75% per annum and mature on February 10, 2021. Interest is payable semi-annually in arrears on February 10 and August 10.

The Company may redeem the 2017 Bonds, in whole or in part, at any time beginning on or after February 11, 2019. Any 2017 Bonds redeemed from February 11, 2019 until February 10, 2020, are redeemable at 103.875% of par, from February 11, 2020 until August 10, 2020, are redeemable at 101.9375% of par, and from August 11, 2020 to the maturity date are redeemable at 100% of par, in each case, plus accrued interest.

The bond agreement covering the 2017 Bonds (the “2017 Bond Agreement”) contains an option to issue additional bonds up to a maximum issue amount of a further $100.0 million, at identical terms as the original bond issue, except that additional bonds may be issued at a different price.

The financial covenants each as defined within the bond agreement are: (a) The issuer shall ensure that the Group (meaning “the Company and its subsidiaries”) maintains a minimum liquidity of no less than $25.0 million; (b) to maintain an interest coverage ratio (as defined in the bond agreement) of not less than 2.25:1; and (c) maintain a Group equity ratio of minimum 30% (as defined in the bond agreement). At September 30, 2018, the Company was in compliance with all covenants for the 2017 Bonds.

The 2017 Bond Agreement provides that we may declare dividends so long as such dividends do not exceed 50% of our cumulative consolidated net profits after taxes since September 30, 2016. The 2017 Bond Agreement also limits us and our subsidiaries from, among other things, entering into mergers and divestitures, engaging in transactions with affiliates or incurring any additional liens which would have a material adverse effect. In addition, the 2017 Bond Agreement includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, false representation and warranty, a cross-default to other indebtedness, the occurrence of a material adverse effect, or our insolvency or dissolution.

The following table shows the breakdown of our senior unsecured bond and total deferred financing costs at December 31, 2017 and September 30, 2018:


	December 31, 2017			September 30, 2018
	(in thousands)
Senior Unsecured Bond
Total Bond	$	(100,000	)	$	(100,000	)
Less deferred financing costs		1,416			1,075

Total Bond, net of deferred financing costs	$	(98,584	)	$	(98,925	)

6.	Fair Value of Financial Instruments Not Accounted For at Fair Value

The principal financial assets of the Company at September 30, 2018 and December 31, 2017 consist of cash and cash equivalents, and accounts receivable. The principal financial liabilities of the Company consist of accounts payable, accrued expenses and other liabilities, secured term loan facilities, revolving credit facilities and the 2017 Bonds.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are reasonable estimates of their fair value due to the short-term nature or liquidity of these financial instruments.

The 2017 Bonds are classified as a level two liability and the fair value has been calculated based on the most recent trades of the bond on the Oslo Børs prior to September 30, 2018.

The fair value of secured term loan facilities and revolving credit facilities is estimated based on the average of the current rates offered to the Company for all debt facilities. The carrying value approximates the fair market value for the floating rate loans and revolving credit facilities due to their variable interest rate, being LIBOR. This has been categorized at level three on the fair value measurement hierarchy.

F-10

The following table includes the estimated fair value and carrying value of those assets and liabilities. The table excludes accounts receivable, accrued expenses and other liabilities and accounts payable.


			December 31, 2017						September 30, 2018
Financial Asset/Liability	Fair Value Hierarchy Level		Carrying Amount Asset (Liability)			Fair Value Asset (Liability)			Carrying Amount Asset (Liability)			Fair Value Asset (Liability)
			(in thousands)
Cash and cash equivalents		Level 1		62,109			62,109			50,458			50,458
Senior unsecured bond		Level 2		(100,000	)		(96,775	)		(100,000	)		(98,332	)
Secured term loan facilities and revolving credit facility		Level 3		(772,191	)		(636,220	)		(729,800	)		(602,474	)

7.	Earnings per share

Basic and diluted earnings per share is calculated by dividing the net income available to common shareholders by the average number of common shares outstanding during the periods. Diluted earnings per share is calculated by adjusting the net income available to common shareholders and adjusting the weighted average number of common shares used for calculating basic earnings per share for the effects of all potentially dilutive shares.

The calculation of both basic and diluted number of weighted average outstanding shares of:


	September 30, 2017		September 30, 2018
Basic and diluted net income/(loss) available to common shareholders (in thousands)	$	3,899	$	(1,840	)
Basic weighted average number of shares		55,531,831		55,620,149
Effect of dilutive potential share options*:		345,332		—

Diluted weighted average number of shares		55,877,163		55,620,149

*	Due to a loss for the nine months ended September 30, 2018, no incremental shares are included because the effect would be antidilutive.

8.	Share-Based Compensation

On March 20, 2018, the Company granted 29,898 restricted shares under the Navigator Holdings Ltd. 2013 Long-Term Incentive Plan (the “2013 Plan”) to non-employee directors with a weighted average value of $12.04 per share. These restricted shares vest on the first anniversary of the grant date. On the same date the Company granted 63,728 restricted shares to the Chief Executive Officer of the Company and a further 32,916 restricted shares were granted to officers and employees of the Company with a weighted average value of $12.04 per share. All these restricted shares vest on the third anniversary of the grant date.

During the nine months ended September 30, 2018, there were 28,194 shares that were previously granted to non-employee directors under the 2013 Plan with a weighted average grant value of $12.77 per share, which vested at a fair value of $325,641.

On March 23, 2017, the Company granted 28,194 restricted shares under the 2013 Plan to non-employee directors with a weighted average value of $12.77 per share. These restricted shares vest on the first anniversary of the grant date. On the same date the Company granted 42,023 restricted shares to the Chief Executive Officer of the Company and a further 23,458 restricted shares were granted to officers and employees of the Company with a weighted average value of $12.77 per share. All these restricted shares vest on the third anniversary of the grant date.

During the year ended December 31, 2017, there were 22,782 shares that were previously granted under the 2013 Plan to non-employee directors with a weighted average grant value of $15.80 per share, which vested at a fair value of $305,279 and 2,500 shares previously granted to an officer of the Company with an average grant value of $19.59 vested at a fair value of $24,888.

F-11

Restricted share grant activity for the year ended December 31, 2017 and nine months ended September 30, 2018 was as follows:


	Number of non-vested restricted shares			Weighted average grant date fair value		Weighted average remaining contractual term		Aggregate intrinsic value
Balance as of January 1, 2017		75,120		$	15.93		1.59 years	$	698,616
Granted		93,675			12.77
Vested		(25,282	)		16.17

Balance as of December 31, 2017		143,513		$	13.82		1.49 years	$	1,413,603
Granted		126,542			12.04
Vested		(28,194	)		12.77
Forfeited		(3,673	)		14.16

Balance as of September 30, 2018		238,188		$	12.99		1.56 years	$	2,882,075

Using the straight-line method of expensing the restricted share grants, the weighted average estimated value of the restricted shares calculated at the date of grant is recognized as compensation costs in the Statement of Income over the period to the vesting date.

During the nine months ended September 30, 2018, the Company recognized $863,685 in share-based compensation costs relating to share grants (nine months ended September 30, 2017: $635,645). As of September 30, 2018, there was a total of $1,651,743 unrecognized compensation costs relating to the expected future vesting of share-based awards (December 31, 2017: $1,027,683) which are expected to be recognized over a weighted average period of 1.56 years (December 31, 2017: 1.49 years).

Share options previously issued under the 2013 Plan are exercisable from the third anniversary of the grant date up to the tenth anniversary of the date of grant. The fair value of each option is calculated on the date of grant based on the Black-Scholes valuation model. Expected volatilities are based on the historic volatility of the Company’s stock price and other factors. The Company does not currently pay dividends and it is assumed this will not change. The expected term of the options granted is anticipated to be between 4 and 6.5 years. The risk-free rate is the rate adopted from the U.S. Government Zero Coupon Bond.

Options activity during the year ended December 31, 2017 and the nine months ended September 30, 2018 was as follows:


Options	Number of non-vested options			Weighted average exercise price per share		Weighted average remaining contractual term years		Aggregate intrinsic value
Balance as of January 1, 2017		373,740		$	21.54		7.70		—
Forfeited during the year		(5,000	)		23.85		—		—
Vested		(214,055	)		24.19		—		—

Balance as of December 31, 2017		154,685		$	17.80		7.70		—
Forfeited		(1,500	)		17.80		—		—
Vested		(153,185	)		17.80		—		—

Balance as of September 30, 2018		—			—		—	$	—

On April 14, 2017, 194,055 share options granted previously at an option price of $24.29 became exercisable and on October 14, 2017, 20,000 share options became exercisable at an option price of $23.18. On March 17, 2018, 153,185 share options granted on March 17, 2015 at an option price of $17.80 became exercisable. None of the options were exercised as of September 30, 2018.

During the nine months ended September 30, 2018, the Company recognized a credit of $99,902 in share-based compensation costs (nine months ended September 30, 2017: expense of $483,037) relating to the forfeiture of options granted under the 2013 Plan, which was recognized in general and administrative costs. As of September 30, 2018, there were no unrecognized compensation costs (December 31, 2017: $85,898) relating to non-vested options under the 2013 Plan.

F-12

9.	Commitments and Contingencies

The contractual obligations schedule set forth below summarizes our contractual obligations excluding interest payable as of September 30, 2018.


	Remainder of 2018		2019		2020		2021		2022		Thereafter		Total
			(in thousands)
Ethylene terminal capital contributions *		16,000		86,000		28,000		—		—		—		130,000
Secured term loan facilities and revolving credit facilities		19,062		70,600		128,725		60,600		302,461		148,352		729,800
2017 Bonds		—		—		—		100,000		—		—		100,000
Office leases		379		1,516		1,303		1,151		111		—		4,460

Total contractual obligations	$	35,441	$	158,116	$	158,028	$	161,751	$	302,572	$	148,352	$	964,260

*	On November 7, 2018, the Company made a capital contribution of $11.0 million reducing the expected contributions required for the remainder of 2018 from $16.0 million to $5.0 million for the Export Terminal Joint Venture.

The Company occupies office space in London with a lease that commenced in January 2017 for a period of 10 years with a mutual option to terminate in January 2022. The gross rent per year is approximately $1.1 million.

The Company entered into a lease for office space in New York commencing on June 1, 2017 and expiring on May 31, 2020. The annual gross rent under this lease is approximately $0.4 million, subject to certain adjustments.

The lease term for our representative office in Gdynia, Poland is for a period of five years commencing from April 2017. The gross rent per year is approximately $60,000.

10.

Subsequent Events

On May 29, 2018, the Company announced the beginning of construction on the Marine Export Terminal. In November 2018 we contributed a further $11.0 million to the Export Terminal Joint Venture, in addition to the $25.0 million contributed up to September 30, 2018, of our expected share of the approximate $155.0 million capital cost of the Marine Export Terminal from the company’s available cash resources and the proceeds of the 2018 Bonds (as defined below).

On November 2, 2018, the Company issued senior secured bonds in an aggregate principal amount of 600 million Norwegian Kroner (“NOK”) (approximately $72.0 million) with Norsk Tillitsmann ASA as the bond trustee (the “2018 Bonds”). The Company expects to use the net proceeds to partially finance its portion of the capital cost of construction of the Export Terminal Joint Venture. The 2018 Bonds are secured by four of the Company’s ethylene vessels. The 2018 Bonds are governed by Norwegian law and are listed on the Nordic ABM, which is operated and organized by Oslo Børs ASA. Interest on the 2018 Bonds is payable quarterly at 3 month NIBOR plus 6.0% per annum, calculated on a 360-day year basis. The 2018 bonds will mature in full in November 2023

F-13

EXHIBITS

The following exhibit is filed as part of this report on Form 6-K:



4.1		Bond Agreement, dated November 1, 2018 by and among Navigator Holdings Ltd., as issuer and the Nordic Trustee.

F-14

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit 4.1

BOND TERMS

FOR

Navigator Holdings Ltd. FRN senior secured NOK 600,000,000 bonds 2018/2023

ISIN NO 0010835069

Contents


Clause		Page
1.	INTERPRETATION		3
2.	THE BONDS		16
3.	THE BONDHOLDERS		17
4.	ADMISSION TO LISTING		18
5.	REGISTRATION OF THE BONDS		18
6.	CONDITIONS FOR DISBURSEMENT		19
7.	REPRESENTATIONS AND WARRANTIES		21
8.	PAYMENTS IN RESPECT OF THE BONDS		23
9.	INTEREST		25
10.	REDEMPTION AND REPURCHASE OF BONDS		25
11.	PURCHASE AND TRANSFER OF BONDS		27
12.	INFORMATION UNDERTAKINGS		28
13.	GENERAL AND FINANCIAL UNDERTAKINGS		29
14.	EVENTS OF DEFAULT AND ACCELERATION OF THE BONDS		33
15.	BONDHOLDERS’ DECISIONS		36
16.	THE BOND TRUSTEE		41
17.	AMENDMENTS AND WAIVERS		46
18.	MISCELLANEOUS		47
19.	GOVERNING LAW AND JURISDICTION		49

SCHEDULE 1 COMPLIANCE CERTIFICATE

SCHEDULE 2 RELEASE NOTICE – ESCROW ACCOUNT


BOND TERMS between

ISSUER:		Navigator Holdings Ltd., a company existing under the laws of Marshall Islands with registration number 29140 and LEI-code 213800H7RVOFYARK2W19; and

BOND TRUSTEE:		Nordic Trustee AS, a company existing under the laws of Norway with registration number 963 342 624 and LEI-code 549300XAKTM2BMKIPT85.

DATED:		1 November 2018

These Bond Terms shall remain in effect for so long as any Bonds remain outstanding.

1.	INTERPRETATION

1.1

Definitions

The following terms will have the following meanings:

“ Acceptable Bank ” means a commercial bank, savings bank or trust company which has a rating of BBB or higher from Standard & Poor’s Ratings Service or Baa2 or higher from Moody’s Investor Service Limited or a comparable rating from a nationally recognized credit rating agency for its long term debt obligations.

“ Affiliate ” means, in relation to any person:

(a)

any person which is a Subsidiary of that person;

(b)

any person who has Decisive Influence over that person (directly or indirectly); or

(c)

any person which is a Subsidiary of an entity who has Decisive Influence (directly or indirectly) over that person.

“ Annual Financial Statements ” means the audited unconsolidated and consolidated annual financial statements of the Issuer for any financial year, which shall be prepared in accordance with GAAP and include a profit and loss account, balance sheet, cash flow statement and report from the board of directors.

“ Assignment of Earnings ” means assignments of all earnings and requisition compensation related to each Security Vessel by the relevant Vessel Owner through a general assignment.

“ Assignment of Insurances ” means assignments of claims of each Vessel Owner under the insurances covering its Security Vessel.

“ Assignment of Intra-Group Debt ” means an assignment over all claims of any Group Company against any Guarantor.

“ Attachment ” means each of the attachments to these Bond Terms.

“ Bond Terms ” means these terms and conditions, including all Attachments which shall form an integrated part of these Bond Terms, in each case as amended and/or supplemented from time to time.

“ Bond Trustee ” means the company designated as such in the preamble to these Bond Terms, or any successor, acting for and on behalf of the Bondholders in accordance with these Bond Terms.

“ Bond Trustee Fee Agreement ” means the agreement entered into between the Issuer and the Bond Trustee relating among other things to the fees to be paid by the Issuer to the Bond Trustee for its obligations relating to the Bonds.

“ Bondholder ” means a person who is registered in the CSD as directly registered owner or nominee holder of a Bond, subject however to Clause 3.3 ( Bondholders’ rights ).

“ Bondholders’ Meeting ” means a meeting of Bondholders as set out in Clause 14 ( Bondholders’ Decisions ).

“ Bonds ” means the debt instruments issued by the Issuer pursuant to these Bond Terms.

“ Book Equity ” means the aggregate book value (on a consolidated basis) of the Group’s total equity treated as equity in accordance with GAAP.

“ Business Day ” means a day on which both the relevant CSD settlement system is open and the relevant Bond currency settlement system is open.

“ Business Day Convention ” means that if the last day of any Interest Period originally falls on a day that is not a Business Day, the Interest Period will be extended to include the first following Business Day unless that day falls in the next calendar month, in which case the Interest Period will be shortened to the first preceding Business Day ( Modified Following) .

“ Call Option ” has the meaning given to it in Clause 10.2 ( Voluntary early redemption – Call Option ).

“ Call Option Repayment Date ” means the settlement date for the Call Option determined by the Issuer pursuant to Clause 10.2 ( Voluntary early redemption – Call Option ), or a date agreed upon between the Bond Trustee and the Issuer in connection with such redemption of Bonds.

“ Cash and Cash Equivalents ” means on any date, the aggregate equivalent in USD on such date of the then current market value of:

(a)

cash in hand or amounts standing to the credit of any current and/or on deposit accounts with an Acceptable Bank; and

(b)

time deposits with Acceptable Banks and certificates of deposit issued, and bills of exchange accepted, by an Acceptable Bank,

in each case to which any Group Company is beneficially entitled at the time and to which any Group Company has free and unrestricted access and which is not subject to any Security, provided that for the purposes hereof amounts standing to the credit on the accounts (other than the Escrow Account) pledged in favour of the Bond Trustee pursuant to the Finance Documents shall count as cash as long as no Event of Default is in existence.

“ Change of Control Event ” means if:

(a)

any person or group of persons acting in concert (other than Invesco Ltd. (formerly WL Ross & Co) or any indirectly or directly controlled subsidiary, fund or other entity of Invesco Ltd.), directly or indirectly, acquires Decisive Influence over the Issuer; or

(b)

a de-listing of the Issuer’s shares from the New York Stock Exchange occurs except in connection with a simultaneous listing of the Issuer’s shares on another recognized stock exchange.

“ CSD ” means the central securities depository in which the Bonds are registered, being Verdipapirsentralen ASA (VPS).

“ Compliance Certificate ” means a statement substantially in the form as set out in Attachment 1 hereto.

“ Decisive Influence ” means a person having, as a result of an agreement or through the ownership of shares or interests in another person (directly or indirectly):

(a)

a majority of the voting rights in that other person; or

(b)

a right to elect or remove a majority of the members of the board of directors of that other person.

When determining the relevant person’s number of voting rights in the other person or the right to elect and remove members of the board of directors, rights held by the parent company of the relevant person and the parent company’s Subsidiaries shall be included.

“ Default Notice ” means a written notice to the Issuer as described in Clause 14.2 ( Acceleration of the Bonds ).

“ Default Repayment Date ” means the settlement date set out by the Bond Trustee in a Default Notice requesting early redemption of the Bonds.

“ Disposal Account ” means an account with an Acceptable Bank where the net proceeds received from a Disposal Event, Total Loss Event or a Piracy Event shall be paid directly into that account, which shall be pledged and blocked in favour of the Bond Trustee (on behalf of the Secured Parties).

“ Disposal Account Pledge ” means the pledge over the Disposal Account.

“ Disposal Event ” shall have the meaning ascribed to such term in Clause 13.18(a).

“ Equity Ratio ” means the ratio of Book Equity to Total Assets.

“ Escrow Account ” means an account with an Acceptable Bank in the name of the Issuer, pledged and blocked on first priority as security for the Issuer’s obligations under the Finance Documents.

“ Escrow Account Pledge ” means the pledge over the Escrow Account, where the bank operating the account has waived any set-off rights.

“ Event of Default ” means any of the events or circumstances specified in Clause 14.1 ( Events of Default ).

“ Exchange ” means:

(a)

the Nordic ABM, a self-regulated marketplace organised and operated by Oslo Børs; or

(b)

any regulated market as such term is understood in accordance with the Markets in Financial Instruments Directive (Directive 2004/39/EC) or the Markets in Financial Instruments Directive 2014/65/EU (MiFID II), as applicable.

“ Finance Documents ” means these Bond Terms, the Bond Trustee Fee Agreement, any Transaction Security Document and any other document designated by the Issuer and the Bond Trustee as a Finance Document.

“ Financial Indebtedness ” means any indebtedness for or in respect of:

(a)

moneys borrowed;

(b)

any amount raised by acceptance under any acceptance credit facility or dematerialized equivalent;

(c)

any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d)

the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;

(e)

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f)

any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

(g)

any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); and

(h)

without double counting, the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) through (g) above.

“ Financial Reports ” means the Annual Financial Statements and the Interim Accounts.

“ Financial Support ” means any loans, guarantees, Security or other financial assistance (whether actual or contingent).

“ First Call Date ” means the Interest Payment Date falling 3 years after the Issue Date.

“ GAAP ” means generally accepted accounting practices and principles under US GAAP including, if applicable, the International Financial Reporting Standards (IFRS) and guidelines and interpretations issued by the International Accounting Standards Board (or any predecessor and successor thereof), in force from time to time.

“ Government Bond Rate ” means the interest rate of debt securities instruments issued by the government of the jurisdiction issuing the currency of the Bonds on the day falling two (2) Business Days before the notification to the Bondholders of the Make Whole Amount following an Event of Default.

“ Group ” means the Issuer and its Subsidiaries from time to time, including, for the avoidance of doubt, PT Navigator Khatulistiwa (Indonesia).

“ Group Company ” means any person which is a member of the Group.

“ Guarantee(s) ” means the guarantee(s) and indemnity granted pursuant to each of the unconditional and irrevocable Norwegian law corporate guarantees (Nw: “ Selvskyldnerkausjon ”) from each of the Guarantors.

“ Guarantor ” means each of the Vessel Owners and the Terminal Holdco.

“ Guarantor Share Pledge ” means a pledge under applicable law over all of the shares (100%) in the Guarantors, together with, where relevant, letters of resignation (effective upon a default) from current board members and covenants to obtain such from future board members.

“ Initial Nominal Amount ” means the nominal amount of each Bond as set out in Clause 2.1 ( Amount, denomination and ISIN of the Bonds ).

“ Insolvent ” means that a person:

(a)

is unable or admits inability to pay its debts as they fall due;

(b)

suspends making payments on any of its debts generally; or

(c)

is otherwise considered insolvent or bankrupt within the meaning of the relevant bankruptcy legislation of the jurisdiction which can be regarded as its center of main interest as such term is understood pursuant to Council Regulation (EC) no. 1346/2000 on insolvency proceedings (as amended).

“ Interest Payment Date ” means the last day of each Interest Period, the first Interest Payment Date being 2 February 2019 (3 months after the Issue Date) and the last Interest Payment Date being the Maturity Date.

“ Interest Period ” means, subject to adjustment in accordance with the Business Day Convention, the period between 2 November, 2 February, 2 May and 2 August each year, provided however that an Interest Period shall not extend beyond the Maturity Date.

“ Interest Rate ” means the percentage rate per annum which is the aggregate of the Reference Rate for the relevant Interest Period plus the Margin.

“ Interest Quotation Day ” means, in relation to any period for which Interest Rate is to be determined, the day falling two (2) Business Days before the first day of the relevant Interest Period.

“ Interim Accounts ” means the unaudited and consolidated quarterly financial statements of the Issuer for the quarterly period ending on each 31 March, 30 June, 30 September and 31 December in each year, which shall be prepared in accordance with GAAP and include a profit and loss account, balance sheet, cash flow statement and management commentary.

“ ISIN ” means International Securities Identification Number, being the identification number of the Bonds.

“ Issue Date ” means 2 November 2018.

“ Issuer ” means the company designated as such in the preamble to these Bond Terms.

“ Issuer’s Bonds ” means any Bonds which are owned by the Issuer or any Affiliate of the Issuer.

“ Liquidity ” means, at any date, the aggregate amount of freely available and unrestricted Cash and Cash Equivalents.

“ Longstop Date ” means 31 December 2018.

“ Make Whole Amount ” means an amount equal to the sum of:

(a)

the present value on the Call Option Repayment Date of 102.864 per cent. of the Nominal Amount of the redeemed Bonds as if such payment originally had taken place on the First Call Date; and

(b)

the present value on the Call Option Repayment Date of the remaining interest payments of the redeemed Bonds, less any accrued and unpaid interest on the redeemed Bonds as at the Call Option Repayment Date, to the First Call Date,

where the present value shall be calculated by using a discount rate of 50 basis points above the comparable Government Bond Rate (i.e. comparable to the remaining Macaulay duration of the Bonds from the Call Option Repayment Date until the First Call Date using linear interpolation), and where the interest rate applied for the remaining interest payments shall equal the Mid-Swap Rate plus the Margin (however so that the interest rate can never fall below the Margin).

“ Manager ” means each of Fearnley Securities AS and Nordea Bank Abp, filial i Norge.

“ Margin ” means 6 per cent.

“ Market Value ” means the fair market value of the relevant Security Vessel determined as the arithmetic mean of independent valuations of the vessel obtained from two approved brokers appointed by the Issuer. Such valuation shall be made on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing seller and willing buyer, on an “as is where is” basis, free of any existing charters or other contracts for employment.

“ Material Adverse Effect ” means a material adverse effect on:

(a)

any Obligor’s or Navigator Gas’ ability to perform and comply with its obligations under any Finance Document; or

(b)

the validity or enforceability of any of the Finance Documents.

“ Maturity Date ” means 2 November 2023 (5 years after the Issue Date), adjusted according to the Business Day Convention.

“ Mid-Swap Rate ” means the linearly interpolated Reference Rate in the currency of the Bonds for the actual period on the day falling two (2) Business Days before the notification to the Bondholders of the Make Whole Amount following an Event of Default, or, if such is not quoted, the mid-swap rate for the leading banks in the relevant interbank market, based on the last quoted Reference Rate or mid-swap rate in the currency of the Bonds for the actual period.

“ Mortgages ” means a Liberian law mortgage over each of the Security Vessels including all relevant equipment being legally part of the Security Vessels under applicable law (including any deed of covenants supplemental to the Mortgages and to the security thereby created between the Issuer and the Bond Trustee).

“ Navigator Gas ” means Navigator Gas LLC, a company existing under the laws of Marshall Islands with registration number 961263, being the owner of each of the Vessel Owners, and a wholly owned Subsidiary of the Issuer.

“ Nominal Amount ” means the Initial Nominal Amount (less the aggregate amount by which each Bond has been partially redeemed, if any) pursuant to Clause 10 ( Redemption and repurchase of Bonds ) or any other amount following a split of Bonds pursuant to Clause 16.2, paragraph (j).

“ Obligor ” means the Issuer and any Guarantor(s).

“ Outstanding Bonds ” means any Bonds not redeemed or otherwise discharged.

“ Overdue Amount ” means any amount required to be paid by an Obligor under any of the Finance Documents but not made available to the Bondholders on the relevant Payment Date or otherwise not paid on its applicable due date.

“ Partial Payment ” means a payment that is insufficient to discharge all amounts then due and payable under the Finance Documents.

“ Paying Agent ” means the legal entity appointed by the Issuer to act as its paying agent with respect to the Bonds in the CSD.

“ Payment Date ” means any Interest Payment Date or any Repayment Date.

“ Permitted Disposal ” means any disposal of a Security Vessel or the shares in a Vessel Owner, if:

(a)

no event of default exists or arises as a result of such disposal;

(b)

the transaction is carried out on arms-length terms and for fair market value; and

(c)

the net proceeds from such disposal is transferred to the Disposal Account (or the Bond Trustee being satisfied that proceeds will be so applied and subject to closing mechanics satisfactory to the Bond Trustee).

Upon a Permitted Disposal, the Bond Trustee shall, upon request and at the Issuer’s cost, release the Transaction Security held relating solely to the asset sold.

“ Permitted Financial Indebtedness ” means:

(a)

any Financial Indebtedness arising under the Finance Documents;

(b)

any secured Financial Indebtedness secured on first priority in the relevant assets;

(c)

any unsecured bonds issued by the Issuer with no amortization or maturity prior to the Maturity Date;

(d)

Financial Indebtedness incurred by any Group Company in the ordinary course of business of such Group Company;

(e)

obligations incurred by any Group Company under any interest rate and currency hedging agreements made for non-speculative purposes and relating to any Financial Indebtedness incurred in compliance with the Bond Terms;

(f)

any unsecured intra-group loans granted by any Group Company to another Group Company provided that the relevant loan is subordinated;

(g)

any Subordinated Loans; and

(h)

any Financial Indebtedness existing on the date of the Bond Terms.

“ Permitted Financial Support ” means Financial Support granted in respect of Permitted Financial Indebtedness items (a), (b), (d), (e), (f) and (h), save that no Financial Support shall be granted by any Terminal Holding Company other than pursuant to the Finance Documents or any Terminal Credit Facility.

“ Permitted Security ” means Security granted in respect of Permitted Financial Indebtedness items (a), (b), (d), (e), (f) and (h), save that no Security shall be granted by any Terminal Holding Company other than pursuant to the Finance Documents or any Terminal Credit Facility.

“ Piracy Event ” shall have the meaning ascribed to such term in Clause 13.18(b)(i).

“ Put Option ” shall have the meaning ascribed to such term in Clause 10.3 ( Mandatory repurchase due to a Put Option Event ).

“ Put Option Event ” means a Change of Control Event.

“ Put Option Repayment Date ” means the settlement date for the Put Option pursuant to Clause 10.3 ( Mandatory repurchase due to a Put Option Event ).

“ Quarter Date ” means each 31 March, 30 June, 30 September and 31 December.

“ Reference Rate ” shall mean NIBOR (Norwegian Interbank Offered Rate) being:

(a)

the interest rate fixed for a period comparable to the relevant Interest Period on Oslo Børs’ webpage at approximately 12.15 (Oslo time) on the Interest Quotation Day or, on days on which Oslo Børs has shorter opening hours (New Year’s Eve and the Wednesday before Maundy Thursday), the data published at approximately 10.15 a.m. (Oslo time) on the Interest Quotation Day shall be used; or

(b)

if no screen rate is available for the relevant Interest Period:

(i)

the linear interpolation between the two closest relevant interest periods, and with the same number of decimals, quoted under paragraph (a) above; or

(ii)

a rate for deposits in the Bond currency for the relevant Interest Period as supplied to the Bond Trustee at its request quoted by a sufficient number of commercial banks reasonably selected by the Bond Trustee; or

(c)

if no quotation is available under paragraph (b), the interest rate which according to the reasonable assessment of the Bond Trustee and the Issuer best reflects the interest rate for deposits in the Bond currency offered for the relevant Interest Period,

in each case, if any such rate is below zero, the Reference Rate will be deemed to be zero.

“ Relevant Jurisdiction ” means the country in which the Bonds are issued, being Norway.

“ Relevant Record Date ” means the date on which a Bondholder’s ownership of Bonds shall be recorded in the CSD as follows:

(a)

in relation to payments pursuant to these Bond Terms, the date designated as the Relevant Record Date in accordance with the rules of the CSD from time to time;

(b)

for the purpose of casting a vote in a Bondholders’ Meeting, the date falling on the immediate preceding Business Day to the date of that Bondholders’ Meeting being held, or another date as accepted by the Bond Trustee; and

(c)

for the purpose of casting a vote in a Written Resolution:

(i)

the date falling three (3) Business Days after the Summons have been published; or

(ii)

if the requisite majority in the opinion of the Bond Trustee has been reached prior to the date set out in paragraph (i) above, on the date falling on the immediate Business Day prior to the date on which the Bond Trustee declares that the Written Resolution has been passed with the requisite majority.

“ Repayment Date ” means any Call Option Repayment Date, the Default Repayment Date, the Put Option Repayment Date, any Tender Offer Repayment Date, the Tax Event Repayment Date, the Longstop Date or the Maturity Date.

“ Secured Obligations ” means all present and future obligations and liabilities of any Obligor under the Finance Documents.

“ Secured Parties ” means the Security Agent and the Bond Trustee on behalf of itself and the Bondholders.

“ Securities Trading Act ” means the Securities Trading Act of 2007 no.75 of the Relevant Jurisdiction.

“ Security ” means a mortgage, charge, pledge, lien, security assignment or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“ Security Agent ” means the Bond Trustee or any successor Security Agent, acting for and on behalf of the Secured Parties in accordance with any Security Agent Agreement or any other Finance Document.

“ Security Agent Agreement ” means any agreement whereby the Security Agent is appointed to act as such in the interest of the Bond Trustee (on behalf of itself and the Secured Parties).

“ Security Vessels ” means, subject to any Permitted Disposal, the four gas carriers all flying the Liberian flag:

(a)

Navigator Neptune with IMO number 9177583;

(b)

Navigator Orion with IMO number 9177545;

(c)

Navigator Saturn with IMO number 9177569; and

(d)

Navigator Venus with IMO number 9177557,

each a “ Security Vessel ”.

“ Subordinated Loans ” means debt financing provided to the Issuer that;

(a)

is subordinated in right of payment to the Bonds, except for interest payments that can be made as long as (i) no Event of Default has occurred and is continuing, or (ii) no remedy period has commenced but not expired under the Bond Terms;

(b)

does not mature or require any amortisation prior to the date on which all amounts under the Bond Terms and any other Finance Documents have been paid in full; and

(c)

does not provide for its acceleration or confer any right to declare any event of default prior to the date on which all amounts under the Bond Terms and any other Finance Documents have been paid in full.

“ Subsidiary ” means a company over which another company has Decisive Influence.

“ Summons ” means the call for a Bondholders’ Meeting or a Written Resolution as the case may be.

“ Tax Event Repayment Date ” means the date set out in a notice from the Issuer to the Bondholders pursuant to Clause 10.4 ( Early redemption option due to a tax event ).

“ Tender Offer ” shall have the meaning ascribed to such term in Clause 10.5.

“ Tender Offer Repayment Date ” means the settlement date for the Tender Offer pursuant to Clause 10.5 ( Early redemption following a Tender Offer ).

“ Terminal ” means the Enterprise Navigator Ethylene Terminal which as at the Issue Date is under construction at Enterprise Product Partners L.P. Morgan’s Point complex in Houston, TX, United States.

“ Terminal Earnings Account ” means an account with an Acceptable Bank (which shall waive any set-off rights) in the name of the Issuer to which any dividends, repayment of loans or other distribution made to the Issuer emanating from its ownership interests in the Terminal (directly or indirectly) shall be made. The Terminal Earnings Account shall be subject to the Terminal Earnings Account Pledge in favour of the Bond Trustee (on behalf of the Secured Parties), and shall not be blocked unless an event of default has occurred (and is continuing) under the Bonds, in which case the account shall be considered blocked (and treated as such by the Issuer) in favour of the Bond Trustee (on behalf of the Secured Parties) without further notice.

“ Terminal Earnings Account Pledge ” means a pledge over the Terminal Earnings Account.

“ Terminal Funding Arrangements ” means:

(a)

a project credit facility in an amount up to USD 70,000,000 (the “ Terminal Credit Facility ”); and/or

(b)

cash raised from:

(i)

retained earnings of the Group in excess of amounts required to satisfy the relevant financial covenants;

(ii)

disposal of assets (other than a disposal of assets subject to security under the Finance Documents) made by an Group Company;

(iii)

issuance of new equity by the Issuer; and/or

(iv)

surplus cash generated from the refinancing of existing vessels (other than the assets subject to security under the Finance Documents), (each a “ Terminal Cash Contribution ”),

and (A) in case of a Terminal Credit Facility, signed and available for drawdown, and (B) in case of a Terminal Cash Contribution, in available funds,

provided in each case of (a) and (b) above, that (i) the Terminal Credit Facility and the Terminal Cash Contribution shall have been allocated and reserved for the Issuer’s funding of its participation in the Terminal project, (ii) the aggregate amount of the proceeds of the Bonds, any relevant Terminal Credit Facility and Terminal Cash Contribution shall be equal to or exceed USD 130,000,000, and (iii) subject to no Event of Default being outstanding at the relevant time or resulting therefrom, the Issuer shall be at liberty to at any time to amend the Terminal Funding Arrangements so that a Terminal Credit Facility may replace, in whole or in part, a Terminal Cash Contribution and/or vice versa.

“ Terminal Holdco ” means the single purpose limited liability company Navigator Terminals LLC (a Marshall Islands corporation with registration number 964073) being the (indirect) beneficial owner of 50% of the Terminal.

“ Terminal Holding Company ” means the Terminal Holdco and any other Group Company (directly or indirectly) holding any equity interest in the Terminal, other than the Issuer.

“ Total Assets ” means the aggregate book value (on a consolidated basis) of the Group’s total assets which are treated as assets calculated in accordance with GAAP.

“ Total Loss Event ” shall have the meaning ascribed to such term in Clause 13.18(b)(ii).

“ Transaction Security ” means the Security created or expressed to be created in favour of the Security Agent (on behalf of the Secured Parties) pursuant to the Transaction Security Documents.

“ Transaction Security Documents ” means, collectively, the Escrow Account Pledge and all of the documents which shall be executed or delivered pursuant to Clause 2.5 ( Transaction Security ) expressed to create any Security by the relevant grantor thereof in respect of the Issuer’s obligations under any of the Finance Documents.

“ USD ” means the legal currency of the United States of America.

“ Vessel Earnings Account ” means account number 4543 001 held with Nordea Bank Abp, London Branch in the name of Navigator Gas LLC, being a joint account for the Vessel Owners where the earnings of each Vessel Owner shall be paid, which shall be pledged but not blocked in favour of the Bond Trustee (on behalf of the Secured Parties).

“ Vessel Earnings Account Pledge ” means a pledge over the Vessel Earnings Account.

“ Vessel Owners ” means each of the single purpose limited liability companies, each being the sole legal and beneficial owner of a Security Vessel. All Vessel Owners are 100% directly or indirectly owned Subsidiaries of the Issuer and registered in the Republic of the Marshall Islands.

“ Voting Bonds ” means the Outstanding Bonds less the Issuer’s Bonds and a Voting Bond shall mean any single one of those Bonds.

“ Written Resolution ” means a written (or electronic) solution for a decision making among the Bondholders, as set out in Clause 15.5 ( Written Resolutions ).

1.2

Construction

In these Bond Terms, unless the context otherwise requires:

(a)

headings are for ease of reference only;

(b)

words denoting the singular number will include the plural and vice versa;

(c)

references to Clauses are references to the Clauses of these Bond Terms;

(d)

references to a time are references to Central European time unless otherwise stated;

(e)

references to a provision of “ law ” is a reference to that provision as amended or re- enacted, and to any regulations made by the appropriate authority pursuant to such law;

(f)

references to a “ regulation ” includes any regulation, rule, official directive, request or guideline by any official body;

(g)

references to a “ person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, unincorporated organization, government, or any agency or political subdivision thereof or any other entity, whether or not having a separate legal personality;

(h)

references to Bonds being “ redeemed ” means that such Bonds are cancelled and discharged in the CSD in a corresponding amount, and that any amounts so redeemed may not be subsequently re-issued under these Bond Terms;

(i)

references to Bonds being “ purchased ” or “ repurchased ” by the Issuer means that such Bonds may be dealt with by the Issuer as set out in Clause 11.1 ( Issuer’s purchase of Bonds );

(j)

references to persons “ acting in concert ” shall be interpreted pursuant to the relevant provisions of the Securities Trading Act; and

(k)

an Event of Default is “ continuing ” if it has not been remedied or waived.

2.	THE BONDS

2.1

Amount, denomination and ISIN of the Bonds

(a)

The Issuer has resolved to issue a series of Bonds in the amount of up to NOK 600,000,000.

(b)

The Bonds are denominated in Norwegian Kroner (NOK), being the legal currency of Norway.

(c)

The Initial Nominal Amount of each Bond is NOK 500,000.

(d)

The ISIN of the Bonds is NO 0010835069. All Bonds issued under the same ISIN will have identical terms and conditions as set out in these Bond Terms.

2.2

Tenor of the Bonds

The tenor of the Bonds is from and including the Issue Date to but excluding the Maturity Date.

2.3

Use of proceeds

The Issuer will use the net proceeds from the issuance of the Bonds:

(a)

to partly fund the Issuer’s portion of the construction cost of the Terminal, provided that the amount on the Escrow Account may be applied by the Issuer towards repayment under a revolving credit facility, if and to the extent the Issuer retains available and unconditional commitments under such revolving credit facility at all times thereafter sufficient to draw down an equivalent amount for application in accordance with this paragraph (a) (until an equivalent amount has been so applied); and

(b)

for general corporate purposes.

2.4

Status of the Bonds

The Bonds will constitute senior debt obligations of the Issuer. The Bonds will rank pari passu between themselves and at least pari passu with all other obligations of the Issuer (save for such claims which are preferred by bankruptcy, insolvency, liquidation or other similar laws of general application) and shall rank ahead of subordinated debt.

2.5

Transaction Security

(a)

As Security for the due and punctual fulfilment of the Secured Obligations, the Issuer shall procure that the following Transaction Security is granted in favour of the Security Agent with first priority within the times agreed in Clause 6 ( Conditions for disbursement ):

(i)

The Escrow Account Pledge;

(ii)

the Guarantees;

(iii)

the Mortgages;

(iv)

the Guarantor Share Pledge;

(v)

to the extent permitted pursuant to the relevant charter contract and applicable law, the Assignment of Earnings. If not permitted pursuant to the relevant charter contract, the Issuer and the relevant Vessel Owner shall, with respect to any charter contract with firm remaining duration of more than 12 months, use reasonable efforts to obtain consent from the charterer (or any other debtor);

(vi)

provided such pledge is permitted pursuant to the relevant account agreement, the Vessel Earnings Account Pledge;

(vii)

the Disposal Account Pledge;

(viii)

the Assignment of Insurances;

(ix)

the Assignment of Intra-Group Debt, if any; and

(x)

provided such pledge is permitted pursuant to the relevant account agreement, the Terminal Earnings Account Pledge.

(b)

The Transaction Security shall be entered into on such terms and conditions as the Bond Trustee in its discretion deems appropriate in order to create the intended benefit for the Secured Parties under the relevant document.

(c)

The Bond Trustee may in its sole discretion elect any other governing law (than set out above) under each respective Security Document.

3.	THE BONDHOLDERS

3.1

Bond Terms binding on all Bondholders

(a)

By virtue of being registered as a Bondholder (directly or indirectly) with the CSD, the Bondholders are bound by these Bond Terms and any other Finance Document, without any further action required to be taken or formalities to be complied with by the Bond Trustee, the Bondholders, the Issuer or any other party.

(b)

The Bond Trustee is always acting with binding effect on behalf of all the Bondholders.

3.2

Limitation of rights of action

(a)

No Bondholder is entitled to take any enforcement action, instigate any insolvency procedures, or take other action against the Issuer or any other party in relation to any of the liabilities of the Issuer or any other party under or in connection with the Finance Documents, other than through the Bond Trustee and in accordance with these Bond Terms, provided, however, that the Bondholders shall not be restricted from exercising any of their individual rights derived from these Bond Terms, including the right to exercise the Put Option.

(b)

Each Bondholder shall immediately upon request by the Bond Trustee provide the Bond Trustee with any such documents, including a written power of attorney (in form and substance satisfactory to the Bond Trustee), as the Bond Trustee deems necessary for the purpose of exercising its rights and/or carrying out its duties under the Finance Documents. The Bond Trustee is under no obligation to represent a Bondholder which does not comply with such request.

3.3

Bondholders’ rights

(a)

If a beneficial owner of a Bond not being registered as a Bondholder wishes to exercise any rights under the Finance Documents, it must obtain proof of ownership of the Bonds, acceptable to the Bond Trustee.

(b)

A Bondholder (whether registered as such or proven to the Bond Trustee’s satisfaction to be the beneficial owner of the Bond as set out in paragraph (a) above) may issue one or more powers of attorney to third parties to represent it in relation to some or all of the Bonds held or beneficially owned by such Bondholder. The Bond Trustee shall only have to examine the face of a power of attorney or similar evidence of authorisation that has been provided to it pursuant to this Clause 3.3 ( Bondholders’ rights ) and may assume that it is in full force and effect, unless otherwise is apparent from its face or the Bond Trustee has actual knowledge to the contrary.

4.	ADMISSION TO LISTING

The Issuer has applied, or shall within 6 months of the Issue Date apply, for the Bonds to be admitted to listing on Nordic ABM.

5.	REGISTRATION OF THE BONDS

5.1

Registration in the CSD

The Bonds shall be registered in dematerialised form in the CSD according to the relevant securities registration legislation and the requirements of the CSD.

5.2

Obligation to ensure correct registration

The Issuer will at all times ensure that the registration of the Bonds in the CSD is correct and shall immediately upon any amendment or variation of these Bond Terms give notice to the CSD of any such amendment or variation.

5.3

Country of issuance

The Bonds have not been issued under any other country’s legislation than that of the Relevant Jurisdiction. Save for the registration of the Bonds in the CSD, the Issuer is under no obligation to register, or cause the registration of, the Bonds in any other registry or under any other legislation than that of the Relevant Jurisdiction.

6.	CONDITIONS FOR DISBURSEMENT

6.1

Conditions precedent for disbursement to the Issuer

(a)

Pre-Settlement: Payment of the net proceeds from the issuance of the Bonds to the Escrow Account shall be conditional on the Bond Trustee having received in due time (as determined by the Bond Trustee) prior to the Issue Date each of the following documents, in form and substance satisfactory to the Bond Trustee:

(i)

these Bond Terms duly executed by all parties hereto;

(ii)

certified copies of all necessary corporate resolutions of the Issuer to issue the Bonds and execute the Finance Documents to which it is a party;

(iii)

a certified copy of a power of attorney (unless included in the corporate resolutions) from the Issuer to relevant individuals for their execution of the Finance Documents to which it is a party, or extracts from the relevant register or similar documentation evidencing such individuals’ authorisation to execute such Finance Documents on behalf of the Issuer;

(iv)

certified copies of the Issuer’s articles of association and a certificate of good standing in respect of the Issuer evidencing that the Issuer is validly existing;

(v)

the Escrow Account Pledge duly executed by all parties thereto and perfected in accordance with applicable law;

(vi)

copies of the Issuer’s latest Financial Reports;

(vii)

confirmation that the applicable prospectus requirements (ref the EU prospectus directive (2003/71 EC)) concerning the issuance of the Bonds have been fulfilled;

(viii)

copies of any necessary governmental approval, consent or waiver (as the case may be) required at such time to issue the Bonds;

(ix)

confirmation that the Bonds are registered in the CSD;

(x)

copies of any written documentation used in marketing the Bonds or made public by the Issuer or any Manager in connection with the issuance of the Bonds;

(xi)

the Bond Trustee Fee Agreement duly executed by the parties thereto; and

(xii)

legal opinions or other statements as may be required by the Bond Trustee (including in respect of corporate matters relating to the Issuer and the legality, validity and enforceability of these Bond Terms and the Finance Documents).

(b)

Pre-Disbursement: The net proceeds from the Bond issue (on the Escrow Account) will not be disbursed to the Issuer unless the Bond Trustee has received or is satisfied that it will receive in due time (as determined by the Bond Trustee) prior to such disbursement to the Issuer each of the following documents, in form and substance satisfactory to the Bond Trustee:

(i)

a duly executed release notice from the Issuer, as set out in Schedule 2;

(ii)

unless delivered under paragraph (a) of this Clause 6.1 (C onditions precedent for disbursement to the Issuer ) as pre-settlement conditions precedent:

(A)

certified copies of all necessary corporate resolutions of each Obligor and Navigator Gas required to provide the Transaction Security and execute the Finance Documents to which it is a party;

(B)

a certified copy of a power of attorney (unless included in the relevant corporate resolutions) from each Obligor and Navigator Gas to relevant individuals for their execution of the Finance Documents to which it is a party, or extracts from the relevant register or similar documentation evidencing such individuals’ authorisation to execute such Finance Documents on behalf of the relevant Obligor or Navigator Gas;

(C)

certified copies of each Obligor’s and Navigator Gas’ articles of association and certificates of good standing, or, where relevant, a full extract from the relevant company register in respect of each Obligor and Navigator Gas evidencing that the Obligors and Navigator Gas are validly existing;

(iii)

the Transaction Security Documents duly executed by all parties thereto and evidence of the establishment and perfection of the Transaction Security;

(iv)

insurance report delivered to the Bond Trustee confirming that the required insurances with respect to the Security Vessels have been taken out; and

(v)

legal opinions or other statements as may be required by the Bond Trustee (including in respect of corporate matters relating to the Obligors and Navigator Gas and the legality, validity and enforceability of the Finance Documents.

(c)

The Bond Trustee, acting in its sole discretion, may, regarding this Clause 6.1 (C onditions precedent for disbursement to the Issuer ), waive the requirements for documentation, or decide in its discretion that delivery of certain documents shall be made subject to an agreed closing procedure between the Bond Trustee and the Issuer.

6.2

Distribution

Disbursement of the proceeds from the issuance of the Bonds is conditional on the Bond Trustee’s confirmation to the Paying Agent that the conditions in Clause 6.1 ( Conditions precedent for disbursement to the Issuer ) have been either satisfied in the Bond Trustee’s discretion or waived by the Bond Trustee pursuant to paragraph (c) of Clause 6.1 above.

7.	REPRESENTATIONS AND WARRANTIES

The Issuer makes the representations and warranties set out in this Clause 7 ( Representations and warranties ), in respect of itself and in respect of each Obligor to the Bond Trustee (on behalf of the Bondholders) at the following times and with reference to the facts and circumstances then existing:

(a)

at the date of these Bond Terms;

(b)

at the Issue Date; and

(c)

on each date of disbursement of proceeds from the Escrow Account.

7.1

Status

It is a corporation or limited liability company, duly incorporated and validly existing and registered under the laws of its jurisdiction of incorporation, and has the power to own its assets and carry on its business as it is being conducted.

7.2

Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, this Bond Terms and any other Finance Document to which it is a party and the transactions contemplated by those Finance Documents.

7.3

Valid, binding and enforceable obligations

These Bond Terms and each other Finance Document to which it is a party constitutes (or will constitute, when executed by the respective parties thereto) its legal, valid and binding obligations, enforceable in accordance with their respective terms, and (save as provided for therein) no further registration, filing, payment of tax or fees or other formalities are necessary or desirable to render the said documents enforceable against it.

7.4

Non-conflict with other obligations

The entry into and performance by it of these Bond Terms and any other Finance Document to which it is a party and the transactions contemplated thereby do not and will not conflict with (i) any law or regulation or judicial or official order; (ii) its constitutional documents; or (iii) any agreement or instrument which is binding upon it or any of its assets.

7.5

No Event of Default

(a)

No Event of Default exists or is likely to result from the making of any drawdown under these Bond Terms or the entry into, the performance of, or any transaction contemplated by, any Finance Document.

(b)

No other event or circumstance has occurred which constitutes (or with the expiry of any grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is likely to have a Material Adverse Effect.

7.6

Authorizations and consents

All authorisations, consents, approvals, resolutions, licenses, exemptions, filings, notarizations or registrations required:

(a)

to enable it to enter into, exercise its rights and comply with its obligations under this Bond Terms or any other Finance Document to which it is a party; and

(b)

to carry on its business as presently conducted and as contemplated by these Bond Terms,

have been obtained or effected and are in full force and effect.

7.7

Litigation

No litigation, arbitration or administrative proceedings or investigations of or before any court, arbitral body or agency which, if adversely determined, is likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.

7.8

Financial Reports

Its most recent Financial Reports fairly and accurately represent the assets and liabilities and financial condition as at their respective dates, and have been prepared in accordance with GAAP, consistently applied.

7.9

No Material Adverse Effect

Since the date of the most recent Financial Reports, there has been no change in its business, assets or financial condition that is likely to have a Material Adverse Effect.

7.10

No misleading information

Any factual information provided by it to the Bondholders or the Bond Trustee for the purposes of the issuance of the Bonds was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

7.11

No withholdings

The Issuer is not required to make any deduction or withholding from any payment which it may become obliged to make to the Bond Trustee or the Bondholders under these Bond Terms.

7.12

Pari passu ranking

Its payment obligations under these Bond Terms or any other Finance Document to which it is a party ranks as set out in Clause 2.4.

7.13

Security

No Security exists over any of the present assets of any Group Company in conflict with these Bond Terms.

8.	PAYMENTS IN RESPECT OF THE BONDS

8.1

Covenant to pay

(a)

The Issuer will unconditionally make available to or to the order of the Bond Trustee and/or the Paying Agent all amounts due on each Payment Date pursuant to the terms of these Bond Terms at such times and to such accounts as specified by the Bond Trustee and/or the Paying Agent in advance of each Payment Date or when other payments are due and payable pursuant to these Bond Terms.

(b)

All payments to the Bondholders in relation to the Bonds shall be made to each Bondholder registered as such in the CSD at the Relevant Record Date, by, if no specific order is made by the Bond Trustee, crediting the relevant amount to the bank account nominated by such Bondholder in connection with its securities account in the CSD.

(c)

Payment constituting good discharge of the Issuer’s payment obligations to the Bondholders under these Bond Terms will be deemed to have been made to each Bondholder once the amount has been credited to the bank holding the bank account nominated by the Bondholder in connection with its securities account in the CSD. If the paying bank and the receiving bank are the same, payment shall be deemed to have been made once the amount has been credited to the bank account nominated by the Bondholder in question.

(d)

If a Payment Date or a date for other payments to the Bondholders pursuant to the Finance Documents falls on a day on which either of the relevant CSD settlement system or the relevant currency settlement system for the Bonds are not open, the payment shall be made on the first following possible day on which both of the said systems are open, unless any provision to the contrary have been set out for such payment in the relevant Finance Document.

8.2

Default interest

(a)

Default interest will accrue on any Overdue Amount from and including the Payment Date on which it was first due to and excluding the date on which the payment is made at the Interest Rate plus an additional three (3) per cent. per annum.

(b)

Default interest accrued on any Overdue Amount pursuant to this Clause 8.2 ( Default interest ) will be added to the Overdue Amount on each Interest Payment Date until the Overdue Amount and default interest accrued thereon have been repaid in full.

8.3

Partial Payments

(a)

If the Paying Agent or the Bond Trustee receives a Partial Payment, such Partial Payment shall, in respect of the Issuer’s debt under the Finance Documents be considered made for discharge of the debt of the Issuer in the following order of priority:

(i)

firstly, towards any outstanding fees, liabilities and expenses of the Bond Trustee and any Security Agent;

(ii)

secondly, towards accrued interest due but unpaid; and

(iii)

thirdly, towards any principal amount due but unpaid;

(b)

Notwithstanding paragraph (a) above, any Partial Payment which is distributed to the Bondholders, shall, after the above mentioned deduction of outstanding fees, liabilities and expenses, be applied (i) firstly towards any principal amount due but unpaid and (ii) secondly, towards accrued interest due but unpaid, in the following situations:

(i)

the Bond Trustee has served a Default Notice in accordance with Clause 14.2 (Acceleration of the Bonds); or

(ii)

as a result of a resolution according to Clause 15 (Bondholders’ decisions).

8.4

Taxation

(a)

Each Obligor is responsible for withholding any withholding tax imposed by applicable law on any payments to be made by it in relation to the Finance Documents.

(b)

The Obligors shall, if any tax is withheld in respect of the Bonds under the Finance Documents:

(i)

gross up the amount of the payment due from it up to such amount which is necessary to ensure that the Bondholders or the Bond Trustee, as the case may be, receive a net amount which is (after making the required withholding) equal to the payment which would have been received if no withholding had been required; and

(ii)

at the request of the Bond Trustee, deliver to the Bond Trustee evidence that the required tax deduction or withholding has been made.

(c)

Any public fees levied on the trade of Bonds in the secondary market, shall be paid by the Bondholders, unless otherwise provided by law or regulation, and the Issuer shall not be responsible for reimbursing any such fees.

8.5

Currency

(a)

All amounts payable under the Finance Documents shall be payable in the denomination of the Bonds set out in Clause 2.1 ( Amount, denomination and ISIN of the Bonds ). If, however, the denomination differs from the currency of the bank account connected to the Bondholder’s account in the CSD, any cash settlement may be exchanged and credited to this bank account.

(b)

Any specific payment instructions, including foreign exchange bank account details, to be connected to the Bondholder’s account in the CSD must be provided by the relevant Bondholder to the Paying Agent (either directly or through its account manager in the CSD) within five (5) Business Days prior to a Payment Date. Depending on any currency exchange settlement agreements between each Bondholder’s bank and the Paying Agent, and opening hours of the receiving bank, cash settlement may be delayed, and payment shall be deemed to have been made once the cash settlement has taken place, provided, however, that no default interest or other penalty shall accrue for the account of the Issuer for such delay.

8.6

Set-off and counterclaims

No Obligor may apply or perform any counterclaims or set-off against any payment obligations pursuant to these Bond Terms or any other Finance Document.

9.	INTEREST

9.1

Calculation of interest

(a)

Each Outstanding Bond will accrue interest at the Interest Rate on the Nominal Amount for each Interest Period, commencing on and including the first date of the Interest Period, and ending on but excluding the last date of the Interest Period.

(c)

Interest shall be calculated on the basis of the actual number of days in the Interest Period in respect of which payment is being made divided by 360 (actual/360-days basis). The Interest Rate will be reset at each Interest Quotation Day by the Bond Trustee, who will notify the Issuer and the Paying Agent and, if the Bonds are listed, the Exchange, of the new Interest Rate and the actual number of calendar days for the next Interest Period.

9.2

Payment of interest

Interest shall fall due on each Interest Payment Date for the corresponding preceding Interest Period and, with respect to accrued interest on the principal amount then due and payable, on each Repayment Date.

10.

REDEMPTION AND REPURCHASE OF BONDS

10.1

Redemption of Bonds

The Outstanding Bonds will mature in full on the Maturity Date and shall be redeemed by the Issuer on the Maturity Date at a price equal to 100 per cent. of the Nominal Amount.

10.2

Voluntary early redemption – Call Option

(a)

The Issuer may redeem all or any part of the Outstanding Bonds (the “ Call Option ”) on any Business Day from and including:

(i)

the First Call Date to, but not including, the Interest Payment Date falling 4 years after the Issue Date at a price equal to 102.864 per cent. of the Nominal Amount;

(ii)

the Interest Payment Date falling 4 years after Issue Date to, but not including, the interest Payment Date falling 4 years and 6 months after the Issue Date at a price equal to 101.790 per cent. of the Nominal Amount; and

(iii)

the Interest Payment Date falling 4 years and 6 months after Issue Date to, but not including, the Maturity Date at a price equal to the Nominal Amount.

(b)

Any redemption of Bonds pursuant to Clause 10.2 (a) above shall be determined based upon the redemption prices applicable on the Call Option Repayment Date.

(c)

The Call Option may be exercised by the Issuer by written notice to the Bond Trustee and the Bondholders at least ten (10), but not more than 20, Business Days prior to the proposed Call Option Repayment Date. Such notice sent by the Issuer is irrevocable and shall specify the Call Option Repayment Date.

(d)

Any Call Option exercised in part will be used for pro rata payment to the Bondholders in accordance with the applicable regulations of the CSD.

10.3

Mandatory repurchase due to a Put Option Event

(a)

Upon the occurrence of a Put Option Event, each Bondholder will have the right (the “ Put Option ”) to require that the Issuer purchases all or some of the Bonds held by that Bondholder at a price equal to 101 per cent. of the Nominal Amount (plus accrued interest).

(b)

The Put Option must be exercised within 30 calendar days after the Issuer has given notice to the Bond Trustee and the Bondholders that a Put Option Event has occurred pursuant to Clause 12.3 ( Put Option Event ). Once notified, the Bondholders’ right to exercise the Put Option is irrevocable and will not be affected by any subsequent events related to the Issuer.

(c)

Each Bondholder may exercise its Put Option by written notice to its account manager for the CSD, who will notify the Paying Agent of the exercise of the Put Option. The Put Option Repayment Date will be the tenth Business Day after the end of the 30 calendar days exercise period referred to in paragraph (b) above. However, the settlement of the Put Option will be based on each Bondholders holding of Bonds at the Put Option Repayment Date.

(d)

If Bonds representing more than 90 per cent. of the Outstanding Bonds have been repurchased pursuant to this Clause 10.3 ( Mandatory repurchase due to a Put Option Event ), the Issuer is entitled to repurchase all the remaining Outstanding Bonds at the price stated in paragraph (a) above by notifying the remaining Bondholders of its intention to do so no later than 20 calendar days after the Put Option Repayment Date. Such prepayment may occur at the earliest on the 15 ^th calendar day following the date of such notice.

10.4

Early redemption option due to a tax event

If the Issuer is or will be required to gross up any withheld tax imposed by law from any payment in respect of the Bonds under the Finance Documents pursuant to Clause 8.4 ( Taxation ) as a result of a change in applicable law implemented after the date of these Bond Terms, the Issuer will have the right to redeem all, but not only some, of the Outstanding Bonds at a price equal to 100 per cent. of the Nominal Amount. The Issuer shall give written notice of such redemption to the Bond Trustee and the Bondholders at least twenty (20) Business Days prior to the Tax Event Repayment Date, provided that no such notice shall be given earlier than 60 days prior to the earliest date on which the Issuer would be obliged to withhold such tax were a payment in respect of the Bonds then due.

10.5

Early redemption following a Tender Offer

Upon the occurrence of a Disposal Event, Total Loss Event or a Piracy Event, the Issuer shall within 20 Business Days after funds are paid into the Disposal Account make an offer to the Bondholders in an aggregate amount equal to the amount standing to the credit of the Disposal Account to redeem Bonds at a price of minimum 100% of the Nominal Amount (plus accrued interest on redeemed amount), or such higher price or range as the Issuer in its discretion may decide, during a period of ten (10) Business Days following the offer (a “ Tender Offer ”), after which Bonds will be redeemed on a pro rata basis between the Bondholders who accepted the Tender Offer at the relevant tender price (and on the basis of number of Bonds tendered for redemption) after which any remaining funds on the Disposal Account may be released to the Issuer.

10.6

Mandatory early redemption at the Longstop Date

In the event that:

(a)

the conditions precedent set out in Clause 6.1 ( Conditions precedent for disbursement to the Issuer ) have not been fulfilled within the Longstop Date; or

(b)

the Terminal Funding Arrangements have not been satisfied by 31 March 2019,

the Issuer shall immediately redeem the Bonds at a price of 101 per cent. of the Nominal Amount plus accrued interest by, inter alia and if relevant, applying the funds deposited on the Escrow Account for such redemption.

11.

PURCHASE AND TRANSFER OF BONDS

11.1

Issuer’s purchase of Bonds

The Issuer may purchase and hold Bonds and such Bonds may be retained, or sold or cancelled in the Issuer’s sole discretion (including with respect to Bonds purchased pursuant to Clause 10.3 ( Mandatory repurchase due to a Put Option Event ).

11.2

Restrictions

(a)

Certain purchase or selling restrictions may apply to Bondholders under applicable local laws and regulations from time to time. Neither the Issuer nor the Bond Trustee shall be responsible to ensure compliance with such laws and regulations and each Bondholder is responsible for ensuring compliance with the relevant laws and regulations at its own cost and expense.

(b)

A Bondholder who has purchased Bonds in breach of applicable restrictions may, notwithstanding such breach, benefit from the rights attached to the Bonds pursuant to these Bond Terms (including, but not limited to, voting rights), provided that the Issuer shall not incur any additional liability by complying with its obligations to such Bondholder.

12.

INFORMATION UNDERTAKINGS

12.1

Financial Reports

(a)

The Issuer shall prepare Annual Financial Statements in the English language and make them available to the Bond Trustee and on its website (alternatively on another relevant information platform) as soon as they become available, and not later than 120 days after the end of the financial year.

(b)

The Issuer shall prepare Interim Accounts in the English language and make them available on its website (alternatively on another relevant information platform) as soon as they become available, and not later than 60 days after the end of the relevant interim period.

12.2

Requirements as to Financial Reports

(a)

The Issuer shall supply to the Bond Trustee, in connection with the publication of its Interim Accounts pursuant to Clause 12.1 (b) ( Financial Reports ), a Compliance Certificate with a copy of the Interim Accounts attached thereto. The Compliance Certificate shall be duly signed by the chief executive officer or the chief financial officer of the Issuer, certifying inter alia that the Interim Accounts are fairly representing its financial condition as at the date of those financial statements and setting out (in reasonable detail) computations evidencing compliance with the financial covenants in Clauses 13.19 and 13.20 as at such date.

(b)

The Issuer shall procure that the Financial Reports delivered pursuant to Clause 12.1 ( Financial Reports ) are prepared using GAAP consistently applied.

12.3

Put Option Event

The Issuer shall inform the Bond Trustee in writing as soon as possible after becoming aware that a Put Option Event has occurred.

12.4

Information: Miscellaneous

The Issuer shall:

(a)

promptly inform the Bond Trustee in writing of any Event of Default or any event or circumstance which the Issuer understands or could reasonably be expected to understand may lead to an Event of Default and the steps, if any, being taken to remedy it;

(b)

at the request of the Bond Trustee, report the balance of the Issuer’s Bonds (to the best of its knowledge, having made due and appropriate enquiries);

(c)

send the Bond Trustee copies of any statutory notifications of the Issuer, including but not limited to in connection with mergers, de-mergers and reduction of the Issuer’s share capital or equity;

(d)

if the Bonds are listed on an Exchange, send a copy to the Bond Trustee of its notices to the Exchange;

(e)

if the Issuer and/or the Bonds are rated, inform the Bond Trustee of its and/or the rating of the Bonds, and any changes to such rating;

(f)

inform the Bond Trustee of changes in the registration of the Bonds in the CSD; and

(g)

within a reasonable time, provide such information about the Issuer’s and the Group’s business, assets and financial condition as the Bond Trustee may reasonably request.

13.

GENERAL AND FINANCIAL UNDERTAKINGS

The Issuer undertakes to (and shall, where applicable, procure that the other Group Companies will) comply with the undertakings set forth in this Clause 13 ( General and financial Undertakings ).

General undertakings

13.1

Authorisations

The Issuer shall, and shall procure that each other Group Company will, in all material respects obtain, maintain and comply with the terms of any authorisation, approval, license and consent required for the conduct of its business as carried out from time to time if a failure to do so would have Material Adverse Effect.

13.2

Compliance with laws

The Issuer shall, and shall ensure that all other Group Companies shall, carry on its business in accordance with acknowledged, careful and sound practices in all aspects and comply in all respects with all laws and regulations it or they may be subject to from time to time. Breach of these obligations shall be regarded as non-compliance only if such breach would have a Material Adverse Effect.

13.3

Corporate status

The Issuer shall not change its type of organisation or jurisdiction of organisation.

13.4

Continuation of business

The Issuer shall not cease to carry on its business. The Issuer shall procure that no substantial change is made to the general nature of the business of the Group from that carried on at the date of the Bond Terms, and/or as set out in the Bond Terms.

13.5

Mergers and de-mergers

(a)

Except as permitted under paragraph (b) below, the Issuer shall not, and shall ensure that no other Group Company shall, carry out:

(i)

any merger or other business combination or corporate reorganisation involving a consolidation of the assets and obligations of the Issuer or any other Group Company with any other companies or entities if such transaction would have a Material Adverse Effect; or

(ii)

any de-merger or other corporate reorganisation involving a split of the Issuer or any other Group Company into two or more separate companies or entities, if such transaction would have a Material Adverse Effect.

(b)

Paragraph (a) above does not apply to any Permitted Disposal.

13.6

Disposals of business

The Issuer shall not, and shall procure that no other Group Company shall, sell or otherwise dispose of all or a substantial part of the Group’s assets or operations to any person not being a member of the Group, unless (i) the transaction is carried out at a fair market value, on terms and conditions customary for such transactions and (ii) such transaction would not have a Material Adverse Effect.

13.7

Arm’s length transactions

Without limiting Clause 13.2 ( Compliance with laws ), the Issuer shall not, and the Issuer shall ensure that no other Group Company shall, enter into any transaction with any person except on arm’s length terms and for fair market value.

Issuer specific covenants

13.8

Dividend restrictions

The Issuer shall not declare or make any dividend payment, repurchase of shares or make other distributions or payments to its shareholders or on any Subordinated Loans, whether in cash or in kind, including without limitation any total return swaps or instruments with similar effect (a “Distribution”) exceeding 50% of the Issuer’s cumulative consolidated net profit after taxes from 1 January 2020, payable at the earliest from 1 January 2021 based on the audited annual accounts.

13.9

Subsidiary distribution

The Issuer shall not permit any Subsidiary to create or permit to exist any contractual obligation (or encumbrance) restricting the right of any Subsidiary to:

(i)

pay dividends or make other distributions to its shareholders;

(ii)

service any Financial Indebtedness to the Issuer;

(iii)

make any loans to the Issuer; or

(iv)

transfer any of its assets and properties to the Issuer,

if the creation of such contractual obligation is reasonably likely to prevent the Issuer from complying with its payment obligations under the Bond Terms.

13.10

Maintenance of Transaction Security

As long as any amount remains outstanding under the Bond issue, the Issuer shall ensure that each Transaction Security Document shall remain duly created, enforceable and perfected on first priority.

13.11

Ownership

The Issuer shall remain the sole owner (directly or indirectly) of the Vessel Owners and ensure that the Vessel Owners shall continue to directly hold legal title to and own the entire beneficial interest in the respective Security Vessels, except if disposed of in a Permitted Disposal. The Issuer shall remain the beneficial owner (directly or indirectly) of at least 50% of the Terminal.

13.12

Negative pledge

(a)

Except as permitted under paragraph (b) below, the Issuer shall not, and shall procure that no other Group Company will, create or allow to subsist, retain, provide, prolong or renew any Security over any of its/their assets (whether present or future).

(b)

Paragraph (a) above does not apply to any Permitted Security.

13.13

Financial Indebtedness restrictions

(a)

Except as permitted under paragraph (b) below, the Issuer shall not, and shall procure that no other Group Company will, incur any additional Financial Indebtedness or maintain or prolong any existing Financial Indebtedness.

(b)

Paragraph (a) above shall not prohibit any Group Company to incur, maintain or prolong any Permitted Financial Indebtedness.

13.14

Financial support restrictions

(a)

Except as permitted under paragraph (b) below, the Issuer shall not, and shall procure that no other Group Company will, be a creditor in respect of any Financial Support to or for the benefit of any person not being a Group Company.

(b)

Paragraph (a) above does not apply to any Permitted Financial Support.

13.15

Subordinated loans

The Issuer shall ensure that any existing and future shareholder loans or any subordinated loans from a third party to the Issuer shall be Subordinated Loans.

13.16

Insurances

The Issuer shall, and the Issuer shall procure that each Group Company will, maintain with reputable insurance companies, funds or underwriters adequate insurance or captive arrangements with respect to its assets, equipment and business against such liabilities, casualties and contingencies and of such types and in such amounts as are consistent with prudent business practice in their relevant jurisdiction.

13.17

Terminal Earnings

The Issuer shall, and the Issuer shall procure that each Group Company will, ensure that any dividends, repayment of loans or other distribution made to the Issuer emanating from the Issuer’s ownership interests in the Terminal (directly or indirectly) shall be made to the Terminal Earnings Account.

13.18

Transfer of funds to the Disposal Account

(a)

Upon the occurrence of any sale or disposal of a Security Vessel or the shares of a Vessel Owner (each a “ Disposal Event ”), the net proceeds received from the disposal shall be paid directly into the Disposal Account; and

(b)

In the event:

(i)

of an expropriation or an act of piracy of a Security Vessel (to the extent not a Total Loss Event and in the case of an act of piracy, provided always that such act of piracy shall have continued for a period of more than 210 calendar days) (a “ Piracy Event ”); or

(ii)

that there is an actual or constructive total loss of a Security Vessel (a “ Total Loss Event ”),

the Issuer shall as soon as the insurance proceeds are available and in any event no later than 180 days following the Total Loss Event or Piracy Event (as the case may be) transfer the higher of the i) insurance proceeds received, or ii) the Market Value of the Security Vessel according to the latest valuation at the time of the Total Loss Event or Piracy Event to the Disposal Account.

Vessel Covenants

The Issuer shall, and shall procure that each other Group Company (if applicable) shall (unless the Bond Trustee or the Bondholders’ in writing have agreed otherwise) procure that:

(a)

the Security Vessels are operated in all material respects in accordance with applicable laws and regulations (and in compliance with all Norwegian, UK, EU, US and UN sanctions regimes at all times) and good industry standards;

(b)

the Security Vessels shall maintain flag and class and remain registered in the Liberia or another ships registry acceptable to the Bond Trustee and the Bond Trustee shall be given notice of any changes to name, flag, class or registry of a Security Vessel prior to any such changes becoming effective;

(c)

the Security Vessels and all relevant equipment related thereto are at all times maintained and in good and safe condition and repair consistent with prudent ownership and industry standards;

(d)

insurance of the Security Vessels are taken out and maintained with financially sound and reputable insurance companies, funds or underwriters, including adequate insurance arrangements with respect to its assets, equipment and business against such liabilities, casualties and contingencies and of such types and in such amounts as are consistent with prudent business practice in their relevant jurisdiction. Each of the Security Vessels shall be adequately insured against (A) Hull & Machinery risks at least covering 100% of the Market Value of such Security Vessel (B) third party liability as per industry standards (P&I), (C) war risk (including expropriation risk) as per industry standards, and (D) any additional insurances required under law or any charter contract. Also, the Bond Trustee may take out a Mortgagee Interest Insurance and Mortgagee Additional Perils Insurance or similar insurances at the expense of the Issuer;

(e)

upon request of the Bond Trustee, arrange for the Bond Trustee, and/or any person appointed by the Bond Trustee, to undertake a technical inspection of the Security Vessels without interference of the daily operation of the Security Vessels and at the expense of the Issuer (however limited to maximum one yearly inspection per Security Vessel unless an Event of Default has occurred and is continuing); and

(f)

at least semi-annually, determine the Market Value of each Security Vessels. The cost of such determination shall be for the account of the Issuer.

Financial Covenants

The Issuer undertakes to comply with the Financial Covenants below at all times, such compliance to be measured on each Quarter Date and certified by the Issuer with each Compliance Certificate to the Bond Trustee to be delivered with the Annual Financial Statements and Interim Accounts. The Financial Covenants shall be calculated on a consolidated basis for the Group during the lifetime of the Bonds.

13.19

Equity Ratio

The Issuer undertakes to ensure that the Group maintains an Equity Ratio higher than 30%.

13.20

Liquidity

The Issuer shall ensure that the Group maintains a Liquidity of minimum USD 25,000,000.

14.

EVENTS OF DEFAULT AND ACCELERATION OF THE BONDS

14.1

Events of Default

Each of the events or circumstances set out in this Clause 14.1 shall constitute an Event of Default:

(a)

Non-payment

An Obligor fails to pay any amount payable by it under the Finance Documents when such amount is due for payment, unless:

(i)

its failure to pay is caused by administrative or technical error in payment systems or the CSD and payment is made within five (5) Business Days following the original due date; or

(ii)

in the discretion of the Bond Trustee, the Issuer has substantiated that it is likely that such payment will be made in full within five (5) Business Days following the original due date.

(b)

Breach of other obligations

An Obligor or Navigator Gas does not comply with any provision of the Finance Documents other than set out under paragraph (a) ( Non-payment ) above, unless such failure is capable of being remedied and is remedied within twenty (20) Business Days after the earlier of the Issuer’s actual knowledge thereof, or notice thereof is given to the Issuer by the Bond Trustee.

(c)

Misrepresentation

Any representation, warranty or statement (including statements in Compliance Certificates) made under or in connection with any Finance Documents is or proves to have been incorrect, inaccurate or misleading in any material respect when made or deemed to have been made, unless the circumstances giving rise to the misrepresentation are capable of remedy and are remedied within twenty (20) Business Days of the earlier of the Bond Trustee giving notice to the Issuer or the Issuer becoming aware of such misrepresentation.

(d)

Cross default

If for the Issuer and any other Obligor or, if and to the extent any such relevant event could reasonably be deemed to have a Material Adverse Effect, for any other Group Company:

(A)

any Financial Indebtedness is not paid when due nor within any applicable grace period; or

(B)

any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described); or

(C)

any commitment for any Financial Indebtedness is cancelled or suspended by a creditor as a result of an event of default (however described); or

(D)

any creditor becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described),

provided however that with respect to the Issuer and any other Obligor the aggregate amount of such Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (A) through (D) above exceeds a total of USD 25,000,000 in aggregate (or the equivalent thereof in any other currency).

(e)

Insolvency and insolvency proceedings

The Issuer and any other Obligor or, if and to the extent any such relevant event could reasonably be deemed to have a Material Adverse Effect, any other Group Company:

(i)

is Insolvent; or

(ii)

is object of any corporate action or any legal proceedings is taken in relation to:

(A)

the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) other than a solvent liquidation or reorganization; or

(B)

a composition, compromise, assignment or arrangement with any creditor which may materially impair its ability to perform its payment obligations under these Bond Terms; or

(C)

the appointment of a liquidator (other than in respect of a solvent liquidation), receiver, administrative receiver, administrator, compulsory manager or other similar officer of any of its assets; or

(D)

enforcement of any Security over any of its or their assets having an aggregate value exceeding the threshold amount set out in paragraph 14.1 (d) ( Cross default ) above; or

(E)

for (A)—(D) above, any analogous procedure or step is taken in any jurisdiction in respect of any such company,

however this shall not apply to any petition which is frivolous or vexatious and is discharged, stayed or dismissed within twenty (20) Business Days of commencement.

(f)

Creditor’s process

Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the Issuer and any Obligor or, if and to the extent any such relevant event could reasonably be deemed to have a Material Adverse Effect, any other Group Company having an aggregate value exceeding the threshold amount set out in paragraph 14.1 (d) ( Cross default ) above and is not discharged within twenty (20) Business Days.

(g)

Unlawfulness

It is or becomes unlawful for an Obligor to perform or comply with any of its obligations under the Finance Documents to the extent this may materially impair:

(i)

the ability of such Obligor to perform its obligations under these Bond Terms; or

(ii)

the ability of the Bond Trustee or any Security Agent to exercise any material right or power vested to it under the Finance Documents.

14.2

Acceleration of the Bonds

If an Event of Default has occurred and is continuing, the Bond Trustee may, in its discretion in order to protect the interests of the Bondholders, or upon instruction received from the Bondholders pursuant to Clause 14.3 ( Bondholders’ instructions ) below, by serving a Default Notice:

(a)

declare that the Outstanding Bonds, together with accrued interest and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, at which time they shall become immediately due and payable; and/or

(b)

exercise (or direct the Security Agent to exercise) any or all of its rights, remedies, powers or discretions under the Finance Documents or take such further measures as are necessary to recover the amounts outstanding under the Finance Documents.

14.3

Bondholders’ instructions

The Bond Trustee shall serve a Default Notice pursuant to Clause 14.2 ( Acceleration of the Bonds ) if:

(a)

the Bond Trustee receives a demand in writing from Bondholders representing a simple majority of the Voting Bonds, that an Event of Default shall be declared, and a Bondholders’ Meeting has not made a resolution to the contrary; or

(b)

the Bondholders’ Meeting, by a simple majority decision, has approved the declaration of an Event of Default.

14.4

Calculation of claim

The claim derived from the Outstanding Bonds due for payment as a result of the serving of a Default Notice will be calculated on the basis of the Make Whole Amount for the period from and including the Issue Date to the First Call Date and otherwise at the prices set out in Clause 10.2 ( Voluntary early redemption – Call Option ) as applicable at the following dates (and regardless of the Default Repayment Date set out in the Default Notice):

(a)

for any Event of Default arising out of a breach of Clause 14.1 ( Events of Default ) paragraph (a) ( Non-payment ), the claim will be calculated at the price applicable at the date when such Event of Default occurred; and

(b)

for any other Event of Default, the claim will be calculated at the price applicable at the date when the Default Notice was served by the Bond Trustee.

15.

BONDHOLDERS’ DECISIONS

15.1

Authority of the Bondholders’ Meeting

(a)

A Bondholders’ Meeting may, on behalf of the Bondholders, resolve to alter any of these Bond Terms, including, but not limited to, any reduction of principal or interest and any conversion of the Bonds into other capital classes.

(b)

The Bondholders’ Meeting cannot resolve that any overdue payment of any instalment shall be reduced unless there is a pro rata reduction of the principal that has not fallen due, but may resolve that accrued interest (whether overdue or not) shall be reduced without a corresponding reduction of principal.

(c)

The Bondholders’ Meeting may not adopt resolutions which will give certain Bondholders an unreasonable advantage at the expense of other Bondholders.

(d)

Subject to the power of the Bond Trustee to take certain action as set out in Clause 16.1 ( Power to represent the Bondholders ), if a resolution by, or an approval of, the Bondholders is required, such resolution may be passed at a Bondholders’ Meeting. Resolutions passed at any Bondholders’ Meeting will be binding upon all Bondholders.

(e)

At least 50 per cent. of the Voting Bonds must be represented at a Bondholders’ Meeting for a quorum to be present.

(f)

Resolutions will be passed by simple majority of the Voting Bonds represented at the Bondholders’ Meeting, unless otherwise set out in paragraph (g) below.

(g)

Save for any amendments or waivers which can be made without resolution pursuant to Clause 17.1 ( Procedure for amendments and waivers ) paragraph (a), section (i) and (ii), a majority of at least 2/3 of the Voting Bonds represented at the Bondholders’ Meeting is required for approval of any waiver or amendment of any provisions of these Bond Terms, including a change of Issuer and change of Bond Trustee.

15.2

Procedure for arranging a Bondholders’ Meeting

(a)

A Bondholders’ Meeting shall be convened by the Bond Trustee upon the request in writing of:

(i)

the Issuer;

(ii)

Bondholders representing at least 1/10 of the Voting Bonds;

(iii)

the Exchange, if the Bonds are listed and the Exchange is entitled to do so pursuant to the general rules and regulations of the Exchange; or

(iv)

the Bond Trustee.

The request shall clearly state the matters to be discussed and resolved.

(b)

If the Bond Trustee has not convened a Bondholders’ Meeting within ten (10) Business Days after having received a valid request for calling a Bondholders’ Meeting pursuant to paragraph (a) above, then the re-questing party may itself call the Bondholders’ Meeting.

(c)

Summons to a Bondholders’ Meeting must be sent no later than ten (10) Business Days prior to the proposed date of the Bondholders’ Meeting. The Summons shall be sent to all Bondholders registered in the CSD at the time the Summons is sent from the CSD. If the Bonds are listed, the Issuer shall ensure that the Summons is published in accordance with the applicable regulations of the Exchange. The Summons shall also be published on the website of the Bond Trustee (alternatively by press release or other relevant information platform).

(d)

Any Summons for a Bondholders’ Meeting must clearly state the agenda for the Bondholders’ Meeting and the matters to be resolved. The Bond Trustee may include additional agenda items to those requested by the person calling for the Bondholders’ Meeting in the Summons. If the Summons contains proposed amendments to these Bond Terms, a description of the proposed amendments must be set out in the Summons.

(e)

Items which have not been included in the Summons may not be put to a vote at the Bondholders’ Meeting.

(f)

By written notice to the Issuer, the Bond Trustee may prohibit the Issuer from acquiring or dispose of Bonds during the period from the date of the Summons until the date of the Bondholders’ Meeting, unless the acquisition of Bonds is made by the Issuer pursuant to Clause 10 ( Redemption and Repurchase of Bonds ).

(g)

A Bondholders’ Meeting may be held on premises selected by the Bond Trustee, or if paragraph (b) above applies, by the person convening the Bondholders’ Meeting (however to be held in the capital of the Relevant Jurisdiction). The Bondholders’ Meeting will be opened and, unless otherwise decided by the Bondholders’ Meeting, chaired by the Bond Trustee. If the Bond Trustee is not present, the Bondholders’ Meeting will be opened by a Bondholder and be chaired by a representative elected by the Bondholders’ Meeting (the Bond Trustee or such other representative, the “ Chairperson ”).

(h)

Each Bondholder, the Bond Trustee and, if the Bonds are listed, representatives of the Exchange, or any person or persons acting under a power of attorney for a Bondholder, shall have the right to attend the Bondholders’ Meeting (each a “ Representative ”). The Chairperson may grant access to the meeting to other persons not being Representatives, unless the Bondholders’ Meeting decides otherwise. In addition, each Representative has the right to be accompanied by an advisor. In case of dispute or doubt with regard to whether a person is a Representative or entitled to vote, the Chairperson will decide who may attend the Bondholders’ Meeting and exercise voting rights.

(i)

Representatives of the Issuer have the right to attend the Bondholders’ Meeting. The Bondholders Meeting may resolve to exclude the Issuer’s representatives and/or any person holding only Issuer’s Bonds (or any representative of such person) from participating in the meeting at certain times, however, the Issuer’s representative and any such other person shall have the right to be present during the voting.

(j)

Minutes of the Bondholders’ Meeting must be recorded by, or by someone acting at the instruction of, the Chairperson. The minutes must state the number of Voting Bonds represented at the Bondholders’ Meeting, the resolutions passed at the meeting, and the results of the vote on the matters to be decided at the Bondholders’ Meeting. The minutes shall be signed by the Chairperson and at least one other person. The minutes will be deposited with the Bond Trustee who shall make available a copy to the Bondholders and the Issuer upon request.

(k)

The Bond Trustee will ensure that the Issuer, the Bondholders and the Exchange are notified of resolutions passed at the Bondholders’ Meeting and that the resolutions are published on the website of the Bond Trustee (or other relevant electronically platform or press release).

(l)

The Issuer shall bear the costs and expenses incurred in connection with convening a Bondholders’ Meeting regardless of who has convened the Bondholders’ Meeting, including any reasonable costs and fees incurred by the Bond Trustee.

15.3

Voting rules

(a)

Each Bondholder (or person acting for a Bondholder under a power of attorney) may cast one vote for each Voting Bond owned on the Relevant Record Date, ref. Clause 3.3 ( Bondholders’ rights ). The Chairperson may, in its sole discretion, decide on accepted evidence of ownership of Voting Bonds.

(b)

Issuer’s Bonds shall not carry any voting rights. The Chairperson shall determine any question concerning whether any Bonds will be considered Issuer’s Bonds.

(c)

For the purposes of this Clause 15 ( Bondholders’ decisions ), a Bondholder that has a Bond registered in the name of a nominee will, in accordance with Clause 3.3 ( Bondholders’ rights ), be deemed to be the owner of the Bond rather than the nominee. No vote may be cast by any nominee if the Bondholder has presented relevant evidence to the Bond Trustee pursuant to Clause 3.3 ( Bondholders’ rights ) stating that it is the owner of the Bonds voted for. If the Bondholder has voted directly for any of its nominee registered Bonds, the Bondholder’s votes shall take precedence over votes submitted by the nominee for the same Bonds.

(d)

Any of the Issuer, the Bond Trustee and any Bondholder has the right to demand a vote by ballot. In case of parity of votes, the Chairperson will have the deciding vote.

15.4

Repeated Bondholders’ Meeting

(a)

Even if the necessary quorum set out in paragraph (d) of Clause 15.1 ( Authority of the Bondholders’ Meeting ) is not achieved, the Bondholders’ Meeting shall be held and voting completed for the purpose of recording the voting results in the minutes of the Bondholders’ Meeting. The Bond Trustee or the person who convened the initial Bondholders’ Meeting may, within ten (10) Business Days of that Bondholders’ Meeting, convene a repeated meeting with the same agenda as the first meeting.

(b)

The provisions and procedures regarding Bondholders’ Meetings as set out in Clause 15.1 ( Authority of the Bondholders’ Meeting ), Clause 15.2 ( Procedure for arranging a Bondholders’ Meeting ) and Clause 15.3 ( Voting rules ) shall apply mutatis mutandis to a repeated Bondholders’ Meeting, with the exception that the quorum requirements set out in paragraph (d) of Clause 15.1 ( Authority of the Bondholders’ Meeting ) shall not apply to a repeated Bondholders’ Meeting. A Summons for a repeated Bondholders’ Meeting shall also contain the voting results obtained in the initial Bondholders’ Meeting.

(c)

A repeated Bondholders’ Meeting may only be convened once for each original Bondholders’ Meeting. A repeated Bondholders’ Meeting may be convened pursuant to the procedures of a Written Resolution in accordance with Clause 15.5 ( Written Resolutions ), even if the initial meeting was held pursuant to the procedures of a Bondholders’ Meeting in accordance with Clause 15.2 ( Procedure for arranging a Bondholders’ Meeting ) and vice versa.

15.5

Written Resolutions

(a)

Subject to these Bond Terms, anything which may be resolved by the Bondholders in a Bondholders’ Meeting pursuant to Clause 15.1 ( Authority of the Bondholders’ Meeting ) may also be resolved by way of a Written Resolution. A Written Resolution passed with the relevant majority is as valid as if it had been passed by the Bondholders in a Bondholders’ Meeting, and any reference in any Finance Document to a Bondholders’ Meeting shall be construed accordingly.

(b)

The person requesting a Bondholders’ Meeting may instead request that the relevant matters are to be resolved by Written Resolution only, unless the Bond Trustee decides otherwise.

(c)

The Summons for the Written Resolution shall be sent to the Bondholders registered in the CSD at the time the Summons is sent from the CSD and published at the Bond Trustee’s web site, or other relevant electronic platform or via press release.

(d)

The provisions set out in Clause 15.1 ( Authority of the Bondholders’ Meeting ), 15.2 ( Procedure for arranging a Bondholder’s Meeting ), Clause 15.3 ( Voting Rules ) and Clause 15.4 ( Repeated Bondholders’ Meeting ) shall apply mutatis mutandis to a Written Resolution, except that:

(i)

the provisions set out in paragraphs (g), (h) and (i) of Clause 15.2 ( Procedure for arranging Bondholders Meetings ); or

(ii)

provisions which are otherwise in conflict with the requirements of this Clause 15.5 ( Written Resolution ),

shall not apply to a Written Resolution.

(e)

The Summons for a Written Resolution shall include:

(i)

instructions as to how to vote to each separate item in the Summons (including instructions as to how voting can be done electronically if relevant); and

(ii)

the time limit within which the Bond Trustee must have received all votes necessary in order for the Written Resolution to be passed with the requisite majority (the “ Voting Period ”), such Voting Period to be at least three (3) Business Days but not more than fifteen (15) Business Days from the date of the Summons, provided however that the Voting Period for a Written Resolution summoned pursuant to Clause 15.4 ( Repeated Bondholders’ Meeting ) shall be at least ten (10) Business Days but not more than fifteen (15) Business Days from the date of the Summons.

(f)

Only Bondholders of Voting Bonds registered with the CSD on the Relevant Record Date, or the beneficial owner thereof having presented relevant evidence to the Bond Trustee pursuant to Clause 3.3 ( Bondholders’ rights ), will be counted in the Written Resolution.

(g)

A Written Resolution is passed when the requisite majority set out in paragraph (e) or paragraph (f) of Clause 15.1 ( Authority of Bondholders’ Meeting ) has been achieved, based on the total number of Voting Bonds, even if the Voting Period has not yet expired. A Written Resolution may also be resolved if the sufficient numbers of negative votes are received prior to the expiry of the Voting Period.

(h)

The effective date of a Written Resolution passed prior to the expiry of the Voting Period is the date when the resolution is approved by the last Bondholder that results in the necessary voting majority being achieved.

(i)

If no resolution is passed prior to the expiry of the Voting Period, the number of votes shall be calculated at the close of business on the last day of the Voting Period, and a decision will be made based on the quorum and majority requirements set out in paragraphs (d) to (f) of Clause 15.1( Authority of Bondholders’ Meeting ).

16.

THE BOND TRUSTEE

16.1

Power to represent the Bondholders

(a)

The Bond Trustee has power and authority to act on behalf of, and/or represent, the Bondholders in all matters, including but not limited to taking any legal or other action, including enforcement of these Bond Terms, and the commencement of bankruptcy or other insolvency proceedings against the Issuer, or others.

(b)

The Issuer shall promptly upon request provide the Bond Trustee with any such documents, information and other assistance (in form and substance satisfactory to the Bond Trustee), that the Bond Trustee deems necessary for the purpose of exercising its and the Bondholders’ rights and/or carrying out its duties under the Finance Documents.

16.2

The duties and authority of the Bond Trustee

(a)

The Bond Trustee shall represent the Bondholders in accordance with the Finance Documents, including, inter alia, by following up on the delivery of any Compliance Certificates and such other documents which the Issuer is obliged to disclose or deliver to the Bond Trustee pursuant to the Finance Documents and, when relevant, in relation to accelerating and enforcing the Bonds on behalf of the Bondholders.

(b)

The Bond Trustee is not obligated to assess or monitor the financial condition of the Issuer or any other Obligor unless to the extent expressly set out in these Bond Terms, or to take any steps to ascertain whether any Event of Default has occurred. Until it has actual knowledge to the contrary, the Bond Trustee is entitled to assume that no Event of Default has occurred. The Bond Trustee is not responsible for the valid execution or enforceability of the Finance Documents, or for any discrepancy between the indicative terms and conditions described in any marketing material presented to the Bondholders prior to issuance of the Bonds and the provisions of these Bond Terms.

(c)

The Bond Trustee is entitled to take such steps that it, in its sole discretion, considers necessary or advisable to protect the rights of the Bondholders in all matters pursuant to the terms of the Finance Documents. The Bond Trustee may submit any instructions received by it from the Bondholders to a Bondholders’ Meeting before the Bond Trustee takes any action pursuant to the instruction.

(d)

The Bond Trustee is entitled to engage external experts when carrying out its duties under the Finance Documents.

(e)

The Bond Trustee shall hold all amounts recovered on behalf of the Bondholders on separated accounts.

(f)

The Bond Trustee will ensure that resolutions passed at the Bondholders’ Meeting are properly implemented, provided, however, that the Bond Trustee may refuse to implement resolutions that may be in conflict with these Bond Terms, any other Finance Document, or any applicable law.

(g)

Notwithstanding any other provision of the Finance Documents to the contrary, the Bond Trustee is not obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation.

(h)

If the cost, loss or liability which the Bond Trustee may incur (including reasonable fees payable to the Bond Trustee itself) in:

(i)

complying with instructions of the Bondholders; or

(ii)

taking any action at its own initiative,

will not, in the reasonable opinion of the Bond Trustee, be covered by the Issuer or the relevant Bondholders pursuant to paragraphs (e) and (g) of Clause 16.4 ( Expenses, liability and indemnity ), the Bond Trustee may refrain from acting in accordance with such instructions, or refrain from taking such action, until it has received such funding or indemnities (or adequate security has been provided therefore) as it may reasonably require.

(i)

The Bond Trustee shall give a notice to the Bondholders before it ceases to perform its obligations under the Finance Documents by reason of the non-payment by the Issuer of any fee or indemnity due to the Bond Trustee under the Finance Documents.

(j)

The Bond Trustee may instruct the CSD to split the Bonds to a lower nominal amount in order to facilitate partial redemptions, restructuring of the Bonds or other situations.

16.3

Equality and conflicts of interest

(a)

The Bond Trustee shall not make decisions which will give certain Bondholders an unreasonable advantage at the expense of other Bondholders. The Bond Trustee shall, when acting pursuant to the Finance Documents, act with regard only to the interests of the Bondholders and shall not be required to have regard to the interests or to act upon or comply with any direction or request of any other person, other than as explicitly stated in the Finance Documents.

(b)

The Bond Trustee may act as agent, trustee, representative and/or security agent for several bond issues relating to the Issuer notwithstanding potential conflicts of interest. The Bond Trustee is entitled to delegate its duties to other professional parties.

16.4

Expenses, liability and indemnity

(a)

The Bond Trustee will not be liable to the Bondholders for damage or loss caused by any action taken or omitted by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. The Bond Trustee shall not be responsible for any indirect or consequential loss. Irrespective of the foregoing, the Bond Trustee shall have no liability to the Bondholders for damage caused by the Bond Trustee acting in accordance with instructions given by the Bondholders in accordance with these Bond Terms.

(b)

Any liability for the Bond Trustee for damage or loss is limited to the amount of the Outstanding Bonds. The Bond Trustee is not liable for the content of information provided to the Bondholders by or on behalf of the Issuer or any other person.

(c)

The Bond Trustee shall not be considered to have acted negligently in:

(i)

acting in accordance with advice from or opinions of reputable external experts; or

(ii)

taking, delaying or omitting any action if acting with reasonable care and provided the Bond Trustee considers that such action is in the interests of the Bondholders.

(d)

The Issuer is liable for, and will indemnify the Bond Trustee fully in respect of, all losses, expenses and liabilities incurred by the Bond Trustee as a result of negligence by the Issuer (including its directors, management, officers, employees and agents) in connection with the performance of the Bond Trustee’s obligations under the Finance Documents, including losses incurred by the Bond Trustee as a result of the Bond Trustee’s actions based on misrepresentations made by the Issuer in connection with the issuance of the Bonds, the entering into or performance under the Finance Documents, and for as long as any amounts are outstanding under or pursuant to the Finance Documents.

(e)

The Issuer shall cover all costs and expenses incurred by the Bond Trustee in connection with it fulfilling its obligations under the Finance Documents. The Bond Trustee is entitled to fees for its work and to be indemnified for costs, losses and liabilities on the terms set out in the Finance Documents. The Bond Trustee’s obligations under the Finance Documents are conditioned upon the due payment of such fees and indemnifications. The fees of the Bond Trustee will be further set out in the Bond Trustee Fee Agreement.

(f)

The Issuer shall on demand by the Bond Trustee pay all costs incurred for external experts engaged after the occurrence of an Event of Default, or for the purpose of investigating or considering (i) an event or circumstance which the Bond Trustee reasonably believes is or may lead to an Event of Default or (ii) a matter relating to the Issuer or any of the Finance Documents which the Bond Trustee reasonably believes may constitute or lead to a breach of any of the Finance Documents or otherwise be detrimental to the interests of the Bondholders under the Finance Documents.

(g)

Fees, costs and expenses payable to the Bond Trustee which are not reimbursed in any other way due to an Event of Default, the Issuer being Insolvent or similar circumstances pertaining to any Obligor, may be covered by making an equal reduction in the proceeds to the Bondholders hereunder of any costs and expenses incurred by the Bond Trustee (or the Security Agent) in connection therewith. The Bond Trustee may withhold funds from any escrow account (or similar arrangement) or from other funds received from the Issuer or any other person, irrespective of such funds being subject to Transaction Security, and to set-off and cover any such costs and expenses from those funds.

(h)

As a condition to effecting any instruction from the Bondholders (including, but not limited to, instructions set out in Clause 14.3 ( Bondholders’ instructions ) or Clause 15.2 ( Procedure for arranging a Bondholders’ Meeting )), the Bond Trustee may require satisfactory Security, guarantees and/or indemnities for any possible liability and anticipated costs and expenses from those Bondholders who have given that instruction and/or who voted in favour of the decision to instruct the Bond Trustee.

16.5

Replacement of the Bond Trustee

(a)

The Bond Trustee may be replaced according to the procedures set out in Clause 15 ( Bondholders’ Decisions ), and the Bondholders may resolve to replace the Bond Trustee without the Issuer’s approval.

(b)

The Bond Trustee may resign by giving notice to the Issuer and the Bondholders, in which case a successor Bond Trustee shall be elected pursuant to this Clause 16.5 ( Replacement of the Bond Trustee ), initiated by the retiring Bond Trustee.

(c)

If the Bond Trustee is Insolvent, or otherwise is permanently unable to fulfil its obligations under these Bond Terms, the Bond Trustee shall be deemed to have resigned and a successor Bond Trustee shall be appointed in accordance with this Clause 16.5 ( Replacement of the Bond Trustee ).The Issuer may appoint a temporary Bond Trustee until a new Bond Trustee is elected in accordance with paragraph (a) above.

(d)

The change of Bond Trustee’s shall only take effect upon execution of all necessary actions to effectively substitute the retiring Bond Trustee, and the retiring Bond Trustee undertakes to co-operate in all reasonable manners without delay to such effect. The retiring Bond Trustee shall be discharged from any further obligation in respect of the Finance Documents from the change takes effect, but shall remain liable under the Finance Documents in respect of any action which it took or failed to take whilst acting as Bond Trustee. The retiring Bond Trustee remains entitled to any benefits and any unpaid fees or expenses under the Finance Documents before the change has taken place.

(e)

Upon change of Bond Trustee the Issuer shall co-operate in all reasonable manners without delay to replace the retiring Bond Trustee with the successor Bond Trustee and release the retiring Bond Trustee from any future obligations under the Finance Documents and any other documents.

16.6

Security Agent

(a)

The Bond Trustee is appointed to act as Security Agent and trustee for the Bonds, unless any other person is appointed. The main functions of the Security Agent may include holding (i) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Secured Parties or any of them or for the benefit thereof under or pursuant to any of the Finance Documents (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to any Secured Party in any Finance Document), (ii) all moneys, property and other assets paid or transferred to or vested in any Secured Party or any agent of any Secured Party or received or recovered by any Secured Party or any agent of any Secured Party pursuant to, or in connection with, the Finance Documents whether from any Obligor or any other person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Secured Party or any agent of any Secured Party in respect of the same (or any part thereof).

(b)

The Bond Trustee shall monitor compliance by the Issuer and other relevant parties of their respective obligations under the Transaction Security Documents with respect to the Transaction Security on the basis of information made available to it pursuant to the Finance Documents.

(c)

The Bond Trustee shall, when acting as Security Agent for the Bonds, at all times maintain and keep all certificates and other documents received by it, that are bearers of right relating to the Transaction Security in safe custody on behalf of the Secured Parties. The Bond Trustee shall not be responsible for or required to insure against any loss incurred in connection with such safe custody.

(d)

Before the appointment of a Security Agent other than the Bond Trustee, the Issuer shall be given the opportunity to state its views on the proposed Security Agent, but the final decision as to appointment shall lie exclusively with the Bond Trustee.

(e)

The functions, rights and obligations of the Security Agent may be determined by a Security Agent Agreement to be entered into between the Bond Trustee and the Security Agent, which the Bond Trustee shall have the right to require each Obligor and any other party to a Finance Document to sign as a party, or, at the discretion of the Bond Trustee, to acknowledge. The Bond Trustee shall at all times retain the right to instruct the Security Agent in all matters, whether or not a separate Security Agent Agreement has been entered into.

(f)

The provisions set out in Clause 16.4 ( Expenses, liability and indemnity ) shall apply mutatis mutandis to any expenses and liabilities of the Security Agent in connection with the Finance Documents.

17.

AMENDMENTS AND WAIVERS

17.1

Procedure for amendments and waivers

(a)

The Issuer and the Bond Trustee (acting on behalf of the Bondholders) may agree to amend the Finance Documents or waive a past default or anticipated failure to comply with any provision in a Finance Document, provided that:

(i)

such amendment or waiver is not detrimental to the rights and benefits of the Bondholders in any material respect, or is made solely for the purpose of rectifying obvious errors and mistakes; or

(ii)

such amendment or waiver is required by applicable law, a court ruling or a decision by a relevant authority; or

(iii)

such amendment or waiver has been duly approved by the Bondholders in accordance with Clause 15 ( Bondholders’ Decisions ).

(b)

Any changes to these Bond Terms necessary or appropriate in connection with the appointment of a Security Agent other than the Bond Trustee shall be documented in an amendment to these Bond Terms, signed by the Bond Trustee (in its discretion). If so desired by the Bond Trustee, any or all of the Transaction Security Documents shall be amended, assigned or re-issued, so that the Security Agent is the holder of the relevant Security (on behalf of the Secured Parties). The costs incurred in connection with such amendment, assignment or re-issue shall be for the account of the Issuer.

17.2

Authority with respect to documentation

If the Bondholders have resolved the substance of an amendment to any Finance Document, without resolving on the specific or final form of such amendment, the Bond Trustee shall be considered authorised to draft, approve and/or finalise (as applicable) any required documentation or any outstanding matters in such documentation without any further approvals or involvement from the Bondholders being required.

17.3

Notification of amendments or waivers

The Bond Trustee shall as soon as possible notify the Bondholders of any amendments or waivers made in accordance with this Clause 17 ( Amendments and waivers ), setting out the date from which the amendment or waiver will be effective, unless such notice obviously is unnecessary. The Issuer shall ensure that any amendment to these Bond Terms is duly registered with the CSD.

18.

MISCELLANEOUS

18.1

Limitation of claims

All claims under the Finance Documents for payment, including interest and principal, will be subject to the legislation regarding time-bar provisions of the Relevant Jurisdiction.

18.2

Access to information

(a)

These Bond Terms will be made available to the public and copies may be obtained from the Bond Trustee or the Issuer. The Bond Trustee will not have any obligation to distribute any other information to the Bondholders or any other person, and the Bondholders have no right to obtain information from the Bond Trustee, other than as explicitly stated in these Bond Terms or pursuant to statutory provisions of law.

(b)

In order to carry out its functions and obligations under these Bond Terms, the Bond Trustee will have access to the relevant information regarding ownership of the Bonds, as recorded and regulated with the CSD.

(c)

The information referred to in paragraph (b) above may only be used for the purposes of carrying out their duties and exercising their rights in accordance with the Finance Documents and shall not disclose such information to any Bondholder or third party unless necessary for such purposes.

18.3

Notices, contact information

Written notices to the Bondholders made by the Bond Trustee will be sent to the Bondholders via the CSD with a copy to the Issuer and the Exchange (if the Bonds are listed). Any such notice or communication will be deemed to be given or made via the CSD, when sent from the CSD.

(a)

The Issuer’s written notifications to the Bondholders will be sent to the Bondholders via the Bond Trustee or through the CSD with a copy to the Bond Trustee and the Exchange (if the Bonds are listed).

(b)

Unless otherwise specifically provided, all notices or other communications under or in connection with these Bond Terms between the Bond Trustee and the Issuer will be given or made in writing, by letter, e-mail or fax. Any such notice or communication will be deemed to be given or made as follows:

(i)

if by letter, when delivered at the address of the relevant party;

(ii)

if by e-mail, when received; and

(iii)

if by fax, when received.

(c)

The Issuer and the Bond Trustee shall each ensure that the other party is kept informed of changes in postal address, e-mail address, telephone and fax numbers and contact persons.

(d)

When determining deadlines set out in these Bond Terms, the following will apply (unless otherwise stated):

(i)

if the deadline is set out in days, the first day of the relevant period will not be included and the last day of the relevant period will be included;

(ii)

if the deadline is set out in weeks, months or years, the deadline will end on the day in the last week or the last month which, according to its name or number, corresponds to the first day the deadline is in force. If such day is not a part of an actual month, the deadline will be the last day of such month; and

(iii)

if a deadline ends on a day which is not a Business Day, the deadline is postponed to the next Business Day.

18.4

Defeasance

(a)

Subject to paragraph (b) below and provided that:

(i)

an amount sufficient for the payment of principal and interest on the Outstanding Bonds to the Maturity Date (including, to the extent applicable, any premium payable upon exercise of the Call Option), and always subject to paragraph (c) below (the “ Defeasance Amount ”) is credited by the Issuer to an account in a financial institution acceptable to the Bond Trustee (the “ Defeasance Account ”);

(ii)

the Defeasance Account is irrevocably pledged and blocked in favour of the Bond Trustee on such terms as the Bond Trustee shall request (the “ Defeasance Pledge” ); and

(iii)

the Bond Trustee has received such legal opinions and statements reasonably required by it, including (but not necessarily limited to) with respect to the validity and enforceability of the Defeasance Pledge,

then;

(A)

the Issuer will be relieved from its obligations under Clause 12.2 ( Requirements as to Financial Reports ) paragraph (a), Clause 12.3 ( Put Option Event ), Clause 12.4 ( Information: Miscellaneous ) and Clause 13 ( General and financial undertakings );

(B)

any Transaction Security shall be released and the Defeasance Pledge shall be considered replacement of the Transaction Security; and

(C)

any Obligor shall be released from any Guarantee or other obligation applicable to it under any Finance Document.

(b)

The Bond Trustee shall be authorised to apply any amount credited to the Defeasance Account towards any amount payable by the Issuer under any Finance Document on the due date for the relevant payment until all obligations of the Issuer and all amounts outstanding under the Finance Documents are repaid and discharged in full.

(c)

The Bond Trustee may, if the Defeasance Amount cannot be finally and conclusively determined, decide the amount to be deposited to the Defeasance Account in its discretion, applying such buffer amount as it deems required.

A defeasance established according to this Clause 18.4 may not be reversed.

19.

GOVERNING LAW AND JURISDICTION

19.1

Governing law

These Bond Terms are governed by the laws of the Relevant Jurisdiction, without regard to its conflict of law provisions.

19.2

Main jurisdiction

The Bond Trustee and the Issuer agree for the benefit of the Bond Trustee and the Bondholders that the City Court of the capital of the Relevant Jurisdiction shall have jurisdiction with respect to any dispute arising out of or in connection with these Bond Terms. The Issuer agrees for the benefit of the Bond Trustee and the Bondholders that any legal action or proceedings arising out of or in connection with these Bond Terms against the Issuer or any of its assets may be brought in such court.

19.3

Alternative jurisdiction

Clause 19 ( Governing law and jurisdiction ) is for the exclusive benefit of the Bond Trustee and the Bondholders and the Bond Trustee have the right:

(a)

to commence proceedings against the Issuer or any other Obligor or any of their respective assets in any court in any jurisdiction; and

(b)

to commence such proceedings, including enforcement proceedings, in any competent jurisdiction concurrently.

19.4

Service of process

(a)

Without prejudice to any other mode of service allowed under any relevant law, the Issuer:

(i)

irrevocably appoints Advokatfirmaet BAHR AS as its agent for service of process in relation to any proceedings in connection with these Bond Terms; and

(ii)

agrees that failure by an agent for service of process to notify the Issuer of the process will not invalidate the proceedings concerned.

(b)

If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Issuer must immediately (and in any event within ten (10) Business Days of such event taking place) appoint another agent on terms acceptable to the Bond Trustee. Failing this, the Bond Trustee may appoint another agent for this purpose.

——-000-——

These Bond Terms have been executed in two originals, of which the Issuer and the Bond Trustee shall retain one each.

SCHEDULE 1

COMPLIANCE CERTIFICATE

[date]

Navigator Holdings Ltd. FRN senior secured NOK 600,000,000 bonds 2018/2023 ISIN NO 0010835069

We refer to the Bond Terms for the above captioned Bonds made between Nordic Trustee AS as Bond Trustee on behalf of the Bondholders and the undersigned as Issuer. Pursuant to Clause 12.2(a) of the Bond Terms a Compliance Certificate shall be issued in connection with each delivery of Financial Statements to the Bond Trustee.

This letter constitutes the Compliance Certificate for the period [•].

Capitalised terms used herein will have the same meaning as in the Bond Terms.

With reference to Clause 12.2 ( Requirements as to Financial Reports ) we hereby certify that all information delivered under cover of this Compliance Certificate is true and accurate and there has been no material adverse change to the financial condition of the Issuer since the date of the last accounts or the last Compliance Certificate submitted to you. Copies of our latest consolidated [Financial Statements] / [Interim Accounts] are enclosed.

The Financial Covenants set out in Clauses 13.19 and 13.20 are met, please see the calculations and figures in respect of the ratios attached hereto.

We confirm that, to the best of our knowledge, no Event of Default has occurred or is likely to occur.

Yours faithfully,

Navigator Holdings Ltd.

[Name of authorised person]

Enclosure: Financial Statements [and any other written documentation]

SCHEDULE 2

RELEASE NOTICE – ESCROW ACCOUNT

[date] 2018

Dear Sirs,

Navigator Holdings Ltd. FRN senior secured NOK 600,000,000 bonds 2018/2023 ISIN NO 0010835069

We refer to the Bond Terms for the above captioned Bonds made between Nordic Trustee AS as Bond Trustee on behalf of the Bondholders and the undersigned as Issuer.

Capitalised terms used herein will have the same meaning as in the Bond Terms.

We hereby give you notice that we on [date] wish to draw an amount of [currency and amount] from the Escrow Account applied pursuant to the purpose set out in the Bond Terms, and request you to instruct the bank to release the above mentioned amount.

We hereby represent and warrant that (i) no Event of Default has occurred and is continuing or is likely to occur as a result of the release from the Escrow Account, and (ii) we repeat the representations and warranties set out in the Bond Terms as being still true and accurate in all material respects at the date hereof.

Yours faithfully,

Navigator Holdings Ltd.

[Name of authorised person]

Enclosure: copy of any written documentation evidencing the use of funds

SIGNATURES



The Issuer:						As Bond Trustee and Security Agent:

Navigator Holdings Ltd.						Nordic Trustee AS

/s/ Niall Nolan						/s/ Lars Erik Laerum
By: Niall Nolan						By: Lars Erik Laerum
Position: Attorney-in-Fact

/s/ Kamaran Jomah
Kamaran Jomah
Attorney-in-Fact

NAVIGATOR HOLDINGS LTD.

Date: November 13, 2018

/s/ Niall J Nolan

Niall J Nolan

Chief Financial Officer