(

) EMPLOYEE BENEFIT PLANS

401(k)

We offer a

401(k)

plan to all of our U.S. employees and provide matching contribution to those employees that participate. The matching contributions paid by us totaled

$1.0

million and

$2.1

million for the years ended

December

31,

2015

and

2014,

respectively. In

August

2015,

we suspended the matching contribution.

Multi-employer Pension Obligation

Certain of our current and former U.K. subsidiaries are participating in a multi-employer retirement fund known as the Merchant Navy Officers Pension Fund, or MNOPF. At

December

31,

2016,

we had accrued

$2.6

million related to this liability, which reflects all obligations assessed on us by the fund’s trustee as of such date. We continue to have employees who participate in the MNOPF and will as a result continue to make routine payments to the fund as those employees accrue additional benefits over time. The status of the fund is calculated by an actuarial firm every

three

years. The last assessment was completed in

March

2015

and resulted in a significantly improved funding position, mainly due to hedging the interest rate and inflation risk, to between

65%

and

80%.

The reported net deficit of the fund at

March

31,

2015

was

$7.5

million and, as a result, the MNOPF trustee did not propose to collect any additional deficit contributions related to the new deficit. The amount and timing of additional potential future obligations relating to underfunding depend on a number of factors, but principally on future fund performance and the underlying actuarial assumptions. Our share of the fund’s deficit is dependent on a number of factors including future actuarial valuations, asset performance, the number of participating employers, and the final method used in allocating the required contribution among participating employers. In addition, our obligation could increase if other employers no longer participated in the plan. In the years ended

December

31,

2016,

2015

and

2014

we made contributions to the plan of

$0.4

million,

$0.4

million and

$0.7

million, respectively. Our contributions do not make up more than

five

percent of total contributions to the plan.

In addition, we participate in the Merchant Navy Ratings Pension Fund, or MNRPF, in a capacity similar to our participation in the MNOPF. Prior to

2013,

we were not required to contribute to any deficit in the MNRPF. Due to a change in the plan rules, however, we were advised that we would be required to make contributions beginning in

2013.

An actuarial valuation was completed as of

March

31,

2014

and deficit notices were communicated in the

third

quarter of

2015.

Our share of the deficit was calculated at

$2.2

million, of which we paid

$1.9

million in

October

2015

and

$0.3

million in

October

2016.

During

2016,

we accrued amounts in respect of future deficit contributions. As of

December

31,

2016,

the amount of this accrual was

$1.1

million.

Norwegian Pension Plans

The Norwegian benefit pension plans include approximately

three

of our office employees and

137

seamen and are defined benefit, multiple-employer plans, insured with Nordea Liv. We also instituted a defined contribution plan in

2008

for shore based personnel that existing personnel could elect to participate in while discontinuing any further obligations in the defined benefit plan. All newly hired shore based personnel are required to join the defined contribution plan. Benefits under the defined benefit plans are based primarily on participants’ years of credited service, wage level at age of retirement and the contribution from the Norwegian National Insurance. A

December

31,

2016

measurement date is used for the actuarial computation of the defined benefit pension plans. The following tables provide information about changes in the benefit obligation and plan assets and the funded status of the Norwegian defined benefit pension plans (in thousands):

	2016			2015
Change in Benefit Obligation
Benefit obligation at beginning of the year	$	6,394		$	8,186
Benefit periodic cost		319			416
Interest cost		144			169
Withdrawal		(377	)		(256	)
Benefits paid		(289	)		(379	)
Actuarial (gain) loss		(1,117	)		(523	)
Translation adjustment		128			(1,219	)
Benefit obligation at year end	$	5,202		$	6,394

	2016			2015
Change in Plan Assets
Fair value of plan assets at beginning of the year	$	5,466		$	6,159
Actual return on plan assets		182			185
Contributions		303			541
Withdrawal		(237	)		(196	)
Settlement/curtailment		82			-
Benefits paid		(297	)		(250	)
Administrative fee		(56	)		(61	)
Actuarial loss		(63	)		55
Translation adjustment		106			(967	)
Fair value of plan assets at end of year	$	5,486		$	5,466

	2016		2015

Funded status	$	284	$	(928	)

Amounts recognized in the balance sheet consist of (in thousands):

	December 31,
	2016		2015

Other liabilities	$	87	$	1,104

	Year Ended December 31,
	2016			2015
Components of Net Period Benefit Cost
Service cost	$	329		$	416
Interest cost		149			169
Return on plan assets		(182	)		(185	)
Payroll tax		52			65
Administrative fee		56			61
Recognized net actuarial gain		(381	)		(609	)
Net periodic benefit cost	$	23		$	(83	)

The vested benefit obligation is calculated as the actuarial present value of the vested benefits to which employees are currently entitled based on the employees’ expected date of separation or retirement.

Weighted-average assumptions	2016			2015
Discount rate		2.6	%		2.7	%
Return on plan assets		3.6	%		2.2	%
Rate of compensation increase		2.5	%		1.3	%

The weighted average assumptions shown above were used for both the determination of net periodic benefit cost and the determination of benefit obligations as of the measurement date. In determining the weighted average assumptions, the overall market performance and specific historical performance of the investments of the Norwegian pension plan were reviewed. The asset allocations at the measurement date were as follows:

	2016		2015		Level
Equity securities		5%		7%	1
Property		10%		14%	3
Money market		24%		22%	2
Held-to-Maturity bonds		32%		35%	2
Bonds		7%		17%	1
Other		22%		5%	3
All asset categories		100%		100%

The investment strategy focuses on providing a stable return on plan assets using a diversified portfolio of investments.

The projected benefit obligation and the fair value of plan assets for the Norwegian pension plan were approximately

$5.6

million and

$5.5

million, respectively as of

December

31,

2016,

$6.4

million and

$5.5

million, respectively as of

December

31,

2015,

and

$8.2

million and

$6.1

million, respectively, as of

December

31,

2014.

We expect to contribute approximately

$0.6

million to the Norwegian pension plan in

2016.

plan assets are expected to be returned to us in

2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

Year ended December 31,	Benefit Payments
2017		332
2018		342
2019		352
2020		363
2021		374
Total	$	1,763